New Trends in Government Procurement Presented at the ZSPA International Conference and Master Class 15 – 17 June 2016 11/16/2018 1 1

Outline of the Presentation General Considerations Public Procurement: An Overview Public Procurement Reforms The New Reform Agenda 11/16/2018

General Considerations Why does Public Procurement matter? Public Procurement is one of the most important economic factors in Zambia: Accounts for an estimated 15% of the GDP Government procurement is perceived to be the major source of corruption The need to apply principles of public procurement 11/16/2018

Public Procurement: An Overview What does government procure? Government procures goods and services from third parties (private sector). The rationale for buying from third parties is well-known. The use of markets to source goods and services drives cost efficiencies and stimulates innovation. Where government outsources complex services, risk transfer may also be a motivation. Third parties have expertise that can help government deliver value-for-money public services and wider policy objectives. 11/16/2018

What does government procure? The types of goods and services procured by government are diverse. On one end of the spectrum, there are products that can be acquired ‘off-the-shelf’ commoditised items such as toner where there is limited product differentiation. On the other, government procures highly specialised goods – such as welfare programmes or rehabilitation services – where it is likely to act as the only buyer. 11/16/2018

What does government procure? IT hardware Mobile phones Office equipment Energy and utilities Construction equipment Consultancy Internet Service Facilities management Construction services Work Programme Rehabilitation Military aircraft and ships Highly commoditised Highly Unique 11/16/2018

How does the procurement process work? To get the most out of suppliers, procurements need to be tailored to the specificities of the market in question. Different procurement methods are available to government. The methods are tailored to promote competition in procurement processes. 11/16/2018

How does the procurement process work? Write Specifications TOR and SOW Evaluate Offers Prepare Solicitation Documents Seek, Clarify and Close Offers Award Contract Manage the Contract Choose a Procurement Method Identify Needs Negotiate the Contract Evaluate the Procurement 11/16/2018

Who does the procuring? There are over 500 procuring entities (PE’S) in Zambia. One of the major challenges being faced in public procurement is poor recordkeeping. The poor record keeping in most PE’s has resulted in Lack of comprehensive statistics on the value of goods, services and works procured and on the key indicators under procurement process. This is exacerbated by the limited use of information and communication technology (ICT). The absence of robust data on government procurement constrains accountability. 11/16/2018

Overview of public procurement reforms in Zambia 1969: Public Finance (Control and Management) Act, 1969. The Act established: Central Supply and Tender Board Provincial Tender Boards 1982: Zambia National Tender Board Act Zambia National Tender Board (ZNTB) as regulatory body 11/16/2018

Overview of public procurement reforms in Zambia 1996: ZNTB authorized and implemented the restructuring of the secretariat with a view to making it more responsive. ZNTB started implementing the Public Sector Procurement Reform Programme under the Financial and Legal Management Upgrading Programme (FILMUP) financed by the International Development Association (IDA). 11/16/2018

The FILMUP programme was aimed at: Administrative strengthening of ZNTB; Recruitment and training of procurement specialists; Decentralising procurement; Providing the necessary office equipment and vehicles; and Enhancing procurement procedures. The FILMUP programme came to an end in 2000. 11/16/2018

Overview of public procurement reforms in Zambia 2000: ZNTB started undertaking other reform activities under the first phase of the Public Sector Capacity Building Project (PSCAP) funded by the IDA. The PSCAP was meant to continue some of the activities started under FILMUP 2008: Public Procurement Act (PPA). PPA established Zambia Public Procurement Authority 2011: Statutory Instrument No. 63 of 2011 (The Public Procurement Regulations, 2011) 11/16/2018

Overview of public procurement reforms in Zambia One of the objectives of preparing a new law on public procurement was adaptation to international instruments on public procurement (COMESA Directives, UNCITRAL Model Law on Procurement, World Bank Procurement Guidelines, etc.). Public Procurement Act No. 12 of 2008 11/16/2018

Factors leading to reform of Zambia’s public procurement system No. Factor 1 The Country Procurement Assessment Review (CPAR) undertaken by the Government and the World Bank in 2002 which revealed weaknesses and omissions in the current Zambia National Tender Board Act and Tender Regulations 2 The decision by the Government to enhance transparency and accountability and the Zero Tolerance to Corruption policy 3 Government policy to decentralise operations 4 COMESA Directive on Procurement which required members states to reform their procurement legal frameworks so as to conform to the UNCITRAL Model Law on Procurement. 5 The enactment of the Citizens Economic Empowerment Act. 11/16/2018

The new reform agenda Despite the recent reform agenda, government procurement is still too often bureaucratic, lengthy and opaque. The fundamental challenge is that: Public Procurement still seen by government as a regulatory function rather than an opportunity to deliver value-for-money public services. 11/16/2018

The new reform agenda To deliver better-value public services, there is need to change our mindset. Resource and attention need to be pushed away from the procurement process, to the areas where true value can be added: pre-market engagement and contract management. Focus on the beginning and end of the procurement cycle –that is a greater emphasis on outcomes and shaping procurement markets more effectively. 11/16/2018

The new reform agenda The digital agenda – which delivers faster and cheaper procurements than traditional models – could be a way to achieve value-for-money for a considerable proportion of government expenditure. ZPPA, starting from July 2017, will be introducing electronic government procurement on 6 Pilot cites. 11/16/2018

The new reform agenda E-procurement aims to simplify the buying procedure, speed up procurement and engender competition through transparency 11/16/2018

Benefits of e-procurement Improved Governance Transparency of public procurement Less opportunity for fraud & corruption Efficiency Gains Competitive prices & reduced transaction costs Procurement management based on data Economic Development Redistribution of savings Private sector activation & infrastructure development 11/16/2018

Benefits of e-procurement Better access to government market E-procurement creates greater opportunities for the business community to sell their goods and services to public agencies. E-procurement drive value for money by lowering barriers to entry and increasing competition. Public procurement monitoring enhances monitoring and compliance to regulations 11/16/2018

Other Future Developments Framework Agreements A contract that establishes terms and conditions under which subsequent contracts will be placed Does not commit the purchaser to purchase Requires the supplier to supply in accordance  with the terms defined within the scope of the  contract 11/16/2018

Other Future Developments Open Contracting Increased disclosure and Multi-stakeholder participation in public contracting at all stages of the contracting (procurement) cycle, from planning to implementation. Open Contracting Goals are: To ensure that investments are aligned with the public interest; To ensure that public resources are managed efficiently; 11/16/2018

Benefits of Framework Agreements Reduced administration and costs Competitive pricing (aggregation of demand) Assured quality Legal protection against breach of contract Assured delivery of goods Planned supplier stock levels Continuity of supply Long-term working relationships Improved flexibility and cooperation Value for money 11/16/2018

Benefits of Open Contracting Enhance transparency in public procurement Increase Availability of Information Encourage Civic Participation Improve Accountability and Integrity in Government Increase Participation in Public Procurement Achieve sustainable Open Public Procurement Data for Analysis 11/16/2018

Conclusion These new mechanisms are at the core of the new trends and changes being introduced in Public Sector Procurement.  There is therefore need for review of procurement skills, identifying gaps that need to be addressed in view of an increasing focus on e-procurement. Capacity building and training are important in this regard. 11/16/2018

Conclusion The ZPPA has responded to the challenge of reforming the country’s procurement system and made improvements. ZPPA is committed to establishing and embedding appropriate procurement policy and best practice in order to ensure fair and efficient procurement practices. 11/16/2018

Thank for your attention THE END 11/16/2018