1. 2008 Fiduciary Week Procurement Post-Reviews How to increase impact Irina Luca AFTPC (March 26, 2008)

2. 2 Agenda 1. General information 2. PPRs & IPRs in Africa 3. Results from PPRs & IPRs 4. How can we increase impact

3. 3 1. PPRs in the Bank In FY07 Staff (HQ/Field) Projects per Proc. Staff AFR 7/30 11 EAP 5/24 8 ECA 7/30 9 LCR 16/24 7 MNA 7/9 7 SAR 8/21 6 # Projects # Countries 394 47 228327281102176 # Projects for post-review 158 * 12216515278102 # Projects post-reviewed # Contracts post-reviewed $ Value in million 139 2,106 $165 85 2,752 $182 114 825 $100 152 2,448 $654 42 52.0 $91.5 74 2,094 $145 * Not including projects with 100% prior review and projects with insufficient # of contracts for post-review

4. 4 2a. PPRs/IPRs Who is responsible Who conducts PPRs: (a) How Who finances (a) Non PAS and consultants- cleared by the RPM for procurement post reviews

5. 5 Risk Profiling Project Implementation System Activities Personnel $ 2b...FOCUSING ON RISKS

6. 6 2c. PPRs and IPRs in Africa (continued) Assessment: 1. Systems 2. Processes/transactions 3. Contract administration 4. Physical controls 5. Risk update 6. Action plan 7. Follow up

7. 7 2d. Funding Involved in Proc. Audits ( continued) Amounts involved in audits carried out for Project Agencies or for Regulatory Bodies are much larger than AFTPC Budget Is there scope for scaling up these audits and maintaining the standards? Per project Per country For Africa (40 countries) Bank Staff$0.5K$6.2K$250K IPRs with Firms and Indiv. Cons $5.7K$57K$400K Total AFTPC--$650K Proc. Audits built in projects $20K$200K$4,000K Proc. Audits by Govt. as part of National Regulation -$200K$8,000K

8. 8 3a. Results from PPRs Generic similar issues as below:  Incomplete record keeping  Poor quality of bidding documents  Inconsistency between evaluation criteria / eval. reports  Lack of publication of contract awards  Improper treatment of complaints  Inconsistency of procedures for shopping  Poor contract management/payment dlys  Indicators of collusions

9. 9 3b. PPR/IPRs Objectives Ascertain if funds used for the purposes intended Capacity Building tool Are they met?

10. 10 3c. Identification of Misprocurement in Africa  IPR: 112 contracts for a total of $ 2.5 m  PR: 12 contracts for a total of $ 29.9 m  PPR: 5 contracts for a total of $ 0.1 m  Complaints: 1 contract for a total of $ 0.9 m  IPR: 112 contracts for a total of $ 2.5 m  PR: 12 contracts for a total of $ 29.9 m  PPR: 5 contracts for a total of $ 0.1 m  Complaints: 1 contract for a total of $ 0.9 m FY06#$ mIdentif. # Contracts35 -- # Countries2 -- Madagascar 12 $ 0.3 IPR Rwanda 23 $ 1.6 IPR FY07#$ mIdentif. # Contracts90 - - # Countries6 - - Sudan 2 $ 24.0 PR Benin 1 $ 0.9 COMPL SA 3 $ 0.05 IPR Ghana 10 $ 5.0 PR DRC 69 $5.9 IPR Ethiopia 5 $ 0.1 PPR Identification in FY06 and FY07 PR: Prior Reviews COMPL: Means Complaints by bidders PR: Prior Reviews COMPL: Means Complaints by bidders

11. 11 3d. Conclusion: Results from “traditional” PPRs Few cases of Misprocurement + small amounts involved ($ 5-15K each) Capacity Development limited to the PIU Resources are not always available for follow up Not adequate for the increased decentralized projects COI? Not always seen as capacity building – punitive. How can we enhance the impact of post reviews?

12. 12 4a. How can we enhance impact of post reviews reviews? 1. Being more effective 2. Making better use of resources 3. Avoiding duplication of efforts

13. 13 4 b. Importance of prevention Better project design, identification of risks, procurement arrangements Assess subprojects at the appraisal time Social accountability mechanisms Decentralized/Centralized procurement Internal controls: government owned control systems Empower Clients to check for indicators of F&C Appropriate post review models

14. 14 4c. Scenarios – pros and cons AlternativesProsCons #1. Conduct PPR by PS/PAS/f/consultants Ensure close Bank supervision Resource intensive, Less depth COI for PS? #2. Select 4-5 countries each year for IPRs/ limit PPRs to few samples during SPN Free substantial resources that can be allocated to capacity development and other tasks May not assure appropriate coverage. #3. Rely on Project Proc. Audits, and limit PPR/IPR to 4-5 countries Free AFTPC resources that can be allocated to capacity development and other tasks Quality. Cost to the Client. #4. Involve National Regulatory Bodies and Proc. Audits Build national systems Build ownership and local accountability Weak national systems

15. 15 4d. Recommendations  Strategic approach by teams:  Emphasize prevention/solid project preparation/capacity building/ project supervision/  Strategic planning – risk based  Empower Government – in charge (including identify F&C flags)  Rethink oversight model by the Bank: mix IPR/PPR/project financed audit (decentralized) – one size does not fit all.

16. 16 4e Recommendations (cont)  High quality TORs, consultants/auditors conducting post reviews  Focus on both systems and transactions  When warranted, integrated FM audit, F&C, asset verification  Samples size sufficient to identify systemic issues  Follow up on action plans Use PPR/IPRs feed back to improve (future) project designs and capacity building  Build capacity of national auditors and of the national private auditors and national auditor general/Proc. Regulatory Agency: (e.g. UGANDA, Poland, Indonesia)

17. 17 DISCUSSION How can we increase the impact of PPRs/procurement audits? What is your experience? THANKS!