Yemen Procurement Reforms and e-procuremente
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1 Yemen Procurement Reforms and e-procuremente Yehya Al-Ashwal Ashwal Chairman of the Technical Committee the High Tender Board (Yemen Public Procurement) MENA Regional Seminar on Preventive Anti- Corruption Institutional Mechanisms: Enhancing Prevention of corruption Rabat Morocco, December, 2010 Page 1
2 Background In early 2006, the Government of Yemen, with the support of international development partners, launched a set of ambitious and interconnected reform measures promoting good governance called the National Reform Agenda (NRA). The President and the Government affirming that combating corruption is the priority of these reforms. Modernising public procurement and bringing related regulations up to international standards played a key role in the National Reform Agenda. World Bank, USAID (Anti-Corruption Program), UNDP and Arab Fund are supporting Yemen to implement NRA. One of the WB technical support to Yemen was Country Procurement Assessment Report, which was completed on December 21, Findings: Gaps in the Legislation, absence of Standard Bidding Documents (SBDs) and conflicts with the World Bank's Guidelines Page 2
3 Results and achievements of the NRA in Public Procurement: The Procurement Manual and the Standard Bidding Documents (SBDs) developed under the supervision of the World Bank, New Procurement Law according to UNICITRAL principles, Restructuring of the High Tender Board (HTB), Producing executive by-laws and regulations for the 2007 Tender Law, Establishing new oversight institution is the HATC, SBDs have been updated and endorsed by the Council of Ministers in June this year 2010 Implementation of a Procurement Management Information System (PMIS) in process. Page 3
4 Current Position of Procurement Systems 5 systems currently in use in purchasing departments have been briefly reviewed All have been developed by staff in the department All systems are attempting to support the same functions There has been very limited opportunities for Staff in different departments to learn from each other There is a lot of duplication. All the systems are still under development IT Support is also variable and sometimes at risk of failure. Page 4
5 SYSTEM TYPE E- Procurement Procurement Management Monitoring & Tracking Financial Monitoring Rural Access Project PEC Urban Water Project Public Works Project Social Fund Page 5
6 4 generic types of Procurement System which are available for development or purchase are described. Type 1: Procurement Financial Monitoring System. Type 2: Procurement Monitoring & Tracking System. Type 3: Procurement Management System. Type 4: E-Procurement System. Page 6
7 Phases System Types Pilot Other Ministries Governorat es Districts 1. Procurement Financial Monitoring MIS System 2. Procurement Monitoring & Tracking MIS System 3. Procurement Management System 4. E-Procurement System Simple Complex Page 7
8 System Type 1 Procurement Financial Monitoring System: Overview Basic Financial & Volume Data. Data may be captured on paper or in spread sheets by purchasing bodies Submitted monthly? to HTB/HATC Consolidated in to simple database in HTB/HATC Reports produced for Donors and Ministry of Finance Interface to AFMIS No networks required Electronic data transfer not essential Relatively cheap & very simple BUT Does not provide audit trails and control of procurement activity Limited Information and risk of mis-information This system does not help Buyers buy Page 8
9 System Type 2 Procurement Monitoring & Tracking MIS System: Overview Financial & Volume Information Time Tracking: Planned vs Actuals May be centralised or distributed database Data transferred electronically to HTB/HATC Flexible Reports produced for Donors and Ministry of Finance Interface to AFMIS Networks not essential but beneficial Improved control over quality of information than in Type 1 Will introduce efficiency gains in Donor Report Production More expensive than Type 1 but less than Type 3 BUT Does not provide audit trails and control of procurement activity Requires discipline in purchasing bodies effort is required This system does not help Buyers buy Page 9
10 System Type 3: Procurement Management System: Overview Full Procurement Life Cycle Processing Catalogues, Requisitions, Tenders, Bids, Bid Evaluation, Contracts, Expediting, Invoice Matching, Line Items, Commodity Coding, Approvals, Automated Document Production. Tracking & Audit Trails Who did what, why, when? Spend Analysis leading to greater negotiation leverage leading to lower prices Flexible Reports produced for Donors and Ministry of Finance Interface to AFMIS and HTB/HATC Web Site Networks essential Improved control over quality of information than in Type 2 Will introduce big efficiency gains in entire procurement life-cycle This system does help buyers buy BUT Requires higher level of IT literacy by procurement and IT support staff More expensive than Types 1 & 2 More complex than Types 1 & 2 requiring higher levels of training and capacity building Page 10
11 System Type 4: E-Procurement System: Overview Full E - Procurement Life Cycle Processing Catalogues, Requisitions, Tenders, Bids, Bid Evaluation, Contracts, Expediting, Invoice Matching, Line Items, Commodity Coding, Approvals, Automated Document Production. All the advantages of Type 3 and also Fully Integrated with Web Site Electronic Links with Suppliers for exchange of Tenders, Bids, Contracts, Invoicing etc. Integrated electronic messaging and to improve communications between all parties E-Auctioning enabling supplier to bid against each other on line BUT Requires yet higher level of IT literacy by procurement and IT support staff than Option 3 More expensive than Types 1 & 2 & 3 More complex than Types 1 & 2 & 3 requiring higher levels of training and capacity building May require further changes to Procurement Law and Donor Rules to derive full benefit from functionality Page 11
12 2 types are rejected quickly as being unsuitable to overcome the challenges: System Type 1: Procurement Financial Monitoring System is rejected because: All Purchasing Departments visited already have systems which are more capable than this Implementation of this system type would mean of loss of existing system support Page 12
13 2 types are rejected quickly as being unsuitable to overcome the challenges: System Type 4: E-Procurement System is rejected because: This would require further change to the new Procurement Law and Procedures. It is not believed that many Yemeni Suppliers are yet capable of responding in a totally electronic trading environment. This would therefore favour foreign Suppliers This system type requires more sophisticated infrastructure and therefore expensive technology Page 13
14 2 types are explored in more detail: System Type 2: Procurement Monitoring & Tracking System It was recommended that: The Procurement Monitoring & Tracking System be rejected. Because enhancing an existing GoY Package appears cheaper in the short & medium terms but a commercially available package will provide longer term savings and benefits. Page 14
15 2 types are explored in more detail: System Type 3: COMMERCIAL PROCUREMENT PACKAGE SYSTEM GoY has accepted the findings of a PMIS feasibility study undertaken by Crown Agents in 2006 which recommended the acquisition of a commercial procurement package system. Work has commenced on the acquisition process and the requirements analysis has been completed and a 2 stage international competitive bidding process for a pilot phase is currently underway. 15 Page 15
16 Yemen Procurement Reforms & e-procuremente The objectives of PMIS Project: An important element in the procurement reform program is the acquisition of a Procurement Management Information System (PMIS). The overall objectives of the PMIS Project is to replace existing manual and electronic systems in GoY Purchasing Departments to support and reinforce the Procurement Law no.(23) 2007 and to develop existing procurement capacity and capability. 16 Page 16
17 Why PMIS is important for Yemen Leading to Reduction in processes Increase the investment. A step towards e-procurement 17 Page 17
18 Yemen working with donors to keep reforms on the track. One of the mutual cooperation between Yemen and the donors is using their tools, to determine the Strengths and weaknesses of the Yemeni Procurement System. Some examples of the donor s tools: 1.World Bank, Country Procurement Assessment Report (CPAR). 2. (OECD-DAC), Procurement Self Assessment (PSA) methodology. 3.The OECD Joint Learning Study (JLS) method. Page 18
19 What is a Joint Learning Study? JLS is a new and innovative method designed to share knowledge on key policy issues between OECD countries and countries in MENA region. JLS methodology supports integrity and corruption prevention mechanism. JLS report covers specific areas of interest for MENA countries. One of the key elements is the involvement of experts from both OECD and MENA countries in the assessment process. JLS was specifically requested by the Government of Yemen following the approval of Law 23 of 2007 on Tenders. Page 19
20 Yemen Procurement Reforms & e-procuremente The objectives of the JLS: To assess progress made by Yemen in key aspects of integrity and corruption prevention policies and practices. To provide policy recommendations to support the successful implementation of reforms in Yemen that are in line with international good practices. To foster policy dialogue and mutual learning across OECD and MENA. The Joint Learning Study addresses the subject of integrity in public procurement. Page 20
21 The objectives of the JLS continued: The JLS will also assist Yemen as a signatory of the United Nations Convention against Corruption to implement its obligations of the Convention. To examine Yemen s progress in modernizing public procurement, with particular emphasis on fighting corruption and strengthening integrity and transparency. To provide advice on how to reduce the risk of corruption. Advice on how to strengthen integrity and transparency in public procurement in order to promote confidence, effectiveness and efficiency. Page 21
22 Yemen Procurement Reforms & e-procuremente Methodology The Joint Learning Study has been prepared in three main stages: Stage 1: Preliminary research and stakeholder identification; Stage 2: Fact-finding field mission supplemented by the OECD questionnaire sent to representatives of the private sector; Stage 3: Discussion and approval of the Study. All the three stages completed and the Final Report submitted. Page 22
23 JLS Principles 1: The following ten Principles are based on applying good governance elements to enhance integrity in public procurement. These include elements of transparency, good management, prevention of misconduct, as well as accountability and control. A. Transparency Principle 1: Provide an adequate degree of transparency in the entire public procurement cycle in order to promote fair and equitable treatment for potential suppliers. Principle 2: Maximise transparency in competitive tendering and take precautionary measures to enhance integrity, in particular for exceptions to competitive tendering. Page 23
24 JLS Principles 2: B. Good management Principle 3: Ensure that public funds are used in public procurement according to the purposes intended. Principle 4: Ensure that procurement officials meet high professional standards of knowledge, skills and integrity. Page 24
25 JLS Principles 3: C. Prevention of misconduct, compliance and monitoring Principle 5: Put mechanisms in place to prevent risks to integrity in public procurement. Principle 6: Encourage close co-operation between government and the private sector to maintain high standards of integrity, particularly in contract management. Principle 7: Provide specific mechanisms to monitor public procurement as well as to detect misconduct and apply sanctions accordingly. Page 25
26 Yemen Procurement Reforms & e-procuremente JLS Principles 4: D. Accountability and control Principle 8: Establish a clear chain of responsibility together with effective control mechanisms. Principle 9: Handle complaints from potential suppliers in a fair and timely manner. Principle 10: Empower civil society organizations, media and the wider public to scrutinize public procurement. Page 26
27 Outputs of the JLS..1 Consolidated Reports and Action Plans for more Reforms. Improvements needed for Yemen Procurement System. Opinion on the reliability of the system and risks associated with it. Encourage Harmonization with all donors. Page 27
28 Outputs of the JLS..2 Standard Bidding Documents to be used by all donors. Basic information for Capacity Building in Procurement. The report contains suggestions to promote the integrity of and the fairness and public confidence in the public procurement process. Page 28
29 ..1 ACTION PROPOSALS FOR Proposal No 1: Strengthen the capacity of the key national oversight institutions. To achieve this, define and implement a procurement capacity strengthening strategy that focuses on key Yemeni institutions at national level, in particular on the High Authority for Tender Control (HATC), the High Tender Board (HTB), the Central Organisation for Control and Auditing (COCA) and the Supreme National Authority for Combating Corruption (SNACC). Proposal No 2: Provide greater transparency and accessibility to decisions about public procurement. To achieve this improve access to relevant, reliable information as a means to support the development of an open, modern public administration. Page 29
30 PROPOSALS FOR ACTION..2 Proposal No 3: Build a mutually beneficial partnership between Government and the private sector. To achieve this, invite representatives of the private sector to discuss with Government the establishment of a national partnership forum as a means to (i) strengthen public sector policy-making and management of public procurement and to (ii) improve the competitiveness and capacity of the private sector. Proposal No 4: Link procurement planning to the national budget and Public Investment Program (PIP) processes. To achieve this, develop and set out with stakeholders a common public-sector approach to budgeting and procurement planning that supports national development and public investment objectives. Page 30
31 Recommendations: Strengthen the capacity of the key national oversight institutions (Judiciary, Oversight organizations (SNACC&COCA) and Procurement organizations (HTB&HATC), and Private sector as well. Provide greater transparency and accessibility to decisions about public procurement; Build a mutually beneficial partnership between Government and the private sector and Link procurement planning to the national budget and Public Investment Program processes. Page 31
32 Tank You very much for your attention 32 Page 32
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