Highlights

The World Bank’s 2016 procurement reform was designed to modernize its procurement system and reduce bottlenecks in project performance. The reform emphasized seven core principles—efficiency, economy, integrity, transparency, fairness, fit for purpose, and value for money—to make procurement faster, more adaptive, and more valuable beyond solely monetary terms.

The reform introduced procurement strategic planning, new and innovative approaches, hands-on support for clients, and an electronic tracking system, among other innovations, to achieve the procurement principles.

This evaluation assesses World Bank–supported project procurement and capacity strengthening for clients since the 2016 procurement reform. The findings in this report produce lessons and recommendations that intend to inform continued reforms and their implementation. The report focuses on advances in improving the reform’s seven core principles—efficiency, economy, integrity, transparency, fairness, fit for purpose, and value for money—and its efforts to strengthen client capacity in these areas.

The reform is an important step toward making procurement faster, fairer, more adaptive, and more appreciated. However, the reform did not broadly achieve all seven principles, except faster procurement times for efficiency. Further progress requires a greater emphasis on incentivizing staff, engaging collaboratively with task teams and clients throughout the procurement cycle, improving risk assessment and mitigation actions, helping clients implement approaches that improve procurement quality and sustainability, strategically planning procurement, applying simple approaches to identify markets, and leveraging data analytics to optimize projects’ value for money. Progress also requires strategically integrating procurement capacity strengthening and support in projects to better address persistent procurement issues at the country level and ensure implementation learning in reform elements, such as sustainable procurement. Capacity strengthening could also emphasize the partial or full use of client country systems in investment project financing (IPF), when appropriate, to empower clients and optimize the limited time of World Bank procurement staff in priority areas such as strategizing procurement approaches and addressing quality.

Procurement for Development

Enhancing procurement in World Bank–supported projects and countries is an opportunity to better support the achievement of development outcomes. Public procurement refers to government purchases of works, goods, and services. It accounts for about one-third of government spending, and trillions of dollars are spent yearly on public contracts (Fazekas et al. 2020; World Bank 2020a). Public procurement accounts for at least 15 percent of GDP in most developing economies (Djankov et al. 2017). Government procurement for World Bank–supported projects is an important part of public procurement. World Bank IPF generated approximately $20 billion in global procurement markets over the five-year evaluation portfolio (fiscal year [FY]17–23). In the final years of the evaluation period, governments annually awarded about 10,000 contracts in FY21 and FY22 for 687 World Bank–supported projects in the 111 countries. In the Human Development, Sustainable Development, and Infrastructure Practice Groups and Governance Global Practice, IPF projects that rely on the World Bank’s procurement framework encompassed 86 percent of World Bank lending support to countries. Other lending, including Program-for-Results and development policy financing, do not follow the World Bank procurement framework. Better procurement in World Bank–supported IPF can enhance satisfactory project implementation in countries, contribute to development outcomes, and help countries strengthen their procurement practices.1

Governments can use public procurement to deliver multiple development benefits. Procurement can create jobs; preserve public resources; stimulate private sector growth; invest in environmental, social, and gender benefits for communities; and improve public service delivery. A well-functioning public procurement system increases citizen trust in governments, levels the playing field for small- and medium-size businesses, and consequently reduces poverty and inequality. Using procurement to achieve these outcomes is part of the World Bank’s approaches to sustainable procurement that considers procurement a contributor to development.

World Bank procurement staff help client countries implement procurement in World Bank–financed projects, contributing to project development objectives. Operations Policy and Country Services is responsible for procurement oversight and policy making, whereas the Governance Global Practice in the Equitable Growth, Finance, and Institutions Practice Group is responsible for procurement implementation (World Bank 2021c, 2022a). Most procurement staff support the day-to-day procurement activities for delivery of goods, works, and services in projects in World Bank Regions. Procurement staff and Operations Policy and Country Services jointly provide procurement oversight to deliver value for money and ensure that procurement contributes to project development objectives. World Bank staff in Governance and procurement teams in regions may also lead interventions, including knowledge work and activities in lending projects, to help countries strengthen their public procurement systems.

The World Bank’s 2016 Procurement Reform

The World Bank reformed its procurement guidelines to align with emerging good practices and to remove bottlenecks. In the early 2000s, international procurement practice expanded to accommodate rapid globalization and modern information technologies. In projects before 2016, World Bank staff saw procurement as a major bottleneck to project performance, especially in low-capacity and fragile and conflict-affected situations (FCS). The World Bank guidelines at that time were not attuned to emerging procurement practices, did not address the World Bank’s growing procurement needs across sectors, and did not align with the procurement approaches of development partners. The 2014 procurement evaluation by the Independent Evaluation Group (IEG) confirmed the need for the World Bank to reform its procurement system (World Bank 2014).

Development effectiveness is at the forefront of the World Bank’s 2016 procurement reform. In 2015, the World Bank started reforming its procurement system for IPF, which included a new procurement framework and new guidance on strengthening public procurement capacity. The reform went into effect on July 1, 2016, when the World Bank launched its new procurement framework for IPF (World Bank 2016a). The objective was to enhance the World Bank’s development effectiveness through better procurement and to keep the World Bank at the forefront of public procurement by setting international best practices (World Bank 2012). The reform’s vision was for procurement in World Bank–supported projects to help clients achieve value for money while maintaining integrity and delivering sustainable development (World Bank 2015). The reform set a path to make projects’ procurement of works, goods, and services less of a barrier to project implementation, especially in countries with low institutional procurement capacity. The reform aligned with reform efforts at other multilateral development banks. For example, the Asian Development Bank and the African Development Bank carried out similar reforms and coordinated their implementation with the World Bank.

The procurement reform emphasizes seven core principles: efficiency, economy, integrity, fairness, transparency, fit for purpose, and value for money. Box 1.1 defines each principle. Achieving efficient procurement requires making procurement timely and easier using electronic tracking systems, such as Systematic Tracking of Exchanges in Procurement (STEP), and focusing procurement staff time on project review activities. Achieving economy requires nurturing quality, competitiveness, and socioeconomic and environmental sustainability. Achieving integrity, transparency, and fairness requires protecting procurement from fraud and corruption, ensuring openness at all stages of procurement, and providing fair opportunities to bidders on contracts. Achieving fit for purpose requires finding the “right solution” to clients’ procurement needs in a given context. Finally, value for money is at the center of the 2016 procurement reform. It requires making sound decisions that assess risks and applying procurement principles concurrently to support project development objectives.

The reform emphasizes improvements in procurement’s customization, outcome orientation, and capacity strengthening. The reform introduced new procurement areas (summarized in box 1.2) to help clients achieve the principles (World Bank 2015). Anchoring the procurement reform in the seven principles was intended to promote more procurement adaptive to meet the different needs of clients through new, tailored options and applying an outcome-oriented approach to procurement in World Bank projects. Procurement guidelines before the reform recognize these procurement principles but present them as rules to follow, leading to risk aversion that limits project-level innovation. In addition, the reform links, for the first time, support for World Bank–supported project procurement with capacity strengthening for public procurement (World Bank 2021c, 2022a). Figure 1.1 and box 1.3 present the procurement framework’s theory of change and results logic.

Figure 1.1. The World Bank Procurement Framework’s Theory of Change and Results Logic

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Figure 1.1. The World Bank Procurement Framework’s Theory of Change and Results Logic

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Sources: World Bank 2015, 2016a.

Note: The boxes for the seven principles list examples of outcomes assessed by the evaluation. The evaluation does not assess whether improved procurement supports development outcomes and does not cover contract management in detail because the World Bank rolled out the contract management system in 2023. The reform also introduced World Bank–facilitated procurement, which was important during the COVID-19 pandemic for purchasing medical supplies. However, it is outside the scope of the current evaluation as it was covered by the COVID-19 evaluation (World Bank 2022c).

Methodology

The evaluation is guided by two lines of inquiry:

1. To what extent has the new procurement framework supported successful procurement in World Bank projects—specifically, the achievement of efficiency, economy, integrity, fairness, transparency, fit for purpose, and value for money—and what are the success factors and challenges?
2. To what extent has the World Bank improved its procurement capacity strengthening in client countries since the 2016 procurement reform, including areas of support, tailoring to country needs, evidence of results, success factors, and challenges?

The evaluation’s scope is based on the 2016 procurement reform’s theory of change (figure 1.1). The evaluation assesses the procurement framework’s seven principles and intended lines of support (further explained in box 1.3). The evaluation focuses on procurement in World Bank–supported projects and the World Bank’s complementary procurement capacity strengthening support in client countries. At the same time, the evaluation recognizes that less than 5 percent of the projects using the World Bank’s reformed procurement system are closed (which affects how it evaluates procurement outcomes after the lifetime of the project). To consider this, the evaluation looked at projects with one or more years of implementation and carried out in-depth case studies and surveys for projects with four or more years of implementation for more detailed estimates of procurement outcomes. Evaluating corporate procurement and internal procurement audits are outside the evaluation’s scope. The higher-level influences of the World Bank’s procurement support on country development outcomes also fall outside this evaluation’s scope.

The evaluation uses a systems approach with findings verified by consultations and triangulation. It examines how the procurement system since the 2016 reform has supported and measured results toward the seven interlinked procurement principles. Qualitative and quantitative evidence gathered by different methods at the country, project, and procurement activity levels is triangulated to infer on outputs and outcomes of the various aspects of the procurement system described in the theory of change. Moreover, the evaluation’s analyses are consistent with the theory of change. The evaluation follows a consultative approach to inform the methods and interpret findings with input from World Bank staff, management, and external experts. Table 1.1 describes the evaluation methods.

Source: Independent Evaluation Group.

Note: CPF = Country Partnership Framework; FY = fiscal year; IBRD = International Bank for Reconstruction and Development; IDA = International Development Association; IPF = investment project financing; PPSD = project procurement strategy for development; STEP = Systematic Tracking of Exchanges in Procurement.

Road Map for the Report

The report is structured around components of the procurement system’s theory of change. Chapter 2 looks at procurement efficiency. Chapter 3 covers the procurement principles of economy, integrity, transparency, and fairness. Chapter 4 covers fit for purpose and value for money in procurement. Chapter 5 focuses on capacity strengthening outcomes. In other words, chapters 2, 3, and 4 show progress toward achieving the seven procurement principles, and chapter 5 looks at progress in strengthening country procurement capacity. Chapter 6 concludes the report by presenting lessons and recommendations to inform the continued reform and the World Bank’s ongoing procurement support.