Public Procurement

1
Public Procurement

• Workshop on Public Sector Governance
• Dec 5, 2006

2
Outline

• Procurement as a public sector governance issue
• Drivers of improved procurement
• Improving procurement elements of a strategy
  for India

3
Procurement in the Public Sector

• Procurement and fiscal discipline
• Procurement and the effective use of money
• Procurement and reducing waste
• Procurement and private sector development

4
Drivers of Improved Procurement Performance

• Simplified rules
• Enhanced management
• Standardized practices
• Strengthened commercial behavior
• Effective oversight and monitoring
• Improved capacity

5
Public procurement in India

• Large and growing component of public spending
  massive infrastructure projects
• Multiple systems GFRs but each ministry and
  department has own procedures
• At state level, procurement is a mosaic
  multiple systems running at the same time.
• No professional cadre no specialized training

6
Core governance issues

• Limited incentives for good performance no one
  owns procurement.
• Greater risk of taking action then of not taking
  action.
• Control efforts create perverse incentives
• Circumvent the system
• Move decision making towards center and to
  political level
• Weak interest on part of private sector

7
Current status

• Relatively poorly functioning system
• Constrained demands for performance from within
  the system or from without.
• Limited attention
• Emphasis on control and not on outcomes

8
New Resources

• E-Government Procurement
• RTI
• New forms of contracting - PPP

9
Elements of a Strategy

• Enhance capacity, focus on outcomes, and increase
  internal and external incentives to perform
• Within procurement
• Utilize technologies that simplify the process
  and enhance effectiveness.
• Improve transparency about system performance
• Establish enhanced linkages with the private
  sector and beneficiary communities

10
Strategy (II)

• Outside of procurement
• Modify budgeting rules to create incentives for
  efficient procurement
• Establish methodology for doing effective
  internal and external audits
• Work with the private sector on enhancing
  competitiveness.