Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 3983 1-BD

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT IN THE AMOUNT OF SDR 15.5 MILLION (US$23.6 MILLION EQUIVALENT)

TO THE

PEOPLE’S REPUBLIC OF BANGLADESH

FOR A

PUBLIC PROCUREMENT REFORM PROJECT I1

May 23,2007

Procurement Services Unit South As ia Reg ion

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. I t s contents may not be otherwise discIosed without World Bank authorization.

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CURRENCY EQUIVALENTS (Exchange Rate Effective April 30,2007)

Currency Unit = Taka (Tk) Tk70 ...... =US1

U S $ l S2493 = SDRl

GOVERNMENT FISCAL YEAR July 1 - June 30

ABBREVIATIONS AND ACRONYMS

ADB Asian Development Bank ADP Annual Development Program ARCS Audit Report Compliance System BAPD Bangladesh Academy for Planning & Dev. BCSAA Bangladesh Civil Service Admin. Academy CBC Communication and Behavioral Change BIAM Bangladesh Institute o f Admin. & Mgmnt BIM Bangladesh Institute o f Management BPATC Bangladesh Public Admin. Training Center BRAC Bangladesh Rural Advancement Committee BWDB Bangladesh Water Development Board C&AG Comptroller and Auditor General CAO Chief Accounts Officer CAS Country Assistance Strategy CFAA Country Financial Accountability Assessment CGA Controller General o f Accounts CIDA Canadian Internat’l Development Agency CIPS CMS Contract Management System ,

CPAR Country Procurement Assessment Report CPTU Central Procurement Technical Unit CSG Community/ Civil Society Groups DANIDA h i i s h International Development Agency DC Direct Contracting DFID Department for Internatl Development (UK) DG Director General EBS Electronic Bidding System ECNEC Executive Committee for Nat l Econ. Council e-GP Electronic Government Procurement ESCB Engineering Staff College Bangladesh FAPAD Foreign Aided Project Audit Directorate FBS Fixed Budget selection FMC/ FMS Financial Mgmt Consultant/ Specialist FMRP Financial Management Reform Program GOB/ GOB Government o f Bangladesh GP GrameenPhone Ltd. CC Consultative Committee IC Individual Consultant ICB International Competitive Bidding IDA International Development Association IFB Invitation for Bids IFR Interim Un-audited Financial Report

Chartered Institute of Purchase & Supply, UK

Vice President Country Director

Sector Director Sector Manager

Task Team Leader

IMED LGED Local Government Engineering Department MIS Management Information System MOP Ministry o f Planning MTR ’ Mid-Term Review

NGO Non-governmental Organization NS National Shopping NSAPR Nat’l Strategy for Accel’d Poverty Reduction OECD PATC Public Administration Training Center PDB Power Development Bdard PDO Project Development Objective PE Procuring Entity PFM Public Financial Management PIP Project Implementation Plan PMC Procurement Monitoring Coordinator ’

PPA Public Procurement Act PPR Public Procurement Regulations 2003 PPRP Public Procurement Reform Project PROMIS Procurement Mgmt Information System PPSC Public-Private Stakeholders Council PSC Project Steering Committee QBS Quality-Based Selection QCBS ,Quality- and Cost-Based Selection REB Rural Electrification Board RHD Roads and Highways Department RFP Request for Proposal SA Special Account SAC Social Accountability SBD . . Standard Bidding Documents SOE Statement of Expenditures SSS Single-Source Selection TA Technical Assistance TAL/TAC Technical Assistance Loan/ Credit Target agencies TPP Technical Project Proposal TWG Technical Working Group UNCITRAL UN Commission for Internat’l Trade Law UNDP United Nations Development Program

Implementation Monitoring & Evaluation Div.

e NCB National Competitive Bidding

Organization for Economic Coop. & Dev.

RHD, LGED, REB, and BWDB

Barbara Kafka . Els Hinderdael

Zafrul Islam

FOR OFFICIAL USE ONLY

BANGLADESH PUBLIC PROCUREMENT REFORM PROJECT II

TABLE OF CONTENTS Page

A . STRATEGIC CONTEXT . AND RATIONALE ................................................................................... 1 1 . Country and sector issues .................................................................................................... 1 2 . Rationale for WB involvement ............................................................................................ 2 3 . Higher level objectives to which the project contributes .................................................... 3

PROJECT DESCRIPTION .................................................................................. : .................................. 4 1 . 2 . . Project development objective and key indicators ............................................................... 4 3 . Project components ................................................................. : ........................................... 5 4 . 5 . Alternatives considered and reasons for rejection ............................................................ 10

C . IMPLEMENTATION .............................................................................................................................. 10 1 . Partnership arrangements .................................................................................................. 10 2 . 3. Monitoring and evaluation o f outcomeshesults ................................................................ 12 4 . Sustainability ..................................................................................................................... 12 5 . Critical r isks and possible controversial aspects ............................................................... 13 6 . Credit conditions and covenants ....................................................................................... 15

APPRAISAL SUMMARY ..................................................................................................................... 16 1 . Economic and financial analysis ........................................................................................ 16 2 . Technical ........................................................................................................................... 17

4 . Social ............................................................ : .................................................................... 19 $ . Environment ...................................................................................................................... 19 6 . Safeguard policies ............................................................................................................. 19 7 . Policy exceptions and readiness ........................................................................................ 20

B . Lending instrument ........................ : .................................................................................... 4

Lessons learned and reflected in the project design ............................................................ 9

Institutional and implementation arrangements ................................................................ 11

D .

3 . Fiduciary ........................................................................................................................... 17

Annex 1: Country and Sector Background ................................................................................... 21 Annex 2: Major Related Projects'Financed by the WB and Other Donors .................................. 24 Annex 3: Results Framework and Monitoring .............................................................................. 26 Annex 4: Detailed Project Description ......................................................................................... 33

Annex 6: Implementation Arrangements ...................................................................................... 52 Annex 5: Project Costs .................. ......................................................................................... ; .... 51

Annex 7: Financial Management and Disbursement Arrangements ............................................ 58 Annex 8: Procurement Arrangements ........................................................................................... 66 Annex 9: Economic and Financial Analysis ................................................................................. 81 Annex 10: Safeguard Policy Issues ............................................................................................... 82 Annex 1 1 : Project Preparation and Supervision ........................................................................... 83

Annex 13: Statement o f Loans and Credits ................................................................................. 85 Annex 14: Country at a Glance .................................................................................................... 87

Annex 12: Documents in Project F i le ........................................................................................... 84

Map : IBRD35508

This document has a restricted distribution and may be used by recipients only in the performance o f their off icial duties . I t s contents may not be otherwise disclosed without Wor ld Bank authorization .

BANGLADESH PUBLIC PROCUREMENT REFORM PROJECT I1

Source Local Foreign BORROWER/RECIPIENT 1.30 INTERNATIONAL DEVELOPMENT 15.78 7.82 ASSOCIATION Total 17.08 7.82

PROJECT APPRAISAL DOCUMENT

Total 1.30

23.60

24.90

SOUTH ASIA S A R P S

Date: May 23,2007 Country Director: Xian Zhu

Els HinderdaeV Barbara Kafka

Project ID: PO98146 Lending Instrument: Technical Assistance (C) Load Credit

[ ]Loan [XI Credit [ ]Grant [ ]Guarantee [ 3 Other:

Team Leader: Z a h l Islam Sectors: General Public Administration

Themes: Public expenditure, financial management, procurement Environmental screening category: None

Sector MangerDirector: (1 00%)

Project Financing Data

... 111

[ ]Yes [XINO

[ ]Yes [XI N o

[ ]Yes [XINO

[XIYes [ ] N o

[XIYes [ ] N o

Does the project depart from the CAS in content or other significant respects? Re$ PAD A.3 Does the project require any exceptions from Bank policies? Re$ PAD D. 7

I s approval for any pol icy exception sought from the Board? Does the project include any critical risks rated “substantial” or “high”? Re$ PAD C.5 Does the project meet the Regional criteria for readiness for implementation? Ref: PAD D. 7

Have these been approved by Bank management? Elyes [ IN0

Project development objective Re$ PAD B.2, Technical Annex 4 The PDO o f the proposed project, as follow-on to the ongoing Public Procurement Reform Project (PPRP) that i s scheduled to close in June 2007, i s to improve performance o f the public procurement system progressively in Bangladesh, focusing largely on the key sectoral ministries and targeting their implementing agencies. I t would be achieved by strengthening the ongoing reform process and moving i t fkther along with the following outputs: (i) enhanced capacity in creating a sustained program o f developing skilled procurement professionals, (ii) strengthened management and monitoring o f procurement in target agencies, (iii) introduction o f electronic government procurement in those agencies and CPTU ‘on a pi lot basis, and (iv) creation o f greater public awareness o f a well hnctioning public procurement system by engaging c iv i l society, think tanks, beneficiaries, and the private sector. All these actions are key elements in effective implementation o f the procurement law/ regulations.

Project description Re$ PAD B.3.a, Technical Annex 4 Component 1: Furthering Policy Reform and Institutionalizing Capacity Development would support the capacity development program and include certain key features o f core procurement ski l ls to institutionalize procurement capacity in Bangladesh.

Component 2: Strengthening Procurement Management at Sectoral Level would support strengthening four key sectoral target agencies for improved management and monitoring o f procurement (RHD, LGED, REB, and BWDB).

Component 3: Introducing e-Government Procurement (e-GP) would support piloting e-GP on a phased approach in the target agencies to make the system more transparent and lower costs.

Component 4: Communication, Behavioral Change, and Social Accountability would support creating greater public awareness o f a well hnctioning public procurement system by engaging civil society, think tanks, beneficiaries, and the private sector with the expectation o f initiating a long-term process o f procurement monitoring by them.

Which safeguard policies are triggered, i f any? Re$ PAD D.6, Technical Annex I O None. Significant, non-standard conditions, if any, for: Board presentation: None Loadcredit effectiveness: None

Covenants applicable to project implementation: See Section C.6 of the PAD

i v

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A. STRATEGIC CONTEXT AND RATIONALE

1. Country and sector issues

1. Investing f‘or good governance i s a high priority for both the World Bank (WB) and the Government o f Bangladesh (GOB). The WB’s Country Assistance Strategy 2006 (CAS), aligned with the G o v e v e n t ’ s National Strategy for Accelerated Poverty Reduction 2005 (NSAPR), identified governance as the major constraint preventing Bangladesh from improving the investment climate and empowering the poor, the two pillars o f the CAS for accelerating the pace o f poverty reduction. Governance i s the focus o f al l sector programs the WB supports and I

engages in, which address both sector and core governance issues in public procurement and public financial management. Likewise, the NSAPR highlights as strategic goals relating to good governance, the need for enhancing efficient use o f resources, promoting transparency and accountability in resource use, and tackling corruption.

*

2. In Bangladesh, shortfalls in core governance, including inefficiencies in public procurement practices, poor financial management, corruption, and quality o f c iv i l service have led to very l ow expectations for public services and contributed to the high cost o f doing business that, in turn, has deterred rapid private sector development. There i s growing recognition within the country that improved governance, with reduction in corruption, is a prerequisite for improving the investment climate and accelerating private sector-led economic growth (see Annex 1 for firther country and sector background).

3. Public procurement i s not just a mechanism for executing transactions but an integral part o f the development process and a priority area for governance improvement within the overall framework o f public financial management (PFM) system.. Budgets get translated into services in large part through the operation o f the procurement system. Public procurement i s also an arena where corrupt practices can be exposed and addressed, and successful procurement reform can help curb corruption. Widespread corruption within procurement systems is particularly damaging since i t perverts public spending (generating a lower rate o f return), reduces the value o f public assets (bribe-givers benefit by skimping on quality), and. distorts the economy ( f i rms invest in competing politically and not economically).

4. The Country Procurement Assessment Report 2002 (CPAR) for Bangladesh identified procurement as the single most significant issue affecting public sector performance, with enormous wastage o f money. Following the CPAR recommendations, with W B ’ s technical assistance, the Government has been implementing a public procurement reform project (PPRP) that has successfully addressed key deficiencies in the legal and policy framework; the project is scheduled to close in June 2007. The Government established a procurement pol icy unit (Central Procurement Technical Unit or CPTU) within the Implementation Monitoring and Evaluation Division (IMED) o f the Ministry o f PIanning (MOP), issued Public Procurement Regulations in 2003, and in July 2006 passed a procurement law in the Parliament. The law and the regulations contain most features o f the international good public procurement practices.

,

5. CPTU established a website (www.cDtu.gov.bd), where i t publishes al l policies and procedures, and which i t uses to track procurement performance. I t has been piloting with two key sector agencies a centralized performance measurement system with a set o f predefined

2

indicators (Management Information System or MIS). To build procurement management capacity, CPTU, in collaboration with the ILO’s International Training Center in Turin, Italy, and a local institute, developed a critical mass o f 25 national trainers and provided training to about 1,700 staff in 260 organizations by February 2007.

6. Though the landscape o f procurement has been reshaped during the course o f the last several years due to the procurement reform with harmonized procedures and the new regulations have increased substantial awareness among al l stakeholders (procuring entities, bidding community, development partners), yet application o f the national procurement rules has proven to be relatively inconsistent across government and within individual agencies, and actual implementation o f the regulations i s slow with less progress in improving tangible outcomes on the ground. In practice, there has been significant non-compliance to the rules and regulations, in particular delays in contract award, ineffective contract administration, and inappropriate bidding practices favoring collusion. The achievement o f better procurement outcomes i s further constrained by cross-cutting governance, institutional, and implementation issues including inadequate enforcement o f regulations, incidence o f fraud and corruption, and political influence.

7. A WB technical assistance credit to support a second PPRP (Public Procurement Reform Project I1 or PPRP 11) would follow up the successes o f the first PPRP in laying the pol icy and legal foundations at the central level, with a shift o f focus to address generic procurement issues in the operational, implementation, and monitoring fbnctions encountered at the sector level, in particular in the infrastructure, power, urban, and water sectors, in order to ensure sustainability o f the reform efforts.

’

2. Rationale for WB involvement

8. The WB has consistently supported GOB’S efforts to improve procurement and has incorporated procurement-related issues in all its strategic pol icy interventions and reviews for Bangladesh-the Country Assistance Strategy (CAS), Country Financial Accountability Assessment (CFAA), Development Policy Lending (DPL), review o f Public Expenditure and Financial Accountability (PEFA) indicators, and review o f institutional arrangements for public expenditure, financial management and procurement.

9. For i t s part, the GOB launch o f procurement reform under the current PPRP has gone far to put procurement reform on the map. However, making reforms operational in Bangladesh wil l continue to be an intensely political matter, and reform design must take into account the local political economy and local capacity. From the outset, there was very limited international experience and therefore l i t t le guidance on how to design procurement reform in an environment where the entire public sector administration i s outdated and broad reforms are needed. Thus the objective o f the ongoing PPRP-the W B ’ s f i rst loan dedicated solely to improving procurement-was not to look for the “best practice” but rather a “good local fit.” In this the PPRP succeeded, creating a sound foundation and attracting a constituency for reform, and it can be considered as a “success story” and a “model”.

,

10. On the political economy front, there is a wind o f change. The new Caretaker Government that came to power on January 11 , 2007, has moved decisively to begin to address the governance problems and aggressively c a w forward the reform agenda. I t is acting to minimize the impact o f black money and corruption on the political process including

3

procurement, and has reconstituted the Anti-Corruption Commission. The anticorruption drive and efforts to improve governance fit in well with the pursuit o f the procurement reform agenda at the operational level. Furthermore, the procurement reform agenda received support from the

The 1996-2001 government approved the CPAR while the 200 1-2006 government supported the preparation and implementation o f PPRP.

’ last two elected governments belonging to two major opposition parties.

11. The WB has a comparative advantage in supporting the proposed project. I t has always taken the lead role in embedding good procurement practices into the GOB’S program of assistance, and has been recognized by the donor community on that account (e.g., DFID, JICA, EC, NORAD, The Netherlands, CIDA, SIDA, UNICEF). N o w the country has i t s own harmonized procurement procedures that have been accepted for local procurement by the key donors. This’ harmonization effort o f the WB was particularly appreciated at the Pqis Harmonization Conference 2005, As part o f the local Consultative Committee (LCG) ,activities, the WB has been leading the sub-group in procurement. Even in sector wide-approaches (SWAPS), like the one for education sector project, led by Asian Development Bank (ADB) and financed by ten donors including the WB, the WB has played a leading role in procurement. The W B ’ s support i s therefore critical to continue with the reform process, and the proposed PPRP I1 is expected to serve as an anchor for the WB and other operations in Bangladesh. Though yet to be firmed up, DFID has shown some interest in the areas o f c iv i l society monitoring. The sectoral strengthening component o f PPRP I1 would be coordinated with ADB’s planned TA to IMED for strengthening project management capacity. Annex 2 presents related projects financed by the WB and other donors.

3. Higher level objectives to which the project contributes

13. The proposed project contributes to the Borrower’s higher-level objectives, envisaged in the NSAPR, o f improving the use o f public resources with greater efficiency, transparency, and accountability, and tackling corruption, which in turn will help give “better value for money” and contribute to reducing poverty. The project supports the W B ’ s core procurement function to work closely with clients to support the development o f their public procurement systems.

14. The project supports both pillars o’f the CAS, namely, improving the investment climate and empowering the poor. I t addresses governance issues across all sector operations in Bangladesh, with particular reference to strengthening the key public sector institutions in the transport, power, urban, and water sectors. By addressing the demand-side issues, the project wil l help the target agencies achieve sector objectives by establishing a system o f accountability and fairness in the execution o f their procurement activities. Scaling up o f procurement training wil l give procurement participants across the board the knowledge they need to operationalize what i s in the law and the regulations. The specialized features o f sensitizing al l strata o f people in the community to procurement issues and increasing public scrutiny o f procurement processes and outcomes wil l add value by making public officials, Members o f Parliament, and the bidding community more accountable for their actions. Piloting e-GP in the target agencies will increase tranpparency through disclosure o f more information and substantially reduce opportunity for the use o f discretionary powers in making procurement decisions, thereby increasing confidence in public sector procurement and contributing to a better investment climate.

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B. PROJECT DESCRIPTION

1. Lending instrument

15. Options examined and rejected included a sector adjustment credit and an adaptable program for lending. A Technical Assistance Loan (Credit) was considered the most appropriate lending instrument because i t i s the one best aligned with the current first-phase reform under the ongoing PPRP. The proposed second project wil l be implemented over a period o f five years, with one mid-term review (MTR) during project Year Three (about October 2010). An enabling procurement environment, with country’s own regulatory institutional framework (procurement pol icy unit) combined with its procurement laws/ regulations and a critical mass o f procurement professionals, provides the basis for the proposed PPRP 11. The project wi l l target four agencies o f the key sectoral ministries, chosen for the size o f their procurement spending and known hereafter as “target agencies”: Roads and Highways Department (RHD), Local GQvernment Engineering Department (LGED), and Rural Electrification Board (REB), and Bangladesh Water Development Board (BWDB). Government would l ike to see the number o f agencies involved increase over time, in particular, the Power Development Board (PDB), Directorate General o f Food (DGF), Bangladesh Chemical Industries Corporation (BCIC), and other agencies relating to education, and health. I t was agreed that such increase and i t s implications would be discussed at the appropriate time.

2. Project development objective and key indicators

16. The Project Development Objective (PDO) o f the proposed Technical Assistance Loan/ Credit (TAL/TAC), as a follow-on project, is to improve performance of the public procurement system progressively in Bangladesh, focusing largely on the key sectoral ministries and targeting their implementing agencies. The PDO would be achieved by strengthening the ongoing reform process and moving i t fbrther along with the following outputs: (i) enhanced capacity in creating a sustained program to develop skilled procurement professionals, (ii) strengthened management and monitoring o f procurement in target agencies, (iii) introduction o f e-government procurement in CPTU and the target agencies on a pi lot basis, and (iv) creation o f greater public awareness o f a well functioning public procurement system by engaging civil society, think tanks, beneficiaries, and the private sector. All these actions are key elements in effective implementation o f the procurement law/ regulations.

17. The project would be rated as “satisfactory” if the principal outcomes at the end o f the project period are as follows: about 60 percent o f contracts in at least three target agencies were awarded within the initial bid validity period; at least 50 percent o f the target agencies have piloted electronic government procurement (e-GP) at their headquarters level for international procurement (international competitive bidding- I C B , and international consultancy); and at least 50% o f the target agencies increased stakeholders engagement in following procurement issues. For a “highly satisfactory” rating, the corresponding figures would need to be 70 percent for the first indicator, and 75 percent for the second and third indicators each. The conceptual framework o f intermediate outcome and output indicators, for which specific measurable indicators have been developed .in consultation with GOB, i s outlined below and detailed in Annex 3. Indicators may be reviewed after a baseline survey has been completed and wil l also be reviewed at the MTR.

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Intermediate Outcomes

Reduced delays in making contract award Improved transparency and disclosure of information in procurement

engagement in following procurement issues

0 Increased professionalism .in procurement

0

0

0 Increased benefciary/stakeholders

Intermediate Outputs

e Contracts awarded within the initial bid validityperiod (40% in Year2, 60% in Year4)

e Procurement management system made functional

e e-GP developed and installed in CPTU and target agencies Comprehensive communica~ion/ advocacy program developed and launched

0 Procurement professionals developed

Total project cost i s estimated as US$24.9 My o f which the proposed IDA Credit would finance US$23.6 M. Most o f project cost goes for consultants’ services and training (US$18.3 M). Detailed component descriptions are presented in Annex 4 and cost estimates in Annex 5.

Component 1: Furthering Policy Reform and Institutionalizing Capacity Development

19. Furthering Policy Reform: The recently passed procurement law wil l come into effect once the enforcement rules are made effective, an activity which i s in i t s final stage. The objective o f this sub-component will be to ensure that all secondary legislation that i s affected by the adoption o f the law i s amended and brought up to date to reflect the latest state o f play including the procedures, guidelines, standard bidding documents (SBDs) or directives issued by the CPTU. The remaining SBDs for specialized procurement (e.g. health sector goods, textbooks, commodity, community contracting) are expected to be issued by December 2007. An international agency wil l be selected through a competitive process to undertake this task, in collaboration with an identified local institute and under overall guidance from the CPTU.

20. Institutionalizing Capacity Development: The current training program under PPRP appears to have been successful in meeting the immediate goal o f training a core number o f procurement officers in the new legal and regulatory procurement framework. As o f Makh 2007, GOB had developed a critical mass o f about 25 national trainers and trained over 1,700 officials. However, the training does not go far enough on core procurement skills such as evaluation mechanisms, contract administration, and planning, budgeting, and supply chain

6

management skills. In order to ensure continuity o f the capacity development program not only for compliance but also for core competence skills, a medium- to long-term capacity development strategy i s envisaged to provide:

0 Main procurement training course (goods and services, works and services); 0 Training ofprocurement focal person (PFP) at agency level; 0 Development of procurement core competence skills; 0 Short training courses for junior level oficers, policy makers, civi l service, bidding

community, and auditors; and 0 Short orientation courses.

The training needs o f the target agencies and a listing o f proposed course descriptions are provided in the attachments to Annex 4. The government in consultation with the Bank would determine the training evaluation modality to ensure that training programs are conducted effectively.

22. To promote sustainability o f the capacity development program, an incentive mechanism has been developed that includes: recognition o f procurement expertise in staff performance evaluation and promotion; recognizing PFPs' contributions through their exposure abroad; recognition as local procurement trainers; allowing top performers to undertake the CIPS accreditation program; recognition as certified procurement professionals worldwide.

Component 2: Strengthening Procurement Management at Sector Level & CPTU/ IMED

,23. Implementation challenges at sector level: M&y factors underlie the varying degree o f implementation at entity level, ranging from the limited amount o f time that has elapsed since the regulations came into force to the lack o f motivation within the bureaucracy to adopt new procurement procedures. Changing bureaucratic attitudes i s a thorny, long-range process, but clarification o f the procurement processes through training, explaining merits o f procurement rules and regulations, and provision o f incentives for good procurement results i s expected to engage the bureaucracy productively in the reform process.

24. Strengthening sector agencies: To'achieve sectoral outcomes in terms o f efficient use o f resources, the project focuses on key sectoral ministries/ implementing agencies (infrastructure, transport, power, and water resources) that are carrying out bulk o f public procurement and spending a large share o f the public budget. The target implementing agencies are RHD, LGED, REB, and BWDB. The sub-component would address generic deficiencies in planning and budgeting, bidding process, contract management, and monitoring For each target agency, there wi l l be a designated procurement monitoring coordinator (PMC) to oversee and monitor the PPR implementation and a group o f procurement focal persons (PFPs) to provide in-house guidance and training. Each target agency will implement a series o f standard protocols within the overall framework o f the PPA/ PPR as described in Annex 4, the key points o f which are:

bidding:

(a) publish invitation o f bids above specified thresholds in website (CPTU); (b) allow a minimum o f 21 days bidding time in national competitive bidding (28

days for large value contracts o f Tk. 50 mi l l ion or more), and receive and

7

open bids at one location save exceptional circumstances as described in the PPRiPPA (for Bank-financed project, such exception i s not permissible);

(c) include two outside members in the bid evaluation committee (either from public offices or from professional bodies/ universities/ beneficiaries), and submit the evaluation report directly to the approving authority within the stipulated timeline to ensure timely award ;

complaints handling mechanism. (d) publish bidding results in website with adequate details, and introduce

contract management: integrate the contract management system (CMS) with CPTU’s “PROMIS” (for RHD only), and pilot electronic government procurement (e-GP); monitoring:

(a) introduce procurement monitoring system “PROMIS” o f CPTU, and provide procurement monitoring data to the CPTU and the designated M&E consultant;

(b) take initiatives to partner c iv i l society/ beneficiary groups to help build a conducive procurement environment; and

(c) post on the CPTU website punitive actions taken against bidders and/or staff for corrupt and fraudulent practices.

- 25. To promote the culture o f good performance among the target agencies, the project envisages an incentive mechanism that includes: announcing annually an agency as “Icon o f the Year” for best implementation o f PPRPPA; recognizing the top three procuring entities o f each target agency as best performers; rewarding exceptionally performing three officials handling procurement in each target agency (senior, mid., and junior); increasing budgetay allocation to agencies with better performance. Evaluation mechanism will be shared with the Bank for review.

26. Strengthening CPTU: CPTU’s current staffing and logistics i s overburdened and underequipped to cope with i t s mandate, which encompasses procurement policy formulation, monitoring o f policy implementation, and expansion o f i t s website to cover a l l important features o f procurement information disclosure. CPTU, headed by one Director General and assisted by two Directors, has staff strength o f 19. The proposed revised organization structure (attachnient to Annex 6), h d e d with GOB’S own resources, wi l l have 36 staff headed by the Director General and assisted by three Directors. In addition, there wil l be project-funded consultants/ staff.

27. Strengthening IMED’s other units with Linkages to CPTU: IMED has four other units that are performing functions relating to project implementation, monitoring, and evaluation for various sectors. Procurement, as an integral part o f the project implementation, thus requires strong linkage o f CPTU with these other units. ADB i s providing a technical assistance grant o f about $USSOO,OOO for IMED project management. The proposed PPRPII wil l complement ADB’s T A by providing support to these units with necessary infrastructure to establish computerized linkage, including hardware purchase and technical assistance.

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Component 3: Introducing e-Government Procurement (e-GP)

28. Governance and e-Government Procurement: The public procurement system should have the trust o f the business sector and the public at large based on demonstrating fair play, value-for-money, transparency, open competition, and accountability. Transparency and accountability require ready access to information. In a paper-based environment, access to information i s highly restricted, while Internet access to information through implementation o f e-GP can deliver highly accessible activity records and greatly reduce the cost o f audit paths.

29. System Components and Functionality: Recognizing the need for quick results but also considering the risks given limited technological capacity, organization and expertise within the public and private sectors, e-GP would be implemented slowly in phases for e-bidding, e- purchasing, and e-contract management. Activities receiving project support would involve development o f single web-based system, formation o f an e-GP technical support unit, capacity development and training on e-GP for target agencies, and e-GP awareness campaign. To start with, the system wil l be piloted on a limited scale in each o f the target agencies. Init ial ly the possible areas for application o f e-GP will be large consultancy assignments involving international consultants, goods/ works procured through international competitive bidding (ICB), and works o f large value contracts in national competitive bidding (NCB).

30. The system wil l be designed and integrated centrally through a single portal at CPTU, allowing each implementing agency to log in and initiate specific independent procurement transactions. The existing MIS o f CPTU will be enhanced, expanded, and integrated to form the f i rst phase o f e-GP.’ To maximize skills transfer, full integration with mainstream management, and long-term systems evaluation, e-GP will be developed by local consultants with the assistance o f an international firm, rather than purchasing a commercial off-the-shelf system. Detailed implementation arrangements are described in the PIP.

Component 4: Communication, Behavioral Change, and Social Accountability

31. The CBC & SAC component involves two separate but related sets o f activities. The first focuses on creating greater public awareness o f the importance o f a w e l l functioning public procurement system and the second involves the initiation o f a long-term process o f engaging c iv i l society, think tanks, and the private sector in monitoring o f procurement activities and outcomes. Both aim to support the implementation o f reforms in public procurement through inducing behavioral change that brings recognition and acceptance o f the legitimate role c iv i l society groups can play in holding Government accountable for the proper conduct o f procurement.

32. Building social awareness and understanding: Wide public support for procurement reform i s important for project success, not just from the general public and civ i l society but likewise from policymakers, public officials, members o f parliament, local politicians, and other vested interest groups. Four subcomponents have been included to support the attainment o f this objective: (a) a communication strategy to raise awareness and educate Bangladeshi society in general about what procurement i s and the crucial importance that i t has for the proper management o f public funds; (b) an education program to inform citizens, the media, and other third parties o f the basics o f proper procurement to expose them to the logic and usefulness o f social accountability mechanisms; (c) a behavior change initiative to promote suitable conduct

9

throughout the procurement community (government officials and bidding community); and (d) an advocacy campaign to ensure that procurement reform remains high on the agenda of the key decision makers. All four are designed to de-mystify the procurement process and promote a shift in behavior and mind-set o f all members o f the community (policymakers, public officials, bidding community, c iv i l society, community groups, politicians).

33. Engagement of beneficiary groups: This component involves the establishment o f an entry point for engagement o f beneficiary groups/ community support groups/ c iv i l society groups/ non-government organizations/ business chambers/ media apex bodies (CSG) in monitoring the procurement process as wel l as outcomes. Social accountability i s s t i l l not a wel l understood concept in Bangladesh. Though wel l known for i t s vibrancy and effectiveness in the delivery o f services, the N G O community (and civil society more generally) in Bangladesh i s s t i l l in the very early stages o f engaging pro-actively in advocacy for governance reforms and in demanding greater accountability in the delivery o f public goods and services. A small number o f groups (comprising think tanks, NGOs, and media) have expressed interest in initiating a gradual process that can potentially lead over the medium term to wider engagement o f c iv i l society. This component focuses on a set o f activities needed to initiate this process.

0

0

0

0

Improving public access to procurement related information; Technical training of media professionals and other interested third parties; Establishing a Government - contractor forum;and Encouraging the creation of formal arrangements.

34. CPTU can help facilitate the implementation o f “building social awareness” sub- component and the first three activities for the “engagagement o f beneficiary groups” sub- component, and it has indicated a willingness to do so. The creation o f formal arrangements wil l require the support and explicit agreement o f the GOB, which the project will endeavor to secure. This could start, for instance, with the creation o f a Public-Private Stakeholders Committee (PPSC) comprising reputable individuals from c iv i l society and the private sector and senior government officials at the Secretary level.

4. Lessons learned and reflected in the project design

35. The key problems encountered during the implementation o f the on-going PPRP include implementation delays because o f complex country decision process and institutional capacity constraints. Lessons learned from this and other current WB interventions in the sector and the region that have contributed directly to project design include: share procurement reform experience from different regions; form task team with more diversified m ix o f sk i l ls from different sectors; make suitable arrangements to improve procurement implementation capacity at the targeted procuring entity level, rather than at CPTU; involve key sectoral implementing agencies/ procuring entities through a technical working group (TWG); focus more on the demand side o f reform through participation o f c iv i l society/ beneficiary groups/ stakeholders in the monitoring o f procurement process and outcomes; provide electronic disclosure o f procurement process information through an improved MIS and introduction o f e-GP; use more realistic and relevant performance indicators; and link procurement reform with public financial management reform, anti-corruption and broader governance-related reforms. In addition, i t has been observed that more attention needs ‘to be given to promoting participation o f stakeholders and behavioral change communications. Because establishment o f a network o f c iv i l society/

10

beneficiary groups i s a time-consuming process, it should be undertaken progressively using a step -by- s t ep approach .

5. Alternatives considered and reasons for rejection

36. The alternative o f pursuing procurement reform through an overall umbrella o f Public Financial Management Reform was considered, but rejected. DFID-funded 'Financial Management Reform Program (FMRP) o f GOB deals only with financial management; while, DFID has initiated dialogue for broadening the framework o f P F M to include procurement, this effort i s s t i l l in a preliminary stage. Since procurement reform has already advanced in Bangladesh substantially, it advisable for these reforms to move ahead without waiting for an integrated P F M reform program.

37. A few years back, an attempt was made to design a public sector modernization project that included procurement, but the project did not materialize. W h i l e there is increasing recognition o f the need to tackle the underlying governance issues in the country, securing Government commitment and ownership o f a broad range o f reforms in public administration or public sector financial accountability under a single framework may not materialize soon. Rather than .waiting, i t was more prudent to proceed with a second procurement reform project to build the constituency for change with small but critical steps. This strategy has clearly demonstrated positive change over time.

'

38. Furthermore, there i s already an agreement with the Government specifically on the priorities and approaches for continuation o f procurement reform. There is, therefore, a critical need to move forward in a decisive manner so as to maintain the momentum created by the current reform process and the on-going PPRP. Based on the above, i t i s proposed to proceed with a follow-on reform T A credit.

c. IMPLEMENTATION'

1. Partnership arrangements

39. The proposed reform interventions have been broadly agreed on by the Joint Strategic Partners (W, ADB, DFID, and Japan) within the overall framework o f the WB CAS. The development partners expected the WB to take a leading role in Procurement in assisting the government in institutionalizing the various measures taken by it, including the issuance o f PPR and enactment o f a procurement law, to improve peformance o f public procurement system. They expressed willingness to associate themselves with the Bank in i t s endeavors in that regard. On i t s part, the Bank kept them posted on the project preparation and discussions held with the government during processing o f the TA components. In sizing the sectoral strengthening component, i t kept in view the ADB's TA support to IMED project management, which i s an important aspect o f the project. The procurement process as well as outcome monitoring by the civil society/ beneficiary groups i s expected to be financed out o f the available trust funds, as available, while other part o f the social accountability component wil l be implemented under the TA credit by the GOB in partnership with the stakeholders.

.

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2. Institutional and implementation arrangements

40. PPRP I1 will be implemented over a period o f five years. To ensure continuity of the reform program, CPTU within IMED will be the key implementing agency for the project while the target agencies (RHD, LGED, REB, and BWDB) wil l be responsible for implementation of management and monitoring o f procurement actions at the agency level as envisaged under Component 2 o f the project. Government would like to see the number o f agencies involved increase overtime as mentioned in paragraph 15. In addition, in coordination with CPTU, the target agencies will be responsible for implementation o f e-GP and social accountability activities in phases as envisaged in Components 3 and 4 respectively. The CPTU and the target agencies wi l l prepare a Project Implementation Plan (PIP) where year-wise implementation activities would be detailed. Each target agency agreed to the proposed activities under the project and to designate preferably a full-time Procurement Monitoring Coordinator (PMC). In light o f the fast increasing task and mandated functions relating to reform, CPTU’s current strength wil l be improved in terms o f staffing in accordance with the proposed structure (Annex 6), headed by one Director General (DG) and assisted by three Directors. The project has adequate logistics and T A support to both CPTU and the target agencies. CPTU has constraints in financial management (FM) capacity. A core FM team o f three skilled staff, under project funding, wil l be in place from the start up o f the project; in addition, one consultant wil l assist the FM team in the first year o f the.project.

41. To oversee and review project activities, the Project Steering Committee (PSC), established under PPRP, wil l be reconstituted in l ine the mandated h c t i o n s in PPRP 11. To provide country-wide pol icy direction and anchor reform at higher level o f bureaucracy, a Consultative Committee (CC), headed by a Secretary, wil l be formed with representatives from the key policy-making ministried divisions and head o f the target agencies. In addition, to initiate and encourage the creation o f formal arrangements for external monitoring o f procurement, GOB wil l constitute a Public-Private Stakeholders Committee (PPSC) comprising reputable individuals from the civil society, think tank, professional and business apex bodies, and senior government officials.

42. Implementation o f capacity development, M I S , and e-GP: A competitively selected TA team (consulting firm), under coordination with CPTUAMED, wil l implement an extensive capacity building program mainly ’ with Engineering Staff College Bangladesh (ESCB- the nominated sub-consultant) and partly with Bangladesh Institute o f Management (BIM) by instituting a well-articulated program covering an array o f training, inqluded in the three-week main training course a short module o f the Chartered Institute o f Purchase and Supply (CIPS, U.K.). To ensure compatibility o f the monitoring system (MIS) in CPTU, in accordance with the e-GP roadmap, the existing MIS “PROMIS” wi l l be updated and expanded to form the f i rst phase o f e-GP using international consultant’s services with substantial input from the local developer o f the CPTU’s M I S to promote skill transfer. In addition, to develop core competence ski l ls in procurement including possible accreditation program, a separate twinning arrangement wil l be pursued between CIPS and a local institute such as ESCB, Bangladesh Rural Advancement Committee (BRAC) University, or another suitable private/ public university.

,

43. Implementation of/ communication strategy for CBC & SAC: Strategy for communication campaign and social awareness wil l be developed and initially implemented by a suitable organization, for instance, partner organization/ media find NGO/ communication firm

12

with specific expertise in the relevant field. The campaign wil l require the organization o f workshops and the development o f print materials specifically targeted to the audience, explaining the benefits o f good public procurement. Public awareness will take place through the m i x o f channels most suitable to reach a large and varied population (probably radio, TV, print media, as well as through school teachers, community leaders, etc.). Subsequently, once the full strategy i s developed and tested, small f i r m s with relevant expertise may be selected who will carry out the grass root level workshops and campaigns. Independent monitoring o f procurement by c iv i l society would be funded separately from trust fund or similar arrangements outside the credit.

3. Monitoring and evaluation of outcomes/results

44. project Monitoring and Evaluation (M&E) wil l be done by both the target agencies and CPTU. Extensive use o f the CPTU’s centralized monitoring system i s envisaged. A M&E team (consulting firm) wil l assist CPTU and prepare semi-annual reports on the overall project M&E including progress on the results framework for review by the WB. Results monitoring for PPRPII covers: (a) process monitoring o f procurement activities by the target agencies to determine compliance with the PPR; (b) monitoring o f procurement performance by the target agencies; and monitorin (c) the capacity development program and i t s impact; (d) the behavioral change communication and social accountability subcomponents; (e) the status o f procurement and financial management; and ( f ) the overall project performance and its impact. For each component, a separate monitoring system has been developed (see Annex 3 for results framework and monitoring). The M&E process wil l cover al l components and sub-components o f the project, and the M&E data wil l be used to evaluate the project in three stages: (a) baseline situation; (b) mid-term evaluations; and (c) at the end o f project implementation.

45. The target agencies and CPTU wil l provide required information to the M&E team. Several means may be used: direct data from the agencies, published data in the M I S o f the target agencies’ and CPTU (“PROMIS”), field visits, consulting official sources/ bidding community/ c iv i l society/ beneficiary groups, and interviewing key informants. Information thus collected wil l be further discussed and verified in open forums such as stakeholders’ consultation sessions.

4. Sustainability

46. Experience world-wide has demonstrated that the most important requirement for sustainable procurement reform i s satisfactory pol icy reform with adequate institutional arrangements for i t s implementation, independent M&E, and stakeholder participation. For this project, most policy reform actions including the creation o f a nodal procurement pol icy unit (CPTU) have been completed. As a follow-on intervention, the design for the proposed PPRPII has made the strategic choice to support strengthening the key sector agencies/ procuring entities for management o f procurement and the CPTU, which would provide a strong foundation to sustain further reforms and institutionalize capacity development effort at local level in the longer term.

47. The reforms to be implemented during the project period-institutionalizing capacity development, strengthening procurement management and monitoring at sector level, introducing e-GP on a targeted basis, and involving c iv i l society/ beneficiary groups in the

13

Risks

monitoring o f procurement process and outcomes-constitute permanent improvements to the present regime. The CPTU i s now a permanent entity that Government i s committed to maintain. The enforcement and monitoring o f procurement rules and procedures at the key procuring entity level together with measures to improve transparency (publication o f procurement planning and monitoring data at websites including bidding results, using e-GP, and partnership with the civil society/ beneficiary groups/ bidding community) would help contain corruption, restore private sector confidence, and contribute to improving the investment climate. These results would help ensure achieving the PDO and sustaining project outcome.

Risk Ratinf RISK MITIGATION MEASURES

To project development objective

Absence o f c i v i l service reform and reluctance and l imited cooperation for management and monitoring o f procurement by key sector target agencies (RHD, LGED, REB,and BWDB)

Unwillingness or non availability o f right c i v i l society/ b e n e f i c i a j groups/ non-profit organizations (CSG) for monitoring procurement process/ outcomes because o f lack o f I inadequate ownership by the Government

N o n issuance o f appropriate information technology and communication rules affecting piloting o f e-GP ,

To component results Inadequate institutionalization or non-well functioning o f capacity development arrangement at local institute(s)

Ensuring reform implementation at the target agencies through a technical working group (TWG) compnsing a small number o f motivated officials f rom these entities and the CPTU, adequate supports in terms o f IT infrastructure and connectivity up to the district level and training for staff, and provision o f a procurement monitoring coordinator at each entity.

Creating a Stakeholders Committee for review o f reforms comprising members f rom the Government, CSG, and business apex body, a separate. funding arrangement (trust fund f rom bilateral o r similar) for the procurement monitoring CSG, effective working relationship through partnership/ MOUs among implementing agencies/ C P T U and CSGs, awareness among CSGs/ bidding community, a gradual process to broaden and deepen the concept o f social accountability al lowing sufficient time for consultation and consensus building. Supporting the preparation o f rules by the Ministry o f Science Information Technology and Communication, the Computer Council for drafting the rules, and complemented with judicious use o f technical assistance.

M

M Ensuring appropriate level interactions between the Chartered Institute o f Purchase and Supply (CIPS- UK) and relevant local institutes (ESCB or BIM), engagement o f international TA team (consulting firm/ training institute) before the effectiveness o f the credit, local institutes providing the local training resource persons, development o f procurement faculty at local institute(s).

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Risks

Inabi l i ty to change mindset and overcome internal resistance to implement reforms within target agencies (RHD, LGED, REB, and BWDB) and weak capacity o f C P T U to implement the reforms. Delays in arranging separate financing for procurement monitoring CSG

Broader public sector inefficiency and lack o f continued pol i t ical support for the implementation o f procurement reforms Implementation- related problems such as shortage o f qualified staff at CPTU and target agencies, quick staff turnover, less experienced consultants and CSG, procurement delays, coordination problems and inadequate supervision.

Loss o f t ime in the issuance o f Drocurement rules Overa l l r i s k r a t i n g

N: Negligible Risk; M: Modest 1

RISK MITIGATION MEASURES

Creating an enabling environment for the change process, incentive mechanism withm target agencies and C P T U (training and ski l l development, recognition o f staff, recognition o f TWG members’ contribution ), a strengthened CPTU with expanded organogram and skilled staff supported a TA team.

Continuing dialogue with bilateral donors; improved coordination, harmonization o f donors funding procedures. Whi le funding constraints may affect procurement monitoring by CSG, other activities under that component relating to communication, advocacy, information, training, etc. st i l l wil l continue f rom the project credit.. Regular coordination and pro-active communications by CPTU, IMED, target agencies including other relevant Miriistries and- higher levels o f Government, meeting o f the Consultative Committee, Stakeholders Council, and Project Steering Committee

Close monitoring and continuous dialogue with C P T U and target agencies staffing, consultants and CSGs; assurance o f Government allowing the current Director General (DG), C P T U to remain as DG and Project Director (PD) until h i s retirement in early 2008, followed by the selection o f DGPD with appropriate qualifications and experience to IDA’S satisfaction who i s expected to continue for the remaining project period; ini t ial project activities would, among others, include appropriate staffing arrangements at the CPTU combined with a suitable TA team; initiate processes to improve financial management and make procurement more efficient and transparent. The draft rule is at the f inal stage o f approval. Regular monitoring; contact at the decision level o f ministries; expedite approval process.

yk; S: Substantial Risk; H:,High Risk

Risk Rat in l

S

S

S

M

M

S

48. The major risk that may affect the achievement o f the project’s development objective i s inadequate support and commitment from’ higher level management o f the target agencies. The overall project risk i s rated “Substantial” Primarily because o f perceived issues in the management and monitoring o f procurement at key sector target agencies, despite their expressed willingness to become part o f the pilot. Since implementation i s the key challenge, the project i s more prone to that risk because o f the sensitive nature o f reform that i s being pursued. The PMC and TWG members o f each target agency would play critical mitigating roles in exposing detractors and building the constituency o f support for reform from within the organization. This risk is also likely to be reduced to some extent by the involvement o f (i) the Consultative Committee for policy direction with senior officials o f the policy-making ministr ied divisions (Cabinet, Prime Minister/ Chief Advisor’s Office, Finance, Law, Economic Relations Division, Planning, NED, Science Information and Communication Technology); (ii) the Public-Private Stakeholders Committee, with reputable individuals from the c iv i l society, think-tank, private sector (bidding community/ business apex body), and senior government officials at the Secretary level; and (iii) the Project Steering Committee with representatives o f implementing agencies.

49. Opposition to reforms may to a great extent be related to corruption, which i s an endemic issue in the region. Project activities to increase transparency, introduce checks and balances in

15

the public sector, and educate the society at large could increase respect for ethics and law and increase the likelihood o f detection. However, the broader issues o f public sector inefficiency and corruption will require sustained effort over time to resolve. The proposed project’s support can educate the community and foster openness but cannot assure that the lessons wil l be absorbed by all; therefor there remains a risk to achieving the desired objectives fully.

50. The project subcomponent involving CSG in the monitoring o f procurement processes and outcomes i s the most controversial activity, while i t s companion subcomponent involving social awareness/ education/ advocacy/ communication campaigns has insignificant risks in implementation. These activities deal directly with the demand side o f the reform process, which i s to a large extent beyond the control o f the procuring entities. As there is no Freedom o f Information Act in Bangladesh, i t i s quite legal to keep certain information confidential and introducing the concept o f procurement monitoring by entities other than the procuring entity or CPTU i s bound to be controversial. But i t i s the very independence o f CSG monitoring that gives i t great value added. If a CSG i s formed with financing from bilateral donors, i t s sustainability wil l remain an issue and may pose a reputational risk to the WB, should i t fail to function appropriately. The associated r isks are proposed twbe managed with following measures:

. ’

0

0

0

0

0

initiating a gradual approach to the concept o f social accountability in procurement; initiating advocacy/ education campaigns at the beneficiary/ user/ community level; instituting a communication strategy to help build support for the reform; facilitating dialogue between procuring entities and the contracting community; and initiating CSG monitoring only after substantial progress on these activities.

5 1. if found necessary. The status o f the CBC and SAC in particular wi l l be reviewed in depth to see if the component would need realignment or restructuring to obtain the desired impact.

6. Credit conditions and covenants 52. Prior to negotiations:

i.

The performance o f M&E will be reviewed in depth at the MTR, which may be advanced

GOB: shared with IDA a copy o f the approved TPP with revised structure of CPTU funded from the revenue budget; and a procurement plan for the initial 18 months o f the project; obtained Bank’s clearance to send request for proposal (RFP) to the shortlisted consultants for the key consultancy assignment for implementation and capacity development; formed a CC with representatives from the key policy-making ministried divisions and head o f target agencies; formed a PPSC, headed by the Finance Advisor, with members from the civil society, thi&-tank, NGO, business apex body, and senior government officials with agreed terms o f reference; and confirmed that each target agency designated a P M C for overall monitoring and coordination o f implementation o f reform actions and represented at negotiations.

.. 11.

... 111.

iv.

v.

53. Prior to Board presentation: None

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54. Prior to effectiveness: None 55. implementation.

Covenants for project implementation: There are following covenants for project

The Borrower shall maintain CPTU with adequate staff funded from the revenue budget, headed by a Director General and three Directors. By no later than two months after the credit effectiveness, the Borrower shall (a) issue the procurement rules under the Public Procurement Act 2006; (b) appoint one more Director in CPTU and a Financial Management Consultant; and (c) confirm to the Association that CPTU i s a permanent entity financed from revenue budget. By no later than three months after the credit effectiveness, the Borrower shall (a) ensure mobilization o f the implementation and capacity development consultant; (b) appoint the additional Deputy Directors in CPTU. By no later than 15 months after the credit effectiveness, the Borrower shall (a) make the procurement performance monitoring system (MIS) o f CPTU functional in all target agencies, and (b) develop and install the electronic government procurement (e- GP) system in CPTU and in at least three target agencies. By no later than 18 months after the credit effectiveness, the Borrower shall start piloting e-GP in at least two target agencies. The Borrower shall submit semi-annual progress report no later than one month after the end o f each reporting period, included in it the detailed results monitoring indicators for each project component. The Borrower shall ensure that the current Director General o f CPTU continues to function as Project Director (PD) until March 2008, following which the Borrower shall appoint a new Director General for successful implementation o f the project for the remaining period to the satisfaction o f the Association. The Borrower shall appoint, no later than nine months after the credit effectiveness, a Procurement Reform Implementation Advisor to assist the Director General o f CPTU for efficient implementation o f the project to the satisfaction o f the Association.

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D. APPRAISAL SUMMARY

1. Economic and financial analysis

56. This project i s designed to support sustainability o f procurement reforms by improving procurement quality through better management and monitoring at target agency level. The direct benefits envisaged under the project would include faster and better use o f public resources with increased transparency, contributing to the reduction o f corruption, to an increase in aid utilization capacity, and to a better investment climate. The project would also enhance the capacity o f the domestic construction and consulting industries to participate more effectively in national and international procurement. In the longer term, al l the above would create a powerful force toward more transparent and accountable institutions, resulting in accelerated economic growth and faster poverty reduction.

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57. To gauge the impact o f the proposed interventions, a set o f well-defined procurement performance indicators have been developed to monitor the performance o f target agencies. In view o f the nature o f the project, since benefits cannot be quantified in monetary terms, no calculation o f economic rate o f return will be attempted. To ensure sustainability o f the reform

17

initiatives, the Government has agreed to provide budgetary support to maintain the CPTU at the desired level. In addition, cost recovery mechanisms for providing training to private participants wil l be reviewed during implementation.

58. The Government wil l fund the CPTU staff salaries and part o f operating expenses. The project’s direct fiscal impact i s minimal in consideration o f its small contribution o f about US$1.3 mi l l ion as part o f operating expenses, constituting five percent o f the project cost. The project, however, would have significant fiscal impact on GOB’S overall budget in terms o f reduction o f corruption, more effective competition, decrease o f contracting costs, and timeliness o f contract execution.

2. Technical

59 The key technical issues requiring special attention relate to (i) how to develop the in- country capability to deliver quality procurement training programs in an efficient and’ demand- driven manner, (ii) how to strengthen procurement management and monitoring at target agencies to help achieve quality procurement transactions, and (iii) how to sensitize the target groups o f both the public and private sectors including the bidding community for acquiring and applying procurement knowledge in their work.

60. The major technical issues are: (i) enhancement, expansion, and integration o f the CPTU’s existing M I S “PROMIS” portal to form a robust system as the first phase o f e-GP, with IT connectivity between the central server o f CPTU and the target agencies up to the district level; (ii) integration o f RHD’s contract management system (CMS) and eventually o f other target agencies with the CPTU’s MIS in a way that al l information starting with the invitation o f bids (IFB) up to the final payments are available for monitoring; (iii) publication o f relevant procurement data ir. the CPTU’s website (www.cptu.qov.bd) including procurement plan, IFBs, bidding results, and procurement performance indicators. To provide support in addressing these issues, an international training institute in collaboration with the local institute wil l provide in- country training to a large number o f participants and extensive rigorous in-country/overseas training to a limited number o f participants who wil l act as procurement focal persons at target agencies. The UK Chartered Institute o f Purchase and Supply (CIPS) wil l introduce/ pilot a new procurement core competence skill certification course/ accreditation program in collaboration with a local institute and/or university, an activity absent from the first PPRP.

3. Fiduciary

Financial Management

6 1. Although CPTU does not have a hll financial management organization o f i t s own, i t has successfully implemented the Public Procurement Reform Project. CPTU satisfactorily met the FM requirements, by employing a consultant ‘as Project Finance Manager. . An appropriate FM system for the project has been agreed with adequate staffing, internal control measures, and internal and external audit arrangement meeting the requirements o f Bank’s OP/BP 10.02. From the financial management perspective, the residual risk i s “Modest”. This i s because FM and disbursement aspects wil l be handled at one point by CPTU and the credit would have several consultancy contracts, where the financial flows are simply from Special Account to the

18

Consultants, with direct payment in some contracts, paid as per the terms and conditions o f contractual agreements. Further details on Financial Management are provided in Annex 7.

62. Financing plan. The total project cost is US$ 24.9 mi l l ion o f which IDA Credit would finance US$23.6 million; the remaining US$1.3 mi l l ion would be funded by GOB. All works, goods, consultants services including training and project staff incremental allowances would be financed 100 percent from the IDA credit. Recurrent/ operating expenses would be financed at the rate o f 34 percent from the IDA credit throughout the project period.

63. Audit of project financial statements. CPTU/ IMED would be responsible for preparing project financial statements to be audited by the Foreign Aided Project Audit Directorate (FAPAD) o f Comptroller and Auditor General (C&AG), using INTOSAI auditing standards. I

64. Funds flow and disbursement. IDA’S part o f project funds wil l f low mainly fhrough a designated account in a nationalized commercial bank to be opened either in U S dollars or in Bangladesh Taka. Project funds will also f low through direct payments and .issuance o f special commitments as and when required. Project cost wil l be disbursed under transaction-based traditional WB disbursement procedures. IDA will require full documentation where contracts for (i) goods exceed US$300,000 equivalent, (ii) works exceed US$500,000, (iii) consulting f i r m s exceed US$lOO,OOO, and (iv) individual consultants exceed ‘US$50,000. Expenditures below the above thresholds wil l be claimed through Statement o f Expenditures (SOEs).

Procuremen’t

65. Risk and type of procurement: The residual procurement risk rating i s “average” since, CPTU, being the key implementing agency, has been implementing a procurement reform project (PPRP) since 2002 without significant procurement problems/ issues. The target agencies may be responsible for very small procurement o f computers for e-GP. The project procurement includes three major technical assistance consultancy contracts (implementation and capacity development, e-GP design and implementation, and M&E), and purchase o f some goods and provision o f obtaining services from non-profit organizations for the implementation o f social accountability component. A draft Procurement Plan i s included in Annex 8, along with other procurement details.

66. As part o f the advance procurement action, the selection process for the key consultancy assignment for implementation and capacity development has been processed by NED/ CPTU in a way that the consultant wil l be on board by credit effectiveness. A competitively selected TA team (consulting firm) wil l implement an extensive capacity building program mainly with ESCB (the nominated sub-consultant) and partly with BIM by instituting a well-articulated program. To ensure compatibiIity o f the existing MIS in CPTU, i t wi l l be expanded to form the f i rst phase o f e-GP using international consultant services with substantial input from the local developer o f the M I S to promote skill transfer and robust maintenance capability o f the system locally. Similarly, given the requirement for high degree o f reliability o f the e-GP system and its connectivity, this system i s expected to be provided on a sole-source basis by hiring Grameen Phone, which has extensive networks across the country for such connectivity. For procurement core competence sk i l ls and accreditation program, UK CIPS wil l be contracted.

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67. Procurement reform actions and management capacity. Most pol icy reform actions wil l be completed by the closing o f the first PPRP. The Government established a Central Procurement Technical Unit (CPTU) with adequate staffing funded from i t s own resources, issued Public Procurement Regulation,s and recently passed a procurement law that includes most features o f international good procurement practice. Concurrently, i t developed a critical mass o f 25 local procurement trainers and provided training to about 1,700 staff. All these actions are contributing positively to changinghmproving the procurement environment.

4. Social

68. Key social objectives and issues. The social development objectives include: capacity building, behavioral change, and public awareness. The major social issue i s the behavioral change communication combined with social accountability. Given the experience o f the first PPW, the key implementation challenges o f the reform actions are closely linked to the change in “mind-set” o f the stakeholders, in particular public procurement officials and the bidding community. Experience in other countries suggests that for such an attempt to succeed in i t s efforts, i t wil l need the extensive support o f external stakeholders-beneficiaries/users, c iv i l society organizations, bidding community, and the media.

69. Planned Social Framework. The involvement o f c iv i l society/ beneficiary groups/ non- profit organizations in the monitoring o f procurement. has led to some controversy, as this approach i s to a large extent beyond the control o f the procuring entities. The key challenge i s how to materialize demand-side monitoring on the ground. The framework for stakeholder participation has been established through: (i) initiating a gradual approach to the concept o f social accountability in procurement; (ii) conducting public awareness campaigns in the beneficiary/ user communities; (iii) instituting a communications strategy to build support for the reform; (iv) facilitating dialogue between procuring entities and the contracting community; and (v) building CSGs capacity for procurement monitoring once substantial progress i s made on (i)- (iv).

70. Implementation plan: There has been extensive dialogue with CSGs regarding their role in the process o f reform. Init ial findings indicate that while social accountability activities relating to social awareness, social mobilization, and media campaign can be achieved through partnership arrangements among CPTU, target agencies, and CSGs using project funds, independent monitoring o f procurement processes and outcomes by civ i l society is likely to be funded separately outside the project.

5. Environment

71. The project i s assigned Category “C” for Environment. N o environmental impacts are expected to arise as a result o f project implementation. The project wil l not involve any acquisition o f land and displacement o f population; there wi l l not be any Project Affected Persons issue on this account (see Annex 10, Safeguard Policy Issues).

6. Safeguard policies

Safeguard Policies Triggered by the Project Yes N o

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Environmental Assessment (OP/BP/GP 4.0 1) [I [ X I

Natural Habitats (OP/BP 4.04) [I [XI

Pest Management (OP 4.09) c1 [ X I

Cultural Property (OPN 11.03, being revised as OP 4.11) [X I

Involuntary Resettlement (OP/BP 4: 12) [I [ X I

Indigenous Peoples (OD 4.20, being revised as OP 4.10) [X I

Forests (OP/BP 4.36) [I [ X I

[ ]

[I

Safety o f Dams (OP/BP 4.37) [I [XI

Projects in Disputed Areas (OP/BP/GP 7.60) [I [XI

Projects on International Waterways (OP/BP/GP 7.50) [I [XI

7. Policy exceptions and readiness 72. There are no exceptions to WB policies.

73. The project meets the readiness filters o f the Region. The financial management and procurement arrangements wi l l be in place at the start o f the project. The project i s expected to be ready for implementation by the time it i s presented to the Board, and the f i rs t year’s activities could start immediately upon effectiveness. The project implementation and capacity development consultant wi l l be in place by credit effectiveness. The first year o f the work program would consist o f developing the capacity development program, working out the plan for strengthening procurement management by target agencies, establishing the e-GP system, and framing a plan for gradual implementation o f social accountability aspects.

21

Annex 1: Country and Sector Background

BANGLADESH: Public Procurement Reform Project I1

Country economic setting and procurement reform

1. Bangladesh is one o f the least developed nations in the world. With the dense population o f about 135 mi l l ion within an area o f 147,570 sq. km and a per capita income below $500, poverty i s endemic and wide spread. As in other country, public fimd i s used for a large variety o f services starting with the infrastructure and public uti l i t ies to service delivery for rural and social sectors with special emphasize on health, and education. With almost 85 out o f 100 poor people living in rural areas, poverty in Bangladesh i s largely a rural phenomenon. Improved performance o f those public service delivery institutions concurrently with a developing private sector is therefore critical to reducing poverty. Despite considerable progress in overall poverty reduction, about hal f o f the population s t i l l lives below the poverty line, and inefficient service delivery is preventing Bangladesh from achieving i t s full economic potential and accelerating the pace o f poverty reduction. Governance and institutional constraints are the major impediments. I t has been well documented that inefficient use o f public fund i s the root cause.

,

2. National Strategy for Accelerated Poverty Reduction 2005 (NSAPR), identified governance as the major constraint preventing Bangladesh from improving the investment climate and empowering the poor. As strategic goals relating to good governance, the NSAPR highlights the need for enhancing efficient use o f resources; promoting transparency and accountability in resource use; and tackling corruption. Thus, investing for “good governance” i s a high priority for the WB and the Government.

The WB’s Country Assistance Strategy 2006 (CAS), aligned with the Government’s ~

3. In core governance,. inefficiencies in public procurement practices, poor financial management, corruption, and quality o f c iv i l services have led to very low expectations o f public services, and contributed to the high cost o f doing business that, in turn, has deterred fast private sector development. There i s growing recognition within the country that improved governance, with reduction in corruption, i s a prerequisite for improving the investment climate and accelerating private sector-led economic growth.

4. Public procurement can be viewed not just as a mechanism for executing transactions but as an integral part o f the process by which ministries and agencies use public money to provide services. Budgets get translated into services in large part through the operation o f the procurement system. Procurement reform contributes to private sector development and enhanced trade. In developing countries, the state i s often the largest single buyer o f goods and services, the largest investor, and the largest single customer for a significant proportion o f f i r m s in the economy. Public procurement decisions have a major impact on the growth o f the economy, the growth of sectors in the economy, and the growth o f individual firms. In addition, the state i s the largest single owner o f assets in almost all countries, and i t s decisions on managing i t s stock and f low o f assets strongly influence local resource markets.

5. Perhaps more significantly, procurement reforms, if successful, can help curb corruption. Public procurement i s often at the epicenter o f corruption and thus can serve as an arena in which

22

corrupt practices can be exposed and addressed. The association o f corruption with procurement i s understandable, given the number o f discretionary choices that are part o f the procurement process (what to buy, how much to buy, from whom to buy) and the amounts o f money that are involved. Widespread corruption within procurement systems is particularly damaging since i t perverts public spending (causing an overemphasis on capital spending and generating a lower rate o f return), reduces the value o f public assets (since bribe-givers benefit by skimping on quality), and distorts the economy (since firms invest in competing politically and not economically).

6. As part o f the broad public sector reforms, procurement i s one o f the priority areas for governance improvement within the overall framework o f public financial management (PFM) system. The Country Procurement Assessment Report 2002 (CPAR), broadly endorsed by the Government, identified series o f deficiencies that include absence o f a sound legal framework governing public sector procurement leading to proliferation o f diverse rules and procedures among various agencies; protracted bureaucratic procedures allowing multi-point rent seeking; lack o f critical mass o f professionals to manage public procurement as reflected in poor quality bidding documents and bid evaluation, inordinate delays in completing the procurement process and ineffective contract administration; and absence o f mechanisms for ensuring transparency and accountability in public procurement.

7. Since that time, following the CPAR recommendations, with WB’s technical assistance through a public procurement reform project (PPRP), the Government made important strides in improving the legal framework for procurement and establishing a structure for managing the fimction. I t made considerable progress in creating the foundations for an effective public procurement system and in bringing about a systemic change by mandating uniform procurement policy across al l public sector entities. The Government established a procurement policy unit (CPTU), issued Public Procurement Regulations 2003 (PPR) and associated implementation procedures including streamlined procurement approval process, delegation o f financial powers, and standard set o f documents for procurement o f goods, works, and services. Recently, the Parliament also passed a procurement law. The law and the regulations contain most o f the international good public procurement practices.

.

8. Though the landscape o f procurement has been reshaped during the course o f the last several years due to the procurement reform with harmonized procedures and the new regulations have increased substantial awareness among a l l stakeholders (procuring entities, bidding community, development partners, etc.), yet application o f the national procurement rules has proven to be relatively inconsistent across government and within individual agencies, and actual implementation and appropriate monitoring o f the regulations has been slow and l i t t le progress has been made in attaining tangible outcomes on the ground. Potential challenges that constrain the achievement o f better procurement outcomes include substantial inefficiencies in procurement practices such as the lack o f accountability o f government officials, delays in the issuance o f contracts, and inappropriate bidding practices including collusions. In effect, there has been significant non-compliance to the rules and regulations. Clearly, more needs to be done to ensure sustainability o f the reform efforts, and the proposed intervention i s undertaken to assist the Government.

23

Procurement policy and sectoral institutions

9. Over 200 public sector agencies are involved in the management o f procurement. Major part o f the annual development program within the Government budget i s spent by few key sectoral ministries involving infrastructure, transport, power, urban, and water resources. Other major ministries include health and education. In consideration o f the use o f large share o f public resources from the annual development program o f the Government, the project focuses on strengthening the key sectoral ministried implementing agencies dealing with infrastructure, transport, power, and water resources. The target agencies are Roads and Highways Department (RHD), Local Government Engineering Department (LGED), Rural Electrification Board (REB), and Bangladesh Water Development Board (BWDB). Other interested ministried agencies may also jo in the program if resources so permit (like, Power Development Board, food, chemicals, health, education).

'

10. While procurement i s carried out at these agencies level, the CPTU oversees the policy/ regulations and i t s implementation part. CPTU, under IMED o f the Ministry o f Planning, was formed by the Government under i t s revenue budget as part o f the PPRP intervention. CPTU i s a permanent entity o f the Government CPTU and has been implementing the current procurement reform project. . 11. For PPRP 11, IMED/ CPTU i s responsible for implementing the project while procurement management actions for strengthening the sectors wi l l be implemented by the target agencies. Given the type o f mandate to be performed, CPTU wil l be strengthened under the PPRP 11.

24

Annex 2: Major Related Projects Financed by the WB and Other Donors

BANGLADESH: Public Procurement Reform Project I1

Sector Issue

WB-financed

Projectls OED/ Latest Supervision (ISR) Ratings (WB financed projectsonly) Implementation I Development Objective

Lack o f management capacity within the customs wing o f NBR, complex export procedures, transaction-based processes leading to corruption and protracted clearance process. Export service institutions not delivering quality services (EPB) Excessive discretion exercised by judiciary, large case backlog causing protracted delays in reaching verdicts, and n o separation o f executive and judicial branches, leading to political interference in due process. Weak project accounting, reporting system and settlement methodoJogy not consistent with modem audit technique and practice. MoF’s asset management system i s also obsolete and there i s n o computerized database storage and reporting system. GOB officials’ little focus on . policies and programs and too much focus on individual projects. Cumbersome procedures for project screening and evaluation are usually associated with major delays in implementation. Statutory framework for accounting, auditing and financial reporting i s outdated.

Accountable loca l government providing services that meet commun i t y priorit ies, supported by a predictable and transparent f iscal transfer system Absence o f a sound legal framework in procurement; protracted bureaucratic procedures allowing multi-point rent seeking; lack o f

Bangladesh Export Diversification Project (BDXDP)

Legal and Judicial Capacity Building Proj ec t

Strengthening GOB’S FM capacity and Building Institutional Capacity o f the Office o f the Comptroller and Auditor General

Economic Management TA Program

Local Government Support Project

Public Procurement Reform Project I

S

(completed)

S

(ongoing)

S

(completed)

U

(ongoing)

S

M S

S

U

S

M S

25

Sector Issue Projecth OED/ Latest Supervision (ISR) Ratings (WB-financed projects only) Implementation Development Objective Progress (IP) (DO)

xi t ical mass o f procurement professionals; poor quality bidding documents and bid.evaluation, inordinate delays in contract award; and absence o f mechanisms for ensuring transparency and accountability in public procurement.

I I

Other development agencies Absence o f appropriate budgeting and expenditure control. Inconsistent accounting system that compromises revenue and budget data used for Annual Development Plan. Weak capacity to conduct Government Audits.

UK-DFID- Reform in Budget and Expenditure Control (RBEC 2000)

UK-DFID- RIBEC Phase-I1

UK-DFID- Reforms in Government Audit (NGA)

UK-DFID- Financial Management Academy Project (FMA)

UNDP- Strengthening Transparency in the Auditor' General's '

Office (STAG)

UK-DFID- Financial Management Reform Project (FMRP)

completed

completed

completed

completed

completed

ongoing .

Improve stewardship of, and value for money obtained by, GOB State funds.

Improve the management o f the financial resources through adopting modem budgeting and expenditure control Improve stewardship of, and value for money obtained by, GOB State funds. Improve Government's fin. management capacity, adopting modem budgeting and expenditure management techniaues. Strengthening The Supreme Audit Institution o f Bangladesh through equipping with IT. Improve the efficiency and effectiveness o f the allocation o f resources and to achieve equitable and improved public service delivery

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory), MS (Moderately Satisfactory). OED = WB Operations Evaluatiqn D e p a m e n t

26

Intermediate Outcomes

Annex 3: Results Framework and Monitoring BANGLADESH: Public Procurement Reform Project I1

Intermediate Outcome/Output Use Intermediate Outcome/ Output Indicators Monitoring

(a) Results Framework

PDO Improve performance o f public procurement system progressively in Bangladesh, focusing largely o n the target agencies

Project Outcome Indicators About 60% contracts in at least three target agencies reduce delays by making contract awards within the init ial bid validity perigd

Electronic government procurement (e- GP) introduced in at least two target agencies at their HQ level for international procurement .

Increased stakeholder engagement in fol lowing procurement issues in at least two target agencies

i. Course curriculum and training materials developed for a l l courses

ii. Local training institute develops a two-member procurement faculty

iii. At least one local institute/ university introduces procurement core competence sk i l l certification/ accreditation

iv. About 60% procuring entities o f each target agency with one t ra ined certified procurement staff

Use of Outcome Information YR1-YE: Assess achievements with respect to the implementation o f reform actions and use o f proquement monitoring system including the use o f e-GP and stakeholders participation in procurement monitoring

YR3: During the MTR, assess implementation o f reform actions, and determine if strategy/ indicators for compliance o r achieving PDO needs to be adjusted

YR4-YR5: Consolidate the gains and feed into the strategy for mainstreaming program and evaluation.

Outcome 2: target agencies manage and monitor their procurement at a l l levels to improve sectoral objectives

i. Computer,hardware and software for a l l target agencies delivered and 3stal led

ii. All contract awards above PPR specified thresholds published in CPTU's website for at least three target agencies

iii. About 60% complaints in at least three target agencies handled satisfactorily

iv. Annual implementation p lan submitted by Target agencies

YR1-YR2: L o w levels may flag either poor training program for certification or lack o f agency incentives to staff certified personnel

YR3: Based annual M&E report and MTR, realign the capacity development approach, if necessary, to make it more effective

YR4-YR5: Based on M&E reports, adjust/ modi fy the capacity development approach and consolidate the gains

YR1-YR2: Flags possible procedural delays or other problems in compliance including lack o f agency incentives

YR3: Based o n annual M&E report and MTR, realign the procurement management and monitoring approach, if necessary, t o make i t more effective

YR4-YR5: Based o n M&E reports, adjust/ modi fy the procurement management approach and consolidate the gains

27

Intermediate Intermediate Outcome/Output Outcomes Indicators

Use Intermediate Outcome/ Output Monitoring

Outcome 3:

communication strategy developed and launched

ii. Workshops for communication campaign and advocacy campaign held in al l districts for target

Target agencies at their HQ level p i lo t electronic government procurement (e-GP) for international procurement.

established for a l l target agencies and semi-annual meetings held

Outcome 4: stakeholder engagement in fol lowing procurement issues increased

be consolidated for real l i fe gains

i. e-GP developed and installed at C P T U and target agencies at HQ agencies Network and connectivity for M I S established at the district level o f at least t y o target agencies

iii. e-GP piloted at HQ level for a l l international procurement in at least two target agencies

ii.

YR1-YR2: HQ-field level (district) connectivity may flag problem or may raise incentive issues

YR3: Based o n M&E report and MTR, adjust the methodology and implementation plan for e-GP pi lot ing and MIS, if necessary

YR4-YR5: Based o n M&E report, adjusvmodify the approach and consolidate the gains. '

professionals. and c i v i l society organizations held

iv. Government-contractors forum

in understanding the concepts o f social accountability and c i v i l society/ beneficiary groups involvement in monitoring procurement

YR3: Based on the M&E report and MTR, each targeted agency's approach may bc adjusted to suite the type o f beneficiaries

YR4-YR5: Based o n M&E report, the involvement o f c i v i l society/ beneficiary wil l

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33

Annex 4: Detailed Project Description BANGLADESH: Public Procurement Reform Project I1

Lending instrument

1. Options examined and rejected included a sector adjustment credit and an adaptable program for lending. A Technical Assistance Loan (Credit) was considered the most appropriate lending instrument because i t is the one best aligned with the current first-phase reform under the ongoing PPRP. The proposed second project will be implemented over a period o f five years, with one mid-term review (MTR) during project Year Three (about October 2010). An enabling procurement environment, with country’s own regulatory institutional framework (procurement policy unit) combined with i t s procurement laws/ regulations and a critical mass o f procurement professionals, provides the basis for the proposed PPRP 11. Out o f 300 public sector agencies where the Gyement ’s procurement law/ regulations are in force, the project will target four agencies o f the key sectoral ministries, chosen for the size o f their procurement spending and known hereafter as “target agencies”: Roads and Highways Department (RHD), Local Government Engineering Department (LGED), and Rural Electrification Board (REB), and Bangladesh Water Development Board (BWDB). Government would l i ke to see the number o f agencies involved increase over time, in particular, the Power Development Board (PDB), Directorate General o f Food (DGF), Bangladesh Chemical Industries Corporation (BCIC), and other agencies relating to education, and health. I t was agreed that such increase and i t s implications would be discussed at the appropriate time.

Project development objective and key rationale

2. The Project Development Objective (PDO) o f the proposed Technical Assistance Loan/ Credit (TAL/TAC), as a follow-on project, is to improve performance of the public procurement system progressively in Bangladesh, focusing largely on the key sectoral ministries and targeting their implementing agencies. The PDO would be achieved by strengthening the ongoing reform process and moving it further along with the following outputs: (i) enhanced capacity in creating a sustained program to develop skilled procurement professionals, (ii) strengthened management and monitoring o f procurement in target agencies, (iii) introduction o f e-government procurement in CPTU and the target agencies on a pilot basis, and (iv) creation o f greater public awareness o f a well functioning public procurement system by engaging civ i l society, think tanks, beneficiaries, and the private sector. All these actions are key elements in effective implementation o f the procurement law/ regulations.

3. Though the basic foundation o f reform has been laid, actual implementation and appropriate monitoring o f the regulations has been slow and l i t t le progress has been made in attaining tangible outcomes on the ground. Experience shows that there are s t i l l substantial inefficiencies in procurement practices such as the lack o f accountability o f government officials, delays in the issuance o f contracts, and inappropriate bidding practices including collusions. In effect, there has been significant non-compliance to the rules and regulations.

4. For sustainability o f the current procurement reform program, the Government i s now embarking on a round o f reforms designed to address implementation challenges with

34

beneficiary/ stakeholders participation by improving i t s capability to implement the new rules and regulations more efficiently (in terms o f process) and effectively (in terms o f outcomes). This includes the development o f a procurement focused management information system, the adoption of an IT based procurement system, and the expansion and institutionalization o f training program aimed at establishing a professional career path within the Government and familiarizing non-specialists on the new rules/regulations and systems, including informed decision making by policy makers in approving contract wards. Thus, the proposed project wil l have the following four major components: a. Furthering Policy Reform and Institutionalizing Capacity Development; b. Strengthening Procurement Management in CPTU and Sectoral Ministries; c. Introducing e-Government Procurement (e-GP); and d. Communication, Behavioral Change, and Social Accountability (CBC & SAC)

I

Component 1 : Furthering Policy Reform and Institutionalizing Capacity Development

5. Furthering policy reform: The Public Procurement Regulations 2003 (PPR), framed under the PPRP, is in force. The recently passed procurement law will come into effect once the rules are made which is at i t s final stage o f preparation through extensive consultation with a 60 member working group representing public sector, private sector, consulting industry, and others. Also, the key development partners provided their comments on it. The objective o f the sub-component wi l l . be to ensure that al l secondary legislation o f whatever nature which i s affected by the adoption o f the law i s amended and brought up to date to reflect the latest state o f play. Whatever those updating/ adjustments might be, they will imply consequential amendments to a number o f other documents including the implementing procedures, the suite o f standard

, bidding documents (SBDs) and any guidelines or directions issued by the CPTU in respect o f the procurement provisions. The remaining SBDs for specialized procurement (e.g., health sector goods, textbooks, commodity, community contracting, etc.) will need to be issued. An international agency wil l be selected through a competitive process who in collaboration o f an identified local institute as explained below wil l undertake this task with overall guidance from the CPTU.

6. Institutionalizing capacity development: As o f March 2007, under PPRP, GOB developed a critical mass o f about 25 national trainers. and trained over 1700 officials o f about 300 public sector organizations. The current training program appears to have been successful in meeting the immediate goal o f training a core number o f procurement officers in the new legal and regulatory procurement framework. However, the training does not go far enough on core procurement sk i l ls such as evaluation mechanisms and contract administration. Also, planning, budgeting, and supply chain management sk i l ls are lacking. For sustainable capacity development, i t s institutionalization i s essential. To ensure continuity o f the capacity development program not only on compliance but also on the core competence skills, the following components o f a medium to long term capacity development strategy are envisaged:

(i) Main procurement training course: The focus o f this training for procurement o f goods, works, and consultants’ services wil l be on compliance o f rules and regulations including basic understanding o f procurement core competence sk i l ls o f purchasing, planning, and supply-chain management. This wil l be a three-week residential. course, each for goods and services, and works and sefiices, operating concurrently, with participants largely from the target agencies (RHD, LGED, REB, and BWDB), followed by other public

35

sector agencies, CPTU/IMED, and private sector. The course is mainly compliance focused, with some basics of competence skills. The junior-mid level officials/ procurement officers (who actually prepares bidding documents, request for proposals, evaluation reports, etc.) of the identified four target agencies are the key target audience; in addition, officers o f other public procuring entities wil l also be included depending on the program need and availability o f appropriate resources. The current training module will be reviewed and revised appropriately; key features o f the course wil l include: basic modules on procurement competence skills, modules on compliance o f national laws/ rules/ procedures, detailed modules on procurement o f goods, works, and consultants’ services including hands-on training on the preparation o f bidding documents/ request for proposals and evaluation o f bids including contract management aspects, br ief modules on the rules/ procedures/ documentation o f the key‘ Multilateral Development Banks (WB, ADB). To ensure sustainability, the training wil l be institutionalized and anchored locally in suitable institute in a way that the local institute over time develops a procurement faculty o f its own in collaboration with the competitively selected international training provider, with a procurement basic core competence module by the Chartered Institute o f Purchasing and Supply, U.K.- CIPS (2-3 days within the three- week course). The international consultant, under CPTU’s coordination, wi l l carry out the extensive procurement capacity building program mainly with Engineering Staff College Bangladesh (ESCB- being the nominated sub-consultant), and partly with Bangladesh Institute o f Management (BIM) by instituting a well-articulated program. The CPTU will coordinate and monitor al l training activities under the program. The entire course module, developed joint ly by the international training provider and the local institutes with necessary input from CIPS, wi l l have endorsement o f the WB and CPTU.

Training oJprocurement focal person (PFP): This i s an intensive advance short course designed specifically for the leading procurement professionals at the identified target agencies and MED/ CPTU; other agencies may jo in if resources so permit. The course wil l be a combination o f compliance and competence ski l ls training, held primarily at the local institute, with provision o f exposures with international institutes or training abroad. Based on the qualification, ski l ls and in-depth professional experience in procurement, a team o f experts wil l select no more than eight persons from each o f the target agencies and IMED/ CPTU to undergo this training; the persons wil l be selected either from TWG members or other mid-senior level procurement officials o f these entities or a combination o f them. After successful completion o f the course, each o f them wil l be a PFP o f the respective agency. PFPs will also act as resource person for providing in- house training and guidance on procurement matters.

Development of procurement core Competence skills: This core competence training i s distinct from the compliance-based training described under the main procurement training course. The component envisages a more holistic demand-based approach concentrating on the core ski l ls o f procurement functions. The method envisaged i s to invite the Chartered Institute o f Purchasing and Supply, U.K. (CIPS) to partner with local institute(s) to create ski l ls at various levels allowing for the efficient division o f labour within procurement departments and the creation o f a distinct career path in procurement, if feasible, leading to the emergence o f a well-trained and diverse procurement regime. The module wil l depend on the type o f certificate/ accreditation a candidate would l ike to

(ii)

(iii)

36

pursue; currently C P S has six modules at various levels 2-7 recognized al l over the world (starting at 16 years in secondary education or adult educations at level 2 up to university Masters Degree). The partnering institution could be either ESCB or BIM or a private/ public sector university l ike BRAC, or other university or a combination o f them,

Short training course for junior level oficers: Junior level staff o f procuring entities who assist in estimates, accounting andor associated with procurement activities wil l be trained on a short course with customized module. This may vary 2-3 days depending on the kind o f audience and the procurement activities.

Short-training course for policy makers: All key policy makers qnd officials at various ’

tiers o f GOB wil l undergo this short course specifically designed on the basis o f procurement rules and associated approval process. The objective i s to help facilitate an efficient procurement approval process with reduced time lag. This course is meant for senior level officers with duration o f 1-3 days, depending on the level o f contract approval authority and financial delegation. Starting with the target agencies, over time this i s expected to cover al l public procurement entities and policy level ministries.

(iv)

(v)

(vi) Short-training for civil sewice oficers: This wil l cover freshly recruited c iv i l servants as well as mid-level and senior c iv i l servants. Assistance wil l be provided to various existing public training institutes to develop and include appropriate procurement modules within their current syllabus. For instance, for c iv i l service entry officers in the administration cadre, a short module i s likely to be introduced in their foundation course for the administrative cadre conducted at the Bangladesh C iv i l Service Administration Academy (BCSAA). Similar courses appropriately designed may be introduced in the training courses o f senior level c iv i l service officials conducted at the Bangladesh Public Administration Training Center (BPATC) or Academy for Planning and Development (APD). Short training for bidding community: This course with expected duration o f about 2-3 days will be designed to take into account the need o f the bidding community including contractors, suppliers, and consultants; course module will. include rules/ regulations as well as preparation o f bids with due consideration o f the bidding conditions. The course could be a combination o f goods, works, and consultants’ services or separate for each audience, depending on the demand. All such courses for the private sector wi l l be based on actual costs paid by the participants.

(viii) Short training for auditors: Given the importance o f the role o f auditors in public procurement, the public auditors wi l l be provided with targeted course on procurement that are appropriate for them. Since their role i s different from the roles o f public procurement officials, the course module will concentrate on the type o f deficiencies in bids and actual contract implementation issues including delayed payments and imposition o f liquidated damages for delayed implementation. Short orientation courses: This course wil l vary depending on the target audience which i s expected to include a cross section o f stakeholders including the Members o f Parliament, business community, civil society groups/ CSGs, and media professionals. The objective wi l l be to create an informed society o f their roles in public procurement matters with special emphasize on peoples expectations o f procurement outcomes.

(vii) ’

(ix)

37

(x) Training on BOT/BOOT/BOO/Concessions Contract: This one-week training course wil l emphasize on public-private partnership contractual arrangements for large infrastructure projects. I t wi l l be provided in ESCB with participants mainly from the four target agencies (RHD, LGED, REB and BWDB). Capacity development/ training needs: Procurement officials o f al l procuring entities

under the target agencies will undergo the mandatory main procurement training course o f three weeks; over 2000 staff wil l be trained from these agencies. Procurement officials o f other implementing agencies may also be nominated and participate in the main course provided suitable vacancy exists. All other training courses are on a demand basis. A summary of estimated training need i s in Attachment 1.

' 7.

8. Incentive mechanism for sustainability: To promote sustainability o f the capacity development program, the following incentive mechanism i s envisaged: (i) make provision to have at least one procurement trained staff in the evaluation committee; (ii) include procurement expertise as one o f the criteria in the staff performance evaluation and promotion that deals with procurement; (iii) identify leading procurement professionals for each target agency who wil l be recognized as procurement focal person (PFP) at the agency level; (iv) make provision of training the PFPs abroad; (v) create opportunity to become local procurement trainers from the PFPs o f each target agency andor top performers in the training classes; (vi) provide opportunity to the agency level PFPs and/or top performers in the training class to undertake procurement accreditation program with the Chartered Institute o f Purchase and Supply (CIPS- U.K), allowing worldwide recognition as certified procurement professional. The details are provided in the Project Implementation Plan (PIP) o f the Government. On recommendation from the ,capacity development consultant, the government in consultation with the Bank would determine the training evaluation modality to ensure that the training programs are conducted effectively.

Component 2: Strengthening Procurement Management at Sectoral Level & CPTU/ IMED

9. Implementation Challenges at Sectoral Level: The GOB has gained invaluable experience with implementing new procurement practices after the adoption o f national procurement rules. Though most policy reform actions are in place, application o f those rules/ regulations has proven to be relatively inconsistent across government and within individual agencies, and the piloting o f the procurement monitoring and information system in key implementing agencies. W h i l e CPTU i s the policy making body, the actual implementation o f regulations and associated procurement outcomes are dependent entirely on the performance o f the implementing agencies under various ministries. Experience shows that full implementation o f regulations with appropriate monitoring still remains as the key challenge combined with cross-cutting governance and institutional constraints including delays in award for large contracts, allegations o f fraud and corruption, and political interference. The experience to date has le f t l i t t le question that implementation o f the PPR wil l require significant strengthening o f the ability o f both CPTU and the implementation agencies to manage procurement operations and transactions and monitor and report upon results. Lessons from international experience with improving procurement in other countries suggests that effective implementation o f the new law wil l require a disciplined and effective central public procurement body, a clear implementation strategy that has been agreed upon by the policy agency and implementing bodies, and mechanisms to support and monitor prokess in the application o f the strategy.

38

10. The reasons for the varying degree o f implementation at entity level encompass issues ranging from the limited amount o f time that has elapsed since the regulations came into force to the disinterest o f parts o f the bureaucracy to adopt new procurement procedures. Experience has demonstrated both the ability to significantly improve procurement practices and outcomes as wel l as the enormous challenges that l ie ahead. All o f the target agencies (LGED, RHD, REB, and BWDB) are playing leading role in the implementation o f PPR. For instance,’ BWDB’s Contract and Procurement Cell- CPC (functional since 2004) i s the focal point for management o f information, knowledge and technology; LGED also has recently set up a Procurement Unit. Though piloting the procurement monitoring system has indicated the power o f the system to

. increase transparency, at the same time it has severely strained the resources o f the executing agencies (REB and LGED) and the CPTU to actually produce/ analyze data with appropriate measures to handle the deficiencies.

1 1. exists and need to be addressed:

Review at the target agencies level indicates the following generic deficiencies that s t i l l

planning & budgeting- inadequate procurement planning and i t s monitoring; splitting o f contract packages; inadequate integration o f procurement planning with budget formulation; delays and complex procedures in the fund release mechanism. Besides, there are also issues concerning quantity increase in the bill o f quantities (BOQs) o f some o f the bidding documents.

bidding process- excessive delays in award o f contract as the contract approval limit goes higher, specially at the levels o f agency head and above; large incidences o f non- adherence to the procurement approval process in particular reference to the processing o f evaluation reports for the approval o f the ministry or cabinet committee levels; ignoring PPR requirements, review o f bid evaluation committee’s report by another committee or set o f persons attached to the contract approving authority; allowing frequent submission o f bids at multiple locations; mostly providing 21 days bidding time in national competitive bidding without regard to the high value o f contract size; incidence o f collusive bidding practices with inadequate enforcement o f the relevant sanction provisions o f the PPR; frequent extension o f bid validity; inadequate disclosure o f information; inadequate adherence to the complaint handling mechanism; either no or poor means o f collecting procurement processing data from the field; no centralized unit or system in place at the agency level to track and monitor bidding and contract award information for determining compliance with the PPR.

Contract management- poor contract administration; frequent non-adherence to the work plan/ schedule; excessive delays in contract execution; frequent incidence o f delayed payments to contractors/ suppliers/ consultants; non-imposition o f liquidated damages for delayed implementation; inadequate supervision and quality control o f works.

monitoring- either no or poor means o f collecting procurement processing data from the field; no centralized unit or system in place at the agency level to track and monitor bidding and contract award infomation; poor monitoring o f contract performance; and infrequent submission o f procurement information to CPTU.

0

0

39

12. Strengthening sector entities: This sub-component is designed to support each o f the critical elements identified in the preceding paragraph for the target agencies, followed by other agencies as the project moves on. For appropriate management o f procurement to address the key generic issues, the implementing agencies require adequate support in terms of improving its practices with required logistics and infrastructural support. In addition, disclosure of procurement process information including contract awards and appropriate handling mechanism for complaints are critical to make the system more efficient and functional in terms of accountability o f the procuring entities. The interventions will include: (i) agreeing to specific sets o f arrangements for each targeted agency to address the deficiencies identified in bidding practices, contract management, and procurement planning and budgeting; (ii) providing support to the target agencies in developing a strategy for the implementation o f new rules and practices; (iii) providing infrastructural and logistic supports to those entities for the collection o f data for procurement tracking and plonitoring including establishing and integrating CPTU’s monitoring system “PROMIS” as a fully functional system; (iv) integration o f “PROMIS” with the RHD’s Contract Management System (CMS) in a way that RHD can have a fully k c t i o n a l automated system to track bidding process as well as contract performance. Other target agencies may also initiate similar arrangements.

13. The sector strengthening reform actions have been anchored at CPTU and the target agencies through a technical working group (TWG) comprising small number o f highly motivated officials in the CPTU and the target agencies. These officials are working together in promoting the improvements “from within”. To achieve sectoral outcomes in terms o f efficient use of resources and strengthening procurement management and i t s monitoring, each target agency wil l implement the following standard protocol within the overall framework o f the P P N PPR:

.

.. 11.

... 111.

iv.

V.

vi.

i. procurement monitoring coordinator (PMC): designate a P M C for overall monitoring o f agency’s procurement. The P M C wil! be responsible for coordination and monitoring o f procurement management at the entity level starting the invitation o f bids up to the final payments, with assistance from TWG. Mainly the procurement monitoring database wil l be the source o f information. Through submission o f quarterly report, the PMC wil l bring any significant deficiencies/ departures from practicing the PPR to the notice o f the management, and may take assistance o f any other staff, as the agency provides.

procurement planning: prepare annual procurement plan with appropriate contract packages without splitting and publish the same in website o f the agency and/or CPTU for contracts o f Tk. 10 mi l l ion and above;

budgeting: prepare budget taking into account the annual procurement plan and the timeline for procurement packages fund release mechanism: obtain fund or assure timely release o f fund in coordination with the relevant ministry.

invitation for bids (IFB]: publish invitation o f bids above specified thresholds in website o f the CPTU, in addition to the publication in widely circulated newspapers.

post qualzjkation; invite bids for works contracts on a post-qualification basis, except for the large value contracts o f US$ 5 mil l ion and more where pre-qualification may be done provided the work i s o f complex nature;

40

vii. bidding time: allow a minimum o f 21 days bidding time in national competitive bidding (NCB), however, for large value N C B contracts (Tk. 50 mil l ion and more), the bidding time should not be less than 28 days;

multiple dropping: all bids shall be submitted and opened at one location; on exceptional circumstances as specified under the Procurement Act/ Rules, submission o f bids at more than one location may be allowed provided they are opened at one location and the reasons thereof are recorded properly. However, for Bank-fimded projects such exception shall not be acceptable;

viii.

ix.

x. opening of bids: open bids immediately after the bid submission deadline.

bid opening committee: open bids by a formal bid opening committee included in at least one bid evaluation committee member.

xi. bid opening minutes: prepare bid opening minutes, with readout bid prices o f participating bidders, signed by bid bpening officials and representatives o f bidders; and share the minutes with bidders immediately after opening.

bid evaluation committee: include at least two members o f outside the procuring entity in the bid evaluation committee, with adequate experience in procurement; depending on the type o f procurement such members shall be either from public offices or from professional bodies/ universities/ beneficiaries;

timeliness of bid evaluation: ensure independent functioning o f the the bid evaluation committee and submit bid evaluation report directly to the contract approving authority within the stipulated timeline, along with the certificate o f impartiality.

timeliness of contract: award contract within the initial bid validity period without seeking extension o f time. P M C will make extra effort to alert concerned procuring entities for award o f contract within the initial period o f bid/proposal validity so that no extension o f validity is required.

sub-delegation ofJnancia1 power: appropriately sub-delegate financial powers at the field level as per the GOB’S financial delegation notification. All field offices shall ensure exercise o f their authority in the field o f bid evaluation, contract award, and contract administration without referring them to the higher authority.

xii.

... xiii.

xiv.

’ xv.

xvi. re-bidding: allow re-bidding only in exceptional circumstance with valid justifications, taking into account that the development partner may not finance such contract, i f found not justified, in particular the agency will enquire into the matter, record and highlight the grounds o f re-bidding (i.e. inappropriate bidding practices or similar, high bid prices etc.). For corrupt practices, actions need to be recommended.

contract awards: publish bidding results in website with brief reasons for rejection o f bids. Within two weeks o f contract award, the agency wil l publish in i ts (if applicable) and CPTU’s website the following information: identity o f contract package, date o f advertisement, number o f bids sold, number o f submitted bids, number o f responsive bids, brief reasons for rejection o f bids, name o f the winning bidder and the price i t offered, date o f notification o f award, date o f contract signing, proposed completion date o f contract.

xvii.

41

xviii.

xix.

xx .

xxi.

xxii.

xxiii.

xxiv.

xxv.

‘xxvi.

xxvi i .

complaint handling: introduce complaint box at each procuring entity and handle complaints within the stipulated timeline, maintain a complaint database and a standard protocol with triggers for carrying out investigations.

late payment and liquidated damage: make payments to suppliers/ contractors/ consultants in a timely manner as per the provisions o f the contract. Interest for delayed payments beyond a specified period will be stated in the bidding documents. Also, impose liquidated damages as per contract provisions for delayed completion/ delivery.

post review: carry out annual post review o f procurement packages on a sample basis as per the provisions o f the PPAI PPR.

procurement performance monitoring: install and use the procurement monitoring system “PROMIS” o f CPTU with connectivity up to the district level to track procurement performance, with necessary updating o f required field, generate report at entity level, and transmit relevant data to CPTU.

integration of contract management tool: for RHD, integrate the contract management system (CMS) with CPTU’s “PROMIS” to generate al l monitoring information starting with the IFB up to the final payment.

MIS data submission: provide procurement management and monitoring data to the CPTU and the designated M&E consultant.

pilot e-GP: pilot electronic government procurement (e-GP) at HQ for international procurement (ICB contracts and international consultancy). The agency wil l establish e-GP connectivity up to the division level.

training: nominate and train al l relevant staff in procurement in accordance with the agreed plan under the project; also suitable candidates will be trained on the use o f e- GP/MIS applications.

engagement of beneficiary: take initiatives to partner c iv i l society/ beneficiary groups/ non profit organizations to help build a conducive procurement environment through awareness building, media campaign, and monitoring as appropriate.

action against bidderdstaf l take action against bidders and/or staff for corrupt and fraudulent practices. In cases o f possible collusion found or established for reasons, Le. same hand-writing, identical unit prices in the bil l o f quantities (BOQs), consecutive serial numbers in bank guarantees for bid security etc, procuring entities wil l initiate actions, including debaning contractors/suppliers, as appropriate in accordance with national rules. I f any firm i s debarred, the list o f debarred f i r m s will appear in the web sites o f CPTU, and o f the entity, if applicable, and the debarment notice wil l be circulated to all field offices and other government/public sector offices, putting it as a lesson to discourage corrupt or similar behavior. Similarly, for staff, the agency wil l take appropriate/disciplinary action against those involved in corrupt or fraudulent practices, in accordance with the services rules and procurement regulations.

14. To promote the culture o f good performance among the target agencies, the project envisages following incentive mechanism: GOB will recognize annually (i) one target agency as

42

the “Icon of the Year” for best procurement performance measured through the project results monitoring indicators and provide symbolic monetary award along with a certificate; (ii) top three procuring entities o f each target agency at the field level (district, sub-districts or other fields) as best performers; and (iii) three officials (senior, mid, and junior level) in each target agency for their effective contribution in promoting the knowledge o f procurement, practicing them, and help implementing the PPW PPA. The project has provisions for the logistics and infrastructure support including training to help achieve the desired goals by the target agencies. Evaluation mechanism for items (i)-(iii) will be shared with WB for review.

15. Strengthening CPTU: CPTU with i t s current staffing and logistics i s overburdened with numerous tasks and i s simply insufficient to cope with the given mandate o f procurement monitoring and the incoming changes in the procurement activities in the country. While the

‘ procurement management and monitoring i s primarily the responsibility o f the procuring entities, CPTU has the responsibility to support GOB not only on procurement pol icy matters but also in the monitoring o f implementation o f procurement policies and practices by various ministried entities and provide necessary reports to evidence proper functioning o f the public procurement system or the lack o f it. In addition, developing and implementing a strategy for procurement capacity development and i t s institutionalization within the country.

16. As part of the disclosure o f information, CPTU;among others, will publish in i t s website the following information: (i) procurement law and associated al l policies/ procedures/ guidelines including standard bidding documents and request for proposals; (ii) procurement plans as submitted by the procuring entities; (iii) all invitations for bids (IFB) above the specified threshold in the PPR (iv) bidding process monitoring information as output o f “PROMIS” including contract management data for RHD and other target agencies, when available; (v) complaints handling information including the results o f review by the independent review panel; (vi) list o f debarred ineligible f i r m s along with brief reasons for debarment and the period o f debarment; (vii) capacity development information including list o f trained staff by agency or batch; and (viii) important clarifications in the form o f frequently asked questions (FAQs). To address functions relating to rules/ procGdures, monitoring, e-government procurement (e-GP), and social accountability issues, CPTU needs substantial strengthening in terms o f staffing and logistics. The proposed organization structure, funded with GOB’S own resources, wi l l have 36 staff headed by the Director General and assisted by three Directors. In addition, there wi l l be project funded consultants/ staff.

17. Strengthening IMED’s other units with linkage of CPTU: IMED has four other units that are performing functions relating to project monitoring and evaluation in reference to various sectors. IMED has the overall responsibility at the national level to provide GOB with required level o f information as regards project implementation monitoring o f various ministries. Procurement, being an integral part o f the project implementation, thus requires strong linkage o f CPTU with i t s other units o f IMED in a way that there i s appropriate exchange o f information. Besides, for carrying out day to day functions more effectively concerning project monitoring and evaluation, strengthening o f those units in terms o f logistical and technical support i s needed. To make the reform initiatives more effective, those units are required to be well equipped in terms o f their infrastructural facilities. ADB i s providing a technical assistance grant o f about $800,000 for IMED’s project management. Given the nature o f the project objective, to complement ADB’s initiative, the project, within i t s limited scope, wi l l provide support to these

43

units through computerized linkage o f the CPTU’s MIS and relevant units with necessary infrastructure to ensure proper sharing o f information. Also, the project will support providing technical assistance in terms o f individual consultants need through a pool o f consultants so that part o f the technical expertise could be outsourced either to relevant agencies/ institutions like Bangladesh University o f Engineering and Technology or to obtain services directly from identified consultants.

18. Strengthening bidding community: Successhl implementation o f the PPW PPA wil l require an informed and well-trained bidding community, equipped with knowledge and skill for preparing bids. Also, i t i s critical that the bidding community contributes to the development of the procurement regime ’ in the country through their experience and hands-on issues. Toward this, as part o f the process, apart from training o f the bidding community, various options wil l be explored including development o f a nation-wide contractors database o f qualifications and experience; formation o f contractors registration board; and development o f local construction industry. NED/ CPTU and the target agencies wil l coordinate the feasibility o f introducing this concept.

’

I-

Component 3: Introducing e-Government Procurement (e-GP)

19. Risks and governance requirements for public procurement: The public procurement system should be able to support the trust o f the business sector and the broader community and be characterized by: value-for-money, transparency, open competition, and accountability. However, the vulnerabilities in procurement include lack o f information and expertise, contacts and collusion, conflicts o f interest with public officials, lack o f accountability and political influence. Experiences have included: discrimination and delay in issue o f bidding documents to suppliers, cartel formation to suppress competition, physical threats to bidders, bid boxes at multiple locations, tampering o f bid files, delays in evaluation o f bids, human interfaces at every stage, and an unwillingness to provide transparency. The significance o f discretion in the anti- corruption arena i s frequently reiterated, and the discretionary power o f officials i s perceived as representing high risk. These problems are mostly not matters for procurement law but for procurement management. Thus while the procurement steps may simply be prescribed in procurement law, the management tasks around this operate at another level. Therefore to bring in transparency in procurement process, information access i s essential, which in turn i s a pre- condition for accountability. This transparency i s not effectively served in a paper-based environment where information access i s substantially academic. This objective can be obtained through implementation o f e-GP.

20. E-procurement design: The strength o f e-procurement arises from i t s capacity to greatly reduce the cost and increase the accessibility o f information. However, the benefits do not arise simply because technologies are being applied. The effective application o f these technologies requires that processes be formally defined, lines o f authority clearly specified and procedures and terms and conditions be standardized - these steps are required by computerization. Thus, e- procurement i s not simply the application o f technology to existing processes, but a reform process in itself. The enhanced transparency arising from the application o f technology to the procurement function delivers directly and efficiently what many rules and regulations seek to do indirectly. Both for high value bidding exercises and low value purchasing, procurement regulations usually aim at ensuring transparency through due process by stipulation o f procedural

.

44

steps. The outcome o f this i s instead often a lack o f transparency because o f over-regulation. Technology can bypass much o f th is by delivering very low cost audit paths and highly accessible activity records: transparency is delivered more directly. The regulation and transparency versus performance issue, noted previously, becomes substantially circumvented.

21. System components and functionality: Recognizing the need for some quick results but also considering the risks associated with the level o f technological capacity, organization and expertise within the public and private sectors, the results o f the recently concluded study provides ground that e-government procurement can be implemented slowly in phases in the following areas: e-bidding, e-purchasing, and e-contract management. The development o f the e- bidding service requires: posting al l bidding information on a single internet site and developing and activating the information systems that support that site. If a third party service provider i s engaged it i s also important that the functional and operational requirements are clearly and contractually specified. These must be specified in a way that integrates the central site and online transactions with work processes. Detailed components wil l involve: development of single web-based system, formation o f an e-GP technical support unit, capacity development and training on e-GP for key procuring entities, e-GP awareness campaign, and piloting e-GP followed by i t s fill introduction.

22. A range o f systems and sub-systems are applicable: E-Bidding System (EBS), Bid Lodgement System (BLS), Contract Management Registers, Contract Management System, Government Procurement Portal (GPP), Consultant Registration System, and Works Management System. The functional capabilities o f an e-bidding service need to be specified.

23. I t i s envisaged that the online e-GP services and functions to be implemented in a phased manner where each phase may be broken down into smaller steps to match the resources, development and the business model. This represents a risk-managed approach and i s recommended over a ‘Big Bang’ approach that would carry high risk o f incompatibility with user needs, policies and resources. CPTU, in close coordination with the target agencies wi l l establish the system. To start with, the system will be piloted on a limited scale in each o f the target agencies, and the actual mode o f implementation wil l vary depending on the type o f procurement. Taking cognizance o f the bidding community, i t i s envisaged that the possible areas wil l be: large consultancy assignments involving international consultants, goods/ works procured through international competitive bidding (ICB); small works wi l l be tried only when the system has proven to be robust and the bidding community i s well equipped with the required level o f expertise and infrastmcture.

24. The system wil l be designed and integrated centrally through CPTU with portals for each key agency/ ministry so that they have independent access. Compatibility o f the system with the CPTU’s MIS i s a critical consideration. The systems on the website can be accessed by both buyers and suppliers. The timetable for this approach wil l be determined by the capacity o f the CPTU to implement the components in target agencies. The system functionality o f these requires specification as a next step. This wil l provide the roadmap to system selection and a realistic timeframe to follow. To maximize skills transfer, as well as fill integration with mainstream management and long term evaluation o f the systems the “Roadmap” wil l be designed around the preference for the local development o f e-GP rather than the purchase o f a commercial o f f the shel f system. While the e-GP system’s technical support function wil l be out

45

sourced, the “fee for service” mechanism could be established to borne the necessary maintenance cost and make the system more sustainable on the long-term where the user charges goes to the application service provider.

Component 4: Communication, Behavioral Change, and Social Accountability

25. This component involves two separate but related sets o f activities. The first focuses on creating greater public awareness o f the importance o f a well functioning public procurement system and promoting a better understanding o f the operations and mechanics o f the procurement process. The second involves the initiation ofa long term process o f engaging c iv i l society, think tanks, and the private sector in monitoring the implementation o f procurement regulations - .are the rules and procedures being followed -- and procurement outcomes. Bdth aim to support the implementation o f reforms in public procurement through inducing behavioral change that, among others, brings recognition and acceptance o f the legitimate role c iv j l society groups can play in holding Government accountable for the proper conduct o f procurement and the willingness o f .such groups to engage in active monitoring o f both procurement processes and outcomes.

26. Building social awareness and understanding: This project aims to facilitate the implementation o f the rules and regulations that wi l l govern public procurement under the recently passed procurement law, e.g. are contracts being bid out in accordance with the law, and the monitoring o f procurement outcomes, e.g. are roads being built to standard, are the right textbooks in the right quantities being delivered to the right school districts. Thus, i t will necessarily draw the attention o f vested interest groups who wil l l ikely create impediments to the project. For this reason, i t i s important for the project to be able to draw wide public support, not just from the general public and c iv i l society but likewise from policymakers, public cfficials, members o f parliament, and local politicians. Four subcomponents have been included to support the attainment o f this objective:

1. Communication strategy: To generate public support for procurement reforms, i t will be important to educate Bangladeshi society in general about what procurement i s and the crucial importance that i t has for the proper management o f public funds. Procurement i s very technical in nature and most citizens, including intellectuals, will know very l i t t le about i t or even care about it. The term itself evokes a sense o f boredom. The challenge for the project i s how to get the public to appreciate the value o f a good procurement system: why should they care about it; what does i t mean for their daily lives, what can they do in their own l i t t le way to help improve it. The project wi l l develop and implement a culturally grounded communication strategy to make the average citizen aware and appreciative o f the need for a well functioning procurement system. The first step would be to carry out an opinion research (a quantitative survey and a series of.focus groups) to determine how much the public understands and appreciates procurement and the values that i t embodies (proper management o f public funds, outsourcing the provision o f goods and services in a competitive manner, accountability o f public officials, etc.). Based on the results o f this research, a comprehensive communication strategy would be developed. While it i s difficult to ascertain the content o f the strategy, i t i s foreseeable that i t would involve print, radio, television, and other forms o f communication as needed. In the

46

Bangladeshi context, innovative approaches that build on cultural attributes wil l be explored as experience suggests these can be very effective for creating awareness among the populace and getting people quickly informed about a complex issue. These could include for instance the following:

use of songs performed by well known Bangladeshi artists that are played on the radio/ TV and recorded on CDs which are then distributed to the population, perhaps through elementary and high schools andor religious organizations;.

0 a music video targeted to the younger generation could also be prepared and shown on regular TV stations as wel l as cable channels;

0 anti-bribery billboard at each procuring entity o f target agencies; a feature fo r -TV documentary on the impact o f a poorly working procurement system and. the pathologies that plague the Bangladeshi system; road shows, rallies, and short plays produced and presented by university drama clubs or other similar arrangements aimed at the college crowd;

0 an education program on morale and ethical behaviors/ norms for honest earning and livelihood (possibly by religious leaders, “ h a m s ” or similar approaches); and

0 a comics series in Bengali that presents the core o f the issues in a lighthearted but clear way.

i i. Education program: Education i s important in creating awareness. The project will thus seek to inform citizens, the media, and other third parties o f the basics o f proper procurement, Le. the steps in the process and the essential requisites for carrying out each step properly, and, through the lens o f public procurement, to expose them to the logic and usefulness o f social accountability mechanisms. An education program wil l be developed which would include among others training o f select NGOs on the basic principles, fundamentals, logic, and implications (for one’s daily l ife) o f procurement and a “roaming” workshop that would go to different towns and would be handled by the NGOs.

i i i. Behavior change: Promoting awareness and appreciation o f the importance o f good procurement among the Bangladeshi public i s not sufficient to bring about change. I t i s key to engage the procurement community - officials, contractors, intermediaries, etc. -explain to them that the Government i s committed to improving the current system and encourage them to operate according to suitable standards. A communication effort in itself will not be enough to convince those who are behaving unethically that they should act differently. However, such a behavior change initiative i s likely to help those who are fundamentally honest and well-meaning but who might have acted differently due to ignorance or peer pressure. Under this initiative i t i s foreseen to have workshops, award schemes, mentoring programs, as well as interpersonal communication activities.

iv. Advocacy campaign: Ultimately the activities above will have to be supported by a well thought out advscacy campaign. This one wil l be designed to gamer support o f officials at the central and local levels for the reforms envisioned within the project as well as for mainstreaming and expanding these reforms, including in particular the engagement o f c iv i l society groups or non-profit organizations. This advocacy effort

47

wil l strive at keeping procurement reform high in the agenda o f decision-makers, c iv i l society and the media. This will help ensure that there i s an ongoing debate about the importance o f counting with a sound procurement system for the social and economic development o f the country.

27. All four sub-elements are designed to de-mystzJL the procurement process -- often a black box to most individuals, to help promote a shi f t in behavior and mind-set among the members of the community (policymakers, public officials, bidding community, c iv i l society, politicians) with regards to procurement activities, to encourage increased demand for reforms, and ultimately to provide the social foundations to support the institutionalization o f a wel l functioning public procurement system over the long term.

28. Engagement of beneficiary groups: This sub-component involves the establishment o f an entry point for engagement o f beneficiary groups/ community support groups/ c iv i l society groups/ non-profit organizations/ business chambers/ media apex bodies (CSG) in monitoring the implementation o f the procurement act and associated procurement outcomes. In the Bangladesh context, the engagement o f external parties in monitoring and advocacy wil l require a relatively long gestation period. This project wi l l attempt to initiate a process that wi l l undoubtedly take several years to mature.

29. Social accountability i s still not a wel l understood concept in Bangladesh (except within the small, limited class o f intellectual elites) and, as such, it draws a high degree o f cautiousness and skepticism (sometimes even suspicion) from most individuals. No t surprisingly, pro-active and focused advocacy for third party monitoring of government activities i s s t i l l very much at a nascent stage: though well known for i t s vibrancy and effectiveness in the delivery o f services, the N G O community (and civ i l society more generally) in Bangladesh i s s t i l l in the very early stages o f engaging pro-actively in advocacy for governance reforms and in demanding greater accountability o f the Government in the delivery o f public goods and services.

. 30. However a small number o f groups (comprising think tanks, NGOs, and media) have expressed an interest in initiating a gradual process that can potentially lead over the medium term to wider and deeper engagement o f c iv i l society and the private sector in the monitoring o f procurement processes and outcomes. This component focuses ‘on a set o f activities needed to initiate the said process.

i. Improving public access to procurement related information: With the CPTU’s existing website and a linked management information system enhanced to form the first phase o f e-procurement, more and more information i s going to become available on procurement related matters. CPTU’s website makes available procurement information and is scaling up a management information system that wil l contain detailed procurement information from the key ministried agencies, who wil l be entering data through an interactive data entry system. This information wil l be made available (through the website) to the public for use in research, analysis, and other related activities.

Technical training of media professionals and other interested third parties: Relevant information, once obtained must be interpreted and analyzed to become useful. Procurement data i s highly technical and requires specialist training;

ii.

48

without sufficient training, interested citizen groups and other third parties will not be able to make effective use o f such information. I t wil l thus be important to establish a training program in procurement practices for the various stakeholders who have an interest in using this data. The idea i s to promote procurement literacy among civ i l society groups and media professionals to enable them to analyze and understand the available data and to motivate them to get increasingly engaged in advocacy for continued reforms in procurement and in monitoring the implementation o f the reforms as well as their outcomes. Establishing a Government - contractors Forum: In terms o f initiating engagement between the Government and external stakeholders, a good place to start i s with the contracting community. This project will endeavor to establish a regular forum through which the contracting community (contractors’ association, suppliers’ association, consultants’ association, etc.) can engage in a continuous dialogue with the Government on procurement related issues. To facilitate and institutionalize this dialogue, a third party will need to be engaged as convener and moderator o f the forum. This could be a think tank, a well established NGO, or a consortium o f c iv i l society organizations. Whatever the form this takes, the groups involved wil l need to undergo sufficient training on procurement to be a credible moderator.

iii.

iv. Encouraging the creation of formal arrangements: To expand, deepen, and sustain efforts to engage beneficiaries in the conduct o f procurement, it will be important to establish an appropriate authorizing environment. One way or another, i t will be necessary for the Government o f Bangladesh to establish formal arrangements through which more direct engagement o f beneficiaries in the procurement process can be officially sanctioned. This could start for instance with the creation o f a public-private Stakeholders Committee(PPSC) comprising reputable individuals from civ i l society and the private sector and senior government officials at the Secretary level..

3 1. CPTU can help facilitate the implementation o f “building social awareness” sub- component and the first three activities for the “engagagement o f beneficiary groups” sub- component, and i t has indicated a willingness to do so. The latter one - the formal arrangements -- wi l l require the support and explicit agreement o f the GOB, which the project will endeavor to secure. I t i s anticipated that increased awareness among the populace and the communications strategy wil l help pave the way for productive discussions with the Government: with better understanding comes a willingness to talk. This could start, for instance, with the creation o f a public-private , Stakeholders Committee (PPSC) comprising reputable individuals from civ i l society and the private sector and senior government officials at the Secretary level.

49

Name o f Number o f Breakdown o f Procuring No. o f Class- Agencies Procuring Entities I Officers

Entities' RHD 65 1 H Q and 64 Distr ict offices 354 LGED 54 1 1 HQ, 64 Distr ict and 480 1,168

Potential Trainees'

354 876

BWDB I 330 I 1 HQ, 7 Zone, 19 Circle, 77 I 361 361

REB

Notes: 1. Procuring Entity i s defined as Ministries, Divisions, Departments andor Local Government agencies (e.g. City

Corporations, Municipalities, etc.), Corporations, Autonomous, Semi-Autonomous bodies or other u n i t s or sub- divisions thereof to the extent that they use public funds for procurement. .

Division and 226 Sub- division offices

. 1 1 H Q (completely 624 468

2. T h i s i s derived on the fol lowing basis: a l l class-I officers if total number i s less than or equal to 500. 75 percent o f class-I officers in case total number i s more than 500.

centralized) 2,507

3. (like, PDB, food, chemical, etc. may be added)

At mid-term review, the above program wil l be reviewed and adjusted according to include other agencies

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Project cost by component’’

Furthering Policy Reform and Institutionalizing Capacity Development Strengthening Procurement Management at Sector Level & CPTU/ IMED Introducing Electronic Government Procurement (e-GP) Communication, Behavioral Change and Social

Annex 5: Project Costs

BANGLADESH: Public Procurement Reform Project I1

Local Foreign Total US$ mi l l ion US$ mi l l ion US$ mi l l ion

5 .OO 3.90 8.90

6.52 1.84 8.36

2.12 2.08 4.20 3.44 3.44

1. includes annual operating costs.

Cost estimates at appraisal are summarized below. ,The recurrent cost in the project

-

Accountability .Total Project Cost Total Financing Required Financing

.

2. The project involves two large consultancy assignments: (i) implementation and capacity development; and (ii) e-GP consultant. Besides, there will be monitoring and evaluation consultant, and a team o f support service individual consultants to CPTU. Estimated costs o f goods and equipment are related mainly to computers and e-GP connectivity. A detailed itemized cost estimate will be included in the TPP.

17.08 7.82 24.90 17.08 7.82 24.90

- ’ IDA GOB Total 23.62 1.28 24.90

Local US$

million 1.79 6.30 0.73

Foreign Total US$ million US$

million 1.81 3.60

. 3.76 10.06 0.00 0.73

I Project cost by category’

6.24 1.94

Goods Consultancy Services Civ i l Works

2.33 8.57 0.00 1.94

I Total

Total Financing Required

Financing

17.01 24.90

17.01 24.90 IDA GOB Total

23.621 1.281 24.901

1/ All costs are inclusive of physical contingencies (3%), price Contingencies (2%), and local taxes. Consultancy services include project incremental allowances for staff o f CPTU, TWG members, and PMCs.

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Annex 6: Implementation Arrangements

BANGLADESH: Public Procurement Reform Project I1

Partnership arrangements

1. The proposed reform interventions have been broadly agreed on by the Joint Strategic Partners (WB, ADB, DFID, and Japan) within the overall framework o f the WB CAS. The development partners expected the WB to take a leading role in procurement in assisting the government in institutionalizing the various measures taken by it, including the issuance o f PPR and enactment o f a procurement law, to improve peformance o f public procurement system. They expressed willingness to associate themselves with the Bank in i t s endeavors in that regard. On i t s part, the Bank kept them posted on the project preparation and discussions held with the government during processing o f the TA components. In sizing the sectoral strengthening component, i t kept in view the ADB's TA support to IMED project management, which i s an important aspect o f the project. The procurement process as well as outcome monitoring by the c iv i l society/ beneficiary groups i s expected to be financed out o f the available trust funds, as available, while other part o f the social accountability component wil l be implemented under the TA credit by the GOB in partnership with the stakeholders.

Institutional and implementation arrangements

2. PPRP I1 will be implemented over a period o f five years. To ensure continuity o f the reform program, CPTU within IMED will be the key implementing agency for the project while the target agencies (RHD, LGED, REB, and BWDB) wil l be responsible for implementation o f management and monitoring o f procurement actions at the agency level as envisaged under Component 2 o f the project. Government would l i ke to see the number o f agencies involved increase overtime as mentioned in paragraph 6 o f the main text. In addition, in coordination with CPTU, the target agencies activities wi l l include, among others, implementation o f e-GP in phases on a selective scale as envisaged in Component 3 o f the project, and engaging beneficiary/ user/ c iv i l society participation in building social awareness in procurement matters as outlined in Component 4, The CPTU and the target agencies will prepare a Project Implementation Plan (PIP) where year-wise implementation activities would be detailed to help timely implementation and monitoring o f the outputs and outcomes in order to meet the project objectives. Each target agency wil l update the annual implementation plan, as needed, no later than two months before the start o f the next fiscal year. The PIP will be shared with IDA for review.

3. All target agencies expressed their deep interest and willingness for implementing the PPR, with varied degree o f implementation stage, for instance, LGED i s relatively at advanced stage o f implementation including piloting MIS o f CPTU. One agency (BWDB) expressed staffing constraints though i t has a Procurement Cell. The main constraint i s the shortage o f staff with the desired skil ls. This would limit the T A intake capacity o f BWDB. The DG will arrange restructuring internally and designation o f staff for procurement training o f i t s regular staff and coordination by drawing upon consultant assistance to carry out the normal functions o f the board. All agencies agreed to the proposed actions, iricluding the appointment o f a Procurement Monitoring Coordinator (PMC), connection o f CPTU's MIS with them, and the preparation o f i t s

53

Implementation Plan. In LGED, i t would also mainstream the active involvement of communities and other stakeholders in the monitoring o f the procurement process in i t s various projects/schemes at the district- and upazilla-levels (covering union parishads and municipalities); this i s because LGED already has some experience in the engagement of members o f civil society, beneficiaries, and peoples’ representatives in various stages of procurement/procurement outcomes at the local level (union parishads).

4. To oversee and review project activities, the Project Steering Committee (PSC) for the ongoing procurement reform project will be reconstituted in line with the mandated functions o f the proposed project. The PSC should meet as frequently as possible depending on the project need, however, not less than at least once in every three months. A Procurement Monitoring Coordinator (PMC) at the target agency level, not below the rank of Superintending Engineer or equivalent, wi l l be responsible for coordination and monitoring o f agency’s implementation o f procurement reform actions; the PMC will be assisted by the TWG. Currently, each target agency nominated two TWG members who are assisting and deeply associated with the preparation o f the project. Given the nature o f the task for coordination and monitoring o f implementation o f the Procurement Act/ Rules, it would be’preferable that the target agency designates a full-time PMC. Also, one o f the T W G members may be designated as PMC provided adequate level o f seniority as stated above i s maintained; in such case another member wil l be included in the TWG. Draft guidelines for TORS for the P M C and extended TOR for the TWG have been agreed.

PSC, PMC, TWG:

* *

.

5 . CC, PPSC: For providing pol icy directions concerning procurement reform across the country and harmonization o f country procedures, a Consultative Committee (CC) wi l l be formed with representatives from the key policy-making ministries/ divisions (Prime Minister/ Chief Advisor’s Office, Finance, ERD, Law, Planning, IT, etc.) and head o f the target agencies. The CC should meet at least once in a quarter. In addition, GOB wil l constitute a Public-Private Stakeholders Committee (PPSC) with reputable individuals from the civ i l society, think-tank, business apex body, and senior government officials at the Secretary level with terms o f reference acceptable to the Association to initiate and encourage the creation o f formal arrangements for external monitoring o f procurement process as well as outcomes; it i s envisaged that this process wil l be gradual and l ikely to take shape once adequate level o f social awareness among community i s built: Draft TOR for CC and PPSC have been agreed.

6. Strengthening support to CPTU & target agencies: In light o f the fast increasing task and mandated functions relating to reform, CPTU’s current strength will be improved in terms o f staffing in accordance with the proposed structure (attached), headed by one Director General (DG) and assisted by three Directors (Rules/ Procedures, Capacity Development & Coordination, and e-GP and M&E), instead o f the current two Directors. CPTU staf f will be entirely funded from the revenue budget. As part o f the incentive structuresand in light o f the sensitivity o f reform functions, since this i s a TA, project staff incremental allowances, as per the Government rules but not exceeding 30% o f salary, will be funded from the credit. For consistency purpose, project staff wi l l include staff o f CPTU, TWG members, and the PMCs. Besides, CPTU and the target agencies wi l l be assisted by a pool o f consultants o f various fields (e.g., e-GP, proc. reform implementation, post review, commercial service, social awareness, client relations, financial management, etc.). For support in e-GP, MIS, monitoring, and data processing of the target agencies, there wi l l be designated consultant attached to each target agency for the init ial period o f the project.

’

54

7. Implementation of capacity development program: A competitively selected TA team (consulting firm), under coordination with CPTU/IMED, wil l implement an extensive capacity building program mainly with ESCB (the nominated sub-consultant) and partly with BIM by instituting a well-articulated program covering an array of training, included in the three-week main training course a short module of the Chartered Institute of Purchase and Supply (CIPS, U.K.). I t i s expected that the local institute wil l develop their faculty to continue with such courses in future, when there i s no project. Introduction of courses in the university or other institutions wil l also be looked into (e.g., Bangladesh Civil Service Administration Academy - BCSAA, Bangladesh Public Administratibn Training Center-BPATC or Academy for Planning and Development-APD or Financial Management Academy- FIMA). In addition, for developing curriculum for core procurement skill (in the planning, budgeting, logistics, and supply chain management) and procurement accreditation program, a separate twinning arrangement will be established between CIPS and other local institute l i ke ESCB or BIM or BRAC University or any other suitable private/ public university.

8. Implementation of M I S & e-GP: To ensure compatibility of the monitoring system (MIS) in CPTU, in accordance with the e-GP roadmap, the existing MIS will be extended and integrated with the existing portal “PROMIS” to form the first phase of e-GP using international consultant’s services with substantial possible input from the local developer of the CPTU’s MIS to promote skill transfer; this will also ensure more robust maintenance capability of the system locally (New DohaTech Ltd.). The team will develop the system with i t s central portal/ server at CPTU and integrate with the key ministries/ target agencies; the TWG wil l coordinate the activities of integration between CPTU and the ministries/ implementing agencies. Given the requirement for reliability of uninterrupted service for transmitting procurement data and in consideration of the wide network coverage across the country, for connectivity with “PROMIS” and subsequent e-GP, i t i s envisaged that CPTU and the target agencies’s relevant portal wi l l have district level connectivity through Grameen Phones network.

9. The CPTU’s MIS will have connectivity up to the district level for each targeted agency while the e-GP connectivity will be piloted up to the division level. E-GP i s expected to be piloted at the head quarter level o f each agency for international procurement (ICB & international consultancy). This phase will adopt implementation o f e-bidding System (EBS), followed by gradual inclusion o f electronic bid evaluation, if feasible. Subsequently, contract management system; government procurement portal (GPP); supplier registry and bid registration; and bid lodgement system (BLS) may also be introduced depending on the feasibility.

10. The CPTU i s to be responsible for e-GP specifically to ensure the consistency of policy authority across this area and to ensure that there i s no separation between procurement and e- GP. This next phase wil l require the CPTU to:

0 mandate a national framework for e-GP including a single integrated procurement data and management system; arrange and engage service providers; establish e-GP whole-of-government policies including for e-signatures;

55

0

11. For implementation, in the case of Bangladesh, there i s a pre-existing portal that wi l l be built on, O f more significance, considerable work has been undertaken to develop and mandate an existing M I S o f CPTU, namely, Procurement Management Information System (PROMIS). The PROMIS has been developed by the CPTU provides a valuable opportunity to consolidate the authority o f the CPTU as wel l as to integrate management systems with online technology. Thus the f i rst phase would constitute the standardization o f the PROMIS that i s already operating to one degree or another in target agencies. These agencies are attempting to comply with the reporting requirements set by the CPTU but are hindered by the lack o f interoperability between systems which has meant that manual inputs are supplementing the data transfers. This issue wil l be resolved to consolidate the template for PROMIS for these and other agencies.

arrange industry briefings and a service centre; ensure that its own internal sk i l l s are adequate to manage the transition.

12. The CPTU will establish an inter-agency committee including one authoritative officer from each o f the target agencies to map PROMIS development and integrate with agency- specific developments such that the standardized core data requirements o f the CPTU wil l be automatically provided as part o f the individual agencies management activities. This committee wil l also coordinate a review o f the contract development, management and advertising, together

' with the associated human resources that i s managed by offices outside o f Dhaka and for whjch basic hardware for connectivity i s required.

13. wil l be undertaken:

In addition to the system developments outlined above several other supporting initiatives

Procurement policies will be redefined to include not only management practices in the electronic environment but also other circumstances.

The CPTU wil l seek further advice on the application o f procurement law and other laws and regulations that may impinge on e-commerce in the economy and give careful consideration o f international trends and experience.

The CPTU wil l provide a human resource up-skilling and orientation program for the pilot agencies in relation to e-GP.

The CPTU, in consultation with key major business associations, wil l develop a business activation strategy to address existing government contracted suppliers, non-contracted suppliers and also work with the service industry that supports e- commerce applications.

The CPTU, in consultation with the I T business association, wil l coordinate and develop government policy to assist the e-GP Service Provider and the IT industry address connectivity and infrastructure.

The CPTU wil l establish a timetable for the deployment o f e-GP phases. This timetable will be published to the Bangladesh technology industry, government suppliers and government agencies.

14. Implementation o f CBC & SAC: Strategy for communication campaign and social awareness wil l be developed and initially implemented by a suitable organization, for instance, partner organization/ media firm/ NGO/ communication firm with specific expertise in the

56

relevant field. The campaign will require the organization o f workshops and the development o f print materials specifically targeted to the audience, explaining the benefits o f good public procurement. Public awareness wil l take place through the m i x o f channels most suitable to reach a large and varied population (probably radio, TV, print media, as well as through school teachers, community leaders, etc.). Subsequently, once the full strategy is developed and tested, small firms with relevant expertise may be selected who will carry out the grass root level workshops and campaigns. To facilitate and institutionalize the dialogue between the Government and the contracting community (Government-contractor forum), CPTU or the target agencies may take assistance o f moderator (e.g., media firm, communication firm or other suitable organization). Independent monitoring o f procurement by c iv i l society would be funded separately from trust fund or similar arrangements outside the credit.

I

I

T

1- T

I

1 n

I

I

T

'T

58

Annex 7: Financial Management and Disbursement Arrangements

BANGLADESH: Public Procurement Reform Project I1

1. Country Issues: Over the last several years, GOB has been addressing key weaknesses in financial management identified in the Country Financial Accountability Assessment (CFAA), through a series o f reform programs supported by DFID, WB and a few other development partners. However, due to the fragmented approhch to Public Financial Management (PFM) reforms there has been uneven improvement across the PFM system and government agencies and institutions. A joint WB, DFID, and GOB review o f Institutional Arrangements for Public Expenditure, Financial Management and Procurement completed in June 2005 revealed that Bangladesh’s public expenditure institutions need to be significantly strengthened. The review that was carried out under Public Expenditure and Financial Accountability (PEFA) Performance Measurement Framework also confirmed that l i n k s in the public financial accountability chain in Bangladesh continue to be weak. Internal and external controls remain weak, as reflected in the lack o f accounting information in line ministries, delays in the publication o f audited reports, unsatisfactory quality o f the external audit function, and ineffective Parliamentary oversight o f the whole budget process.

2. Though GOB has taken several steps to improve i t s public financial management and procurement systems and the overall trajectory o f change has been positive, the pace o f progress has been slower than anticipated. Various diagnostic studies report that piece-meal technical assistance driven by donors neither helped the Government to reap the full benefit o f reforms nor sustained the capacity developed. Country institutions are s t i l l not sufficiently developed to manage public resources and undertake project implementation effectively. The recently approved GOB document on “PFM Vision & Medium Term Rolling Action Plan” develops time-bound reform actions and remedial measures to improve financial management and accountability. Among the reform actions proposed are measures aimed at strengthening line ministry’s financial management function. Despite the weak overall country financial management environment, fiduciary risk in donor-funded projects has been greatly minimized due to the government policy stipulating additional implementation arrangements in those projects

3. Implementing Agency: Implementation Monitoring and Evaluation Division(IMED) o f the Ministry o f Planning wil l implement the project through its Central Procurement Technical Unit(CPTU). CPTU, being one o f the four directorates o f IMED, wil l be responsible for implementing all four components o f the project and for overall financial management o f the project including the part o f the project actions that would be implemented by the target agencies (RHD, LGED, REB, and BWDB). The target agencies wi l l be implementing the respective part o f component I1 o f the project that might include carrying out limited procurement function. However, all project disbursement including those for procurement o f equipment, software and consultants support for other agencies wi l l be handled by CPTU for the sake o f simplified project financial management, facilitating one point budgeting , fund access, disbursement , accounting and financial reporting for all project financial transactions. All those other agencies have prior experience of implementing WB funded project and al l are either currently implementing or are involved in preparation o f WB-funded projects.

59

Risk

Inherent Risk

P F M institutions and system lack capacity for detecting financial irregularities in a timely manner, including taking

County Level

4. IMED i s a division of the Ministry o f Planning, headed by a Secretary. The Secretary, apart from being the administrative head o f the division, i s also the Principal Accounting Officer o f the division and as such has the responsibility to exercise oversight over al l financial activities o f the division. IMED does not prepare any agency-level annual financial statements; however GOB’S annual and quarterly financial statements prepared by Controller General o f Accounts (CGA), includes annual and quarterly expenditure statements o f IMED showing comparison against the approved budget for each l ine item. IMED has limited organizational capacity in financial management and does not have a specialized unit in financial management. L ike al l other ministries in GOB, a Chief Accounts Officer (CAO) reporting to the CGA, i s assigned for IMED. The CAO, who sits in the CGA’s premises far away from IMED office, performs limited finaqcial management functions that include pre-audits and payments o f al l expenditures incurred out o f recurrent and development budgets o f IMED and i t s offices located in Dhaka city and submission o f quarterly and annual expenditure statement o f the Ministry to the CGA. An’ in- house Accounts Officer (AO) in IMED, supported by four other staff, processes staff pay bills and other recurrent expenditures o f IMED and i t s directorates including CPTU, for payment by CAO . The A0 draws cash cheques from C A O for payment o f salaries t o low paid staff and meeting petty office expenses and arranges payments to other staff and vendors in cheques. The AO’s payment hnctions are overseen by a Senior Assistant Secretary who i s authorized to act as the Drawing and Disbursement Officer (DDO) o f IMED. The A 0 prepares for the DDO, monthly, quarterly and annual statements o f expenditure under IMED’s recurrent budget, for submission to CAO and other GOB agencies.

Initial FM Risk Rating

H

5. Risk Analysis and Mitigation: Before mitigation, the overall FM risk i s rated as “Substantial”. This is mainly due to non existence o f an ongoing FM organization and system in CPTU. Considering CPTU’s experience o f successfully implementing the PPRP and the agreed arrangement for carrying out o f al l FM activities at one point and agreements reached on mitigating measures, the residual risk i s “Modest”. Risk assessment, mitigation measures and determination o f residual risks are tabulated below:

corrective actions. Entity Level S Absence o f an ongoing FM organization

Condition After

Various reforms on country level P F M ongoing and planned but unlikely to have any impact in short term

A core FM team has been designed and agreed to be in place under project hnding

M FA includes covenants for FM staff to be in place on time.

60

Adequate staffing and

Project Level

L

. . - - -. - - . - - Besides CPTU, four other

Annual FS harmonized with IFRs FM staff wil l be trained in reporting expenditure Timely receipt o f audited FS not being

, an issue, efforts wil l be made on proper '

follow up o f audit ,

issues

target agencies will also implement some activities.

L

M

Control Risk Budget

Accounting

Internal Control- Weak internal controls might not prevent improper use o f project funds Funds flow

Financial Reporting

Auditing

~~

Residual FM Risk Rating

Strengths

M

M

M

S

M

M

M

S

FM and disbursement functions designed to be carried out by

Excel based accounting system wil l

Segregation o f duties in FM function and internal audit h c t i o n designed in the project Designated account in a commercial bank wil l ensure quick disbursement and retlort back.

L

I M

Agreed upfiont

Agreed upfiont

Included in the TOR for FM consultant . TORS by negotiations

Included in the Disbursement Letter

All FM and disbursement functions wil i be performed centrally at one point by CPTU that successfully implemented the Public Procurement Reform Project. FM consultant o f the ongoing project wi l l be hired right f iom the start up o f the project to establish the FM systems and to train up the CPTU FM staff to be recruited. '

6. Project Financial Management: The project financial management arrangement, as assessed and agreed, together with the implementation o f the actions in the action plan would be adequate to meet the project financial management needs complying the requirements o f Bank's O P B P 10.02. Implementations o f the actions will be enforced through appraisal and negotiations

61

conditions. The status as assessed and arrangements agreed on various aspects o f financial managements are stated below.

7. Staffing: CPTU does not have a financial management organization o f i t s own but it has successfully implemented the Public Procurement Reform Project, satisfactorily meeting the FM requirements, by employing a consultant as Project Finance Manager. The consultant’s term of employment expires on June 30, 2007, when the current IDA credit closes. As the Accounts Officer, IMED and his staff do not have the mandate or the capacity to look after project financial management functions, there lies no FM arrangement in place to meet the project financial management needs. IMED did not place an Accountant with the CPTU during the life time o f the ongoing project, for building up in-house FM capacity, though agreed at negotiations. In order to have an adequate financial management arrangement in place to cater to the project’s requirement, the IMED/CPTU agreed to appoint a Financial Management Consultant (FMC), for a duration o f at least one year starting with effectiveness o f the project. For comparative advantage, the F M C for the ongoing project wil l be hired on a sole source basis. The F M C will set up the FM system for the project by replicating the excel based accounting system that is being used in the ongoing project. In addition, in view o f CPTU’s extended functions in PPRP I1 and to institutionalizing FM capacity within CPTU, IMED will hire three staff - Deputy Director (Finance), Accounts Officer and Accountant in CPTU, within three months o f credit effectiveness using credit funds. TORS and the qualifications for these positions wil l be agreed before negotiations. The appointed staff wil l assist/ share with the F M C the responsibilities o f various FM functions and will eventually take over the responsibility under a learning plan.

8. Budgeting: CPTU wil l be responsible for one point comprehensive budgeting for a l l project activities regardless o f implementation and procurement by other target agencies. Project’s annual budget estimate will be initiated by the FM staf-f with the help o f the units entrusted staff with implementation o f various components and activities o f the project, having regard to implementation plan and updated procurement plan and following GOB guidelines on budgeting for development projects. MS Excel based accounting system and CPTU’s MIS will serve as information systems for budgeting purpose. The budget estimates wil l be identified in two distinct columns by source o f finance based on the agreed share o f financing for budgeted activities. The budget estimates submitted by the DG, CPTU and recommended by the Secretary, IMED wil l be scrutinized by MOF, which wil l allocate the approved GOB and IDA resources in the annual budget under Annual Development Program(ADP). M O F wil l monitor the budget implementation through issuance o f authorization for use o f designated account and quarterly release o f GOB funds. M y genuine necessity for deviation from the budget wil l be met by obtaining the approval through Revised Annual Development Plan(RADP).

’

9. Fund Flow and Designated Account: IDA’S part o f project funds wil l f low mainly through a designated account in a nationalized commercial bank to be opened either in U S dollars or in Bangladesh Taka. Having regard to the depreciation o f BDT in the recent past; i t would be advisable to open the account in US$. Project fund w i l l also f low through direct payments and issuance o f special commitments as and when required. The authorized limit for designated account and minimum application size for direct payment wil l be agreed with loan department and w i l l be reflected in the Additional Instructions (Disbursement Letter).

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1. Goods, Works, Consultants Services, Training, incremental Project staff salaries, and prqject allowance for the Project staff

10. All CPTU staff will continue to be funded from GOB’S revenue/recurrent budget. . Project operating cost wi l l be funded 34% by IDA. Consolidated salaries o f incremental project staff and project staffs incremental allowances, as permissible by the Government, has been agreed to be entirely funded by IDA. Project staff wi l l include staff o f CPTU, TWG members, and PMCs. All other project activities will be funded 100 percent by IDA including taxes thereon. GOB Funds allocated under Annual Development Plan(ADP) through the national budget will be accessible following observance o f quarterly fund release procedures initiated by the PD and approved by IMED and also by MOF and M O P in case o f 4th quarter. No GOB fund wil l f low directly to the project; all bills for expenses incurred as approved by the Project Director wi l l be presented to the CAO, IMED for payment after pre-audit in cross cheques to the providers o f goods and services including vendors and incremental staff.

’

22.96 mi l l ion 100%

1 1. Whi le al l other activities under Component 4 will be financed from the project, the monitoring o f procurement activities by civ i l society/ beneficiary group (engaging the creation of formal engagement) has not been considered under project financing at this stage. Other donors and trust funds are being explored as the funding source for this activity.

2. Operating Cost

Total

12. Disbursement: IDA’s share o f the project cost (100 percent o f al l project costs including taxes except operating expenses) wil l be disbursed under transaction based traditional WB disbursement procedures initially. IDA will require full documentation where contracts for (i) goods exceed US$300,000 equivalent, (ii) works exceed US$500,000, (iii) consulting firms exceed US$lOO,OOO, and (iv)individual consultants exceed US$50,000. Expenditures below the above threshold wi l l be claimed through Statement o f Expenditures (SOEs). After the mid-term review, disbursements may be switched over on the basis o f Interim Unaudited Financial Reports (IFRs) if the borrower so prefers and IDA finds that project financial management system i s working satisfactorily and i s generating timely and reliable full set o f IFRs that are acceptable to IDA.

13. following table shows the share o f financing:

Disbursement o f IDA funds will be made through two disbursement categories. The

1.94 mi l l ion 34%

24.90 M i l l i on

I Expenditure Category I Amountinus$ I IDA’s Share of Financing

4mount (US$)

For the purpose o f project allowance, the Project staff means CPTU staff, Procurement Monitoring Coordinators (PMCs) and Technical Working Group (TWG) members o f the target agencies

63

. .

“Operating Costs” means costs incurred by CPTU on account o f the operation and maintenance o f equipment and vehicles, hiring o f vehicles, office rent, costs o f consumables, fuel, office uti l i t ies and supplies, bank charges and advertising expenses but excluding any salaries and allowances o f c iv i l servants.

14. Expenditure Management and Internal Control: CPTU will follow the GOB’S General Financial Rules that stipulates the procedures for the incurring o f expenditures including expenditure approvals and payment procedures. In addition, the specific directives from thk GOB including the Table o f Organization and Equipment (T&OE), Government’s Standard Code of Accounts, Delegation o f Financial Authorities for development projects, procedures for use of funds for development projects and the Project Accounting Manual that provide for the internal control arrangements on financial transactions, hiring, acquisition and use o f fixed assets, accounting controls and delegations and controls on project implementation wil l be followed in implementing the project. IMED wil l also implement the Internal Control Manual that the Ministry o f Finance has recently introduced to be implemented in al l l ine ministries and departments o f GOB. Internal control in terms o f the separation and segregation o f various functions under financial management o f the project wil l be achieved by clearly drawn TORS for three FM staff positions and appropriate supervision and monitoring o f the various functions internally and through oversight o f DG, CPTU. A Director in CPTU will be assigned to oversee the monthly bank reconciliation, countersign the cash book every month end and scrutinize before payment any bill for operating expenses above certain threshold .All payments shall be approved by the Project Director. Besides, pre audit by the office o f the CAO, o f any payment on operating expenses would serve as check and balance on numerous small transactions.

15. Accounting and Reporting: The project wi l l follow GOB Project Account:rg Manual iIi maintaining books o f accounts and in complying with monthly, quarterly and annual financial reporting requirements o f various government agencies as well as the WB. CPTU has been maintaining basic books o f accounts manually using spread sheets for analysis and reporting. The same excel based accounting tools wi l l be replicated in the up coming project, using GOB code o f accounts and project components. Manual Registers wil l be used to adequately record acquisition and use o f al l project fixed assets. Physical inventory at the end o f each financial year wil l ensure updated status on usable condition and safe custody o f the assets. IDA, through an IDF Grant i s supporting the GOB in computerization o f i t s Project Accounting Manual with the objective to provide universal software to al l the development projects. This project’s accounting system wil l promptly adopt such universal system whenever i t i s ready. The CPTU wil l provide Interim Un-audited Financial Reports (IFRs) on a quarterly basis showing project progress on al l components on a user friendly format. The format o f the IFRs and exact contents wi l l be discussed and agreed with the CPTU during project appraisal.

16. Internal Audit: Government’s Internal Control Manual encourages large ministries to have in house internal audit unit, but presently IMED does not have any internal audit unit. As such, internal audit wil l be conducted annually by hiring a chartered accountants firm on the basis o f a. TOR to be agreed during project negotiations. The firm wil l be selected through appropriate competitive process to be prior reviewed by IDA. The internal audit report would be submitted to the Secretary, IMED with a copy to the DG, CPTU.

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Implementing Agency

IMEDKPTU

17. External Audit: The Comptroller and Auditor General (C&AG), through the Directorate o f Foreign Aided Projects Audits (FAPAD), wil l carry out the external audit o f the project. The C&AG i s acceptable to the WB as an independent auditor. Annual audited financial statements wil l be submitted by FAPAD to the IDA no later than six months after the end o f each fiscal year. For the sake o f avoiding duplicity and promoting effective harmonization, last quarter IFRs wil l be presented as the annual financial statement o f the project. The WB i s now in the process o f such agreement with C&AG for accepting the IFRs as the A F S for al l projects under Bangladesh Portfolio. In case such an agreement i s not reached soon, this project specific agreement wil l be reached during negotiations. The IMED as per i t s mandated responsibilities as the line ministry o f CPTU, wil l liaise with FAPAD and follow up on al l audit issues and recommendations relating to the project. The country is yet to adopt a pol icy on the disclosure o f audit finding. However, a recently prepared draft audit law includes provisions for mandatory disclosure o f audit reports in the website.

Audit Type Auditor Deadline

Project Financial Statement C&AG December 3 1

18. Compliance System:

The following audit reports would be monitored by the WB in the Audit Report

Action

'1. Finalize TOR for Financial Management Consultant (FMC)

2. Agreement to complete selection o f F M C on sole source basis (FMC o f PPRP).

3. Appointing the F M C

4. Finalize TOR for Deputy Director(Finance) and other two FM positions

5. Filling the position o f DD(F) and other two FM positions (Accounts Officer & Accountant)

6. TOR for Internal Audit

.

Responsibility Completion date

CPTU By Negotiation

IMED By Negotiations

IMED Before Effectiveness

IMED By Negotiations

IMED

CPTU/IMED By Negotiations

19. Financial Management Action Plan: An action plan, that summarizes required activities and timelines to help ensure that adequate financial management arrangements are in place during project implementation, i s presented below.

Covenant

effectiveness

o f effectiveness

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7. Finalize Interim Un-audited Financial Reports formats and contents

CPTU/IDA , By Negotiations

' 20. Supervision Plan: The initial superyision wil l focus on compliance with all agreed actions, terms, and conditions including FM staff being on board, identifying any FM or disbursement issues in project implementation and agreeing on redressing measures. CPTU's readiness to access o f funds, ,use o f excel based accounting system, production o f f i rst IFRs on time, and use o f internal controls on FM functions wil l be closely reviewed. In addition, supervision efforts wil l focus on sampling expenditures below prior-review thresholds, reviewing payment processes against the defified control framework, and monitoring the progress o f institutional preparedness and strengthening.

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Annex 8: Procurement Arrangements

BANGLADESH: Public Procurement Reform Project I1

1. . Country Procurement Environment: The Country Procurement Assessment Report (CPAR), broadly accepted by the Government and issued in 2002, identified inadequate public procurement practices as major impediment affecting project implementation in Bangladesh. Procurement deficiencies include: absence o f a sound legal framework, protracted bureaucratic procedures allowing multi-point rent seeking, lack o f critical mass o f professionals to manage public procurement, inordinate delays in completing the procurement process and ineffective contract administration and absence o f mechanisms for ensuring transparency and accountability in public procurement.

2. Procurement Reform Actions: To carry out procurement reform, following the CPAR recommendations, the Government is implementing a WB-supported a Public Procurement Reform Project (PPRP), which i s scheduled to close in June 2007. As part o f the reform under I

PPRP, the Government has established a Central Procurement Technical Unit (CPTU) within the Implementation Monitoring and Evaluation Division (IMED) o f the Ministry o f Planning, with staffing funded from own resources. The Government issued Public Procurement Regulations 2003 and associated implementation procedures, including streamlined procurement approval process, delegation o f financial powers, and standard set o f documents for procurement o f goods, works, and services. The Parliament has now passed a procurement law in July 2006. The effectiveness o f the law and the issuance o f the rules are expected to take place in the near future. The law and the regulations contain most o f the international public procurement best practices; notable features include: (i) non-discrimination o f bidders; (ii) effective and wide advertising o f procurement opportunities; (iii) public opening o f bids in one place; (iv) disclosure o f award of al l contracts above specified threshold in the CPTU’s website; (v) clear accountability for delegation and decision making; (vi) annual post procurement audit (review); (vii) sanctions for fraudulent and corrupt practice; and (viii) review mechanism for handling bidders protests. Concurrently, in order to build procurement management capacity, CPTU, in collaboration with ILO and local institutes, has developed a critical mass o f 25 national trainers and pravided training to about 1700 staff o f about 300 organizations.

3. The new regulations are being implemented by al l public sector entities with var$ng degrees. The landscape o f procurement has been reshaped in the last several years due to the procurement reform with harmonized procedures. The new regulations have also increased awareness among the stakeholders (such as the procuring entities, bidding community) by building confidence. Though the basic foundation o f reform has been laid, actual implementation and appropriate monitoring o f the regulations has been slow and less progress has been made in attaining tangible outcomes on the ground. Experience shows that there are s t i l l substantial inefficiencies in procurement practices such as the lack o f accountability o f government officials, delays in the issuance o f contracts, and inappropriate bidding practices including collusions and public interference. In effect, there has been significant non-compliance to the rules and regulations.

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General:

4. Total value o f the project i s US$ 24.9 million; IDA Credit wil l finance US$23.6 million. Procurement under the project will largely involve consultancy services and training o f US$ 18.6 million, followed by goods o f US$ 3.6 mi l l ion and works o f US$0.7 million.

5. Procurement under the project would be carried out in accordance with the WB’s Guidelines: Procurement under IBRD Loans and IDA Credits o f M a y 2004, Revised October 2006 (Procurement Guidelines) and Guidelines for Selection and Employment o f Consultants by World Bank Borrowers o f May 2004, Revised October 2006 (Consultant Guidelines). Within the overall context o f WB guidelines, local procurement o f goods, works, and services (for which the shortlist entirely comprised o f national consultants) wi l l follow the Government’s Public Procurement Regulations 2003- PPR (goods: < US$300,000 per contract, works: < US$500,000 per contract, and consulting services- f i r m s : < US$200,000 per contract and individual consultant- < US$50,000 per contract) and in case o f any conflicts between the two procedures or ambiguous/confbsing interpretation WB Guidelines will prevail.

~

6. Expected major procurement o f goods and consultants’ services has been announced in the General Procurement Notice (GPN), published in the dgMarket and United Nations Development Business (UNDB), a d i t wil l be updated annually.

7. Procurement Components and Responsibility: All four components o f the project wil l be implemented by the Implementation Monitoring and Evaluation Division (IMED). While CPTU o f IMED will be responsible for main implementation, the target agencies (RHD, LGED, REB, and BWDB) wil l implement certain actions under the project relating to the management o f procurement at agency level, piloting e-GP, and introducing the concept o f social accountability. Each target agency wil l designate a Procurement Monitoring Coordinator. Except computers and accessories, al l procurement wi l l be carried out by CPTU. Computers and accessories wi l l be procured by target agencies.

8. Procurement Capacity and Risk Assessment: Procurement capacity assessment o f CPTU has been carried out with a view to: evaluate the capability o f the implementing agency and o f the adequacy o f systems in place to administer WB-financed procurement and assess the r isks that may negatively affect ability o f the agency to carry out the procurement process. CPTU has been implementing a public procurement reform project since 2002, without significant procurement problem or systemic deficiencies except delays in implementation; it has adequate in-house expertise to deal with procurement. A very small part o f procurement o f goods wil l be carried out by the target agencies. All target agencies have experience in IDA hnded projects. To safeguard WB fbnd, a critical review o f procurement has been done; though the residual risk at the agency level can be rated as “average”, because o f the country procurement environment, the project risk i s “high” from procurement operation and contract administration viewpoint. To minimize the risk, a procurement risk mitigation framework has been introduced.

’

.

Measures for Improving Governance in Procurement.

9. Several measures have been introduced and agreed with the Government for improving governance in procurement and for minimizing procurement r isks under the Project. The two

68

main pillars of improving procurement related governance risk mitigation framework are: (i) system o f handling complaints; and (ii) disclosure o f information and procurement website.

10. System for Handling Complaints: A credible system o f handling complaints wil l be put in place in CPTU. The salient features o f the system wil l be an oversight o f a complaint database, a standard protocol with appropriate triggers for carrying out investigations, and taking action against involved parties. The system wil l be developed and managed by CPTU. The system will be supported by a database containing information about al l procurement steps and other relevant information such as official estimates, al l bidders information (individuals, compani’es, joint ventures, owners information, etc. ), and al l bids. In this regard, the CPTU’s MIS database can be used. For ICB/ prior review contracts for goods, works and selection o f consultants, and al l contracts above US$lOO,OOO, the WB prescribed complaint redress mechanism will apply.

11. Disclosure of Information and Procurement Website: All information relating to bidding and procurement above the specified thresholds, as per PPR, wi l l be published in CPTU’s website. The information, among others, wil l include invitation to bid, bid documents and RFPs, wherever applicable, latest information on procurement pladcontracts, status o f evaluation once completed, contract award information with adequate details and poor performance o f contractors, suppliers and consultants, including l i s t o f debarred firms. The website would be accessible to all bidders and interested persons equally and free o f charge.

12. CPTU, wi l l be followed as a part o f procurement and implementation:

In addition, the following additional steps, which have been discussed and agreed with

(i) Alert CPTU and target agencies’ offlciald staffi The CPTU in reference to the provisions in the PPR and the legal agreement signed with IDA, will issue an alert letter notifying about the possible consequences o f corrupt and similar behavior in procurement practices and actions to be taken against the officials/staff if get involved in such practices. Moreover, the ministry will highlight that in case o f non-compliance o f the W B ’ s procurement guidelines, the WB may take remedial actions (Le., withdrawal o f fhd , misprocurement) against the concerned packages and slices.

(ii) Alert bidders: CPTU, through a notification, wi l l alert al l bidders on consequences o f corrupt practices (fraud and corruption, collusion, coercion, etc.). The alert message, among others, wi l l include that if bidders are found to have adopted such practices, they would be debarred from subsequent bidding processes in conformity with PPR and the W B ’ s Guidelines, as appropriate. In addition, in the pre-bid meeting, the bidders wil l be clarified for preparation o f bid correctly.

Multiple dropping: Multiple dropping o f bids (bids submitted in. more than one location and opened in one location) will not be permissible for al l procurement under the WB-financed project.

Bid opening commi#ee (BOG‘) & Bid evaluation commi#ee (BEC): A formal structured BOC and BEC wil l be constituted for each contract package, as per the provisions o f the PPR. The BOC wil l include at least one member o f the BEC; the

(iii)

(iv)

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BEC wil l have at least five members with two members from outside the procuring entity, with proven track record of experience in procurement; depending on the type of procurement such members shall be either from public offices or from professional bodies/ universities/ beneficiaries; Bid opening minutes: During the same day of bid opening, photocopies of the bid opening minutes (BOM), signed by bid opening officials and the bidders’ representatives (present at the bid opening), with readout bid prices of participating bidders wil l be shared with the bidders either by email, fax or special messenger. Also, for prior review packages, copy of such BOM wil l be sent to the WB the same day of bid opening.

Timeliness of bid evaluation and contract award: In accordance with the procurement approval process of the Government, bid evaluation reports wil l include certificates of impartiality (individually and collectively) as per the PPR and wil l be submitted directly to‘ the contract approving authority following the stipulated timelines. CPTU will put extra effort to ensure award of contract within the initial period of bidproposal validity so that no extension of validity i s required. It wil l closely monitor the timing, taking into account that the WB may not finance contracts which are not awarded within the period of bid validity. Action for corrupt practices - by bidders: In cases of possible collusion found or established for reasons i.e. same hand-writing, identical unit prices in bills of quantities (BOQs), consecutive serial numbers in bank guarantees for bid security etc, CPTU will initiate actions, including debarring contractors/suppliers, as appropriate in accordance with PPR and W B ’ s guidelines. I f any firm i s debarred, the l i s t of debarred f i rms will appear in the web sites o f CPTU, and of the entity, if applicable, and the debarment notice wil l be circulated to a l l field offices and other government/public sector offices, putting i t as a lesson to discourage corrupt or similar behavior. CPTU will share such information with the WB regularly.

Action for corrupt and similar practices - by GOB staf$ In cases of possible corrupt or similar practices, CPTUI IMED will thoroughly investigate it and if involvement of GOB staff i s established, they wil l take appropriate/disciplinary action against those concerned, strictly in accordance with the services rules. In addition, sanction provisions as per the PPR will apply.

(v)

vi)

(vii)

(vi$

x) Measures to reduce coercive practices: Upon receiving allegations of coercive practices resulting in low competition, CPTU/ IMED will look into the matter and take appropriate measures. For prior review contracts, observations of CPTU/ IMED will be shared with the WB, along with the evaluation reports. CPTU may seek assistance from law enforcing agencies to provide adequate security for bidders during bid submission, For ICB contracts, provision for bid submission through IntemationaVNational Courier Services wil l be allowed and confirmation of the receipt of the bid wil l be informed to the bidder through e-mail.

(x) Rebidding: In case of re-bidding, CPTU/ IMED will enquire into the matter, record and highlight the grounds of rebidding (i.e. corruption or similar, high bid prices etc.) along with recommended actions to be taken. For prior review cases, al l such detailed reports wil l be sent to the WB. The WB may not finance

70

contracts recommended for rebidding and take further remedial measures, if in the opinion o f the WB, it i s determined that collusion, corruption or similar practices have been adopted in the bidding process.

Filing and record-keeping: CPTU will preserve records and al l documents regarding their public procurement, in accordance with provisions o f the PPR. These records wil l be made readily available on request for audit, investigation or review by the WB.

Procurement Plan in websites: The approved procurement plan o f the project will be published in the website o f CPTU for contract packages o f Tk. 10 mi l l ion and more, and the WB (if applicable), and updated semi-annually.

Procurement monitoring in formation in websites: CPTU/ IMED wil l enter al l information related to procurement monitoring into the database software MIS. Quarterly reports wil l be generated for monitoring procurement performance of CPTU and published in the website o f CPTU and/or entities. These reports wil l be submitted to the WB.

Publication of award of contract in websites: CPTU, within two weeks of contract award, wi l l publish in i t s websites the following information: identity o f contract package, date o f advertisement, number o f bids sold, number of submitted bids, number o f responsive bids, br ief reasons for rejection o f bids, name o f the winning bidder and the price it offered, date o f notification o f award, date o f contract signing, proposed completion date o f contract as well as br ief description o f the contract awarded. For contracts following international competitive bidding (ICB) procedures, direct contracting for goods and works, single source selection o f consultants and all other pertinent consultant contract for firms (e.g., QCBS, QBS, FBS, LCS), CPTU/ IMED will publish notice o f award o f such contracts in UNDB Online and Development Gateway Market (dgMarket), in accordance with the provisions o f the W B ’ s Guidelines. Contracts awarded under the N C B procedures ’should include publication o f results o f evaluation and o f the award o f the contract nationally/locally.

(xv) Complaints handling mechanism: CPTU, for procurement under national competitive bidding (NCB), wi l l enforce a complaint handling mechanism in accordance with the provisions o f the PPR including submission and disposal o f complaints within the timeline stipulated therein. In the office o f CPTU, they wil l introduce a complaint box and during pre-bid meetings, bidders wil l be informed o f their rights to complain. For ICB, complaints wil l be handled as per the W B ’ s Guidelines.

Late payments and liquidated damages: CPTU will ensure timely payment o f bills o f the suppliers/contractors/consultants as per the provisions o f the contract. Interest for delayed payments beyond a specified period will be stated in the bidding documents. For delays in implementation, liquidated damages wil l be imposed, as per the terms o f the contract. Post procurement audit (review): As per the provision o f the PPR, CPTU/ IMED w i l l carry out annual post procurement audit (review) based on sample contracts

(xi)

(xii)

(xiii)

(xiv)

(xvi)

(xvii)

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(xviii)

(xix)

o f at least 15 percent o f the number o f contracts covering 30 percent of the aggregate value o f the contracts by hiring chartered accounting firm (with international affiliation), share the findings o f the report with the WB, and wil l initiate actions/steps for improving procurement practices, as appropriate. This is in addition to the IDA’S Procurement Post Review that would cover a minimum o f 20 percent post review contracts consistent with the level o f risk.

Oversight by Director General/ Project Director: The CPTU’s DG/ PD will provide oversight hnct ion o f procurement. Review and monitoring wil l also include the cases on corrupt and similar practices, review contract award and ,

management issues (i.e. delays in award, liquidated damages, delayed payments, etc.), prepare reports on monitoring o f contracts and submit quarterly report to the WB.

NCB conditions to be added: i) Post bidding negotiations shall not be allowed with the lowest evaluated or any other bidder; and ii) Bids should be submitted and opened in public in one location immediately after the deadline for submission; and iii) Rebidding shall not be carried-out without the IDA’S prior concurrence.

13. Other Actions: Other action to improve the procurement governance includes emphasizing by the target agencies and CPTU to make award o f contract within the initial bid validity period without any extension;

14. With the above arrangements, the procurement under the project i s likely to be effective and transparent, resulting in smooth implementation o f the project leading to achievement of the project development objectives. However, procurement process and implementation o f the contracts would be reviewed every six months by the WB, and adjustments or corrections wil l be made, as appropriate.

Procurement Arrangements:

15. Overall procurement arrangements with tentative amounts are given in Table A. 16. Procurement ofworks. Civ i l works are primarily in Component 2 related to a building and training complex, if applicable. Because o f the small nature o f work, i t may not attract international contractors, though provisions have been kept.

(9 International Competitive Bidding (ICB). Civ i l works contracts estimated to cost more than US$2.0 mi l l ion equivalent per contract may be procured using ICB.

(ii) National Competitive Bidding - NCB: Civ i l works contracts estimated to cost less than US$2.0 mi l l ion equivalent per contract may be procured using NCB.

Procurement of Goods. Generally goods will be procured using I C B for large packages,

(i) ICB: Goods and equipment contracts estimated to cost US$300,000 equivalent or more per contract wi l l be procured using ICB. This includes large value computer networking in e-GP.

17. followed by N C B and national shopping for small valued contracts.

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(ii) NCB: Goods and equipment contracts estimated to cost less than U§$300,000 equivalent per contract may be procured using NCB. This includes office equipment and vehicles etc.

(iii) Shopping - S: Goods o f very small contracts or individual purchases o f off-the-shelf items may be procured, through prudent shopping procedures.

(iv) Direct Contracting - DC: Computer software, books journals and training materials with individual contract costing less than US$2,000 equivalent may be procured following DC with the prior approval o f the Association.

Consultants’ Services and Training 18. including e-GP connectivity and MIS expansion.

Major consultancy assignments relate to capacity building and technical assistance

(a) Quality- and Cost- Based Selection (QCBS/ Quality-Based Selection) : Consulting services through f i r m s estimated to cost US$200,000 equivalent or more per contract wil l be procured following either QCBS or QBS, depending on the type o f assignment.

Fixed Budget Selection (FBS): Services through f i r m s estimated to cost less than US$200,000 equivalent per contract may be procured following FBS in accordance with the Borrower’s Procurement Regulations.

Consultants’ Qualification (CQJ: Services through f i r m s estimated to cost less than US$lOO,OOO equivalent per contract may be procured following FBS or CQ, depending on the type o f assignment, in accordance with the Borrower’s Procurement Regulations.

Single-Source Selection (SSS): Specific consultants’ services through firms, satisfying Consultants’ Guidelines (paragraph 3.9 to 3.13), with the Association’s prior agreement, may be procured following SSS.

(e) Individual Consultants (IC): Services for assignments, estimated to cost US$50,000 or more, for which teams o f personnel are not required and the experience and qualifications of the individual are the paramount requirement, wi l l be procured through individuals in accordance with paragraph 5.4, Section V o f the Consultants Guidelines. All other individual consultants may be selected following Borrower’s Procurement Regulations. Individuals will be selected on the basis o f their qualifications for the assignment.

(b)

(c)

(d)

19. Nominated sub-consultant for implementation and capacity develop.ment consultant: A . T A team comprising international and national consultants wi l l support the implementation and capacity development program. To institutionalize capacity development in Bangladesh by developing a procurement faculty in at least one local institute and for conducting the main three-week residential procurement training course on goods, works, and services, i t i s critical that an appropriate twinning arrangement i s put in place using the services o f an international consultant, selected competitively, in collaboration with a suitable local institute. This three-week course i s mainly compliance focused, with basics o f competence skills. Besides, the consultant wi l l be responsible for conducting other short-term courses. An initial review o f the possible local institutes has been carried out; institutes considered are: Engineering Staff

73

College Bangladesh (ESCB), Bangladesh Institute o f Management (BIM), Bangladesh, Institute o f Administration and Management (BIAM), Bangladesh Public Administration Training Center (BPATC), Bangladesh Academy for Planning and Development (BAPD). Detailed review indicates that, among the above institutes, ESCB, though new, appears to be the most potential to grow into a major private sector training provider with long term sustainability, followed by BIM.

20. BPATC, a purely government entity located about 28 km away from Dhaka, though suitable for residential training, i t has two main limitations: (a) the centre does not have adequate classrooms and (b) i t mainly caters the need for training o f purely civil servants. BIAM, a quasi- government organization located in Dhaka and associated with Bangladesh Civ i l Service Association, provided the main training courses under PPRP during its initial stage, but’ i t suffered from administrative difficulties for which CPTU had to transfer the course to BIM. BIM, a semi-autonomous training institute in Dhaka, has been imparting the main courses under PPRP for almost the last two years o f the project. Though the courses are being conducted in a smooth fashion by CPTU in collaboration with ILO, BIM yet could not develop a procurement faculty o f i t s own; besides due to i t s location at Dhaka, the trainees are not encouraged to stay in- house. APD, a purely government entity at Dhaka, provides training mainly to economic cadre o f the Government and has limited capacity in terms o f available classrooms and dormitory. .

2 1. The rationale for proposing ESCB as nominated sub-consultant are as follows: a. ESCB, headed by a Rector and affiliated with The Institution o f Engineers

Bangladesh (IEB), though new, i s developing as a potential local training institute in the private sector aimed at becoming a center o f excellence in engineering, management and social science;

b. ESCB, with i t s own resource persons, has been conducting a five-day procurement course in i t s facilities at IEB, Dhaka since January 2005, mainly for the key implementing agencies’ staff (e.g., RHD, LGED, BWDB). Though this course i s on a limited scale, in consideration o f i t s nature o f functions under the IEB, i t appears that this i s likely to be the only institute who has the right potential to mobilize adequate number o f quality faculty members and conduct the courses in a sustained manner in the long term, including effective use o f the services o f local trainers developed under PPW;

c. ESCB’s new campus o f about 23 acres, located 40 km from Dhaka, i s an ideal set-up and environment for such residential training away from everyday work. I t has adequate overall physical infrastructure and facilities to start such courses including classrooms, adequate academic and residential building, administrative arrangements, and own electricity generation support; and

d. From the viewpoint o f long-term sustainability and institutionalization o f capacity development within the country, in consideration o f the above potentials, ESCB has competitive edge over the other institutes. .

22. For all training courses, the consultant wil l provide the resource persons (international and local) regardless o f whether the course is conducted in ESCB (nominated sub-cohsultant) or elsewhere. The main procurement training course (three-week) wil l largely be conducted at ESCB, while part o f i t wi l l be conducted at BIM. However, for the purpose o f nominated sub-

a

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consultant, arrangements between the international firm (consultant) and ESCB be made in a way that wil l permit the international consultant to select the faculty among a pool o f qualified candidates o f ESCB providing the specific unit rate applicable to each individual o f the pool. In addition, ESCB, since new, still may require some initial support in terms o f logistics and equipment to expand i t s capability, which the project can support taking into account the long- term benefits for procurement capacity development.

23. . Nominated sub-consultant for MIS expansion to form e-GP and its maintenance: The existing procurement management information system (“PROMIS”) o f CPTU for tracking procurement performance was designed by Dohatech N e w Media, a local software developer; Dohatec also worked for the WB. “PROMIS” i s a unique tool o f this kind, being used %for procurement tracking, to capture procurement process data and measure a set o f pre-defined performance indicators; currently the tool is being piloted with two target agencies (LGED k d REB). “PROMIS” by now have been presented in a number o f international forum and the software received high appreciation. Recognizing the potential o f this system, and since i t captures many o f the e-GP related initial functionalities (l ike invitation for bids, publication o f contract awards), the proposed e-GP design and implementation wil l require the services o f an international consultant in collaboration with the local developer; meaning Dohatech wil l be a nominated sub-consultant for this assignment. The rationales are as follows:

a.

b.

C.

d.

I t i s most common for most countries to commence with the development o f the portal and build functionality around this. In the case o f Bangladesh there i s a pre- existing portal that wi l l be built on. Of more significance, considerable work has been undertaken to develop and mandate the CPTU’s MIS, designed and is being maintained by Dohatech. The existing portal “PROMIS” wil l be used as the foundation for the development o f the f i rst phase o f e-GP;

Dohatec was initially hired through a competitive selection process to develop the CPTU’s website; the TOR that time mentioned about the possible follow-on actions for the development o f an integrated MIS, with compatible functionalities. Subsequently, they developed the M I S for CPTU;

The proposed e-GP design and development i s a downstream work o f what has already been established in CPTU’s MIS. To ensure compatibility o f the MIS in CPTU, in accordance with the e-GP roadmap and implementation strategy, the existing MIS wil l be enhanced, expanded, and integrated with the existing portal to form the first phase o f e-GP using international consultant’s services with substantial input in the form o f sub-consultancy from the local developer (Dohatec New Media) to promote skill transfer; and

The involvement o f the local developer wi l l also ensure sustainable more robust and cost effective maintenance capability o f the system.

24. Single source selection for e-GP and M I S connectivity: target agencies wi l l implement e-GP in 6 divisional districts and wil l provide online data for MIS from 64 districts. Given the highly specialized nature o f the assignment and to implement the e-GP and MIS, these target agencies will need dedicated and reliable internet and data connectivity. GrameenPhone Ltd, has significant competitive edge over the few other internet and data connectivity providers, l ike Rangs IIT or Bangladesh Telephone and Telegraph Board (BTTB). BTTB, being a public sector

75 0

agency, provides service of low quality with very high degree o f unpredictability. On the other hand, though Rangs IIT has internet and data connectivity network, they do not have their own connectivity l ine and actually uses GrameenPhone’s l ine on lease basis. I t is only Grameen who has connectivity across the country even up to the sub-district level. The MIS data collection network for target agency l i ke LGED (who has offices in al l sub-districts) wil l be expanded up to the sub-district level over time, though now i s proposed to start up to the district level. The similar would be the case with e-GP in the future. In consideration o f al l o f these and the rationale provided below, GrameenPhone Ltd. (Bangladesh) wi l l be contracted for the connectivity:

a. GrameenPhone Lid. (GP) i s the leading mobile service provider in Bangladesh, which has more than 10 mi l l ion subscribers. I t has connectivity al l over the country through optical fiber and microwave link. GP has separate division named “Optical fiber division” to provide data connectivity;

b. Bangladesh Railway has an optical fiber network through out the country. GP has taken lease o f this optical fiber network for 20 years in the year o f 1997. After that GP has improved the network significantly. This provides GP a sustainable competitive advantage over other competitors. No other service provides has such facilities;

c. GP has “Enhanced Data Rates for Global Evolution” (EDGE) services throughout the country. Through this facility, one can easily transfer electronic data, and can also access servers from remote area. GP maintain high quality internet and data services. I t has also community information centre (CIC) up to sub-district level. Form CIC one can get very high speed internet service; and

d. GP i s the only service provider which can provide the required level o f quality services with high degree o f liability, as i t has alternative backbone network for each and every route. Due to this, if main connectivity i s out o f order, the network automatically switches to the alternative route. This satisfies the requirements o f paragraph 3.10(d) o f the Consultant Guidelines,

25. Single source selection o f competence training provider/ accreditation program: This sub-component o f core competence training i s distinct from the compliance-based training described under capacity development program above. The core competence training in procurement envisages a more holistic demand-based approach to develop ski l ls in procurement planning, budgeting, supply-chain management, strategic procurement, with necessary levels o f accreditation after fulfilling or undertaking a defined number o f modules. The approach envisaged i s to invite one of the internally reputed institutions who provides such accreditation program and to partner them with a local institute(s) to create ski l ls at various levels allowing for the efficient division o f labour within procurement departments and the creation o f a distinct career path in procurement, if feasible, leading to the emergence o f a well-trained and divers procurement regime. There are only couple o f institutions who deal with such accreditation program; one in the USA and the other in the UK, the Chartered Institute o f Purchase and Supply (CIPS). Under the project, CIPS would be contracted on a sole source basis to provide these services. The rationales are as follows:

.

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a.

b.

C.

CIPS, being a highly specialized and recognized institution, acts as a center for excellence for the whole profession o f purchase and supply chain management to improve the professional standards o f practitioners and raise awareness o f their contribution to corporate, national, and international prosperity;

I t i s an international education and qualification body representing purchasing and supply chain professionals and a central reference point worldwide on matters relating to purchasing and supply; i t s professionals code o f ethics is the model for the international code and the domestic codes for many countries; and

CIPS has currently six modules at various levels 2-7 recognized all over the world (starting at 16 years in secondary education or adult educations at level 2 up to the university Master Degree). Thus, CIPS i s exceptionally qualified to undertake this assignment.

Operating Costs

26. The operating costs wil l include operations and maintenance o f equipment and vehicles, hiring o f vehicles, office rent, costs o f consumables, fkel, office utilities and supplies, bank charges, and advertising expenses but excluding any salaries and allowances o f c iv i l servants.

Procurement and Selection Planning

27. The Borrower wi l l prepare a Procurement Plan for project implementation which provides the basis for the procurement methods. The Plan wil l cover the initial 18 months o f the project and wil l be updated annually covering always the next 18 months o f project implementation. I t wi l l also be available in the Project’s database and in the W B ’ s external website. Prior to issuance o f any invitation for bids for procurement o f goods and works and selection o f services, the proposed Plan shall be furnished to the WB for i t s review and approval, in accordance with the provisions o f paragraph 1 o f Appendix 1 to the respective Guidelines. Procurement o f goods and works and selection o f al l consultants wil l be undertaken in accordance with Plans approved by the WB.

28. Use of Standard Bidding and Contract Documents. For I C B procurement o f goods and works, the use o f IDA’S Standard Bidding Documents (SBD) i s mandatory. For N C B procurement,, CPTU may use the Government’s Standard Bidding Documents in form acceptable to the WB. For selection o f international consulting f irms, the W B ’ s Standard Request for Proposals (RFP), including standard contract form will be used; for local consultants Government’s procedure laid out in the national regulations wil l apply including its documentation. Depending on the type o f procurement, the WB’s or Government’s Standard BidProposal Evaluation Form wil l be followed for submission o f evaluation reports.

77

Category Works

Table A: Procurement Arrangements (US$ Millions)”

Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies.

Includes (i) goods to be procured through shopping; direct contracting (ii) consulting services to b e procured fol lowing quality based selection, quality and cost based selection, selection under fixed-budget, least cost selection, consultant qualification and single source selection, and individual consultants’ methods, and cost o f training, seminar, workshops and other dissemination activities; (iii) project incremental allowances for CPTU’s staff, TWG members, and PMCs; and (iv) recurrent costs.

I/

2

3

N.B.F. N o t Bank-financed

Prior Review Thresholds

29. Goods and Works: During the initial 18 months o f the project, the WB wil l carry out prior review o f the following contracts: (i) first contract for goods by each implementing agency using NCB, and thereafter contracts estimated to cost US$ 300,000 equivalent or more, irrespective o f the procedures; (ii) for works- first packagekontract using NCB, and thereafter al l contracts estimated to cost US$500,000 equivalmt or more, irrespective o f the procedures; and (iii) all contracts ’for goods and works using direct contracting. After 18 months, the above thresholds will be revieweddefinedredefined in the revised procurement plan, if necessary but subject to the prior review and “no objection”. ,

30. ‘ Consultants Services: The W B ’ s prior review wil l be required for consultants’ services contracts estimated to cost US$lOO,OOO equivalent or more for f i rms and US$50,000 equivalent or more for individuals. All single-source contracts wil l be subject to prior agreement by.the WB. All TORS o f the consultants are subject to the W B ’ s prior review.

#

(Threshold) Method >= us$2,000,000 ICB All contracts.

Table B: Thresholds for Procurement Methods and Prior Review a/

- Goods

All contracts

>=US$300,000 ICB , All contracts

D C

N C B First contract regardless o f value in NCB and thereafter, a l l contracts valued US$SOO,OOO or more

78

Expenditure Category

Services

Contract Value Procurement Contracts Subject to Prior Review (Threshold) Method

<US$300,000 NCB First contract by each implementing agency regardless o f value in NCB and thereafter, a l l contracts valued US$300,000 or more.

DC All contracts >=us$200,000 QCBS/ QBS All contracts.

Post Review

<us$200,000 <us$loo,ooo >=US$50,000

<US$50,000

Selective contracts meeting the requirements o f 3.9 to 3.12 o f the Consultant Guidelines ’

l

- a/ Prior review threshold would be reviewed after

31. For compliance with the W B ’ s procurement procedures, the WB will carry out sample post review o f contracts that are below the prior review threshold. The Procurement Core Team wil l also review and carry out audit o f such contracts. Such review (ex-post and procurement audit) o f contracts below the threshold will constitute a sample o f about 20 percent o f the . contracts in each agency.

FB S F B S L C S Post review IC- Qualifications All contracts (Section V o f the Consultant Guidelines) IC - Qualifications, Post review references. sss Prior agreement

Al l contracts o f US$lOO,OOO or more

18 months and adjusted, if necessary.

‘Review of Procurement Performance

32. The WB will monitor the compliance with the requirements o f W ’ s different procurement methods and performance standards on a continuous basis. As part o f the project’s planned annual review/mid-term review, a comprehensive assessment o f procurement performance wil l also be carried out. Based on the review, in consultation with the Government, the WB may revise the prior review threshold, including the procurement and selection methods.

33. Reporting. The project wil l prepare semi-annual Procurement Monitoring Report (PROCMOR) included as part o f the implementation status report, as per specific formats agreed with GOB.

34. Frequency of procurement supervision missions proposed. Once every six months. Besides, as part o f the fiduciary control, W B ’ s staff and independent consultant, as deemed appropriate, will carry out post review/procurement audit o f contracts.

79

5 Procurement

Method

ICB NCB NCB WCB NCB

Details of the Procurement Arrangement:

6 Domestic

Preference (yesho)

Yes No No N o No

35.

Post) Prior Post Post Post Post

1 Re€ No.

May2008 April 2008 April 2008 April 2008 March 2008

G1 G2 G3 G4 G5

- - - -

- G6

G7 -

- G8

G9 -

Hardware and software for LGED Hardware and software for RHD Hardware and software for REB Hardware and software for BWDB Computers & Printers for CPTU and IMED (Desktop, laptop, printer, modem, photocopier and

- w 1

400,000 275,000 150,000 275,000 230,000

36.

S6

S7

S8

S9

G6ods and Works: List o f contract packages to be procured following ICB and NCB:

target agencies (field offices) e-GP awareness and communication consultant Feasibility study on IT infrastructure 60,000 CQI FBS Yes December 2009 and e-contract management e-GP implementation and monitoring 345,000 IC Yes, October 2007 consultant (intl.) (15 SM) e-GP Training Specialist (intl.) (9 2 10,000 IC Yes April 2008

200,000 QCBS Yes June 2008

2 1 3 Contract

Description Estimated

cost (US$)

other accessories) Furniture and Fixture for C P l T I 180,000 and IMED including furnishing

communication equipment for Office equipment, electrical and 100,000

CPTU and IMED- Vehicles for CPTU (2 Microbus I 75,000

Civil works -Construction o f new CPTU office facilities

700,000

Consulting Services

NCBNS

(Prior I

January 2008

March 2008

December

80

1 Ref. No.

2 3 5 6 7 Description of Assignment Estimated Sekction Review Expected

by Proposals Submission cost Method (US%) (Prior / Post) Date

SM) SI0

S 1 1

-~ -

e-GP Training Specialist (local) (36 150,000 I C Yes April 2009 SM) Social Awareness Campaign and 1,500,000 QCBS/ Yes December 2007

1/ with nominated sub-consultant

I Communication consuitant - QBS

81

, , I . Present Value of Flows Economic Analysis Financial Analysis

Annex 9: Economic and Financial Analysis

BANGLADESH: Public Procurement Reform Project I1

Fiscal Impact Taxes Subsidies

Project Costs NA NA

1. This project i s designed to support sustainability o f procurement reforms by improving competition in the bidding process, reducing procurement delays, improving procurement quality through better management and monitoring at entity level. The direct benefits envisaged under the project would include faster and better use o f public resources with increased transparency; thus contributing to reduction o f corruption and increased aid utilization capacity. The project would restore the public confidence, thereby contrihuting to the creation o f good investment climate in Bangladesh. The project would also enhance the capacity o f the domestic construction and consulting industries to participate more effectively in national and international procurement. In the longer term, al l the above would create a powerful force toward more transparent and accountable institutions, resulting in accelerated economic growth and faster poverty reduction.

2. To gauge the impact o f the proposed interventions, a set o f well-defined procurement performance indicators have been developed. The existing procurement management information system wil l be enhanced and expanded to include more features to monitor the performance o f target agencies against the said benchmarks during project implementation. In view o f the nature o f the project, since benefits cannot be quantified in monetary terms, no calculation o f economic rate o f return wil l be attempted.

3. To ensure sustainability o f the reform initiatives, the Government has agreed to provide counterpart funding for the reform program, including budgetary support to maintain the CPTU. In addition, cost recovery mechanisms for providing training t6 private participants wil l be reviewed during implementation.

'

4. The Government wi l l fund the CPTU staff salaries and part o f operating expenses: The project's direct fiscal impact i s minimal in consideration o f i t s small contribution o f about US$1.3 million, constituting five percent o f the project cost. The project, however, would have significant fiscal impact on GOB'S overall budget in terms o f reduction o f corruption, more effective competition, decrease o f contracting costs, and timeliness o f contract execution.

82

Annex 10: Safeguard Policy Issues

BANGLADESH: Public Procurement Reform Project I1

Environmental Category is “C”. As such, no environmental impacts are expected to arise as a result o f project implementation. The project wil l not involve any acquisition o f land.

Safeguard policies

Safeguard Policies Triggered by the Project Yes No

Environmental Assessment (OP/BP/GP 4.0 1) [I [XI

Natural Habitats (OPBP 4.04) [I [XI

Pest Management (OP 4.09) [I [XI

Cultural Property (OPN 1 1.03, being revised as OP 4.11) [I [XI

Involuntary Resettlement (OPBP 4.12) [I [XI

Indigenous Peoples (OD 4.20, being revised as OP 4.10) [I [XI

Forests (OP/BP 4.36) [I c X I

Safety of Dams (OP/BP 4.37) [I [XI

Projects in Disputed Areas (OP/BP/GP 7.60) [I [XI

Projects on International Waterways (OP/BP/GP 7.50) [I [XI

83

Annex 11 : Project Preparation and Supervision

BANGLADESH: Public Procurement Reform Project I1

1. Timeline: Planned Actual

PCN review February 13,2006 February 27,2006 Init ial PID September 7,2006 September 19,2006 Init ial ISDS September 7,2006 March 13,2007 Appraisal April 23,2007 April 24,2007 Negotiations May 2 1,2007 May 2 1 ,‘2007 Board/RVP approval ’ June 20,2007 Planned date of effectiveness October 1, 2007 Planned date of mid-term review October 31,2010 Planned closing date March 31,2013

2. Key institutions responsible for preparation of the project: Ministry o f Planning, GOB, Bangladesh Implementation Monitoring and Evaluation Division, Bangladesh Central Procurement Technical Unit, NED, Bangladesh

3. WB staff and consultants who worked on the project included: Name

Z a h l Islam Jose Edgardo Campos Misuyoshi Asada M o h i U z Zaman Quazi Zahed Khan M. Iqbal S.A:M. Rafiquzzaman Joel Turkewitz Nilufar Ahmad Jose-Mane1 Bassat Burhanuddin Ahmed Kishor Uprety Marghoob Bin Hussein Tanvir Hossain Dimitri D e Pues Saeed Rana Peter Trepte Paul Schapper Shejuti Ahmed

Tit le Task Team Leader (Senior Procurement Specialist) Lead Public Sector Specialist Senior Transport Specialist Senior Transport Engineer Senior Urban Specialist Senior Energy Specialist Irrigation Engineer Senior Procurement Specialist Senior Social Scientist Senior Communication Officer Senior Financial Management Specialist Senior Legal Counsel Procurement Analyst Procurement Analyst Consultant (Social Accountability) Consultant Consultant (Capacity Development & Legal) Consultant (e-GP) Research Assistant

4. WB funds expended to date on project preparation:

WB resources: US$60,000 Total: US$60,000 5. Estimated approval and supervision costs:

1. Remaining costs to approval: FY07: U S $ 30,000 2. Estimated annual supervision cost: US$ 50,000

SASPR SASSD SASSD SASSD SASSD SASSD S A R P S SASSD EXTCD S A R F M L E G M S s m s S A W S S A R P S SARPS SARPS SARPS SARPS

84

Annex 12: Documents in Project Fi le

BANGLADESH: Public Procurement Reform Project I1

A. Project Implementation Plan/ Technical Project Proposal Government of the People's Republic o f Bangladesh, Implementation Monitoring and Evaluation Division, Ministry of Planning, Technical Project Proposal 2007 for PPRP I1 - Draft

B. WB SM'Assessments

Leviathan, T., 2000. Reforrhing Governance in Bangladesh. The World Bank.

The World Bank, 2000. Pakistan Country Procurement Assessment Report The World Bank. 2004: . Guidelines - Procurement under IBRD Loans and IDA Credits by the World Bank Borrowers. The World Bank. 2004: Guidelines - Selection and Employment of Consultants by the World Bank Borrowers.

The World Bank. 2002. Bangladesh Country Procurement Assessment Report

The World Bank 2002 Public Procurement Reform Project- Project Appraisal Document

The World Bank 2005 BD: Public Expenditure, FM, and Procurement Review- Draft Report

The World Bank 2006 BD: Country Assistance Strategy

The World Bank. 2006. Background Technical Papers at Preparation Mission.

The World Bank. 2006. Bangladesh Country Assistance Strategy.

The World Bank. 2001. Country Financial Accountability Assessment Report

The World Bank. 2007. Background Technical Papers at Pre-Appraisal Mission ,

The World Bank 2007 Capacity Assessment o f CPTU/ IMED

The World Bank 2007 Operational Risk Assessment of RHD- Draft Report

The World Bank 2007 Behavioral Change Communication & Social Accountability- Draft Policy Note

The World Bank 2007 Strategy for Procurement Capacity Development- Draft Policy Note

The World Bank 2007 Strengthening Monitoring & Evaluation at Sectors- Draft NLTA

C. Other ADB: Hand Book on Problems in Procurement for Project Financed by ADB. Government o f Bangladesh 2005, National Strategy for Accelerated Poverty Reduction RHD, LGED, REB & BWDB: Delegation o f Financial Powers for Development Projects.

'Including electronic fi les

85

Annex 13: Statement of Loans and Credits

BANGLADESH: Public Procurement Reform Project I1

Original Amount in US$ Millions

Difference between expected and actual

disbursements

Project ID F Y Purpose IBRD I D A SF GEF Cancel. Undisb. Orig. Frm. Rev'd

PI00330

PO98273

PO89382

PO74841

PO86661

PO83890

PO86791

PO81969 PO74966

PO78707

PO53578

PO7 1435

PO62916

PO8 1849

PO7473 1

PO75016 PO7 1794

PO44876

PO74040 PO69933

PO57833 PO50752

PO44810

PO41887

2007

2006 2006

2005

2004

2004

2004 2004

2004

2004 2003

2003

2003

2003

2002

2002 2002

2002

2002 2001

2001

2001 2001

1999

BD Railway Reform Programmatic DevPolicy Local Governance Support Project '

Investment Promotion Financing Facility

HNP Sector Program

iBD - Water Supply Program Project

Economic Management T A Program (EMTAP) Reaching Out o f School Children Project

Enterprise Growth '& Bank Modernization

Primary Education Development Program I1

Power Sector Development T A

Social Investment Program Project Rural Transport Improvement Project

Central Bank Stfengthening Project

BD: Telecommunications Technical Assist. Financial Services for the Poorest

Public Procurement Reform Project

Rural Elect. Renewable Energy Dev. Female Secondary School Assis. I1

Renewable Energy Development HIV/AIDS Prevention

A i r Quality Management Project

Post-Literacy & Continuing Education Legal & Judicial Capacity Building

Municipal Services

Total:

0.00

0.00 0.00

0.00 0.00 0.00

0.00 0.00 0.00

0.00 0.00

0.00

0.00 0.00

0.00 0.00 0.00

0.00

0.00 0.00

0.00 0.00

0.00

0.00

40.00

11 1.50

50.00

300.00

0.00

0.00

0.00

250.00

150.00

7.10

18.24

190.00

37.00

9.12

5.00

4.50 190.98

120.90

0.00 40.00

4.71

53.30 30.60

138.60

0.00

0.00 0.00

0.00 0.00 0.00

0.00 0.00 0.00

0.00 0.00

0.00 0.00 0.00

0.00 0.00 0.00

0.00 0.00 0.00

0.00 0.00

0.00

0.00

0.00 0.00

0.00 o.ob 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00

0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 .o.oo 0.00 0.00 0.00

0.00 31.06

8.20 0.00 0.00. ' 21.98

0.00 0.00 0.00 0.00

0.00 0.04

0.00 0.68

40.29

112.33

47.35

361.48

39.57

19.64

43.54

140.99 100.14

13.86 5.63

126.17

36.37 7.82

1.78

0.34 91.56

25.11

1.98 2.09

2.65 29.89

15.03

36.88

0.00 0.00

-0.08 0.00 -1.25 0.00

-56.05 0.00

0.77 0.00 8.74 0.00

4.35 0.00 50.42 0.00

3.78 0.00

9.77 1.93 3.60 0.00

54.76 0.00 32.50 0.00

5.10 1.89

1.07 0.00 -0.35 -0.48

47.73 0.00 38.32 -5.35

6.21 0.00

19.67 -0.33 2.15 -0.54

21.80 -1.20

10.57 0.00 34.08 22.36

0.00 1,751.55 0.00 8.2G 53.76 1,302.49 297.66 18.28

86

BANGLADESH STATEMENT OF IFC's

Held and Disbursed Portfolio In Millions of U S Dollars

Committed Disbursed

IFC IFC

F Y Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. .-

2001 BRAC Bank 0.00 1.63 0.00 0.00 0.00 1.60 0.00 0.00

1997 DBH 1.91 0.65 0.00 0.00 1.91 0.65 0.00 0.00 1991 Dynamic Textile 0.00 0.00 0.00 1.48 0.00 0.00 0.00 1.48

GTFP Dhaka Bank 5.00 0.00 0.00 0.00 5.00 0.00 0.00 0.00

GTFP Eastem Bnk 2.59 0.00 0.00 0.00 2.59 0.00 0.00 0.00 2004 GrameenPhone Ltd 24.00 0.00 0.00 0.00 24.00 ' 0.00 0.00 0.00 2006 GrameenPhone Ltd 59.00 0.00 0.00 0.00 0.00 0.00 6.00 0.00 I998 IPDC 3.13 0.00 0.00 0.00 3.13 0.00 0.00 0.00 1998 Khulna 10.40 0.00 0.00 11.99 10.40 0.00 0.00 11.99

1998 Lafarge/Sunna 35.00 ' 10.00 0.00 0.00 35.00 10.00 0.00 0.00 2000 LafargeiSunna 0.00 0.00 0.00 15.00 0.00 0.00 0.00 ' 15.00

2003 RAK Ceramics 7.20 0.00 0.00 0.00 7.20 0.00 0.00 0.00 2000 United Leasing 2.57 0.00 0.00 0.00 2.57 0.00 0.00 0.00

Total portfolio: 150.80 12.28 0.00 28.47 91.80 12.25 0.00 28.47

Approvals Pending Commitment

FY Approval Company Loan , Equity Quasi Partic.

2000 USPCL 0.00 0.00 ' 0.00 0.00 1998 Khulna 0.00 0.00 0.00 0.00

Total pending commitment: 0.00 0.00 0.00 0.00

87

2o06

8.5

Annex 14: Country at a Glance

BANGLADESH: Public Procurement Reform Project I1

Growth o f capital and GDP (Yo)

" T

POVERTY and SOCIAL

2006

GNI per capita (Atlas method, USSj 460 GNI(Atiasmathod, US% billions) 69.9

Average annual growth, 2000-06

Bangladerh

Population, mid-year (miilionsj n4.4

Population (Sy 19 Laborforce(%J 2 2

Most recant estlmate (latest year avallable, 2000-06)

P overly (94 of popuiatio n below national po verty line) 50 Urban population (%of totelpopulation) 25 Life errpectancyat birth (yesrsj 63 Infant mortality(per 1M)Oiive births) 56 Child malnutrition (%of children under5) 46 Access to an improvedwtersource (%ofpopviation) 74 Literacy(%ofpopulationage 159 41 Gross pdmary enrollment (%of school-agepopuiationj 0 9

Male 0 7 Female 111

t

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1986 1996

. GDP (USS biiiionsj 212 40.7 Gross capital formation/GDP 6.7 20.0 Eqorls of goods and services/GDP 5.4 Ill

Gross national savings/GDP 73.9 20.0 Gross domestic savings/GDP 9.6 P.4

Current account balance/GDP -5.1 -3.2 Interest paynentslGDP 0.7 0.5 Total debt/GDP 36.1 37.7 Total debt serviceiexports 284 It4 Present value of debt/GDP Present value of debtlexports

1986.96 1996-06 2005 (average annuaigmMhJ GDP 4.2 5.4 6.0 GDP per capita 18 3.4 4.0 Eqorts of goods and sewices 117. 9.6 8 6

South LOW- Asla Income

1470 684

1005

17 2 1

29 63 66 45 84 60 10 16 0 5

2006

60 0 24 5 6 6 20 0 25 6

-0 9 0 4

30 6 5 6

22 0 985

2,353 580

1384

19 2.3

31 59 80 39 75 62 0 4 10 99

2006

62.0 25.0 l7.8

20.3 26.6

0.9

2006 2006-IO

6 7 6 3 4 6 4 5 8 7 P5

Development diamond'

Llfe expectancy

capita "1 l+enro~~~~

Access to improvedvletersource

primary

-Bangladesh -- Lowincomagroup

Eco no mlc ratto s*

Trade

T Capital formation

Domestic savings

Indebtedness

-Bangladesh Lo wincome gro up

STRUCTURE of the ECONOMY

(%of GDPJ I986 1996

Agnculture 319 257 Industry 215 249

M anufactunng 110 6 4 Services 465 495

Household final consumption expenditure 656 632

Imports of goods and services P 2 8 7 General gov't final consumption eqenditure 4 3 4 4

(average annual gro Mh) Agriculture Industry

Services M anufact unng

1906 .9~ ISSO-06

2 3 3 6 6 5 7 0 67 6 3 3 6 5 5

Household final consumption expenditure 3 2 3 6 General gov't final consumption expenditure 4 0 6 3 Gross capital formation 6 7 6 6 Imports of goods and services 7 5 56

2005

20 1 272 6 5

52 6

76 4 5 5

23 0

2005

22 6 3 8 2 6 4

5 1 7 6 0 7 81

52 2ns: 4 ~:W .-

76.1 Lo, 0, 0, A b 5.6

24.4 -GCF &GDP

2o06 Growth o f exports and Imports ('4 4.5 3 0 1 9 6 0 4 6 5

6 0

Note 2006data arepreliminaryestimates Groupdataarefor2005 'Thediamonds showfour keyindicators inthecountry(1n boId)comparedwth its incomegroupaverage lf dataare missing,thediam&dmll

be incomplete

88

F 528

B 8 6 8 8

Bangladesh

PRICES andGOVERNMENT F INANCE

Domestlc prlces (%change) Consumer pnces Implicit GDP deflator

Government finance (%of GDP, includes cumn! granlsj Current revenue Current budget balance Overall surplddeficit

T R A D E

(US$ millions) Totalexports (fob)

Raw jute Leather and leather products Manufactures

Total imports (cif) Food Fuel and energy Capital goods

Export pnce index(2000=Wj Import pnce index(2000=UOj

' Terms of trade (ZOOO=UOj

BALANCE of P A Y M E N T S

(US$ milhonsj Exports of goods and services Imports of goods and sewices Resoume balance

Net income Net current transfers

Current account balance

Financing items (net) Changes in net reserves

M e m o : Reserves including gold (US$ m4/llons) Conversion rate (DEC,local/US$j

1986

8.0

9.5 4.1

-3.1

1988

819 124 61

486 2.3M

358 342

1003

46 48 96

IS86

1043 2,537 -1544

-126 586

-1084

U P -128

29.9

EXTERNAL DEBT and RESOURCE FLOWS

(US$ millions) 1906

Tota!debt outstanding and disbursed . 8.062 IB RD 61 IDA 2,450

Total debt service IBRD IDA

448 5

28

Composition of net rbsourceflow Official grants 553 Official creditors ' 843 Pnvate creditors 55 Foreigndirect invesfment (net inflow) 2 Portfolio equity(net inflows) 0

World Bank program Commitments Disbursements Pnncipal repaynents Net f l o m Interest paynents Net transfers

383 337

8 330 25

305

~

19@6

8.7 4.2

9.0 2 2

4 . 5

1998

3.884 91

24 1 3205 6,947

570 274 198

85 79 0 8

mea

4,437 7,804 -3,167

55 1821

-1291

274 10 ff

1870 40 9

I 9 9 6

6,341 46

5.70

672 8

92

596 548 -30

-Iff n

168 279

54 225

45 SO

~

2006

6.5 5.1

0 . 5 2.1

-3.6

2005

8,573 96

22 1 7,819 11870 1807 1602 1794

IS 04 89

2005

9.750 0.9ff 4.167

-680 4290

-557

824 -67

2,929 618

2004

20,129 0

8.895

671 8

208

822 557 -16

449 4

707 615 108

467 86

399

2006

7.0 5.2

0.7 2.2

-3.3

2006

U,422 Iff

269 9,506 0.301

1601 1795 2.00

P2 ni 87

2008

1178 6,707 -3,989

-786 5.347

572

-207 -365

3.408 87 2

2005

8,935 0

8,888

791 0

223

871 339

-9 802

1

500 547 6 3

394 70

325

lLLlxI -GDPddlaor &CU

Export and Import levels (US$ mlll.)

5.m

I w 01 02 03 04 06 w

.Exports .lfrQOrI6

Current account balance to GDP (K) L------

Comporl t lon o f 2005 debt (US$ mlll.)

C: 308

A - IBRD E . Ellaerd E . IDA D. Gihm rmltil&rd F. P w a e C-IMF G - Ston-tsm

C: 308

I A - IBRD E . Ellaerd E . IDA D. Gihm rmltil&rd F. P w a e C-IMF G - Ston-tsm

Development Economics 3/0/07

Rangpur

Gaibandha

Dinajpur

Bogra

SerajganjNatore

Joypurhat

Naogaon

Nowabganj

JamalpurSerpur

Netrokona

Sunamganj

Pabna

Kushtia

RajbariMeherpur

Chuadanga

JhenaidahMagura

Narail

Satkhira

Bagerhat

Perojpur

Jhalukathi

Gopalganj

MadaripurSariatpur

Faridpur

Jessore

Noakhali

Khagrachhari

Patuakhali

Bhola

Borguna

Comilla

MoulviBazar

Mymensingh

Tangail

Manikanj

Rangamati

Bandarban

Cox's Bazar

Thakurgaon

Nilphamari Lalmonirhat

Kurigram

Panchagar

Feni

GazipurNarsingdi

Naraynganj

Munshiganj

Chandpur

Luxmipur

Brahmanbaria

Habiganj

Kishorganj

Khulna

Rajshahi

Chittagong

Barisal

Sylhet

DHAKA

PANCHAGAR

THAKURGAONNILPHAMARI

LALMONIRHAT

DINAJPUR

RANGPUR

KURIGRAM

GAIBANDHA

JOYPURHAT

NAOGAON

NOWABGANJ

RAJSHAHI

NATORE

BOGRAJAMALPUR

SERPUR

NETROKONA

MYMENSINGH

TANGAILSERAJGANJ

PABNA

KUSHTIA

MEHERPUR

CHUADANGA

JHENAIDAHMAGURA

RAJBARI

FARIDPUR

MANIKGANJDHAKA

GAZIPUR

KISHORGANJHABIGANJ

SUNAMGANJ SYLHET

MOULVI BAZAR

BRAHMANBARIA

NARSINGDI

NARAYNGANJ

MUNSHIGANJ

SARIATPUR CHANDPUR

COMILLA

MADARIPUR

GOPALGANJNARAILJESSORE

SATKHIRA

KHULNA

BAGERHAT

PEROJPUR

BARISAL

JHALUKATHI

PATUAKHALIBHOLA

BARGUNA

LUXMIPUR

NOAKHALI

FENI

KHA

GRA

CH

HA

RI

RANGAMATI

CHITTAGONG

BANDARBAN

COX’S

BAZAR

R A J S H A H I

D H A K A

S Y L H E T

K H U L N A

B A R I S A L

C H I T TA G O N G

INDIA

INDIA

MYANMAR

Bay

of

Bengal

Karnaphuli R.

Padma R.

Jamuna R.

Brah

map

utra

R.

Tista R.

Madhumati R.

Meg

hna

R.

Meghna R.

Ganges R.

26°

25°

24°

23°

90° 91° 92°

21°

23°

24°

25°

26°

92°91°90°89°

21°

22°

DhakaBANGLADESH

Bay of Bengal

INDIA

MYA

NM

AR

SRILANKA

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

0 25 50 75

KILOMETERS

100

BANGLADESHPUBLIC PROCUREMENT

REFORM PROJECT II

DISTRICT CAPITALS

DIVISION CAPITALS

NATIONAL CAPITAL

DISTRICT BOUNDARIES

DIVISION BOUNDARIES

INTERNATIONAL BOUNDARIES

IBRD 35508

MAY 2007