Is There Room For Discretion? Reforming Public Procurement in a Compliance-Oriented World

Public procurement—the purchase of goods, works and services by governments—is treated too often by policy-makers and development aid practitioners as an administrative “plumbing and wiring” issue, best left to procurement technicians and contract attorneys. Like the car engine for the typical driver, procurement is recognized as important for the functioning of the overall system, but not necessary to understand on its own. Follow the instructions (comply with the rules), and all will go well. What is at stake, however, is a powerful instrument in the toolbox of good governance proponents. To look at procurement as simply an issue of compliance is to view its development impact through too limited a lens. Procurement, representing on average 13 percent of GDP and a third of government expenditures in OECD countries, helps determine the quality of government expenditures as well as the fiduciary credibility of public sector management. It is a key variable in determining development outcomes. To be effective, it requires the active engagement of the full range of development stakeholders. 

The timing of this discussion at a conference on governance is important, as international financial institutions (IFIs), particularly the World Bank and the African Development Bank (AfDB), are in the process of reviewing and overhauling procurement policies and guidelines for the projects they finance—the first such overhaul in decades. Both the World Bank and the AfDB have developed framework papers to guide their reforms and are consulting extensively with stakeholders all over the world. Between June and December of 2014, the proposed reforms will be detailed and discussed. These efforts coincide with the evolution of development finance as well as worldwide procurement reforms (EU guidelines, the WTO Government Procurement Agreement, and the United Nations Commission on International Trade Law).

 The purpose of this paper is to ensure the engagement of the broadest range of stakeholders, especially policymakers and aid practitioners, to raise key issues with implications for public sector governance, and to lay out a framework for addressing contentious and seemingly irreconcilable differences among the various actors. The paper is based on a range of sources, including the substantial reviews and analyses conducted in recent years by the IFIs. The sections are set forth according to the following five questions:

  •  Where does procurement fit in the global governance agenda?
  • Why isn’t anyone looking at procurement in terms of development outcomes?
  • Is it really only about the bid and award stage of the procurement cycle?
  • Should I follow the rules or apply my best judgment?
  • Where do I fit in as a stakeholder?