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Public Procurement

Reform and Importance

in the Current Economic
Contributions to Economic Stability and Growth
Pamela Bigart
World Bank
22 May 2009
Importance of Procurement

 Public Procurement systems are at the

center of the way public money is spent
since budgets get translated into
services largely through the
government’s purchase of goods, works
and services
What’s Procurement Got to do
with It?
 Percentage of GDP
 Economy, Efficiency and Value for Money
 Service Delivery
 Foreign Investment in Country
 Investment in Building Private Sector
 Trade Policy – Opening Doors for Growth
and Competition
GDP and Percentage of
 Overall spending on procurement by
governments has been estimated to be
15% of GDP (much higher in many
 Procurement as a percentage of budget
expenditure ranges from to as high as
Clearly, efficient procurement translates to
obtaining more value for money
Size of Procurement in
Selected Countries
Country % Total Expenditure
 Global  12-20%
 Angola  58%
 Azerbaijan  34%
 Bulgaria  30%
 Dominican Republic  20%
 Malawi  40%
 Vietnam  40%
Economy, Efficiency and
Value for Money
 Economy and efficiency are traditional
principles of a well functioning public
procurement system – generally delivered
through competitive marketplace
 Value for money is expanding traditional focus
to include achieving results through the public
procurement system – brings into play the
concept of quality and other criteria as a means
of determining effective use of public funds and
service delivery
Service Delivery
 Many systems are focusing less on the input
side (paying for goods, works or services) to a
focus on the service delivery side.
 Ensuring that goods, works and services
purchased through the government system
provide for the needs of the citizens
 Use of result focused instruments with payment
based on delivery of required services or on
performance criteria
Foreign Investment

 Public procurement helps define the

business environment in a country
 Attracting new business investors into
the country requires a fair playing field
where foreign investors see the
opportunity for development and growth
Building Private Sector
 Competition
 Partnership
 Training
 Facilitation
 Governance environment
 Information
Opening Doors for Growth and
 Cross border trade agreements
 Exposure to competition
 Reducing dependencies on
governmental protectionist policies
Role of Technology

 Expands access to market

 Provides for greater transparency
 Increases confidence in governance
 Increases efficiency
 Captures data for better management
and results
 Involves stakeholders
What is Procurement Reform?
 Creating a sound, transparent and fair
legal framework
 Supporting implementation with tools,
documents and procedures
 Ensuring quality and capacity of those
implementing procurement
 Sound, transparent and fair governance
and public financial management system
with full integration
Procurement Reform (continued)

 Supporting a competitive market

 Feedback mechanisms to ensure that
system remains relevant
 Controls and accountability
 Access to Information
 Reliable partner
 Stakeholder involvement
What Lessons have we Learned?

 Procurement reform costs money and

takes time
 Some reforms can deliver results in the
short term
 Reform cannot be effective if isolated
from broader public sector management
and financial management reform
 Reforms require long term commitment
to achieve sustainable results