Given the critical role of procurement in the efficiency of client countries’ public expenditures, Volume I focuses on the extent to which the Bank has helped its clients develop better procurement capacity and improve their public procurement systems. Second, because World Bank operations are dominated by investment lending, Volume II of the report examines the extent to which Bank procurement guidelines and processes help support its own goals of competition, economy, efficiency, and transparency in the execution of Bank projects.

The Bank’s wide array of efforts to support training and capacity building for procurement in client countries was fragmented and focused substantially on legal and regulatory reform. Reforms were supported by extensive use of policy-based lending and grants. There is limited evidence of systematic integration of procurement into the wider context of effective public expenditure. The Bank could better support capacity building for procurement through country-level strategies, the use of lending instruments adapted to providing hands-on assistance, and a fine tuning of its present diagnostic instruments.

Regarding development impact and the Bank’s own lending, IEG finds that present Bank procurement guidelines are broadly adequate instruments for Bank lending, including new areas of lending. IEG finds that there is need for review of select provisions, for example, on consultant selection or new and complex forms of procurement, such as in information and technology projects or public-private partnerships (PPPs).

Bank procurement processes, in contrast, are time consuming and have posed difficulties because of inflexibilities in interpretation. Process change requires better monitoring, clear standards, and changes in incentives that would lead to the exercise of reasonable judgment and less risk aversion.

Looking at the potential for greater use of client countries’ own procurement systems, some country clients point out gains from alleviating the need to maintain parallel systems. However, private suppliers want the World Bank to retain its role to ensure a level playing field, greater transparency in selection, and perceptions of higher levels of recourse. There is scope for the Bank to move further toward using country systems, on an incremental basis, in line with the approach adopted by global partners, taking into account its own risk assessments, country counterpart views, agency capabilities, and the views of the private sector. There is a need to consider how assurance could be provided that there would be no change to the Bank’s legal remedies and no change in existing rights and obligations concerning fraud and corruption.

The Bank has a highly articulated set of instruments to manage fiduciary risk that have been strengthened in recent years. More integrated risk management systems and a greater focus on risk, as opposed to value, could reduce the need for oversight through prior review. Instruments could be fine tuned and the balance between the use of specific tools could be revisited, especially in the light of a risk-efficiency trade-off.

Finally, there is a significant need to improve Bank procurement processes in two areas: the setting of monitorable service standards and the introduction and use of procurement monitoring tools. These are imperative to help the Bank track the achievement of procurement goals such as economy, efficiency, and value for money. With such tools the Bank could make major global contributions to information on markets, suppliers, and prices, thus contributing to open data, benchmarking, and knowledge objectives.

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Read Appendixes to Volume 1