Why reform is needed
Public contracts are a basis for major and expensive projects (in areas such as infrastructure, education and health care), which deliver essential everyday services to the public and make a vital contribution to national economic development. Public procurement therefore has a significant impact on the economic performance and the quality of life for citizens in our countries of operations.
The efficiency of public procurement is strictly related to the public procurement legislation in force, the capacity of the regulatory and enforcement authorities to perform their duties effectively and the professionalism of individual procurement officers.
The challenge for governments is to develop a legal regime that balances maximum efficiency with the need for transparency in public contracting. All stakeholders – public sector contracting entities, suppliers and contractors and members of the general public – need to be aware of the fundamental principles of transparency and fair competition in public procurement, as these play an important role in ensuring that public money is well spent. Governments also need to train and retain qualified procurement officers.
The LTP’s role
The main objective of LTP’s work in this area is to support legal and institutional reforms aimed at ensuring that procurement laws and practices in the EBRD regions are modern and in line with international standards. The LTP achieves this through sector assessments, standard setting, technical cooperation and knowledge-sharing initiatives.
Public procurement projects are divided into the following work streams:
- digital transformation of public procurement
- tribunal skills for public procurement review bodies
- facilitating SME participation in electronic public tenders
- open data in public procurement for public access to procurement information and enforcement of procurement policies including reporting, monitoring and audit
The EBRD UNCITRAL Public Procurement Reform Initiative
This technical cooperation programme launched in 2011 in collaboration with the United Nations Commission for International Trade Law (UNCITRAL) and dedicated to promoting modern public procurement best practice.
The EBRD UNCITRAL Initiative works with governments in the EBRD region interested in updating their national public procurement regulatory framework to the standards of the UNCITRAL Public Procurement Model Law. Presently, the work focuses on standard-setting for digital procurement and policy modernisation projects with Egypt, Moldova, Tunisia and Ukraine.
Case study: Digital transformation of procurement in Moldova
Moldova had been trying to reform its public procurement system for over 20 years. To achieve this, with advice and support from EBRD’s LTP, the Ministry of Finance of Moldova launched a pilot of MTender, a ground-breaking digital procurement system which is radically transforming the way public funds are spent. The pilot’s success proves that the corruption and cronyism which costs the Moldovan state up to US $183m each year in the procurement sector could be drastically reduced.
But it is not just about stopping corruption: the MTender system will make public procurement easier for government officials and deliver better public services for its citizens. Learning from success of Prozorro in Ukraine and developed collaboratively by local IT companies, government and civil society in Moldova, MTender is taking the concept of an open source, open data and open contracting standard even further, to provide for the ‘end-to-end’ digital public procurement, covering all aspects of the public procurement cycle from budget planning to payment.
For more information, please see the detailed case study available here.
The EBRD GPA Technical Cooperation Facility
The EBRD GPA Technical Cooperation Facility is a programme assisting governments in the EBRD region committed to joining the World Trade Organization’s Agreement on Government Procurement (the GPA). Working in collaboration with the WTO Secretariat, the EBRD is supporting governments that are interested in or committed to accession to the GPA.
Since its launch in 2014, trade experts and procurement policy advisers engaged by the EBRD GPA TC Facility have assisted Armenia, Azerbaijan, FYR Macedonia, Georgia, Jordan, the Kyrgyz Republic, Moldova, Montenegro, Ukraine, Tajikistan and Turkey. Supported by the EBRD technical cooperation Armenia, Montenegro, Moldova and Ukraine have recently joined the GPA. To facilitate further GPA accessions, the LTP’s current work focuses on Belarus, Jordan, the Kyrgyz Republic, Northern Macedonia, Tajikistan and Uzbekistan.
Case study: Belarus’ public procurement on the way to WTO standards
Working with the EBRD GPA Technical Cooperation Facility, Belarus’ Ministry of Antimonopoly Regulation and Trade aimed to modernise its public procurement system, ensuring it can draw on the data stored within its national eProcurement marketplaces to drive improved policies and decisions. It aimed to:
- Provide improved public procurement statistics to guide decision-making;
- Generate automated public procurement reports; and
- Provide transparency on public spending for citizens.
The LTP-developed vision to achieve these objectives contains two primary points:
- Implementation of an open contracting data standard (OCDS) transformation on existing eProcurement data; and
- Deployment of an OCDS-based set of business intelligence and reporting tools to enable analysis of public procurement data, and ensure transparency towards citizens and businesses.
The project completed in 2019 and first results are forthcoming. For more information, please see the detailed case study available here.
EBRD Open Government Lab
The EBRD Open Government Lab was first started in 2015 in Ukraine in collaboration with Transparency International Ukraine and Open Contracting Partnership to research, innovate and pilot policies for digital government building on the concepts of Open Government and civic tech for public service.
In Ukraine, the stakes for taxpayers were huge – the country’s annual public procurement budget is valued at up to US$ 20 billion. Following decades of concealment and corruption, which allowed the country’s ruling elite to exploit the state procurement system in their interests, 2015 brought two seismic shifts. The first was Ukraine joining the WTO GPA, and the second involved the introduction of an electronic procurement system for state purchasing of goods, works and services.
The LTP worked with the government on both initiatives throughout a time of great political turbulence in Ukraine. In 2012, the Bank started to support the Ukrainian government to navigate the Ukraine’s GPA negotiation process and promote adoption of the WTO public procurement policy standards. Upon successful completion of the GPA negotiations in September 2015, the focus of the EBRD support shifted to meeting GPA transparency standards in practice by introducing electronic public procurement and independent public procurement complaints mechanism. Recognising innovative ideas of civic activists from Maidan, the Bank supported the pilot of “ProZorro”, a new concept of the e-procurement system based on Open Contracting Data Standard.
Prozorro means transparent in Ukrainian, and the system launched in February 2015 aimed to achieve full transparency of public procurement decisions by making “everyone see everything” online. To achieve that, the ProZorro system connected a new open source and OCDS-based central database to the existing commercial electronic platforms in Ukraine to ensure online public procurement data exchange and publication in the open data OCDS format in real-time. This approach is making procurement information literally open to anyone and reduces corruption risks significantly.
The ProZorro pilot has been very successful – it attracted almost 1000 contracting entities within first three months of operation. Local suppliers started to trust the public procurement market for the first time, which meant competition grew and Ukrainian taxpayers started to get better value for money. Made mandatory on 1 April 2016, the ProZorro system won several international awards.
As the above projects detail, designing modern policies and implementing digital reforms in tandem with national reform leaders requires a collaborative and frequently multi-disciplinary approach. The LTP has found that digital transformation reforms are more successful when lawyers, policy-makers and data scientists work together and created a lab zone where legal expertise, innovative economic thinking, data enthusiasm and Open Government values can mix freely.
In spirit of this collective goal, the LTP has set up the EBRD Digital Transformation GitHub, an open-sourced wiki wherein EBRD digital transformation know-how products can be shared publicly and widely. Information about specific LTP projects and files related to the project can be accessed and re-used by anyone.
If you wish to collaborate in the EBRD Digital Transformation hub, follow these steps.