Matthieu CAHEN Policy Analyst Public Sector Integrity Division

Beirut – 3 June 2015

IMPLEMENTATION OF SELECTED PRINCIPLES OF

THE OECD RECOMMENDATION ON PUBLIC

PROCUREMENT

Increase transparency and

Improve performance through

evaluation of procurement systems

SIGMA Regional Conference

on Public Procurement

• It stands as a crucial pillar of strategic governance for any government body;

• It is also a high-risk area due to the close interaction between private and public spheres

• Governments face the challenge of ensuring that different priorities are clear, work together and overlaps or conflicts are avoided.

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Public Procurement matters

Government procurement as share of GDP and of total govt. expenditures

Source: OECD National Accounts Statistics. (2013)

Public Procurement really matters

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Estonia

Hungary

Netherlands

Korea

Japan

Ireland

Luxembourg

Czech Republic

Germany

New Zealand

Canada

Israel

Slovak Republic

Finland

United Kingdom

Sweden

Turkey

Belgium

Austria

Denmark

Switzerland

Spain

Poland

OECD(UWA)

Norway

France

United States

Mexico

Italy

Portugal

Greece

Slovenia

28.1

0 10 20 30 40 50

13.0

0.05.010.015.020.025.0

as % share of total government expenditureas % of GDP

And it matters for everyone

• From the Business side, public sector efficiency is the second business priority area for reform after product market regulation.

And public procurement the top priority in this sector:

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BIAC Economic Survey, 2014

Supported governments in reforming public procurement systems for sustainable and inclusive growth and trust in government through:

• Building evidence from useful, reliable and comparable data across OECD countries on the performance of public procurement – Key Performance Indicators

• Undertaking hands-on peer reviews that provide assessment of public procurement systems, either national or sectorial, and tailored proposals to address implementation gaps in specific context – in Italy, Greece, Northern Ireland but also US, Korea, Mexico

• Organising policy dialogue to share insights & shape directions for future reforms, build strategic partnership with private sector - G20

• Identifying good practices and providing international standards on public procurement – Compendiums on Green Procurement, Transparency, Accountability and Anticorruption

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OECD contribution to reforming

public procurement

Through the MENA/OECD Network on Public Procurement:

• Specific workshops in the region:

– on professionalisation of the procurement workforce,

– e-procurement,

– global procurement strategies (from needs analysis to aggregation mechanisms).

• Manuals and Guides

Application in the MENA Region

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Main findings from the OECD work in Public

Procurement

The OECD’s experience in working with public procurement shows that a sound procurement system includes:

a) procurement rules and procedures that are simple, clear and ensure access to procurement opportunities;

b) effective institutions to conduct procurement procedures and conclude, manage and monitor public contracts;

c) appropriate electronic tools;

d) suitable, in numbers and skills, human resources to plan and carry out procurement processes; and

e) competent contract management.

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•The 2008 OECD Recommendation on Enhancing Integrity in Public Procurement focused on integrity, transparency, accountability, good management, risk prevention and control.

• Interest in governance of public procurement to achieve efficiency and advance public policy objectives has significantly increased.

•The new OECD Recommendation on Public Procurement supports a shift from an administrative and compliance-based approach to a strategic and holistic approach to realise government policies

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A standard for Public Procurement in

the XXI century

• Supports dedication of public resources to address the increasing complexity of strategic public procurement

• Yields returns as the investment in a sound public procurement brings major outcomes: a 1% saving represents 43 billion EUR per year in OECD countries.

• Supports achievement of policy goals such as job creation, innovation, environmental protection or the development of SME, a crucial pillar of strategic governance and services delivery for any government.

• Supports risk mitigation such as those arisen from public works, complex digital technology or major events.

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Investing in Better Policies

The New Recommendation:

Participation

Efficiency

Capacity

Integrity

Access

Balance

E-Procurement

Evaluation

Risk Management

Transparency

Integration

Accountability

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The New Recommendation on Public

Procurement: 12 integrated principles

TRANSPARENCY THROUGHOUT THE ENTIRE PUBLIC PROCUREMENT CYCLE

How transparency principles could be

implemented?

• Most recent reviews from the OECD suggest that transparency could efficiently be implemented notably by e-Procurement systems if appropriately designed and used

• But why implementing transparency into public procurement?

Transparency fosters competition

• Fair and equitable treatment of suppliers ranging from SMEs to foreign suppliers

• Need to be balanced with disclosure of information which could be detrimental to competition

Transparency brings inclusiveness

• Easily and readily accessible online information on public procurement provides suppliers with a coherent view of procurement opportunities

• Rebuild citizens’ trust in governments by offering a platform to review public expenditures

Transparency enhances visibility

• On average, 2/3 of public procurement is done at sub-central level, hence the potential offered by transparency in understanding procurement patterns at sub-central level

• Greater visibility of public funds provides strategic insights which help shape future public procurement decisions

• Greater transparency provides opportunities for rationalisation and mutualisation of needs, thus economies of scale.

IMPROVEMENTS THROUGH PERFORMANCE ASSESSMENT OF PUBLIC PROCUREMENT

Performance evaluation

• Assess periodically and consistently the results of the procurement process to guide future decisions

• Develop indicators to measure performance, effectiveness and savings of the public procurement system

In Feb. 2013, the Leading Practitioners on Public Procurement asked the OECD to help developing a set of indicators to measure the performance of public procurement systems and their evolution over time.

Four areas for the development of indicators were identified:

1. Efficiency of the public procurement cycle

2. Openness and transparency of the public procurement cycle

3. Professionalism of the public procurement workforce

4. Contract performance management

Towards key performance indicators

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Why implementing performance-based

assessments?

• Procurement is an evidence-based system and so shall be its performance evaluation

• Measuring performance provides insights both at macro and micro-level

• Measuring public procurement performance not only provides assessment of public spending efficiency but also information to governments on achievements of their objectives.

Yet, measuring is a challenge

• Purchasing entities report difficulties in centralising information on public procurement

• Need for a consensus on what to measure and how to measure it: – Performance indicators vs. Activity indicators

– Common terminology

– Shared vision on the objectives

An international reference for public procurement standards that shall shape public procurement systems:

• Deepening the evidence base - Key Performance Indicators, comparative data, e.g. for G@G

• Best practice compendiums – green procurement, transparency, integrity and innovations

• Basis for future policy advice – country and sectorial reviews (like Mexico, Greece, Colombia, Korea)

• Implementation toolkit

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Next steps

Implementing the Recommendation

www.oecd.org/gov/ethics/public-procurement.htm

For more information on OECD work on public

procurement and integrity

Thank you!

matthieu.cahen@oecd.org

Web: www.oecd.org/gov/ethics/integrityinpublicprocurement.htm

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