Public contracts

This focus area involves government commerce – what governments are buying and selling, leasing or renting, digital transformation centred on the principles of open government as well as the EBRD's related collaboration with the World Trade Organization (WTO) and the United Nations Commission on International Trade Law (UNCITRAL).

Towards smart, sustainable and inclusive digital government-to-business (G2B) markets

Public contracts are behind major and expensive public projects (in areas such as infrastructure, education and healthcare) that deliver essential everyday services to the public and make a vital contribution to national economic development. Governments wield significant purchasing power, and G2B transactions have a weighty impact on the economic performance of domestic markets and the quality of life for citizens, in particular in transition economies where the EBRD operates. At the same time, government contracts remain a leading corruption risk, and waste and inefficiencies are rife. Many governments do not know where in the globalised world their public funds end up.

A main objective of the EBRD’s Legal Transition Programme (LTP) is to support legal reforms behind the digital transformation of government purchasing and selling, to ensure that government commerce laws in the Bank’s regions are modern, fit-to-market and meet the needs of the digital economy.

Policy and regulation

The challenge for governments in regulating the public procurement and sale of assets is developing legal regimes that prioritise environmental sustainability and balance economic efficiency with the need for a high level of transparency with public contracts. All stakeholders – government departments and other public bodies, the business community and citizens – need to be aware of the fundamental principles of transparency, fair competition and open market access for businesses big and small, domestic and international, as these play an important role in ensuring that state budget funds are well spent and public assets are sold to commercial buyers at market prices. Government commerce laws call for regulatory frameworks encouraging high levels of transparency and accountability in the public sector. Modern policy recognises that public procurement and public sale laws may become a stimulus for market development and contribute to the sustainable transformation of local economies.

The business of government

The public procurement of assets and sale of public assets have a strategic impact on public services, citizens’ quality of life and the economic development of EBRD countries of operation. The focus on sustainability in government purchasing and selling – particularly on environmental protection – as well as on social and economic development has the potential to change domestic market practices, create new directions for international trade and contribute to environmental conservation efforts.

The EBRD is advocating for laws for public procurement and the sale of public assets that are based on fair competition, without trade barriers but with business-friendly online digital transactions to encourage wide business participation. At the LTP, we aim to identify global best practices for improving market access for public procurement, public sales and business-to-government opportunities for domestic and international trade, as well as for small and large business.

Technological challenge

The digital transformation of public-sector procurement and sale processes is essential for the modern digital economy. In complete end-to-end digital procurement and sale, ICT system business-to-government transactions can be initiated and completed online, with real-time, data-driven, transparent monitoring and auditing enabled, and bureaucracy and formalities limited to fundamentals. Designing modern policies and implementing digital reforms in tandem requires a collaborative and frequently multidisciplinary approach. Tools and methodologies for automated compliance, monitoring and enforcement are key to data-driven policy enforcement and public-sector performance monitoring. In addition to increased transparency and transaction efficiency, these offer quick and efficient feedback loops to enable refinement of legislation and regulations, tools and control mechanisms and, as a result, further innovations.

The LTP’s experience has confirmed that digital transformation reforms are more successful when policymakers, lawyers and data scientists work together in legal sandboxes. They are also more successful when digital government tools are centred on open data as a means for the interoperability of digital government, and when they are built upon open data standards to promote open government and effectively engage market stakeholders, including civil society organisations, in dialogue with public authorities.

The LTP therefore aims to create a lab zone within technical cooperation projects where legal expertise, innovative economic thinking, data enthusiasm and open government values can mix freely, and where it can work with champion governments in transition economies to develop and pilot new data-driven and results-based policies.

Legal sandbox pilot projects explore the best regulatory options for the automation of compliance and policy enforcement for government commerce and prototype digital data solutions. This enables analysis of the lessons learned from pilots and facilitates the development of new regulatory standards for automated compliance enforcement, data-driven policy enforcement and performance monitoring of the public procurement and sale of public assets.

In the spirit of this collaboration, the LTP operates an open-sourced wiki for digital government commerce tools at GitHub (EBRD Digital Transformation), wherein EBRD digital transformation know-how products can be shared publicly and widely, and regulatory and digitalisation knowledge developed for specific reform projects can be accessed and re-used.

EBRD UNCITRAL Public Procurement Initiative. The LTP and UNCITRAL have been working together since 2011 under the EBRD UNCITRAL Public Procurement Initiative to promote modern public procurement legislation, initially in the Commonwealth of Independent States countries and subsequently across the EBRD regions.

We work together with UNCITRAL to contribute to the development of modern global legal standards for public procurement and public sales, in particular international best-practice-based legal instruments promoting policy innovation for better regulation of government commerce (Model Law on Public Procurement, Model Law on Electronic Commerce).

Clearly identified regulatory gaps (UNCITRAL diagnostic) help to unlock reforms with clear priorities to build (i) competitive, (ii) well-governed, (iii) transparent public procurement markets offering (iv) greater value for money and lower corruption risks to (v) a wide group of market operators, including small and medium-sized enterprises (SMEs) and women-owned businesses.

In particular, we focus on identifying global best practices for improving market access and creating business-to-government opportunities for SMEs and introducing small-business-friendly legal instruments (electronic reverse auctions, e-catalogues and framework agreements) to increase the capacity and SME participation in public tenders.

EBRD GPA Technical Cooperation Facility. Since 2014, the LTP has assisted multiple countries pursuing accession to the WTO's 1994 Agreement on Government Procurement (GPA). The EBRD GPA Technical Cooperation Facility has provided the framework for structured cooperation with the WTO GPA Secretariat and effective collaboration with governments in the EBRD regions that are interested in or committed to accession to the GPA.

EBRD Open Government Lab. The LTP worked closely with Transparency International in Ukraine on implementation of the e-procurement system ProZorro, intended to increase transparency and reduce corruption in public procurement. Learning from ProZorro's global success, the LTP sought further cooperation with Transparency International and Open Contracting Partnership to explore the emerging open source technology and develop the Open Contracting Data Standard to suit other jurisdictions globally.

Most recently, the LTP integrated its regulatory standard-setting work with UNCITRAL with open government advocacy. It is also working together with Transparency International Ukraine and Open Contracting Partnership on a concept for Open Data Digital Procurement, an all-digital, end-to-end procurement system that is able to exchange open data in real time, building on emerging open source technologies and the latest open data standards to decrease operational costs and shorten the implementation time for governments by operating a network with private e-commerce platforms.

Since 2010, the LTP has conducted three regional sector assessments that seek to evaluate the quality of national laws and practice and track the progress of public procurement reforms in the EBRD’s countries of operation.

2010 EBRD regional public procurement sector assessment

The first EBRD regional public procurement sector assessment was conducted in 2010. This reviewed national public procurement legislation and national public procurement practice in 28 economies in which the EBRD invests. The assessment evaluated the level of development of public procurement laws and identified elements of law and practice that reduce the efficiency of the public contracting process in the EBRD regions. The final results of the assessment were published in a summary assessment report (available in English and Russian) and in country profiles that also take into account the findings of the excercise.

The EBRD SEMED Public Procurement Sector Assessment (2012)

In 2012, the EBRD completed a legal assessment of public procurement laws and local procurement practice in countries in the southern and eastern Mediterranean (SEMED) region, namely Egypt, Jordan, Morocco and Tunisia. 

The EBRD Regional Public Procurement Legislation Self-Assessment (2013)

In 2013, the EBRD worked with governments on a review of national public procurement laws. Conducted in the form of a self-assessment excercise by the regulatory authorities, it provided an overview of progress in the development of public procurement policy in the EBRD regions. If you are interested in comparing assessment scores for public procurement laws in the EBRD countries of operation, please contact: ltp@ebrd.com.