Reform Strengths

The World Bank’s 2016 procurement reform is a step in the right direction. The reform emphasizes international good practice principles—efficiency, economy, integrity, fairness, transparency, and fit for purpose—to enhance procurement’s value for money in World Bank–supported projects. The evaluation finds that the reform was successful in projects that apply these principles to achieve higher value for money and advance project development objectives. The evaluation also finds that projects with higher value for money have improved project implementation and procurement performance and that fit-for-purpose assistance to customize procurement supports satisfactory implementation. These findings confirm the benefit of integrating the procurement principles into the World Bank’s procurement framework and validate the reform’s results logic. However, the benefits of the reform have not yet reached projects across the portfolio. Achieving value for money requires tailoring procurement to projects’ contexts and managing trade-offs among the procurement principles—for example, balancing speed, cost, and quality. Doing this customization requires extensive procurement knowledge in addition to contextual knowledge.

The 2016 procurement reform increased procurement speed in World Bank–supported projects. The time gain largely materialized from simplifying World Bank reviews of procurement processes—that is, more simplified or post reviews carried out on a sample basis after the client completes a procurement process and fewer comprehensive or prior reviews carried out during procurement implementation and covering all key procurement stages. Time was also gained by encouraging the use of simple and familiar procurement approaches when appropriate. The reform’s introduction of HEIS also enhanced procurement speed and performance in projects in countries with lower procurement capacity.

The 2016 procurement reform brought about other benefits, such as greater data availability and transparency and more procurement options. The World Bank’s new electronic procurement system—STEP—made World Bank reviews more agile and transparent and started the World Bank down a path toward better data analytics and data-informed procurement decision-making. World Bank staff and clients became acquainted with new ways of doing procurement and started to experiment—even if not yet fully successfully or on a large scale—with new tools, such as market analyses and strategic procurement planning, and with new procurement approaches that emphasize improved quality, sustainability, and partnerships, among other noncost factors.

Reform Opportunities

Opportunities in Strategizing and Targeting Capacity Strengthening Support

The evaluation shows that capacity weaknesses, time constraints, and inadequate collaboration impede many of the flexibilities introduced in the 2016 reform. The reform expanded the variety of procurement approaches that projects could choose from and created tools to help projects strategize and customize procurement activities to country and project needs. However, clients and, often, World Bank staff, lack sufficient knowledge and applied experience to implement these new options and tools. The reform introduced HEIS to help clients fill human resource gaps, especially in low-capacity countries. However, HEIS could be better strategized to support clients’ on-the-job learning and complement other support of procurement staff. The World Bank largely relies on one-off training courses, workshops, and training materials to develop task team leader knowledge and strengthen client capacity, but these activities are not enough to support the change management process required to adopt new procurement practices. Part of the problem is that World Bank procurement staff, who provide highly valued support to projects, have limited time to focus on the innovations of the 2016 reform. For example, the evaluation finds that procurement staff are incentivized to support procurements with a high monetary value and solve procurement problems for many projects after they occur rather than try to prevent them. This leaves insufficient time for World Bank procurement staff to collaborate with task team leaders and clients on innovation, customization, and strategy. Moreover, management provides staff with little guidance on how to optimize their client support.

The reform’s increased emphasis on simplified post reviews quickened procurement times but came at the cost of client learning and delayed oversight. The efficiency gains from an increase in clients conducting their own procurement processes created some drawbacks when not accompanied by capacity strengthening support—mainly, less client learning that comes with World Bank support and delays in procurement oversights. Client learning is important when clients have limited capacity and are unfamiliar with procurement approaches, and when projects encounter issues that slow down procurement. Often, clients rely on World Bank procurement staff to provide coaching to help them carry out procurement in World Bank–supported projects, and staff have limited time to provide this support. A greater reliance on simplified post reviews also sometimes delayed project oversight because the reports to audit procurement by the World Bank are carried out only when a critical number of procurement processes has been completed. A potential solution to fill these challenges could be to better allocate procurement staff time based on a project’s risk profile. Certain projects might need hardly any prior review reports, others could have prior review reports only of critical stages with the most issues, and yet others could have large numbers of prior review reports to audit processes and support learning from early in the project. This could help clients apply sound procurement practices from the start of a project when procurement support is most critical but also keep time-consuming review tasks to a minimum. Moreover, procurement staff working collaboratively with technical teams could help identify solutions that speed up the first procurements in a project.

Country procurement capacity strengthening activities could target the most persistent procurement issues, especially in complex and high-risk projects. The World Bank’s lack of a strategic approach to capacity strengthening makes this support often fragmented, short term, and not focused on the most common and recurrent procurement issues in the World Bank portfolio. These recurrent procurement issues include inadequate functioning bid evaluation committees, insufficient strategic planning of procurement, a lack of market engagement, lengthy national complaint handling mechanisms, inadequate procurement monitoring, and the limited adoption of sustainability approaches in procurement. If the World Bank were to target these issues for support, it could improve procurement processes across the entire World Bank portfolio, especially for more complex procurements that use competitive market approaches. It could also help strengthen national procurement systems. Common procurement issues continue to extend the timeline of complex or higher-risk procurements that use market approaches.

Opportunities in Data and Analyses

The World Bank could better use procurement data analytics, market analyses, and risk analyses to make procurement more effective. The reform’s introduction of STEP was an important development, especially in tracking procurement times. However, the dashboards used to monitor STEP do not yet bring together relevant data on the quality of procurement processes in projects, client feedback, the success of mitigation actions, procurement processing issues, the frequency and quality of PPRs, and other indicators for use to make decisions on procurement. In addition, the World Bank’s monitoring dashboards could improve by adding defined benchmarks to assess the level of the achievement of indicators by projects to inform decision-making. Moreover, World Bank staff and clients find STEP difficult to use and not integrated with the financial management tracking system. Improving these systems, investing further in data analytics, and helping staff and clients learn how to use them would advance achievement of the reform’s objectives. The World Bank could also improve support to help clients carry out simple and transparent market analyses in projects, which could facilitate competitive procurements and inform procurement customization. Similarly, the frequency of risk analyses could be reduced and their depth enhanced to cover the complete spectrum of risks, such as those related to processing issues, achievement of development outcomes, use of country systems, oversight needs, procurement quality, and timing. Currently, project-level procurement risk assessments are frequent and take significant amounts of time for World Bank procurement staff. However, these repeat assessments rarely uncover new risks or contain actionable data that help projects develop mitigation actions. The information on risks is also not proactively used, for example, for decision-making to customize World Bank procurement oversight or to intensify support when warranted, especially at the beginning of project implementation. Lastly, procurement risk assessments fail to adequately involve task teams and clients.

Opportunities in Applying Innovation, Including Quality and Sustainability Approaches

The reform’s principle of economy emphasizes quality and sustainability, but more could be done to help projects apply these approaches. Quality and sustainability approaches are rarely applied partly because both World Bank staff and clients lack experience in how to implement them. The reform’s change management process could be enhanced by providing incentives and support for applied learning to demonstrate results in quality and sustainability approaches. The World Bank could benefit from a strategy to expand these innovative procurement approaches across projects when appropriate. Quality could also be approached more strategically and not limited to using rated criteria (which is currently the main focus). Quality could be promoted by using a range of procurement approaches and emphasizing quality throughout the procurement cycle, from the preparation of technical and procurement documents to contract implementation. Approaches that improve sustainability through gender equality, market development, and environmental sustainability could have strong development value.

Recommendations

Recommendation 1. Improve change management support for the reform’s implementation.

Proposed actions are as follows:

• Ensure strong central oversight and governance arrangements to manage the reform’s implementation across regions. This support may involve proactive senior management leadership and incentives that encourage staff to help clients implement elements of the reform. It may involve making resources available for applied learning and building a pool of staff with expertise in specific areas, such as coaching, market engagement, use of data for decision-making, and quality and sustainability approaches. In addition, it might be beneficial to recognize procurement staff, task teams, and clients who collaboratively tailor procurement to client needs, apply quality and sustainability approaches, and demonstrate procurement outcomes in the areas of the World Bank’s framework. Fostering collaboration between technical teams and procurement staff to strategize procurement approaches in projects to benefit clients and implement reform elements at scale could also improve support.
• Enhance procurement data systems to benchmark outcomes, identify bottlenecks, and inform decisions to improve reform implementation and project procurement. Adding benchmarks to monitoring dashboards could help track procurement outcomes for the reform principles (that is, efficiency, economy, integrity, fairness, transparency, fit for purpose, and value for money). Monitoring procurement processing issues could help solve these issues more efficiently. Simplifying data entry for clients could facilitate timely and complete information on procurement activities. At the reform level, the data acquired could also be used to correct shortcomings while implementing reform elements. At the portfolio level, the data acquired could be used to prioritize and allocate procurement staff and resources to support procurement achievements in projects with the greatest needs—those with frequent procurement issues, limited experience with planned approaches, low capacity to carry out procurement, and several procurement risks. At the project level, the emphasis could be on providing intensive procurement staff support starting from project preparation through the first year of implementation. For instance, the support could help strategize procurement approaches and ensure early contracting to maximize the success toward the project’s development objectives.

Recommendation 2. Strategically strengthen country-level procurement capacity.

Proposed actions are as follows:

• Engage in country-level dialogue to enhance portfolio performance and the uptake of quality, sustainability, and other innovative procurement approaches. This dialogue would help clients and World Bank staff take advantage of procurement synergies across projects and promote capacity strengthening where relevant to enhance the portfolio’s performance. It could help reduce the burden on task teams, procurement staff, and clients to repeat certain types of procurement-related activities, such as aspects of market analyses in each project, and solve procurement bottlenecks for the project portfolio as a whole instead of on a project-by-project basis. For example, it could help solve bottlenecks related to delays at the start of projects due to client procurement specialists not being in place to strategize and process contracts early. Dialogue could also be used to agree with clients on suitable actions to enhance quality and sustainability in the portfolio and identify innovative ways to improve procurement in World Bank–supported projects in the country context.
• Develop country-level capacity strengthening plans to support countries with persistent procurement issues. These plans could have a long-term horizon (based on timely data on project procurement issues and outcomes, such as from projects, complaints, and client feedback). The plans could be tailored to address procurement-related barriers to project and portfolio performance. The plans could emphasize countries with severe or persistent procurement issues and lower procurement capacity. They could focus on actions to tackle persistent procurement issues in the World Bank’s portfolio, with a strong focus on procurement human resources and knowledge sharing, especially in countries where finding local procurement experts is a constant hindrance. Procurement human resource support could build on hands-on expanded implementation support and include training programs with other development partners, the development of university curricula on procurement, and collaboration with regional procurement networks. The plans could also involve strengthening national procurement and complaint systems and other actions to streamline and expand procurement approaches that enhance quality and sustainability.

Recommendation 3. Consistently manage the full spectrum of procurement risks to maximize project success.

Proposed actions are as follows:

• Improve procurement risk identification and data to help enhance project implementation and results. Risk identification could become a collaborative discussion with task teams and clients to identify and support practical actions to mitigate risks while encouraging procurement innovations to help enhance project development outcomes. The World Bank could provide tools and workshops for procurement staff to support clients in managing risks, such as strategizing procurement activities, balancing the use of comprehensive prior reviews with simplified post reviews, engaging potential suppliers, developing procurement approaches, and remotely monitoring procurement. Risk data analytics could be modernized to generate a dynamic risk profile on a wide spectrum of risks using procurement information from projects (for example, using data on procurement activities, complaints, historical performance, post review problems, and indicators or flags to track risks). This could ease the timely collation of fragmented data from multiple sources to inform decisions and the heavy burden on staff to enter risk information repeatedly and manually for many projects. Data could track risks related to value, the timing of procurement contracting to support the achievement of project development outcomes, the use of quality approaches for procurement, market engagement, post review oversight, client readiness and experience to carry out planned procurement approaches, and clients’ use of alternative procurement approaches.
• Use risk data to help World Bank procurement management and staff optimize oversight and support to projects. Based on the risk profile, procurement oversight approaches for clients could be customized and simplified. For example, clients with demonstrated procurement capacity and low risks might require less support, and part of their procurement could be done using country systems. In contrast, procurement activities might need frequent oversight for clients with low capacity and high risks. This includes early oversight of post review processes done by clients in projects and more targeted World Bank support for comprehensive prior reviews. Prior review timelines may be shortened by targeting the World Bank’s review to focus on challenging stages of procurement rather than the entire process. The use of third-party review mechanisms could also be expanded for higher-risk procurements, where clients want the assurance of oversight but prior reviews would be too slow. Managing risks better, with clear guidance to inform decisions, could help procurement staff customize client support and optimize the time they spend supporting clients. Risk profiles may also change over time and vary for different project components and activities.