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CORRUPTION RISK ASSESSMENT OF THE PUBLIC PROCUREMENT SYSTEM IN JORDAN

Presentation of the main findings

Amman, Jordan, 30 January 2017

Erika Bozzay / Steen Bruun-Nielsen / Zoran Blazevic OECD/SIGMA

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Content

• SIGMA in a nutshell

• The background, outline and objectives of the Review

• Impact of the corruption in public procurement

• Review of the Jordanian public procurement system

• Recommendations for the improvement of the procurement system

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EUSIGMA = almost 25 years working together

to improve public administrations

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How do we work?

We review and give feedback on:• Governance systems and institutions• Legal frameworks• Reform strategies and action plans• Progress in reform implementation

We provide:• Recommendations for improving laws and administrative

arrangements• Methodologies and tools to support implementation• Advice on the design and prioritisation of reforms• Opportunities to share good practice from a wide range of countries,

including regional events• Policy papers and multi-country comparative studies

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SIGMA brings…

• Almost 25 years of experience working with countries in transition

• Experts from EU national public administrations• Long-term relationships with in-country partners• Practitioner-to-practitioner support• Flexibility in project design and implementation• A combination of EU and OECD expertise• Support that complements other EU institution

building instruments5

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PART I.

– The background, outline and objectives of the Review

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The background of the Review

• The main aim was to conduct a review of the public procurement system in Jordan focusing on integrity and transparency.

• The review covered the four main pillars of the public procurement system: policy, legal and regulatory framework; institutional framework and capacity; operational capacity and market functionality; control, monitoring structure and integrity mechanisms.

• The Review is the outcome of the joint efforts of the SIGMA team and the JIACC project team.

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Objectives and methodology

• The methodology was tailored to Jordan’s political, regulatory and institutional contexts while also being in line with international standards.

• The main objectives: mapping the integrity risks related to the procurement

system in Jordan – reviewing the current system and drafting a report,

developing recommendations for risk mitigation strategies, raising awareness on corruption risks in public procurement.

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PART II.

– Impact of the corruption in public procurement

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Public procurement and corruption

• Public procurement is a major risk area for corruption, for two main reasons:

a large share of public money, paid by the taxpayers, is spent through public procurement.

close interaction between the public officials and the private sector and high potential gains from bribery.

• In the Review, corruption is defined as referring primarily to any situation in which a public position is being misused for private gain.

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EUTypical corruption risks during the public

procurement process

• Basic corruption risks in the report are divided into three main categories:

the pre-tender stage risks,

the tender stage risks,

the post-tender stage risks.

• Specific corruption risks for the Jordanian public procurement system are explained and highlighted in Chapter 5 and 6 of the Review.

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EUPrerequisite to fight against corruption in

public procurement

Conclusion of the EU funded study “Identifying and Reducing Corruption in Public Procurement in the EU”:

• effective detection and prevention of corruption is possible if administrative data on tenders, bidders, projects and contractors are collected and stored in a structured way, accessible for controls, investigations and analyses.

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PART III.

– Review of Jordanian public procurement system

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EUPillar A

The Policy, Legal and Regulatory Framework on Public Procurement

• Jordan has a long tradition for regulating public procurement with the first legislation introduced in the 1920’es.

• The legislation on public procurement is divided with separate by-laws for supplies and works and for the supplies of medicines and medical equipment to the health sector.

• Institutionally this is reflected in having three different Government entities: Government Tenders Department – GTD, General Supplies Department – GSD and Joint Procurement Department – JPD.

• The three sets of laws are reviewed from the point of view of integrity.

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Pillar A The Legislation examples of too much discretion

• Possibilities for adjusting technical specifications

• Possibilities for admitting non-compliant bids

• Room for the use of other criteria than price without indicating any requirements or limitations in this respect.

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EUPillar B

The Institutional Framework and Capacity

• There is no entity with a clearly mandated policy-making function to initiate, implement and monitor procurement development strategies.

• There are three central procurement bodies in charge of procuring different items (one for works and services, one for supplies and one for medicine and medical equipment).

• In addition to these main actors of procurements, large parts of the procurement market are dominated by other entities. These are the special committees established ad hoc by the Government for specific projects, including tenders involving international financing.

• There is no overall strategy for the development of the Jordanian pubic procurement system.

• Statistical information about the public procurement system in Jordan is missing.

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EUPillar C

Operational Capacity and Market

• The lack of proper statistics makes it difficult to estimate the distribution of procurements between State and regional level.

• The interview with various groups uniformly pointed as lowest price being the criterion mostly used.

• The criteria of suitability are putting too much emphasis on resources (number of staff, size of offices etc.) and financial capacity rather than technical capacity in terms of skills and experience (including references) from previous contracts.

• The interviews showed that the tender specifications are generally perceived as being of low quality.

• The various committees involved in the procurement processes lack the technical capacities, for example for the purpose of evaluating tender specifications proposed by consultants.

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EUPillar D

Control, Monitoring Structure and Integrity Mechanisms

• Without one authority in charge of overall public procurement matters there is no dedicated centralised supervision of public procurement activities.

• There is a limited possibility to object to the procuring entity as regards planned awards, albeit within very short time limits.

• Contract management has been mentioned as a problem due not least to failing resources on the part of the beneficiary, respectively the receiving committee and high percentage of variation orders.

• Another problem in connection with contract management is that it apparently often happens that the winner of the tender leaves the contract to be implemented by a less qualified “subcontractor”.

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PART IV.

– Recommendations for the improvement of the Jordanian procurement system

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EUSummary of the main risk factors within

legislation and institutional setup

• There is no central policy making institution and complaints system.

• The public procurement legislation is fragmented.

• Capacity problems in relation to tender evaluation and contract supervision.

• No specific requirements to the planning of procurements.

• Lack of monitoring and processing of statistical information.

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EURecommendations for enhancing integrity in

the Jordanian procurement system I.

A. The establishment or the designation of a central body in charge of policy issues regarding public procurement.

B. Rationalisation of the legal and regulatory system: the three by-laws should be unified under one law in connection with various legislative reform.

C. Introduction of a clear policy concerning preparation of procurements, especially for the purpose of variation orders.

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EURecommendations for enhancing integrity in

the Jordanian procurement system II.

D. Introduction of a clear policy for dealing with integrity standards and conflicts of interest.

E. Professionalisation of the function of public purchaser and creation of a database of all members of technical, tendering, receiving and special committees.

F. Capacity building of the public and private sectors

G. Increased integrity in relations between the public sector and the business sector (potential bidders) by ensuring easy access to legal protection (remedies).

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Conclusion on recommendations

• The seven components (from A – G) constitute a strategy for dealing with what is identified as main corruption risks in the Jordanian legislation and structures for public procurement.

• As it was pointed out from the start of the review, nearly any institutional or legislative shortcoming can be exploited for corruptive purposes.

• This is why the above seven-component approach covers such a wide range of measures.

• An added effect of implementing the strategy would therefore be not only the mediation of corruption risks but also a general improvement of the efficiency and integrity of the Jordanian public procurement system as a whole.

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Time for….

Questions and comments ?

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Thank you for your attention!

More information can be found at:

www.sigmaweb.org

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