Organization
World Bank
Report Year
2014
1st MAR Year
2015
Accepted
Yes
Status
Active
Recommendation

#5. Adopt a progressive approach towards greater use of country systems, based, first, on the materiality of differences between Bank and the country systems, and second, on country, agency and private sector capacity. The Bank could approve subcomponents of a system, such as specific contracts, categories, methods or specific administrative entities. Clarify, where used, the form and content of the use of country systems proposed, in terms of Bank oversight and recourse.abc

Recommenation Adoption
IEG Level of Adoption by Year: mar-rating-popup HHNTNT Management Adoption by Year: mar-rating-mng-popup SCNTNT
CComplete
HHigh
SSubstantial
MModerate
NNegligible
NANot Accepted
NRNot Rated
Findings Conclusions

The Bank developed its own pilot approach towards the use of Country Systems (UCS); an effort characterized by rigor but also minutiae in terms of detailed specification of necessary areas of compliance or conformity to the Bank needed. While most country systems have some differences from the Bank, some differences have greater materiality than others, in terms of underlying Bank principles, touching upon core principles of promoting competition and market access; others impact less upon such principles and there may be scope for flexibility. IEG also found mixed views, between country clients and private suppliers, which reflect ambiguity in the concept of "use of country systems" which would benefit from clarification, especially with regard to the extent to which they would also include, for example, Bank engagement in the procurement process, in fiduciary oversight, or in terms of legal recourse.

The IDB and proposed African Development Bank UCS programs contrast with the Bank's pilot which strove for full compliance to a set of criteria for the full range of procurement circumstances, including ICB (except consultant recruitment). The Bank's general intention was to approve national systems for use on all projects in a country. IDB and African Development Bank are attempting to avoid the "all or nothing" approach, striving to gradually move to full use of country systems though a measured process involving partial use, conditional acceptance, agreed improvements, and considerations of intent and objectives.

Original Management Response

WB: Agree #5. Management agrees on the need to adopt a progressive approach to utilize client procurement arrangements and institutions in whole or in part, as appropriate. Critically, the decision on the most appropriate procurement arrangements to utilize in a Bank operation should be proportional and fit for purpose, with the final decision resting with the Bank (Procurement Team) as part of its obligation to provide fiduciary assurance.

Management has made proposals to update its approach to operational procurement, with an increased focus on strengthening client procurement arrangements and institutions as an integral part of its proposed new framework for Procurement in World Bank Investment Project Finance. If agreed, this approach envisages the World Bank Procurement Guidelines becoming one of several different procurement arrangements that could be utilized to support a Bank operation. See Management Response #4 above.

Action Plans
Action 1
Action 1 Number:
0327-01
Action 1 Title:
Action 5: Development of a fit for purpose strategy to identify the most appropriate solution based on agency, sector and count
Action 1 Plan:

Action 5: Development of a fit for purpose strategy to identify the most appropriate solution based on agency, sector and country capacity, including the use of other appropriate procurement systems/ procedures, i.e. EU or IFIs in the case of co-financing.

Indicator: Policy/Guidance regarding fit for purpose, which clarifies Bank engagement in the procurement process, in terms of fiduciary oversight or legal recourse.

Baseline: Limited possibility to apply fit for purpose under current Bank Procurement Guidelines.

Target: Policy developed and approved by Board.

Timeline: FY15

Action 2
Action 3
Action 4
Action 5
Action 6
Action 7
Action 8
2018
IEG Update:
No Updates
Management Update:
No Updates
2017
IEG Update:
No Updates
Management Update:
No Updates
2016
IEG Update:

This recommendation requires a progressive approach towards greater use of country systems be adopted. Under the Alternative Procurement Arrangements (APA), the Bank may now agree to (i) rely on and apply the procurement rules and procedures of another multilateral or bilateral agency or organization and may agree to such a party's taking a leading role in providing the implementation support and monitoring of project procurement activities; or (ii) rely on and apply the procurement rules and procedures of an agency or entity of the borrower (as per Section III.E of the Procurement Policy). APA allows the Bank to adopt a progressive approach to using a borrower's procurement arrangements for all procurement (international and national) in particular projects, depending on their performance. To that end, Management has drafted an assessment methodology to inform the acceptance of an APA for a borrower implementing agency. APA assessment started with Thimphu Thromde (Municipality), Bhutan, and Power Grid of India, and the early results are reported to be positive. IEG awaits the results of the pilot in Bhutan and India, and the prospective roll-out strategy.

Management Update:

Under APA, the Bank may agree to (i) rely on and apply the procurement rules and procedures of another multilateral or bilateral agency or organization and may agree to such a party's taking a leading role in providing the implementation support and monitoring of project procurement activities; or (ii) rely on and apply the procurement rules and procedures of an agency or entity of the borrower (see Section III.E of the Procurement Policy).

The Procurement Directive and Procedure set out specific internal instructions, requirements, and ADM roles for handling and approving requests for the use of APA. For example, according to the Procurement Directive, the APA justification should describe, among other things (a) why the APA would be the most appropriate procurement arrangement to support the Borrower in achieving the project's development objectives; and (b) how the APA would (i) provide adequate assurance that the proceeds of Bank financing will be used only for the purposes for which the financing would be granted, and (ii) meet specific requirements set out in Section III.F.2 of the Procurement Policy, including, among other requirements, the Bank's Sanctions Framework and Anticorruption.(See Section III.D of the Procurement Directive.)

APA allows the Bank to adopt a progressive approach to using a borrower's procurement arrangements for all procurement (international and national) in particular projects, depending on their performance. To that end, Management has drafted an assessment methodology to inform the acceptance of an APA for a borrower implementing agency.

As mentioned above, this methodology is being tested in agencies in India and the Kingdom of Bhutan. Early findings are very positive, and the assessment reports should be complete by October 2016. Management is currently identifying other suitable agencies to further test the methodology.

Additionally, for procurement below international advertising thresholds, the NPF has streamlined requirements for the use of a borrower's own national procurement arrangement for contracts (see paragraphs 5.3 to 5.6 of the Procurement Regulations). This approach is in line with the country systems approach used by the Inter-American and African Development Banks.

2015
IEG Update:

IEG notes points (a) and (b) above, as substantial progress towards a fit-for-purpose approach towards the adoption of procurement procedures either of Borrower agencies or of other IFIs.

ユSpecifically, Procurement Policy, Section III.F.1-2 states that: The Bank may agree to relay on the procurement arrangements (and supervision) of another multilateral or bilateral agency or organization; and rely on and apply the procurement arrangements of an agency or entity of the Borrower.

ユProcurement Policy, Section III.D.1 points out that under the fit-for purpose approach, the Bank team needs to justify why the APA would be the most appropriate procurement arrangement to support the Borrower in achieving the projectメs development objectives.

As regards agency capacity building, IEG has requested and received a copy of the Annext J document on the APA methodology (attached). In a subsequent review IEG hopes for information on the extent to which it may already have been put into practice.

IEG has already been informed that:

ユThe APA methodology for assessing Borrowerメs agencies is under review, and it has been tested internally with corporate procurement. Further testing outside the Bank is part of a pilot plan.

Management Update:

Reflecting IEG recommendations, the proposed new Procurement Framework allows the Bank to:

(a) rely on and apply the procurement rules and procedures of another multilateral or bilateral agency or organization, and may agree to such a party taking a leading role in providing the implementation support and monitoring of project procurement activities; and

(b) rely on and apply the procurement rules and procedures of an agency or entity of the Borrower.

To inform agency capacity building and institutional strengthening, Management has drafted a Methodology to assess Alternative Procurement Arrangements in Borrower Implementing Agencies (Annex J of the CODE/AC package). This methodology will primarily be used to determine the acceptability of a Borrower's implementing agency APA for procurements in Bank IPF. The methodology also provides an enhanced procurement system diagnostic that could be used to inform procurement capacity-building programs.