Procurement Reform within Papua New Guinea’s Procurement System. Seoul, Korea Training Workshop on Capacity Building Programme for Government Procurement Reform . Good Afternoon to all. It is both a privilege and a pleasure for me to attend the Seminar on Capacity Building Programme for Government Procurement Reform. At this time I extend my thanks to the many people that have worked on bringing this meeting together in Seoul, Republic of Korea and for making my stay in your country a pleasant one. I would now like to present a brief summary on the current state of play of public sector procurement reform within the Government of Papua New Guinea. Procurement Reform within Papua New Guinea’s Procurement System. by Veari Hitolo - Contract Coordinator

Role of the CSTB The Central Supply and Tenders Board is required to “control and regulate” procurement under the Public Finance (Management) Act. It does this by reviewing all major tenders (>K100, 000) and ensuring that they: Are conducted in accordance with the law, and Represent “value for money, transparent, promote effective competition, fair and ethical dealing and efficiency and effectiveness. The Sovereign nation of Papua New Guinea is a developing independent nation. It gained its independence 31 years ago and has a total population of approximately 6 million, with 70% of people living in rural areas. PNG has 19 provinces and 89 districts. Although, its cultures are similar the people of Papua New Guinea have 700 languages. Pidgin is its national language that is commonly used throughout the all nation. Procurement reform within PNG has been significantly bolstered with the promulgation of new legislation and Finance Instructions in relation to procurement. The Government of Papua New Guinea (GoPNG) through the Central Supply and Tenders Board (CSTB) is currently undergoing significant internal reform. It is also managing procurement reform across PNG as part of its legislated responsibility.

Centralised Central Supply & Tenders Board Promulgation of new legislation and Finance Instructions in relation to procurement. The Government of Papua New Guinea (GoPNG) through the Central Supply and Tenders Board (CSTB) is currently undergoing significant internal reform. It is also managing procurement reform across PNG as part of its legislated responsibility. The CSTB has sought the assistance of the South Australia State Supply Board (SA SSB) in furthering GoPNG procurement reform. The similarities include the role of a central Board in setting the framework within which agencies undertake their procurements, requirement for central reporting and control of public procurement and centralising of the oversight of procurement competency development. The Australian Governments Donor Agency - AusAID is currently providing support to assist in the enhancement of the CSTB by the provision of two (2) fulltime specialist Procurement Advisors. AusAID desires to support the CSTB in its internal and external reforms; in order for the GoPNG to begin to obtain the 20% improvement dividend available through better procurement. This dividend will significantly enhance the GoPNG’s fiscal outcomes in the longer term. GoPNG procurement expenditure is approximately K1.2 bn per annum.

Control & Regulates by Law 20 Provincial Boards Limited threshold of each Supply Board and Depart. Heads Public Finances (Management) Act and Financial Instruction All procurement by Government is through conventional methods Majority of expenditure is on infrastructure Limited internet and website usage by private sector Currently the majority of government spending in PNG is on core infrastructure; a major obstacle for the introduction of e-procurement systems in PNG is that the required infrastructure – stabilised power and telecommunications networks is not currently available. The CSTB is in a development phase, as we continue to evolve; we expect to be in a position to take on further procurement responsibilities and initiatives. As noted our current focus is on building consistent procurement practices and expertise within the CSTB and spending Agencies. As we move into the Continuation phase of reform in five or six year’s time, PNG will have sufficient expertise and infrastructure to better pursue e-procurement practices. We envisage that our extended timeframe for the implementation of such systems will allow us the benefit of your lessons learnt as your nations pursue e-procurement.

The CSTB developed a Procurement Reform Plan to establish its intentions for procurement reform and provide an opportunity for integration of further procurement reforms across the entire government sector and to anticipate harmonization with Aid and Donor Agencies’ procedures and practices. In cooperation with AusAID Advisors the CSTB reviewed the Financial Instructions and developed a Good Procurement Manual and Operational Manual. The Good Procurement Manual is required to be used in accordance with the Financial Instructions and as such this Manual is the centre-piece of GoPNG procurement principles, practices and procedures. The CSTB has a total of thirteen (13) staff. Six (6) of the thirteen are trained procurement specialists who provide detailed guidance to departments, Provincial Supply and Tenders Boards and Specialized Tender Boards on the conduct of tenders. The Central Supply and Tenders Board is required to “control and regulate” procurement under the Public Finance (Management) Act. It does this by reviewing all major tenders (>K100, 000) and ensuring that they: Are conducted in accordance with the law, and Represent “value for money, transparent, promote effective competition, fair and ethical dealing and efficiency and effectiveness. The CSTB reviews all major procurements over which it has delegated authority; prior to the awarding of contracts. Procurement is conducted as a collaborative process between the spending department and CSTB, within the GoPNG legislative framework. This model has been adopted as a result of insufficient capacity, skills and experience across the GoPNG in relation to procurement. Such arrangements also minimise opportunities for corruption and enable procurement reform to be easily managed. The CSTB developed a Procurement Reform Plan as a means to clearly establish its intentions for procurement reform and provide an opportunity for integration of further procurement reforms across the entire government sector and to anticipate harmonization with Aid and Donor Agencies’ procedures and practices. In cooperation with AusAID Advisors the CSTB reviewed the Financial Instructions and developed a Good Procurement Manual and Operational Manual. The Good Procurement Manual is required to be used in accordance with the Financial Instructions and as such this Manual is the centre-piece of GoPNG procurement principles, practices and procedures.

Reform Plan The rollout of the Good Procurement Manual is just one of the elements of the overall procurement reform process. The Procurement Reform process is clearly envisioned in three phases: Consolidation Phase 1 year horizon This phase strengthens existing procurement capabilities in the government and standardises practices and procedures, where possible. Development Phase 5 year horizon (2006-2009) This phase exploits the good work from the previous phase under the auspices of the Reform Plan. Extensive Training and further institutional development is seen to be the target in this phase. Continuation Phase After year 2009 The GoPNG will continue the reform process, on an ongoing basis. This phase will be undertaken by the Government with a sustainable system, with little or no external assistance. The rollout of the Good Procurement Manual is just one of the elements of the overall procurement reform process. The Procurement Reform process is clearly envisioned in three phases: Consolidation Phase 1 year horizon This phase strengthens existing procurement capabilities in the government and standardises practices and procedures, where possible. Development Phase 5 year horizon (2006-2009) This phase exploits the good work from the previous phase under the auspices of the Reform Plan. Extensive Training and further institutional development is seen to be the target in this phase. Continuation Phase After year 2009 The GoPNG will continue the reform process, on an ongoing basis. This phase will be undertaken by the Government with a sustainable system, with little or no external assistance.

E-procurement in PNG – where it its at. Current infrastructure is not stable enough to support minimal requirements. Government recognizes the use of Information Communication Technology as a tool for future growth in e-Commerce/ e-procurement Government has recently launched its Medium Term Development Strategy, (MTDS),...improve telecommunications (ICT)...develop provinces Two main objectives :- 1. Conduct research into ICT development 2.To develop & deliver a more responsive & effective service Currently the majority of government spending in PNG is on core infrastructure; a major obstacle for the introduction of e-procurement systems in PNG is that the required infrastructure – stabilised power and telecommunications networks is not currently available. Unfortunately, all government departments and agencies have no online network within each organisation neither within total government circles where information can be shared and is accessible to the general public. The Prime Minister has charged departments to address this issues upon launching the Integrated Government Information System workshop last couple of months. There is therefore, an urgent need to conduct research into the ICT sector to clearly determine its impact on the public, private sector, individuals and the economy as a whole. The future inter connection and integration between government agencies will provide a single government service. It will also allow the public and the private sector participants to register and participate in the development of ICT. It will allow and provide an Executive Information System for all concerned parties in decision making as individuals or collectively.

C : Implementation Arrangement Central Supply & Tenders Board will take carriage of the project. Formation of Working Committee Improve current Laws & Legislation to enter e-Procurement Promote public & private sector participation The CSTB is in a development phase, as we continue to evolve; we expect to be in a position to take on further procurement responsibilities and initiatives. As noted our current focus is on building consistent procurement practices and expertise within the CSTB and spending Agencies. The CSTB as the centralised Government Procurement body will take lead in co-ordinating all government departments and agencies including private sector involvement in the eventual pursuit of e-procurement frameworks and processes.

Benefits of our reforms Improved transparency Improved accountability Reduce corruption Increase public participation Generate a savings of 20 to 30 percent ( US$ 120million approx) Rapid enhancement of the ICT infrastructure. We envisage that the benefits of our improved procurement processes and reforms will be improved transparency and accountability, reduced corruptions, increased public participation, efficiency gains and savings and an improved ICT platform for both procurement and information management and sharing. As we move into the Continuation phase of reform in five or six year’s time, PNG will have sufficient expertise and infrastructure to better pursue e-procurement practices. We envisage that our extended timeframe for the implementation of such systems will allow us the benefit of your lessons learnt as your nations pursue e-procurement.

EM TASOL THANK YOU ALL