1. EBRD 2010 Regional Assessment of Public Procurement Legal Frameworks Assessment Scope, Focus and Methodology Eliza Niewiadomska EBRD Legal Transition Programme

2. 2 Assessment Concept First assessment of the public procurement sector covering all 29 EBRD countries of operation Specially designed benchmark reflecting critical elements of the public procurement process (the EBRD Core Principles) Public procurement ‘law on the books’ as well as ‘law in practice’ reviewed Research analysis structured around the Legal Efficiency Approach – a tool developed by the EBRD team for evaluating effectiveness of commercial laws

3. 3 Country and sub-region groupings Eastern European Countries, including Georgia and Russia Belarus, Georgia, Moldova, Russia and Ukraine Central Asian Republics, the Caucasus and Mongolia Armenia, Azerbaijan, Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan, Turkmenistan and Uzbekistan EU Member States in the EBRD Region Bulgaria, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia The Balkan Countries and Turkey Albania, Bosnia & Herzegovina, Croatia, FYR Macedonia, Montenegro, Serbia and Turkey

4. 4 Selected from recognised international public procurement standards The primary role of a public procurement law is to facilitate the business process of contracting in a public governance context EBRD Core Principles apply to the public procurement process as a whole: pre-tendering tendering post-tendering phase Public Procurement Legal Framework Core Principles AccountabilityIntegrityTransparency Fair competition EconomyEfficiencyProportionality Reasonable exemptions EnforceabilityStability Assessment benchmark: EBRD Core Principles

5. 5 Benchmark, indicators and evaluation categories (1) Integrity Safeguards 1.Accountability of public sector spending. The legal framework should promote accountability across all stages of the procurement process, balancing public and business dimensions of the process. 2.Integrity of the procurement process. The legal framework should promote integrity between the procurement function, transparency in delivering government policy and value for money. 3.Adequate level of transparency. For public procurement to be acceptable to all stakeholders it should be seen to be transparent and objective.

6. 6 Benchmarks & indicators (2) Efficiency Instruments Competition. The legal framework should promote fair competition and prevent discrimination. Tenders and tenderers of equivalent status should be given equal treatment. Domestic preferences should not be allowed. Economy. The law should enable public procurement to be accomplished professionally in a reasonable time. Efficiency of the public contract. The legal framework should ensure value for money is achieved. Value of proportionality. The formality of the public procurement procedure should reflect the scope and size of the contract. The contracting entity should align the value and scope of the contract with a choice of the procurement procedure.

7. 7 Benchmarks & indicators (3) Institutional & enforcement measures Uniformity. The legal framework should be comprehensive and limit derogations to reasonable exemptions. The regulation should be unitary, comprehensive and cover all public contracts. Stable, but flexible. To make the process efficient, stakeholders must learn their roles, rights and obligations, within a stable legislative framework. At the same time, the framework should be capable of flexible so as to accommodate the changing market. Enforceability. Public procurement law should be easy to enforce. Regulatory and review and remedies mechanisms should be able to assess the compliance of the contracting entities and employ corrective measures when necessary.

8. 8 The Legal Efficiency Approach in the public procurement regulation “The extent to which a law and the way it is used provide the economic benefits that it was intended to achieve” Basic legal function Maximising economic benefit Simplicity Speed Cost Certainty Sound financial management in the public sector Value for money Transparency Economic, social and environmental objectives Fit-to-context

9. 9 Functional Approach: Basic Legal Function enable sound financial management in the public sector as a whole deliver ‘value for money’ protect integrity of the process regulate all stages of the procurement process respond to economic, social and environmental objectives, if included in the government’s regulatory agenda provide clear and consistent eligibility rules that cannot be modified by the prejudiced decision of the particular contracting entity enable the efficient selection of tender type or method based on the specifics of the purchase and contract profile Public procurement legislation should:

10. 10 Legal predictability as a critical element of any sound legal regulation. Three key components of this indicator for the public procurement system are: consistency, or predictability impartiality resistance to corruption. There are costs on both sides: a public client conducting the process and a private contractor participating in this process. Inevitably, higher costs have an adverse impact on the economic benefit of a transaction. The Legal Efficiency Approach indicators Reasonable balance between the user- friendly approach and the sophistication required by the local legal and business culture. Simplicity For most aspects of the legal process, the less time it takes the more efficient it is. Speed Is the process well adapted to the economic, social and legal context of the market? achieve particular policy objectives of the law; reach an appropriate balance between fulfilling the contract economic purpose and integrity requirements of the public client; respond to contract characteristics (business case); respond to the local market situation. Fit-to-context Certainty Cost

11. 11 Assessment Research Core Areas Public Procurement Legislation - a review of the extensiveness of national public procurement legislation, based on a questionnaire, answered in cooperation with national public procurement regulatory bodies Local Public Procurement Practice - a survey of local public procurement practice, based on an online questionnaire answered by local contracting entities in the government and utilities sectors in the EBRD region National Public Procurement Remedies Systems - a case study a legal analysis of a typical event of prohibited procurement behaviour of the contracting authority, answered by local law firms with a demonstrated expertise in public procurement Recognition for Public Procurement Sustainability Policies in Practice- based on an online questionnaire answered by local contracting entities in the government and utilities sectors in the EBRD region

12. 12 Evaluation and Rating FOUR MAIN STAGES Data collection Methodical assessment of laws and practice Rating and scoring Degree of compliance –Each research area carried same maximum scoring potential –No weighting between indicators and questions raised in each core area –Avoid subjective judgments –Country groupings based on public procurement policies adopted by governments to enable fair basis for comparison

13. 13 Scoring Each question in the 4 surveys comprising the assessment was scored from 0 to 4 points depending on the respondent’s answer. ‘Positive approach’ – what does 1 point mean? Yes. Substantial compliance. The legal framework provides for recommended features. Yes with reservation. Compliance with reservations. The legal framework provides for some features which are not compliant with the benchmark. No with reservation. Doubtful compliance. The legal framework provides for features which may be non compliant with the benchmark. No compliance. The legal framework provides for features which are not compliant with the benchmark. Not applicable. The legal framework does not provide for any recommended feature

14. 14 Compliance Rating Very High Compliance High compliance Medium compliance Low compliance Very Low Compliance above 90% 76% - 90% 60% - 75% 50% - 59% below 50% Medium or Satisfactory Compliance means that public procurement legal framework provides for basic recommended features. Legal framework provides for most of the recommended features. Legal framework provides for some recommended features. Legal framework provides for features which may be non complaint with the benchmark. Legal framework does not provide for basic recommended features. ‘law on the books’

15. 15 Rating examples (1) ‘law on the books’ - total compliance ranking in the EBRD region

16. 16 Rating examples (2) Spider graph presents results of legislation review, based on a legislation questionnaire, structured in accordance with the EBRD Core Principles benchmark indicators. ‘law on the books’ - country compliance rating in detail

17. 17 Rating examples (3) ‘law on the books’ ‘law in practice’ The case of Albania: country and its region extensiveness vs. effectiveness comparison

18. 18 Thank you for your attention. Eliza Niewiadomska Legal Transition Programme Office of the General Counsel European Bank for Reconstruction and Development +44 207 338 7190 Niewiade@ebrd.com