Professional Documents
Culture Documents
Procurement Reforms
Manmohan Parkash
Advisor, OSFMD and Head, OSOM
31 January 2017
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Agenda
Background
Procurement Reform:
Drivers for Reform
Proposed Procurement Framework
Quality and Value for Money
Procurement of High Level Technology
Change Areas and Action Plan:
Time, Quality and Delivery System
Organizational Delivery Model
Summary
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Background
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Procurement at ADB
Category Number of Value
Background
contracts
Consulting services
(firms and 3,200 $650 million
individuals)
$28 billion (44%) uncontracted balance in 2015 $43 billion (64%) undisbursed balance in 2015
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Average processing time for
procurement contracts 10Mn
2014 2015 2016
Background
(Jan June)
(days) (days) (days)
ADB
processing 151 144 103 (-28%)
time
EA
processing 211 262 237 (-10%)
time
Total
processing 362 406 340 (-16%)
time
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EA = Executing Agency
MTR 10-Point Action Plan
1. Robust
Procurement Risk
Assessment
Thresholds
9. New e- 3. Risk-
Approval based
Forms Procurement
Reviews
8. Streamlined 4. New
Approval Decision
Processes Making Levels
7. Project 5. Project
Specific Master Procurement
Bidding Classification at
Concept Page
Documents 6. New IT-based
Procurement
Review System
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10-Point Action Plan Progress
12 procurement risk assessments completed, 10 new ones
under process
26 developing member countries have adopted the
Background
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Procurement Reform:
Drivers for Reform
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The Need to Change
Rising Expectation Developments
2nd Generation
Drivers for Reform
and Changes in among MDBs:
Reforms:
Public Procurement:
Mandate by the
ADF-OCR merger WB and AfDB President
increased number of new procurement Steering
contracts framework Committee:
Chaired by MDG
Increased use of high Entry of AIIB Members: RD DGs,
level technology and NDB GC, Controller,
Head OAI
Slow and Working Group: All
unresponsive to RDs, SDCC, RMs,
clients and SPD, CTL, OAI,
technologies OGC, OSFMD
Consultations in full
Low quality swing
consultants and
contractors
Current Model Proposed Model
Drivers for Reform
Time 41%
Quality 21%
Delivery
System 38%
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Procurement Reform
Existing Procurement
Framework
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Core Procurement
Procurement Reform
Principles
Economy
Efficiency Current
Policy
Fairness
Transparency
Quality
Proposed
Value for money
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Value for Money
Procurement Reform
Optimal benefits
In addition to initial cost, also consider:
costs over the economic life
fit-for-purpose
socio-economic and environmental development
benefits
Facilitate high technology procurement
Keep up with policies of WB, AIIB, AfDB
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Quality
Procurement Reform
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How Quality will be embedded?
Procurement Reform
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Procurement Reform Procurement of high value technology
Project Design
Greater emphasis on market assessments
Use of better quality consultants in order to help
with project preparation
Procurement methods
Use of appropriate procurement methods to ensure
the engagement of quality contractors (1S, 2E)
Use of 2-stage process to permit discovery and
improvement of initial specifications
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Procurement Reform Procurement of high value technology
Bid evaluation
Inclusion of quality criteria in specifications, bid
evaluation
Work out life cycle cost and value for money
Delivery systems
Upfront involvement of procurement staff (during
project design stage)
Decentralize procurement function to field offices
Contract management
Provide support for contractual issues
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Procurement Reform How Core Procurement
Principles work together
Non standard and
strategic:
Value for
money
Quality
Standard
Complexity
procedures:
Economy
Efficiency
Risk Value
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Risk based ADB oversight
Procurement Reform
Procurement Post
Prior
Review and
audits Review Sampling
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Three Pillars
Change Areas
Delivery
Time Quality System
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Organizational Delivery Model Existing Structure
DG OSFMD
Procurement Procurement
Director OSP1 Director OSP2
CWRD EARD
Procurement Procurement
Unit Unit
SARD PARD
Procurement PC Procurement
Unit Unit
SERD
PSU Procurement Procurement
Unit
Consulting Consulting
Unit
Individual
TA
OSP1 = Procurement Division 1
OSP2 = Procurement Division 2
Staff
PC = procurement committee 30
Organizational Delivery Model ADB RMs and Sector Divisions with $1B+ Portfolio
DIVISION PROJECT
RM PROJECT PORTFOLIO
PORTFOLIO
RM $B RM $B
INRM 7.3 CWTC 3.9
PRCM 5.6 CWEN 3.8
VRM 3.7 SETC 3.1
Procurement
Policy
CWRD SARD EARD PARD Special Initiatives
SERD
CSU
Capacity Building
HQ HQ HQ Quality Assurance
HQ HQ HQ
Complaints
CWOD SAOD EAOD PAOD SEOD SDCC
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Summary
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Proposed procurement reforms build on ADBs 10-Point Procurement Reform Plan (2014), which
aimed to increase operational efficiency and reduce ADB internal procurement time
Goal of the proposed reforms is to help ADBs developing member countries (DMCs): (a) design
Executive Summary
better projects; (b) procure goods, works and services with quality and Value for Money; and (c)
implement projects faster by resolving procurement-related issues.
A less prescriptive and more principles-based procurement policy, to meet emerging needs
of DMCs, as well as market conditions
Procurement principles expanded to include Quality and Value for Money, in addition to
Economy, Efficiency, Fairness, and Transparency
Enabling procurement of high value technologies
Focusing on quality of consulting services, civil works and goods
Risk-based procurement approach, to help ADB focus better on more complex projects
Alternative Procurement Arrangements, to reduce transaction costs for DMCs as well as
ADBs co-financiers
To help roll-out these reforms, ADB will also adopt a detailed Action Plan focused on: (a) Reducing
Overall Procurement Time; (b) Improving Quality of Procurement Outcomes; and (c) Strengthening
Procurement Support Delivery Systems
Specifically, ADB will significantly overhaul its procurement delivery model, by decentralizing and
placing procurement specialists either closer to DMCs (in Resident Missions) or Project Teams
(particularly in Energy, Transport and Urban Sectors, accounting for 70% of ADB lending)
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For further information:
Ramesh Subramaniam, Director General, Operations Services and Financial Management
Department (Email: rsubramaniam@adb.org)
For Procurement Issues in Central and West Asia and South Asia: Ignatius Santoso, Senior
Director, OSFMD (Email: isantoso@adb.org)
For Procurement Issues in East Asia; Southeast Asia; and Pacific Region: Walter Poick,
Director, OSFMD (Email: wpoick@adb.org)
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