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Fiduciary Forum - 2010
Afghanistan Procurement Team
PROCUREMENT REFORMS AND
IMPLEMENTATION SUPPORT IN A
FRAGILE STATE: CASE OF
AFGHANISTAN
FRAGILE STATE
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Fragile states is the term used for countries which are
characterized by
political instability,
frequently on-going violence or
the legacy effects of past severe conflict
Afghanistan Procurement Team
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What is a Fragile State
The above lead to particularly severe challenges to
development due to weak institutional capacity,
weak governance ……….
Few Countries – Afghanistan, Bosnia & Herzegovina,
Cambodia, Kosovo, Sudan, Somalia, Timor-Leste,
West Bank and Gaza, Yemen ……………
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FRAGILE STATE
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Afghanistan Procurement Team
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Countries at the end of conflict often need help to
build an effective state. Such assistance needs to be
comprehensive and requires the integration of
security, diplomatic and development efforts
While the risk of failure in these countries is high, the
risk of non- action is even higher.
As Robert B. Zoellick stated “Only by securing
development can we put down roots deep enough to
break the cycle of fragility and violence”
The cost of development including project preparation
and implementation costs in a fragile state is
relatively high in comparing with normal state.
Bank has developed Operational policy
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OPERATIONAL POLICIES FOR FRAGILE STATES
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The new policy sets out a framework for a more rapid and
effective response to crises and emergencies that is better
aligned with Recipient/Borrower needs and the Bank’s
experience and current engagement.
Afghanistan Procurement Team
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New Framework for Rapid Response to Crises and
Emergencies: OP/BP 8.00
The note identifies various procurement issues that may
arise during the preparation and implementation of
emergency response projects. Guidance note available
Rapid Capacity Assessment
Management and use of UN agencies under Bank Projects
Simplification on certain procurement policies and procedures.
Bank maintains a long list of procurement agents that clients/ borrowers
can consult when needed
PPF facility for project preparation – 5 million USD
Retroactive financing limit – 40% of loan/ credit / loan amount
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Afghanistan Procurement Team
PROCUREMENT REFORMS IN A
FRAGILE STATE---ISSUES AND
MOVING FORWARD- EXPERIENCE
FROM AFGHANISTAN
Afghanistan Procurement Team
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BACKGROUND
Afghanistan
Afghanistan Procurement Team
Fully fits the characteristics of Fragile state
 has suffered from more than 30 years Conflict
 Destroyed all institutions, and any Governance
 No development works was done when the county
was in war
 Nearly all infrastructure were destroyed, and no
maintenance was effected during this period
 Development work started after 2002 when funds
were available from World Bank and other
donors
 Multi Donor Trust Fund - ARTF
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BACKGROUND …
Brief history
 1979
 Subsequent
Afghanistan Procurement Team
to1989 – Soviet Occupation
 1989 to 1994 – Civil War
 1994 to 2001 – Taliban Rule
 2002 to 2003 – Afghan Interim Authority
to 2004 - country convened a
Constitutional Loya Jirga in 2003 and a
new constitution was ratified in January
2004.
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BACKGROUND …
2002 – Status
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Reconstruction and Development of Afghanistan
Flow of Large Donor Aid
Afghanistan Procurement Team
Brief of Public Procurement System in Afghanistan
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Had series of provisions regulating procurement
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A law on procurement of 1987
Rules and Regulations for procurement of works 1989 – replaced the
procurement law but very few amendments, mostly of religious nature
Purchase regulation adopted as a decree in 2001 – Applicable to goods,
routine works and maintenance
Issues with the provisions / rules regulations
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BACKGROUND …
Issues with the provisions / rules regulations
 Failed to meet the standards of International
Procurement
 Procurement of works – mostly based on 1989 rules –
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Procurement of Goods – mostly based on 1987 rules –
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Core problem with the provisions of the goods procurement was
lack of detail and clarity in the qualification; specifications;
drafting of bidding documents and award criteria
Smaller contracts – Direct under which 1, 2 or 3 officials could
purchased
Afghanistan Procurement Team
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resembled more like a set of bid and contract preparation
guidelines rather than a regulation to ensure competitive bidding
Minimum time limits, qualification criteria, processes ……
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No reference to Services contracts
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NEED FOR PROCUREMENT REFORMS
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was to put in place emergency procurement capacity to facilitate rapid, transparent
utilization of donor resources for reconstruction and development – act as a facilitating
purchasing by the Government - under different financing - nearly 100% of
procurement
Carry out training needs analysis
Develop framework for training
Afghanistan Procurement Team
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Cope with the urgent task of reconstruction, the Transitional
Government of Afghanistan with the help of Donors
Capacity to plan and implement reconstruction projects in line
ministries is very weak – Establishment of Afghan Assistance
Coordination Authority (AACA) – So centralized technical assistance
in critical areas – Financial management, procurement and auditing
AACA – dissolved and the department responsible for procurement
was renamed as ARDS and was put under the Ministry of Economy
Crown Agents was contracted as the Country’s Central Procurement
Agent – Role
New PA – RITES India Ltd
Challenge to Carry out Procurement Reforms and Procurement
implementation in such conditions and environment.
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PROCUREMENT REFORMS …..
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May 2003 – Holistic procurement review carried out and a
number of serious constraints were identified
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The need for adequate standards in procurement
Procurement Law 2005 reflecting the current international
best practice and suitable to the local requirements
Three main pillars of new law
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Creation of a regulatory body
Procurement function in all ministries and government departments
Capacity building thru formalised training and certification program
Afghanistan Procurement Team
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Limited procurement capacity at all levels
Lack of ownership of procurement
Obstacles to such ownership
No consistency in the structures of the line ministries
The law requires creation of units at National Level
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Procurement Policy Unit (PPU)
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Contract Management Office (CMO)
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Special Procurement Commission (SPC)
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PROCUREMENT REFORMS - ORG
President
Special Procurement
Commission
Ministry of Finance
Proc
Capacity
Building
Officers
Procurement Policy
Unit (PPU)
Procurement
Controllers
Line Ministry
Line Ministry
Proc
Capacity
Building
Officers
Proc
Capacity
Building
Officers
Contract
Management Office
Ministry of Economy
ARDS
Afghanistan Procurement Team
Ministry of Justice
Procurement
Liaison Officers
Administrative Review Committee
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PROCUREMENT REFORMS …..
Procurement Policy Unit (PPU) – Functions
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Afghanistan Procurement Team
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Policy and professional development
Performance monitoring organ
Not involved in contract award or review of Procurement
process
What has been done / achieved – Rules of Procedure,
SBDs, Dissemination of Information, Capacity Building,
Capacity Building – How it has been done, Impact
evaluation of the Capacity building, Exit strategy
Future vision / Steps - why
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PROCUREMENT REFORMS …..
Contract Management Office (CMO)
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Afghanistan Procurement Team
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Serves as the office of the SPC
Provides secretariat support to SPC in conducting
business
To regulate and coordinate the Management of State’s
contract’s including procurement contracts
It has the overall responsibility for planning, executing
the work of SPC, as well as record keeping
Liaise with the procuring entity
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PROCUREMENT REFORMS …..
Special Procurement Commission (SPC)
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All high value procurement contract awards- thresholds
are in Annex of the Law
The SPC membership consists of
• Minister of Finance – Member and Chairman
• Minister of Justice – Member
• Minister of Economy – Member
Afghanistan Procurement Team
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Highest authority under the Law to grant approval for
procurement contracts
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APPEAL AND REVIEW MECHANISM
Administrative Review Committee – Provide the PPU
with a mechanism to ensure expert and independent
decisions in respect of applications of complaints or
Representations.
Head of PPU – nominate suitably qualified members of
Committee, from both public and private sector; nominated
members not more than 7 for a period of max 3 years at a
time
Other members competitive – open, every three years, new
Experts
Afghanistan Procurement Team
21 members – ensure sufficient choice and breadth of
experience, various fields
Head of PPU appoints the Chairman from one of the
Members
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APPEAL AND REVIEW MECHANISM
Review Board – each time a complaint or representation
is received; 3 independent experts chosen from
administrative review committee
No hearing requested by the Applicant – then order
issued based on documentation without hearing the
parties
Order by Review Board – within 7 days of its
appointment and receipt of application
Afghanistan Procurement Team
Secretariat will register the commencement of the
review procedure
PPU will confirm the order
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CAPACITY BUILDING
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Carried out by a Consultancy Firm
Three year capacity building program – including Training
of Trainers
Multiple types of programs
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Shattered education system due to 30 years of war
Capacity of civil servants and functioning of public offices – adversely
affected
Language and translation, Knowledge of IT
High level of mobility
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Lack of technical support
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Afghanistan Procurement Team
Challenges
Results
Trained nearly 1750 trainees (1100 Basic; 250 Intermediate;
200 advanced; 160 short term and 125 Special)
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CAPACITY BUILDING
What was missed out
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Allocation of a Dedicated PCBO - Trainer for each of the
Ministry
Introduction of a Special Short Term Procurement Course in
University - Diploma
Afghanistan Procurement Team
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Technical Help Desk for dealing with the queries on the
Procurement, SBDs, Procurement Law etc – This will provide
a means of ensuring consistency of interpretation, application
and removal of uncertainty in the use of documents
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Afghanistan Procurement Team
Afghanistan Procurement Team
PROCUREMENT IMPLEMENTATION
SUPPORT IN A FRAGILE STATE:
CASE OF AFGHANISTAN
PROCUREMENT IMPROVEMENTS – WHY?
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Same Size does not fit all or The Same
prescription cannot cure even if the symptoms
are the same i.e. yield results
For Fragile Countries - The need for doing things
differently, creative, out of the Box Procurement
Solutions – is all the more important in such
fragile countries than other Countries due to
many reasons but need to be within the
Boundaries of the Bank GL
Afghanistan Procurement Team
To do the same old thing the same old way
And to expect some new outcome…..
That is madness
- Einstein
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PROCUREMENT OF WORKS AND GOODS
Analysis of the Country situation, and Market
Study – Customization of the SBD’s
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Afghanistan Procurement Team
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Encourage bid securing declaration – Poor or no
Banking Facilities
Post qualification Criteria – Similar experience,
Annual turnover, liquid Assets?
To increase Competition and Development of
Construction industry - Increasing the NCB threshold
and use slice and package
Allow Procuring Entity to conduct pre-bid meeting for
all NCBs to explain salient features of bidding
document and preparation of bid
Conducted training workshops for local bidding
community, Afghan Builders Association
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PROCUREMENT OF WORKS AND GOODS …,
Performance Security – Recovery from First
Invoice
 Insurance – Acceptance of Self Insurance
 Payment terms – Letter of Credit – Supply and
Installation Contracts.
 Requirement of Manufacturer’s Authorization Permitting dealership certificate in procuring
standard equipments.
 Flexible contracting arrangements to address
rapidly any additional funds made available by
the Government of Afghanistan, ARTF, IDA or
any other donor by make changes in IFB, ITB
and GCC/SCC
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Afghanistan Procurement Team
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PROCUREMENT OF WORKS AND GOODS ….,
Disseminate information about bidding thru the
Radio stations
 Sell bid documents electronically and free of
charge – Poor or no postal service
 Allow downloading of bid documents from PIU
websites
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Afghanistan Procurement Team
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PROCUREMENT OF CONSULTANCY
SERVICES
Single RFP with both forms of Contract Lump
Sum and Time based
 Lump Sum contracts – Modifications
incorporated to indicate that equipment
purchased would be the property of the Client at
the end of the contract
 Price Adjustment even in lump Sum Contracts
which are long term
 Strengthening of Contract Conditions
 Monitoring of Inputs in a Lump Sum Contracts
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Afghanistan Procurement Team
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CONSULTING SERVICES …..
Health Sector – Service Delivery Contracts - Brief
Details of the Services – Decision on What type of
contract to be used
Opening of Separate and special account for the Contract
100 % verification of financial statements of expenditure
(SoE).
 Payment based on actual eligible expenditure based on SoE
and verification of services provided by third party monitoring
evaluation team
 Transfer of assets after contract completion to the client
 In the beginning Procurement of Pharmaceuticals, Vaccines
and Condoms, to be carried out by Service Provider as per the
Firms Procurement Guidelines – Third Party Survey carried
out to verify and check the Quality of the Goods Procured
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Afghanistan Procurement Team
Use of Lump Sum Consultancy Contract for Delivery of Basic
Package of Health Services to Rural Poor with the
modifications to standard Contract Conditions of lump-sum
contract
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CONSULTING SERVICES …..
Health Sector – Service Delivery Contracts
Now, Procurement of Pharmaceuticals, Vaccines and Condoms
following the World Bank Guidelines and specifically related
to health sector goods. The Service Provider shall keep copy of
GMP, COPP, license to produce drug in the country of
manufacturing and test certificate for the batch for the
Pharmaceuticals, Vaccines and Condoms dispensed in the
health facility to ensure quality of drugs dispensed.
 Verification by a Third Party M&E Consultant
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Results Based Financing Implementation
Afghanistan Procurement Team
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CONSULTING SERVICES …
Community Driven Development (CDD) –
National Solidarity program (NSP) - Brief Details
of Services
Hiring of Facilitating Partners
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Challenge to Decide on what type of contract
Changing the type of contract from time based to
lump sum based on per community based facilitation
work defined in the operational manual.
Providing price variation as the contract duration
was more than two years in lump-sum contract.
Providing for adding more communities depending on
the performance of the NGOs and availability of
funds.
Third party performance (Qualitative and
Quantitative) and technical evaluation of facilitating
partners
Afghanistan Procurement Team
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CONSULTING SERVICES …
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Third party evaluation / quality of physical works
Impact Evaluation of the Project on welfare of
community and get feedback on what is required,
working or not working …
Appointment of Independent Consultant for
handling of Financial Transactions, Float account
Afghanistan Procurement Team
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Third party evaluation of large Technical/ Project
Support Consultant including financial audit.
Introduction of MIS
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CONSULTING SERVICES …
Power Sector Projects - Brief Details of Services
Hiring Project Management Consultant
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Devolving of Powers to Management Consultants
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Responsible for entire procurement process
including the preparation and submission of
BERs with Government agreement and technical
evaluation of Contractors, etc
Afghanistan Procurement Team
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CONSULTING SERVICES …
Education Sector Projects - Brief Details of Services
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Large University Partnership contracts (around
US$2 million) in Higher Education Sector to
improve higher education in Afghan universities
following CQS procedures.
Distribution of girls scholarship and teachers
training expenditure as ‘pass through money’ in
consultancy contracts and the consultants are
responsible for distribution of girls scholarship or
teachers training in view of weak government
capacity
Afghanistan Procurement Team
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Twinning of Higher University – Curriculum
development, Capacity Building, Exchange of
Staff, Conduct teaching
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INNOVATIONS IN SUPERVISION
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Capturing the GPS coordinates of the
community (CDC) in the database
Verification of assets, and progress
through GPS enabled digital cameras
Evaluation of physical Works by
Third Party
Afghanistan Procurement Team
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Supervision/ Fiduciary Verification – Issues in
Fragile state – Afghanistan
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INNOVATIONS IN SUPERVISION
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Impact Evaluation study
Appointment of an Independent Consultant to
handle Money
Third Party survey of quality of Pharmaceuticals
procured by NGOs
Afghanistan Procurement Team
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Performance Evaluation of Facilitating Partners
by Third Party
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