public procurement reform and modernization in sri lanka
TRANSCRIPT
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Public Procurement Reform and Modernization in Sri Lanka
By.By.Veluppillai MohanVeluppillai Mohan
15-16 October 201015-16 October 2010
Beijing , China Beijing , China
ABSTRACT
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1. This objective of this paper is to contribute to improved capacity in the conceptualization of public procurement reform and modernization in Sri Lanka after Tsunami disaster in 2004 with the implementation of environmental and social considerations in procurement, in line with internationally accepted principles and practices to recover the economy
2.A well functioning procurement system ensures; better value for money, increased efficiency and effectiveness of delivery, reduces the potential for corruption, positive impact on a country’s investment climate, non-discriminatory practices, transparency and accountability. Sustainable procurement is a key indicator of governments’ commitment to sustainable development.
3.Achieving sustainable development in practice requires that economic growth supports social progress as well as respect for the environment, that economic performance reinforces social equity, and that environmental policy is cost- effective without compromising the livelihood of future generations
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Introduction
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Sri Lanka
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Tsunami Disaster In Sri Lanka on 26th December 2004
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• TSUNAMI DISASTER IN SRI LANKA
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8• Tsunami Affected Areas in Sri Lanka
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• Affect of Tsunami Disaster in Sri Lanka
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Types Affect (Number/Cost)•Fatalities •35,322 people•Injured •21,441 people•Widowed, orphaned, affected elderly and disabled
•40,000 people
•Internally displaced people (IDPS) •516,150 people
•People who lost their source of livelihood •150,000 people (75% of the total fishing fleet)
•Value of lost assets •$ 900 million
•Houses destroyed •88,544 No•Schools destroyed or damaged •168 public schools, 4 universities, 18
vocational centers
•Schools used as camps for IDPs •446 No•Schoolchildren affected •200,000 No•Health facilities destroyed or damaged •97 No
•Tourism Infrastructure damaged •53 large hotels, 248 small hotels, 210 small enterprises
•Cultivated arable land affected by salinity •23,449 acres
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DAMAGES CAUSED BY TIDAL WAVE (TSUNAMI) TO ROAD SECTOR
Road Status ID No.Sourthern ProvinceColombo-Galle-Hambantota-Wellawaya Road (A2)
Akurala Bridge Damaged 01Seenigama And Hikkaduwa Section (96-99km) Breached (30-40 m long) 02Magalle Bridge Damaged 03Goiyapana Bridge Damaged 04Weligama Bridges 2 Nos. 145/3 & 145/5 Damaged 05Dondra Bridge (No.166/1) Approaches Damaged 06Talalla Bend Damaged 07 North-East ProvinceAmbepussa-Kurunegala-Trincomalee Road (A6)
197th kmRetaining wall (20m) damaged. The road is passable
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Trincomalee - Pulmoddai Road
22nd km -Salappawaru BridgeApproach (200m) washed off. The road is impassable
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Beach Road
1st kmCulvert damaged. Half the carriageway (75m) washed off. The road is passable
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Road Status ID No
Batticaloa-Trincomalee Road (A15)
116-121 km Washed off 11
126th kmHalf the carriageway (100m) washed off. The road is passable.
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Thampalakamam-Kinniya Road
Causeway damaged 12
Colombo-Ratnapura-Wellawaya-Batticaloa Road
334/1 Bridge (Komari Bridge) Collapsed 15
362-364 km Washed off 14
375 km Washed off 14
380 km Washed off 14
392 km Washed off 13
393 km Washed off 13
394 km Damaged 13
394/1 culvert Washed off 13
394/2 Washed off 13
395/1 Washed off 13
396/3- Periyakallar bridge cum causeway Washed off 13
398/1- Koddaikkallar bridge cum causeway Washed off 13
409/5 & 410/1 Culverts Washed off 13
412 & 415 km Part of the carriageway is damaged 13Beijing, China 15 – 16 October, 2010
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Road Status ID No
Batticaloa-Trincomalle Road (A15)
42/1 Bridge Bailey Bridge damaged 16
46-59 km Damaged 17
59/1 Bridge (Pannichchankeni) Washed off 18
60-78 km Washed off 19
Bar Road
4/2 Bridge Washed off 20
5/2 Bridge Damaged 21
3-5 km Damaged 21
Pottuvil-Panama Road
1-3 km Washed off 22
Bridge No:3/4 (Arugambay) Damaged 23
Peradeniya-Badulla-Chenkaladi Road
282/2 Bridge Damaged 33
North -East (North) Province
Paranthan - Mullaitivu Road
48-52 13 km & 50/1 Causeway Damaged 24
Beach Road
0.9 km Washed off & still submerged 25
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Road Status ID No
Mankulam-Mullaitivu Road
42-49 25 km Damaged 26
Soranpattu-Thalayadi Road
6.5-7.2 km Damaged 27
Point Pedro Maruthankerny Road
19-30 km 28
East Coast Road
0-8 - 4.74 km 29
Jaffna-Ponnalai-Point Pedro Road
42.6-55.4 km Damaged 30
Point Pedro Maruthankerny Road
0-8-4 km Damaged 31
Mullaitivu-Kokkilai Road
0-16 km Damaged 32
18/1 Bridge (Nayaru) Beijing, China 15 – 16 October, 2010
Remedial Action by GOSL for the “Plan to Rebuild Sri Lanka”
• Rapid Income Recovery Programme for SL1.Involving Protection for who cannot work2.Comprising Jobs or training for who can work.3. Comprising support for the revival of small
enterprises. All Inter ministerial focus group formed for enhanced
employment initiatives in the infrastructure sector has been established to take forward the 2 and 3 component.
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Remedial Action by GOSL for the “Plan to Rebuild Sri Lanka” (Contd.)
• Income generation within the components for people who can work is justified by: a) the need to provide immediate and longer term employment and enterprise opportunities for the tsunami affected population now out of work; and b) the broader need to contribute to poverty reduction.
• Focus Group is to ensure that all GOSL bodies in infrastructure reconstruction use an optimal mix of local resources during the process so as to maximize opportunities for employment of low income and other affected groups.
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Remedial Action by GOSL for the “Plan to Rebuild Sri Lanka” (Contd.)
The income generation strategy for the RIRP envisions two phases ;1. immediate social protection needs through Short term employment by
means of Labour-Intensive (LI) techniques (labour and hand-tools only) which are essential but restricted to a narrow range of works.
2. comprising work which will be recurrent under regular budgets of the infrastructure Ministries where by shifting wisely and carefully from the current conventional equipment-based work methods to more Labour-Based (LB) techniques (where there is a shift in balance between labour and equipment in the way the work is specified and executed) for selected works components, it will be possible to realize significant numbers of new jobs without compromising on the quality on the works or without affecting the timelines and costs of the works
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LITERATURE REVIEW
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Public Procurement
The acquisition of works, goods and services on the best possible terms - has historically been based on two criteria, price and quality, with a view to maximising benefits for the procuring organisation (Procurement Entity) along with value for Money considerations.
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Public Procurement Objectives (a) Maximizing economy, timeless and quality resulting in least cost together
with the high quality, (b) Adhering to prescribed standards, specification, rules, regulations and good
governance,(c) Providing fair, equal, and maximum opportunity for eligible interested parties to participate in procurement,(d) Expeditious execution of works and delivery of goods and services,(e) Compliance with local laws and regulations and international obligations, (f) Ensuring transparency and consistency in the evaluation and selection procedures; and (g) Retaining confidentiality of information provided by bidders.
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What is sustainable development?
Sustainable development
is about “… meeting the needs of the present without compromising
the ability of future generations to meet their own needs.”
• Source: World Commission on the Environment and Development, Brundtland Report 1983
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Primary Objectives of Sustainable Procurement
• Procurement in the public sector should take place with the minimum of environmental impact and with respect for fundamental workers’ rights and human rights and Environmental and ethical/social considerations in public procurement shall contribute towards an efficient public sector and a competitive business sector
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Sustainable Procurement is procurement that integrates requirements, specifications and criteria that are compatible and in favour of the protection of the environment, of social progress and in support of economic development, namely by seeking resource efficiency, improving the quality of products and services and ultimately optimizing costs. (immediate and life cycle
based).
Definition of SP
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SD wants to bring together:
... respecting the rules of good governance
Social progress:
Human development, rights, education,
reduction of poverty and inequality, security
and social inclusion
Social progress:
Human development, rights, education,
reduction of poverty and inequality, security
and social inclusion
Economic sustainability:
Economic growth, full employment,
effectiveness, integration of social and
environmental costs
Economic sustainability:
Economic growth, full employment,
effectiveness, integration of social and
environmental costs
Environmental balance:
Preservation of natural resources, ecosystems, biodiversity; reduction
of the ecological footprint
Environmental balance:
Preservation of natural resources, ecosystems, biodiversity; reduction
of the ecological footprint
The three pillars of SDThe three pillars of SD
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Criminal Law
Environmental Legislation
Social Legislation
International Legislation
(Env/Social/Proc)
Procurement Legislation
Fiscal LegislationNational Legal
Framework for SP
National Legal Framework for SP
National SD Priorities
National SD Priorities
National SD Priorities
National SD Priorities
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Integrating Sustainability Integrating Sustainability Concerns in the various steps of Concerns in the various steps of
the Procurement Cyclethe Procurement Cycle
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Strategy/Action Plan for SRPP
Presentation issuesMain actions purchasers can undertake to introduce social/
environmental issues at the key stages of the procurement cycle:
Identifying the need and planning the
proc actionMonitoring &
Evaluating
Defining Contract Requirements
Selecting Suppliers Awarding the
contract
Administering contract execution
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Identification of Need
Key stage to consider social/
environmental impacts
Be aware of social/ environmental
agendas/obligations and possible fit
with your procurement
Be aware of legislative
requirements e.g. the Race Relations,
Discrimination Acts, Landfill Tax
Can you:• Rethink?• Eliminate
?• Reduce?• Re-use?• Re-cycle?• Dispose?
Apply the test of
affordability and cost
effectiveness
What are the benefits/cost
s using procurement in this way?
Ensure Procurement practices are open to bodies like SMEs and voluntary organisations
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It is about what the organisation wants to procure
Key stage at which sustainability considerations should take place
… However, need, affordability and efficient and effective use of financial resources must be considered
Normally performed by technical staff and internal customers (budget holders)
Identify the Needs
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Bringing Environmental and Social Factors into Need (cont’d)
• Users knowledge of the market
knowledge of potential environmental/social impacts and relevant regulations and legislation
knowledge of products/services; influence on the development of new products/markets
information on alternative products/services, alternative means of delivering functionality
Those who might be involved in identifying needs include:
• Procurement managers
• First and second tier suppliers
• Environmental/Supply Chain/HR managers
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Role of the Procurement Function
• Procurers need to:
– Be aware of social/environmental policy priorities and legislation
– Appreciate the social/environmental implications of the products they buy
• Sources of information:
1. Environmental/social expertise in the Organisation
2. Suppliers
3. External sources of environmental/social information (Trade Unions, Government Bodies, etc.)
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…….Wider Thinking
Think in terms of solutions to problems not to products
This will allow you to find environmentally/socially preferable solutions to problems rather than using products implying predetermined solutions
Identify the Needs (cont’d)
Some Examples:
1. Purchasing new fax machines or providing users with IT facilities to fax from their computers
2. Negotiating waste management contracts for packaging waste or working with suppliers to introduce returnable packaging for delivery of the products supplied
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Engaging with Suppliers
SMEs, Woman and Disadvantaged-owned business should
be helped to increase their participation in public
contracts
– They operate in key public services
– They are well placed to provide public services in hard to
reach areas How to achieve this?
1. Training programs, workshop and seminars on
how to complete TDs
2. Dissemination of information on procurement
opportunities at local level
3. Include the SME sector when testing the market
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Specification
Ensure that specifications…
Are relevant e.g. contribute to
characteristics of the product or service, and
reflect all applicable social/environmental
requirements
• Respect rules on use of standards
• Are transparent and
non-discriminatory
Could you….
Use performance-
based specifications
?
• Use criteria from eco-labels?
• Use Production Process with less
social risk?
Use variants to encourage innovation?
Is it appropriate to reserve for supported
employment?
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Specifications
Environmental/social issues can be part of the specifications provided they:– Are relevant to the requirement
– Respect the rules on use of standards
– Do not restrict competition and participation of SMEs in the process
– Meet the test of need, affordability and cost-effectiveness
Articulate the user requirements so that suppliers know what is needed
Provide measurable requirements against which offers can be evaluated
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PEs are free to specify in terms of performance
Performance Based Specifications
Ex: Using performance based specs for procuring heating/ventilation systems for office spaces
A performance based approach:– focuses on the outcome/functionality
desired
– gives the opportunity to be more innovative and to find the most cost-effective environmental/social preferable solution
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What a product is made of and how it is made can form part of the specs
Specific Materials and Production Processes
Ex: Specifying renewable energy, sustainable timber
However, specific materials and production processes should link to the subject matter of the product 1. Specific materials: right to specify preferred materials
(recycled materials)2. Production process: right to include requirements on
production method
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Variants to encourage innovation
It is possible to define one/more options with higher environmental/social performance in addition to basic option
At the award stage the purchasing entity can decide which option best meets its needs
This should be based on criteria made clear in the STDs
Acceptance of variants should be disclosed in contract notices
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Tender Evaluation
Social/Environmental award criteria can be used
provided they …
Are relevant to the subject of the
contract
Are consistent with the fundamental
principles of transparency, equal treatment and non
discrimination
Are consistent with criteria allowed by
international regulatory
framework, where they apply
Help identify the bid that
represents BVM from the point of
view of the PE
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At this stage of the process PEs evaluate the quality of the tenders and compare prices on the basis of:
– Lowest price alone
– Best value for money (BVM)
BVM is the “optimum combination of whole-life-costs and quality to meet the user’s requirements”
BVM allows the use of environmental criteria
The extent of use of social criteria depends on the procurement regime and memberships in international/regional agreements
Tender Evaluation
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Award criteria must be:
Award Criteria
2. Do not confer unrestricted freedom of choice on the PE
should be clear, product-related and measurable
1. Relevant to the subject of the contract should relate to the intrinsic qualities of each bid
and not to secondary issues (i.e. local development) should relate to the technical specifications
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Award criteria must:
Award Criteria (cont’d)
3. Be advertised previously in contract notices/STDs should be listed in descending order and relative
weighting should be given
4. Respect Community Law principles of non-discrimination/transparency/equal-
treatment should be respected
5. Be distinct from selection criteria The criteria used for selection and award should be
distinct
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The Life Cycle Costing Approach-three stages1. Purchase and all associated costs
• Purchase
• Delivery
• Installation
• Commissioning, etc.
2. Operating costs• Energy
• Spare Parts
• Maintenance
3. End-of-life costs• Decommissioning
• Removal
Examples of Award Criteria
Purchase & associated cost
Operating costs
End-of-life costs
cost
time
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Use of Life-Cycle Costing to promote Environmental Objectives
Savings on use of water, energy and fossil fuels– Their costs are easy to calculate and have clear
economical aspects
Savings on disposal costs– Can range from the cost of physical removal to paying
for secure disposal– If not taken into consideration, a bargain can turn into
an expensive purchase
Ex: Planning the Disposal Phase - the building sector
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Contract Management and Review
Ensure that contract
conditions are…..
1. Relevant to the performance of the contracts and the
achievement of BVM
2. Not disguised technical
specifications, selection or
award criteria
4. Included in contract
notices or tender
documentation
3. Compatible with international
regulatory framework,
where applicable
Where possible work with supplier for continuous improvement
Where appropriate
pass on public sector
obligation to supplier
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Contract Management and Review
Contract conditions relate to the performance of the
contract
They specify how the contract should be carried out
They provide wide scope for addressing the
environmental and social impacts
Working with the supplier during
contract performance is crucial to the
achievement of sustainability objectives
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Contract Conditions and procurement policy
1. Contract conditions should: Be relevant to the subject of the contract Not add requirements that do not bring a
proportionate benefit Be disclosed in advance (tender notices, STDs) Not be disguised Technical Specs, award
criteria, selection criteria
2. Suppliers must accept the Contract T&C in order to be awarded the contract
3. Contract T&C must be compatible with international/regional legal/ regulatory frameworks for PP
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Contract Conditions: use of disadvantaged people
Contract clauses can stipulate that a successful tenderer must employ:– A certain percentage of long-term unemployed,
apprentices, handicapped people and other disadvantaged groups
… however benefits must be weighed up against additional costs, including restriction of the supplier base
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Ex of Environmental Contract Clauses
Transport of products and tools to the site
• Delivery of products to the site in concentrated form and then dilution on site
• Use of reusable containers to transport products to the site
• Delivery of products in bulk and outside peak traffic times
How the service is performed
• Use of dosage indicators to ensure that appropriated quantities of cleaning products are used
Disposal of used products or packaging from products
• Products or packaging taken away for reuse, recycling or appropriate disposal by the contractor
Training of contractor staff
• Staff trained in the environmental impact of their work and the environmental policy of the authority in whose buildings they will be working
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Ex of Social Contract ClausesEngagement of staff and labour
• Arrangements for the engagement of all staff and labour, their payment, feeding, transport, housing
• Employment of local staff with appropriate skills and experience
Rates of wages and conditions of labour
• Payment of rates of wages and observance of conditions of labour not lower than those prevailing in the trade sector or industry where the work is carried out (ILO Conv. 94)
• Information of Contractor’s personnel about their liability to pay personal income taxes under the laws of the Country, and the performance of Contractor’s duties in relation to deductions thereof imposed by Country Law
Persons in the service of employer
• No recruitment, or attempt to recruit, Employer’s staff
Labour Laws • Abeyance to all labour Laws applicable to the Contractor’s personnel (H&S, immigration, legal rights, welfare, etc.)
WB “Master Document for Procurement of Works” 2006
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Ex of Social Contract ClausesWorking Hours • Prohibition to carry-out work outside the working hours stated in
the contract
• Statement of exceptions in the contract, and consent of the Engineer
Facilities for Staff and Labour
• Provision of accommodation and welfare facilities for the Contractor’s Personnel
Health and Safety
• Precautions for maintenance of Contractor’s personnel H&S
• Appointment of an accident prevention officer at the site and reporting on H&S conditions
• HIV-AIDS prevention
Contractor’s Superintendence
• Provision of superintendence to plan, arrange, direct, manage, inspect and test the work.
Contractor’s Personnel
• Skills, experience and qualification requirements for Contractor’s personnel
WB “Master Document for Procurement of Works” 2006
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Ex of Social Contract ClausesDisorderly Conduct
• Precautions to prevent any unlawful, riotous or disorderly conduct by among Contractor's personnel and to preserve peace and security of persons and property on and near the site
Foreign Personnel
• Provision of residence visas and work permits to foreign personnel and respect of applicable laws
• Arrangement of return to their domicile or place where recruited
Supply of foodstuffs and water
•Arrangement of a sufficient supply of suitable food at reasonable prices
•Provision of adequate supply of drinking and other water
Measures against insect and pest nuisance
• Provision of superintendence to plan, arrange, direct, manage, inspect and test the work.
Alcoholic liquor or drugs
• No provision, disposal, barter, import of alcohol and drugs, except than if otherwise provided by the Country Law
WB “Master Document for Procurement of Works” 2006
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Ex of Social Contract Clauses
WB “Master Document for Procurement of Works” 2006
Arms and Ammunition
• Prohibition to give, barter, dispose of any arms and ammunition of any kind
Festival, Religious Customs
Funerals
• Respect of the Country’s festivals, days of rest and religious or other customs
• Responsibility for arrangements of funerals for local employees who may die while engaged upon the Works
Prohibition of Forced, Compulsory Labour
• Prohibition to employ any forced or compulsory labour
Prohibition of Child Labour
• Prohibition to employ child labour
Employment Records
• Skills, experience and qualification requirements for Contractor’s personnel
• Reporting on Contractor’s personnel and equipment employed
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Monitor and Control
Monitor supplier performance and compliance with contract conditions related to social and environmental objectives
Assess the impact of the procurement action upon the target area over a pre-determined time period
Undertake review of targets/objectives and feed lessons learned back into your SP strategy
Share information on achievements and future targets inside the organization and with the business community and other stakeholders
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EMERGING NEEDS OF TSUNAMI AFFECTED SRI LANKA
The role of Sustainable procurement in implementing the Rapid Income Recovery Programme RIRP .
1) The first priority is the re-construction of houses and related services in the tsunami affected areas and the construction of new houses and related services and the envisaged site clearing operations should the planned 100m “house free” zone from the sea be declared,
2) There a number of employment intensive low volume gravel road projects and
3) There is an increasing demand for surfaced roads
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RESULTS/OUTCOMES THROUGH FOLLOWING AGENCIES FUNDED PROJECTS OF THE TSUNAMI AFFECTED AREAS THROUGH SUSTAINABLE PROCUREMENT
1. World Bank(WB)
2. Rebuilding Community Infrastructure & Shelter Project – Japanese.
3. Spain funded
4. USAID
5. Asian Development Bank (ADB) Project
6. Trincomalee Integrated Infrastructure Projects (TIIP).
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RESULTS/OUTCOMES OF THE TSUNAMI AFFECTED AREA PROJECT THROUGH SUSTAINABLE PROCUREMENT
• WATER SUPPLY SCHEMES
New BRIDGESNew BRIDGES
HOUSING SCHEMES HOUSING SCHEMES
FISHING HARBOUR
FISHING HARBOUR
SCHOOLS SCHOOLS
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RESULTS/OUTCOMES OF THE TSUNAMI AFFECTED AREA PROJECT THROUGH SUSTAINABLE PROCUREMENT
ROADS PROJECTS ROADS PROJECTS
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RECOMMENDED ACTIONSWhen buying products, to reduce the social and
environmental impact of purchasing decision.
• Fit for the purpose and value for money• Biodegradability-• Design for disassembly-• Minimum use of virgin and non-renewable materials• Resource Efficiency-Running• Fault controls to prevent unnecessary• Health and safety standards-• Local production-• Maximum durability, reparability, reusability, recyclability and upgradeability-• Minimum packaging• Maximum use of post-consumer materials -• Non (or reduced) polluting with minimum use of toxic chemicals, CFCs, ozone
and other pollutants-• Ethically sourced
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CONCLUSIONS
• Met Sri Lanka’s Needs Fulfilling the duty requires an integrated approach to pursuing economic, social and environmental well-being and all three components are central to success.
• Progress has been made and there are initiatives which have reduced environmental impact and saved money.
• To achieve value for money, procurement decisions need to be based on a thorough understanding of costs and benefits along with social and environmental impacts.
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Benefits
1. Reduces adverse environmental impacts arising from Government procurement action, waste to landfill, saves water, reduces greenhouse gas emissions, decreases air and water pollution, saves money through re-using materials and products, and reduces consumption of both natural and processed resources. Ensures the health and safety of the community.
2. Makes more efficient use of public resources. Reduces costs through greater energy efficiency, reduced waste disposal, and reduced risk management. Lowers the cost for products over their life cycle
3. Stimulates the local and global markets to innovate and produce more sustainable products and services
4. Demonstrates governments are committed to achieving sustainable development objectives.
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Barriers1.habit and the difficulty in changing procurement
behaviour, 2.lack of suppliers of sustainable assets, suppliers or
services, 3.complexity of comparing costing/value for money
assessments, 4. the difficulty of including factors broader than
environmental considerations, and 5. a perception that the process and outcomes are
more costly or time consuming.
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Drivers• 1. effective organization wide policies to ensure that everyone
is aware of the strategy, • 2.training and guidance to help all of those involved in
procurement to understand sustainable procurement and whole life costing;
• 3.regular audits and monitoring to assess where your organization is in the context of sustainable procurement and where you could make further progress in this area commitment to sustainable development as an organizational policy
• 4.supporting and educating suppliers/creating markets linking up with other organizations to learn from their experience and
• 5.pooling procurement by forming procurement consortium where relevant.
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THANK YOU
THANK YOU