Invitation to comment

30 October 2007

Invitation to comment on the review of the EBRD's Procurement policies and rules

The EBRD has started work on the review and updating of its Procurement Policies and Rules (PP&R). Comments are invited to help the Bank in this exercise and should be submitted to ProcurementPolicyReview@ebrd.com. Any comments should be submitted to the Bank no later than 30 November 2007. While the Bank will take into account comments received it will not respond individually to such comments.

Background

Pursuant to Article 1 of the Agreement Establishing the Bank, the purpose of the Bank is “to foster the transition towards open market-oriented economies and to promote private and entrepreneurial initiative” in the countries of Central and Eastern Europe, including the Commonwealth of Independent States and Mongolia.

As the Bank’s purpose is carried out mainly through the financing of projects in the public and private sectors, Article 13 of the Agreement Establishing the Bank also recognises the importance of open and verifiable procurement by stipulating that:

• “the Bank shall place no restriction upon the procurement of goods and services from any country from the proceeds of any loan, investment or other financing undertaken in the ordinary or special operations of the Bank;” and
• “the Bank shall take the necessary measures to ensure that the proceeds of any loan made, guaranteed or participated in by the Bank, or any equity investment, are used only for the purposes for which the loan or equity investment was granted and with due attention to considerations of economy and efficiency.”

In implementation of Article 13, the Bank adopted procurement principles and procedures for itself and for the clients whose projects it finances. The PP&R were first issued in January 1992. They were modified in 1994, 1995, 1996, 1998 and more recently in 2000 and 2007. The 2000 revision saw the inclusion of Annex 2 of the PP&R which provides guidance to tenderers and establishes their general rights and obligations. In 2007, after signing the Uniform Framework for Preventing and Combating Fraud and Corruption with other prominent International Financial Institutions, the Bank revised paragraph 2.9 of the PP&R in order to adopt the commonly agreed definitions of corrupt practices and fraudulent practices.

Information about the Bank’s procurement procedures and practices, as well as about opportunities arising in the context of Bank-financed projects, can be found on the Bank's website under Procurement Policies and Rules.

Objectives of the proposed review

Although modified and updated on the foregoing occasions, the PP&R have not been subjected to a comprehensive review since their adoption in 1992. The overall aim of the review now initiated is to take stock of the evolving needs of the Bank and its clients and suppliers, as well as those of its public stakeholders, with a view to reflecting such evolution in the PP&R. In this context, the following events and trends are particularly noteworthy:

• The nature of EBRD’s business has changed, with a greater focus on projects to the East and South parts of the Bank’s region of operation and in municipal infrastructure and concession financing: this entails greater procurement risks, especially where the tendering/contracting authorities do not have adequate experience in international open tendering and contract management.
• Ten of the EBRD’s countries of operations have joined the European Union and have incorporated in their respective legislative frameworks the public procurement principles laid down in European directives.
• Several other international financial institutions have completed major procurement policy and guidelines reviews, or are in the process of doing so (it should be noted that a number of institutions incorporated in their policies principles that already underpin the PP&R, such as full open competition without restriction of eligibility).
• Efforts to fight corruption and promote integrity in public procurement have been intensified by international financial institutions and in many countries.
• Although economy and efficiency continue to be the main considerations in procurement, various experts and non-governmental organisations have suggested that other criteria be also taken into account in order to achieve specific policy objectives, e.g., objectives set out in other key Bank policies.
• Stakeholders of EBRD, including members, clients, and contractors have suggested changes and clarifications to the PP&R.

Invitation to comment

The current PP&R are attached as a basis on which to comment. Comments are particularly welcome in order to assist the Bank in ensuring that its procurement policies and procedures continue to be appropriate in terms of the Bank’s mandate and reflect relevant best practices.

Specifically, the Bank would welcome views on potential changes in four main areas:

• Ensuring enhanced transparency and accountability through:
  • improved monitoring and reporting on compliance
  • increased disclosure of procurement-related information;
  • strengthened enforcement mechanisms to promote integrity and fight corruption;
• Paying greater attention to local conditions by allowing greater use of local law, language and currency, as well as by adapting thresholds for mandatory tendering to reflect differing local environments;
• Modernising procurement processes and reports to take advantage of benefits offered by electronic, rather than paper-based, systems; and
• Promoting, through procurement, objectives set out in other key Bank policies.

A summary of the comments received, with staff responses, will be provided to the Board of Directors to facilitate their review of the PP&R and assist them in considering revisions. However, the PP&R, in its current and revised forms, will continue to be a Bank document and the responsibility for its contents will remain with the Bank.