By Paul Emanuelli

This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.

The increasing economic integration created through the formalization of trading blocks and international trade treaties has led to the development and expansion of common governance standards for public procurement. The following section surveys the following leading sources for public procurement that can help shape and inform both jurisdictional and institutional public procurement practices:

  1. World Trade Organization Government Procurement Agreement
  2. United Nations Commission on International Trade Model Procurement Law
  3. European Union Procurement Directive
  4. American Bar Association Model Procurement Code
  5. United States Federal Acquisition Regulations
  6. United Nations Convention Against Corruption
  7. Organization for Economic Co-operation and Development Procurement Standards
  8. World Bank Rules and Other Regional Development Bank Guidelines

1.  World Trade Organization Government Procurement Agreement

According to Wikipedia, the World Trade Organization (WTO) is an “intergovernmental organization that regulates international trade” that was “officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 124 nations on 15 April 1994” and replaced “the General Agreement on Tariffs and Trade, which commenced in 1948.” Amongst other treaties, the WTO has promulgated the Government Procurement Agreement (GPA), which is described as follows on its website:

What is the GPA?
The GPA is a plurilateral agreement within the framework of the WTO, meaning that not all WTO members are parties to the Agreement. At present, the Agreement has 19 parties comprising 47 WTO members. Another 31 WTO members participate in the GPA Committee as observers. Out of these, 10 members are in the process of acceding to the Agreement. The fundamental aim of the GPA is to mutually open government procurement markets among its parties. As a result of several rounds of negotiations, the GPA parties have opened procurement activities worth an estimated US$ 1.7 trillion annually to international competition (i.e. to suppliers from GPA parties offering goods, services or construction services).

The parties to the GPA are Armenia (2011); Canada (1996); the European Union (EU) (1996 for Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom; 2004 for Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovak Republic, and Slovenia); Bulgaria and Romania (2007); Croatia (2013); Hong Kong (1997); Iceland (2001); Israel (1996); Japan (1996);South Korea (1997); Liechtenstein (1997); Moldova (2016); Montenegro (2015); Aruba (1996);New Zealand (2015);Norway (1996); Singapore (1997); Switzerland (1996); Chinese Taipei (2009); Ukraine (2016); and the United States (1996).

Australia’s final market offer was accepted by the WTO in October 2018, with its accession anticipated to occur within a year thereafter, and the United Kingdom (UK) is renegotiating its standing as an independent member due to its departure from the European Union.

The key objectives of the GPA are to promote greater trade liberalization through the reduction of protectionist trade barriers in the government procurement of goods, services, and construction by promoting efficient and transparent competition for government procurement contracts. To achieve these ends, the GPA includes the following sixteen key provisions and protocols:

  1. Anti-avoidance provisions that include rules around quantifying the value of contracts and prohibitions against contract-splitting.
  2. Reciprocal non-discrimination provisions that entrench national treatment to all suppliers across the trading block and prohibit local preference practices.
  3. Recognition of the use of electronic means to post solicitations and receive bids, including electronic reverse auction protocols.
  4. Transitioning protocols for “developing countries” that are seeking accession to the trade treaty.
  5. Jurisdictional disclosure obligations relating to the publication of government procurement rules and related enforcement rulings.
  6. Institutional disclosure obligations relating to the posting of contracting opportunities with minimum information standards applicable to those posting opportunities.
  7. Prohibitions against imposing conditions for supplier participation in a bidding process that unnecessarily restrict competition, including conditions of past experience with the purchasing institution.
  8. Provisions calling for the transparent description of requirements, evaluation criteria, and process rules.
  9. Debarment rules that allow purchasing entities to exclude suppliers from competitions on grounds including bankruptcy, false declarations, persistent performance deficiencies, convictions for serious crimes or offences, professional misconduct, and the failure to pay taxes.
  10. Regulations for using multi-use supplier lists to ensure transparency in both the qualification for such lists and in the award of assignments under such lists.
  11. Prohibitions against using unnecessarily restrictive specifications, including the use of supplier or product specific branding, and provisions in favour of using performance and functional specifications over descriptive or design-based specifications.
  12. Prohibitions against relying on restrictive tendering timeframes that undermine open competition.
  13. Provisions permitting the use of negotiated tendering formats and procedures.
  14. Restrictions against using limited tendering procedures.
  15. Provisions requiring member parties to establish supplier bid dispute processes with independent adjudicative bodies applying formal court-based due process standards, including rapid interim measures to preserve supplier rights to participation.
  16. Provisions governing party-to-party trade disputes.

This trade treaty has served as a key source for setting common core global standards for other regional trade treaties, which have adopted many of the same open public procurement standards first recognized in the WTO’s trade treaty.

2. United Nations Commission on International Trade Model Procurement Law

According to its website, the United Nations Commission on International Trade Law (UNCITRAL) is the “core legal body of the United Nations system in the field of international trade law…with universal membership specializing in commercial law reform worldwide for over 50 years, UNCITRAL’s business is the modernization and harmonization of rules on international business.” These harmonization efforts include model laws, legislative guides, and training guides.

As noted on the UN website, the 2011 United Nations Commission on International Trade Model Procurement Law, which replaced the 1994 version, contains a series of international standards for conducting public procurement:

The Model Law on Public Procurement contains procedures and principles aimed at achieving value for money and avoiding abuses in the procurement process. The text promotes objectivity, fairness, participation and competition and integrity towards these goals. Transparency is also a key principle, allowing visible compliance with the procedures and principles to be confirmed.

The UN website confirms that Afghanistan, Armenia, Azerbaijan, Belarus, Egypt, Ghana, India, Jamaica, Kazakhstan, Kenya, Kyrgyzstan, Mexico, Mongolia, Myanmar, the Russian Federation, Rwanda, Tajikistan, Thailand, Trinidad and Tobago, Tunisia, Uganda, Ukraine, United Republic of Tanzania, Uzbekistan, and Zambia have “used the Model Law and accompanying Guide to Enactment in reforming their public procurement law and systems”, while noting that these reforms also included the application of local legal traditions and domestic policy objectives.

The UN Model Procurement Law offers a model legal framework for achieving open, transparent, and fair government procurement practices including the following eleven provisions and protocols:

  1. Rules regarding the publication of anticipated government procurement projects to provide advanced notice to suppliers.
  2. Protocols permitting suppliers to participate in government procurement opportunities regardless of nationality, as well as rules regulating the use and disclosure of local preferences.
  3. Rules surrounding the qualification of suppliers based on professional, technical, and financial abilities and resources, as well as rules regarding the prohibition of suppliers based on bankruptcy, insolvency, criminal offences, and the failure to pay taxes, as well as standards requiring the transparency of criteria used in the qualification of suppliers.
  4. Transparency standards relating to the disclosure of project requirements, evaluation criteria, and tendering process rules, including rules regarding the use of neutral functional specifications.
  5. Rules regarding the clarification and amendment of procurement documents during the bidding process.
  6. Rules relating to the use of bid security.
  7. Protocols for conducting supplier pre-qualifications.
  8. Rules regulating the cancellation of a tendering process and the rejection of abnormally low bids.
  9. Debarment protocols for excluding suppliers from procurement proceedings due to bribery, unfair advantage, or conflict of interest.
  10. Transparency standards for the public disclosure of contract awards, along with confidentiality rules to protect confidential supplier information.
  11. Protocols requiring the proper documentation of procurement proceedings, as well as codes of conduct for government procurement staff.

The UN Model Procurement Law also recognizes a range of acceptable tendering formats and procedures, including the following eight procurement procedures:

  1. Open Tendering
  2. Restricted Tendering
  3. Request for Quotations
  4. Request for Proposals Without Negotiation
  5. Request for Proposals With Dialogue
  6. Request for Proposals with Consecutive Negotiations
  7. Electronic Reverse Auction
  1. Single-Source Procurement

The UN Model Procurement Law also establishes protocols for the proper use of framework agreements, recognizing the distinction between closed and open framework agreements, and related protocols for ensuring supplier access to competitive opportunities, including rules regulating the second stage of a framework agreement procedure.

The UN Model Procurement Law additionally institutes a series of enforcement protocols, including standstill mechanisms, first-stage protest procedures at the institutional level, and second-stage protest procedures involving independent adjudicative bodies at the jurisdictional level. Like the European Directive, with which it is largely harmonized, the UN Model Procurement Law provides a series of common core global standards that have been implemented across multiple jurisdictions and serves as a useful source for the adoption of procurement rules at the jurisdictional and institutional level.

3. European Union Procurement Directive

As stated on the European Commission’s website, spending in government procurement accounts for a significant percentage of GDP across Europe:

Every year, over 250,000 public authorities in the [European Union (EU)] spend around 14% of GDP on the purchase of services, works and supplies. In many sectors such as energy, transport, waste management, social protection and the provision of health or education services, public authorities are the principal buyers. Public procurement refers to the process by which public authorities, such as government departments or local authorities, purchase work, goods or services from companies. Examples include the building of a state school, purchasing furniture for a public prosecutor’s office and contracting cleaning services for a public university.

Given the importance of government spending in the marketplace, the European Union has created a system of rules to create consistent standards in government procurement:

To create a level playing field for all businesses across Europe, EU law sets out minimum harmonised public procurement rules. These rules organise the way public authorities and certain public utility operators purchase goods, works and services. They are transposed into national legislation and apply to tenders whose monetary value exceeds a certain amount. For tenders of lower value, national rules apply. Nevertheless, these national rules also have to respect the general principles of EU law.

The EU has undergone a series of recent reforms, which included the promulgation of three new procurement directives in 2014, with an effective date across the EU membership of April 18, 2016. Those directives included a main government procurement directive, as well as separate directives for procurements by utilities sector entities and for the award of concession contracts.

The main EU procurement directive includes the following fifteen provisions and protocols:

  1. Provisions promoting open competition between suppliers and prohibiting discrimination based on nationality or otherwise unnecessarily restricting competition.
  2. Protocols protecting confidential supplier information.
  3. Rules regarding the transparent communication of procurement rules and regulations of each jurisdiction.
  4. Rules regarding conflict of interest that require all public institutions to establish procedures to ensure the equal treatment of all suppliers.
  5. Protocols regarding the open tendering process, including rules regulating minimum posting periods and posted information, as well as rules regarding the use of negotiated procurement formats, including competitive dialogue formats and innovative partnership arrangements, as well as protocols for the use of framework agreements, dynamic purchasing systems, electronic auctions, and electronic catalogues.
  6. Rules regarding the use of central purchasing activities and central purchasing bodies.
  7. Protocols relating to the planning stages of the procurement process, including rules regarding preliminary market consultations, the description and use of neutral specifications and labelling requirements, product test report requirements, and the acceptability of variants.
  8. Transparency rules to ensure the proper disclosure of tendering information to all suppliers, as well as the publication of contract award notices.
  9. Protocols relating to the electronic availability of procurement documents and to the equal disclosure of information to short-listed candidates during multi-staged processes.
  10. Rules regarding the evaluation of suppliers and bid submissions, including rules regarding the disclosure of evaluation criteria and procedures.
  11. Debarment and disqualification protocols including rules recognizing the exclusion of suppliers due to criminal behaviour, fraud, terrorist offences, money laundering and child labour offences, bankruptcy, collusion, conflict of interest, persistent performance deficiencies, misrepresentations, unfair influence, or unfair advantage.
  12. Rules regarding the pre-qualification of suppliers and disclosure of contract award criteria, including protocols for calculating life-cycle costing and the treatment of abnormally low bids.
  13. Contract management rules, including protocols surrounding the regulation of contractors and subcontractors, contract amendments, and the termination of contracts.
  14. Protocols relating to general governance, including the creation of national compliance monitoring bodies.
  15. Reporting requirements relating to contract awards and protocols for national reporting systems to maintain statistical information.

These standards set the framework for the adoption of domestic procurement rules across the EU, including the procurement regulations that were adopted to govern public procurement in the UK and in Ireland. The European Directive was also highly influential in setting the standard for the 2017 Comprehensive Economic and Trade Agreement between Canada and the European Union.

4. American Bar Association Model Procurement Code

Since the 1970s, the American Bar Association (ABA) Section on Public Contracting Law has been promoting the adoption of uniform statutory procurement codes for state and local governments. As stated on the organization’s website:

Mission
Focuses on two fundamental tasks: (1) encouraging adoption of the ABA 2000 Model Procurement Code and the 2002 Model Procurement Regulations by state and local governments; and (2) identifying areas for code coverage and assisting in the drafting of revisions to the Model Procurement Code. These principles have been adopted by 17 states and many hundreds of local jurisdictions, and are designed to provide public officials, vendors and contractors, and taxpayers with procurement processes with integrity and value for money.
The Section of Public Contract Law and the Section of State and Local Government Law have also adopted the 2007 Model Code for Public Infrastructure Procurement (the 2007) MC PIP, which is a condensation of the ABA 2000 Model Procurement Code for State and Local Governments. Through both publications, the Committee seeks to foster consideration and adoption of these principles across the United States.

The American Bar Association Model Procurement Code serves as an early example of attempts to codify the rules relating to government procurement. The 2000 version of the Model Code, which was originally promulgated in 1979, includes the following seven key provisions and protocols:

  1. Provisions regarding the creation of institutional administrative frameworks to manage public procurement at the organizational level.
  2. Rules governing acceptable tendering formats, including competitive bids and proposals, small purchases, sole-sourcing, and emergency procurements.
  3. Protocols regarding the use of technical specifications that maximize competition.
  4. Provisions governing the modification and termination of contracts.
  5. Protocols relating to procurement remedies, which in 2000 were harmonized with provisions under the North American Free Trade Agreement (NAFTA) and the WTO Government Procurement Agreement, including bid protests procedures, contract disputes, debarments, and suspensions.
  6. Rules regarding inter-governmental co-operation and group purchasing initiatives.
  7. Protocols regulating ethics in government procurement, including ethical standards covering conflict of interest, kickbacks, contingency fees, and the misuse of confidential information.

The ABA 2000 Model Code is supplemented by the ABA 2002 Procurement Code: Recommended Regulations for State and Local Government, which provides the next-level implementation details for the creation of statutory frameworks governing public procurement, as well as the 2007 Model Code For Public Infrastructure Procurement, which focuses on standard setting for public infrastructure projects.

These ABA standards have helped inform the statutory frameworks adopted by many state governments across the US in their regulation of procurement practices of state and local government institutions, and can serve as useful benchmarks for the adoption of statutory codes and institutional policies and procedures in other countries as well.

5. United States Federal Acquisition Regulations

The United States Federal Acquisition Regulation, which governs United States federal government procurement, serves as a source for detailed operational standards relating to government procurement. Amongst other things, this detailed statutory regime contains provisions addressing the following twelve areas:

  1. Standards governing improper business practices, including internal conflict of interest rules and external contractor code of conduct standards.
  2. Document retention standards, including standards regulating contract execution and the use of paper and electronic documents.
  3. Solicitation posting and tendering standards, including the use of sealed bidding, competitive proposals, and simplified and accelerated tendering formats.
  4. Contractor qualification and debarment rules, including rules governing organizational and consultant conflicts of interest.
  5. Contract provisions setting out different pricing models and contract structures.
  6. Provisions governing labor laws and environmental standards in government contracts.
  7. Privacy and public access rules, including provisions relating to the provision of training in the area of privacy and access laws.
  8. General contract requirements, including intellectual property requirements, performance bonding and insurance, cost accounting, contracting financing, prompt payment rules, quality assurance, and value engineering.
  9. Bid protest rules regarding protests, disputes, and appeals.
  10. Rules governing different types of projects, including major system acquisitions, architecture and construction, services, information technology, utility services, and transportation contracts.
  11. Rules regarding contract administration, contract amendments, contract termination, and audits.
  12. Detailed standards regarding solicitation formats and contract terms and conditions.

6. United Nations Convention Against Corruption

The 2004 United Nations Convention Against Corruption addressed the corrosive impact of corruption on public administration:

Corruption is an insidious plague that has a wide range of corrosive effects on societies. It undermines democracy and the rule of law, leads to violations of human rights, distorts markets, erodes the quality of life and allows organized crime, terrorism and other threats to human security to flourish. This evil phenomenon is found in all countries—big and small, rich and poor—but it is in the developing world that its effects are most destructive. Corruption hurts the poor disproportionately by diverting funds intended for development, undermining a Government’s ability to provide basic services, feeding inequality and injustice and discouraging foreign aid and investment. Corruption is a key element in economic underperformance and a major obstacle to poverty alleviation and development.

The Convention calls on member nations to implement the following four anti-corruption measures:

  1. Adopt anti-corruption polices and practices.
  2. Establish recruitment standards for civil servants based on merit and aptitude; ensure anti-corruption training for staff working in areas vulnerable to corruption; promote adequate remuneration measures and pay scales; and promote training programs to ensure proper performance.
  3. Establish codes of conduct for public officials and establish measures to enable the reporting by public officials of acts of corruption to the appropriate authorities.
  4. Implement systems for government procurement that ensure transparency of decision-making based on objective criteria and procedures, bid protest enforcement mechanisms, and the establishment of transparent government budget procedures and general reporting obligations.

These principles provide guidance for the creation of anti-corruption measures for public procurement at both the jurisdictional and institutional levels.

7. Organization for Economic Co-operation and Development (OECD) Procurement Standards

The mission of the Organization for Economic Co-operation and Development (OECD) is to assist governments in improving global living conditions:

Our mission
The mission of the Organisation for Economic Co-operation and Development (OECD) is to promote policies that will improve the economic and social well-being of people around the world. The OECD provides a forum in which governments can work together to share experiences and seek solutions to common problems. We work with governments to understand what drives economic, social and environmental change. We measure productivity and global flows of trade and investment. We analyse and compare data to predict future trends. We set international standards on a wide range of things, from agriculture and tax to the safety of chemicals.

The 35 OECD members are Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Latvia, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States.

In 2009, the OECD released its Principles for Integrity in Public Procurement, which established governance principles in the following four areas:

  1. Transparency principles aimed at promoting transparency across the procurement cycle.
  2. Good management principles aimed at ensuring that government funds are used for their intended purposes and managed by competent procurement professionals.
  3. Compliance and monitoring principles aimed at preventing misconduct and maintaining high standards of integrity.
  4. Accountability and control principles aimed at establishing a clear chain of responsibility in the procurement cycle, establishing procurement dispute mechanisms for suppliers, and empowering civil society to scrutinize public procurement.

To assist in the implementation of these principles, the OECD offers a series of practical recommendations for maintaining the integrity of the procurement process during the procurement planning stage, the bid evaluation and award phase, and the contract administration phase. The OECD principles also contain a series of recommendations, process guides, and checklists for identifying the risks of fraud and corruption during the different phases of the procurement process. These guidelines are particularly useful for institutions that are looking to update their project governance practices.

In 2011, the OECD also released its Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions. The Convention recognized that bribery is a widespread phenomenon that distorts international competition. It called on all members to establish criminal offences for bribing foreign public officials and to impose strict record-keeping obligations on companies to deter “off the books” transactions that are often associated with bribery. In its follow-up 2016 Preventing Corruption in Public Procurement report, the OECD noted that 57% of all foreign bribery cases involved public procurement. Additionally, it provided guidelines to help inform the development of uniform global standards to combat corruption in public procurement.

Furthermore, in February 2015, the OECD Council on Public Procurement enacted a series of proposed standards relating to government procurement that included the following nine-recommendations:

  1. Recommendations relating to the transparency of public procurement systems, including timely access to and disclosure of information to competing suppliers during all stages of the procurement process, and visibility in the expenditure of public funds throughout all stages of the public procurement process.
  2. Recommendations relating to the integrity of the public procurement process, including recommendations relating to the development of integrity tools and training for public officials and the development of compliance and anti-corruption monitoring practices.
  3. Recommendations promoting greater accessibility to the public procurement system to encourage greater supplier participation, including stable institutional, legal, and regulatory frameworks, the use of clear documentation, and restrictions on the use of limited tendering and sole-sourcing.
  4. Recommendations for balancing and properly measuring any “secondary” policy objectives of government procurement against the primary value-for-money objectives of open transparent competition.
  5. Recommendations for fostering effective stakeholder participation, including processes for formulating changes to the procurement system through the use of regular dialogues with suppliers and business associations.
  6. Recommendations for driving the efficiency of the public procurement system, including the creation of updated institutional frameworks, processes, and centralized workflows that reduce administrative red tape, duplication, and waste.
  7. Recommendations for fostering e-procurement throughout the procurement cycle by using state-of-the-art digital procurement solutions and avoiding unnecessarily complicated systems with excessive implementation risks.
  8. Recommendations for capacity development of the government procurement workforce through ongoing training and certification, and collaboration with universities, think tanks and policy centres, as well as the development of merit-based career advancement opportunities and the removal of political interference in the procurement process.
  9. Recommendations for implementing performance tracking systems and integrating the budgeting planning process with the procurement system, as well as control mechanisms to better ensure public accountability through enforcement mechanisms.

These standards help to establish a series of benchmarks to track procurement governance progress at the jurisdictional and institutional level.

8. World Bank Rules and Other Regional Development Bank Guidelines

The World Bank provides funding for major procurement projects and ties compliance with prescribed procurement governance standards to that funding. The World Bank describes its Investment Project Financing as follows:

Investment Project Financing (IPF) is used in all sectors, with a concentration in the infrastructure, human development, agriculture, and public administration sectors. IPF is focused on the long-term (5 to 10 year horizon) and supports a wide range of activities, including capital-intensive investments, agricultural development, service delivery, credit and grant delivery [including micro-credit], community-based development, and institution building.
Unlike commercial lending, Bank IPF not only supplies borrowing countries with needed financing but also serves as a vehicle for sustained, global knowledge transfer and technical assistance. This includes support to analytical and design work in the conceptual stages of project preparation, technical support and expertise (including in the areas of project management and fiduciary and safeguards activities) during implementation, and institution building throughout the project.

In 2016, the World Bank released a revised Procurement in IPF and Other Operational Procurement Matters policy with the following objectives:

This Policy sets out a vision, the key principles, and policy requirements governing the procurement of goods, works, non-consulting services, and consulting services financed by the Bank (in whole or in part) through IPF operations, excluding procurement under Bank guarantees and under Bank-financed loans made by eligible financial intermediaries, for which the final recipient of loan funds is a private borrower.

This new World Bank policy contains the following two governing principles:

  1. When financing projects, the Bank will seek assurances that borrowers establish acceptable procurement procedures to address the core procurement principles of value-for-money, economy, integrity, fitness for purpose, efficiency, transparency, and fairness.
  2. The Bank will require proper governance structures to ensure accountability, address conflict of interest, and establish complaints processes for non-compliance.

The Bank requires that borrowers establish a procurement strategy and plan for each project. To assist in the development of these strategies and plans, in July 2016, the World Bank released extensive Procurement Regulations for IPB Borrowers. These regulations included rules and guidelines covering the following four core areas:

  1. Project governance, including rules focusing on the definition of project roles and responsibilities, conflict of interest, unfair advantage, non-compliance, process complaints, and fraud and corruption.
  2. Guidelines for the development of procurement strategies and plans, including communication protocols.
  3. Rules regarding the use of specifications and branding, as well as protocols regarding bid security, bid submission deadlines, evaluation criteria, domestic preferences, bid rejection, and the treatment of unbalanced, front-loaded, and abnormally low proposals.
  4. Protocols regarding notifications of award, standstill periods, debriefings, contract management, and records retention.

The World Bank’s policy and regulations framework is supplemented by an even more detailed series of standards established under its July 2016 Bank Procedure: Procurement in IPF and Other Operational Procurement Matters, which provides more detailed procedural instructions for procurement projects, as well as its July 2016 Project Procurement Strategy for Development: Long Form Detailed Guide that includes extensive procurement project planning instructions.

The World Bank sets global standards that are also adopted by regional development banks to encourage the development of compliant domestic procurement systems. For example, according to its website, the Inter-American Development Bank (IDB) encourages borrowers to develop their own national procurement systems so that they can use their own local rules in IDB-financed projects:

The procurement policies reflect the interest of the Inter-American Development Bank (IDB) and its member countries to grant transparency, competition, equality of opportunities, and the principles of economy, efficiency and integrity in the procurement of IDB-financed operations. The IDB provides funding to its Borrowing member countries with a broad range of loans and development programs. These operations involve procurement processes for goods, works, and services provided by firms and individuals.
The IDB is supporting Borrowing member countries in their effort to strengthen their procurement systems so that they meet international best practices. The goal is to have Borrowing member countries use their own systems to carry out procurement processes for IDB-financed projects, under the threshold for International Competitive Bidding (ICB), if the system or sub-system has been accepted by the IDB in compliance with the provisions in the Guide for the Acceptance of the Use of Country Procurement Systems. Consequently, IDB Procurement Policies shall be observed for ICB or for when a country’s system has not yet been accepted for use in Bank operations.

The IDB 2013 Guide for Acceptance of the Use of Country Procurement Systems includes a series of guidelines for measuring and establishing the equivalency of national procurement practices and systems. These guidelines include processes for reviewing, assessing, and strengthening country procurement systems for IDB approval, as well as procedures for the implementation of approved procurement procedures and related monitoring systems.

The Guide also includes substantive benchmarks, based on OECD standards, for measuring compliance of the domestic procurement systems, including standards in the following nine areas:

  1. General procurement procedures, including posting rules and related time limits, participation rules, tender documentation disclosure rules, technical specifications protocols, evaluation and award criteria protocols, bid submission, receipt, and opening rules, complaint processes, and pre-qualification procedures.
  2. Detailed procurement manuals for contracting entities, including guidelines for the development of general contract terms, procurement planning procedures, budgetary processes, communication protocols, statistic tracking processes, procurement training strategies, staff funding, quality control, and staff performance assessments.
  3. Record-keeping practices for transactions and contract documents, as well as clear delegations of authority.
  4. Procedures to avoid unnecessarily restrictive obstacles to competition, as well as clearly defined protocols for contract administration, including dispute resolution procedures.
  5. Procedures for the internal and external review and audit of procurement functions, including a control framework with follow-up reviews to rectify identified governance gaps and enable management action.
  6. An effective independent complaints process with public reporting requirements.
  7. An effective legal and regulatory framework, including rules regarding corruption, fraud, and conflict of interest, along with evidence of enforcement of rulings and penalties.
  8. The implementation of fraud detection measures, including measures for reporting corrupt and unethical behaviour.
  9. The creation of codes of conduct governing ethical standards for government staff.

These standards are similar to those adopted by other regional development banks, including the Caribbean Development Bank’s 2006 Guidelines for Procurement, the Asian Development Bank’s April 2015 Procurement Guidelines, and the African Development Bank-African Development Fund’s August 2015 Procurement Policy for Bank Group Funded Operations.

Future Considerations

As these leading global sources for procurement governance standards illustrate, purchasing institutions have a deep body of common core global standards to draw from in the development of their own local procurement practices. By leveraging these broadly recognized global standards, purchasing institutions can better ensure that they are keeping pace with current expectations on how they manage public resources in their procurement cycles.