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World Bank pushes for open tender system
A World Bank governance expert warns that the absence of open tendering for contracts is a cause for concern in any country.
“Open tendering is extremely important,” stressed Felipe Goya, the Bank’s Governance Practice Manager for South Asia. “When you don’t see open tendering in a given country or society, it always raises a red flag. It is something that needs immediately to raise questions and cause citizens to ask questions.”
Mr. Goya’s comments-made during an interview on the sidelines of a World Bank regional conference in Colombo-have particular resonance in Sri Lanka. In recent years, the government eschewed open tendering in favour of unsolicited or sole-sourced proposals. The most lucrative of these projects went to Chinese companies.
The tendency worldwide is to open governments to scrutiny. In Sri Lanka, the promise of a Right to Information Act is a positive development. But the mentality in some South Asian countries is to treat the output of tenders as private to protect the commercial rights of the contractor.
“That approach in more developed countries would not be acceptable because citizens will say it is their money, they have the right to know what is being paid to a vendor,” Mr. Goya said. “Some countries in this region think it’s completely normal to keep that information restricted.”
This is a mindset. Citizens were not sufficiently empowered to demand that information, Mr. Goya said. But the money belonged to taxpayers. “It is my money, your money, all of us are paying,” he stressed. “When it is coming from us, they need to explain how they are using the money and the price of the contract.”
Minimising political appointees in favour of professionals will improve systems. “Countries with fewer political appointees but stronger civil services behave better than countries that are full of political appointees,” he added, citing experience.
Across South Asia, there was a lack of information and data on procurement-defined as the purchase of goods, services and works from an outside source. “It is the same in other countries of this region, not only Sri Lanka,” Mr. Goya said. “If you ask how much money the government spent on procurement during the last fiscal year, they don’t have a clue. They have some idea in general.”
In developed economies, it was possible to track how much money was spent, by what agency and when, which vendor was awarded the contract and how many times a specific company received contracts. With 20 percent of South Asia’s gross domestic product routinely going towards public procurement, it was doubly important for the public to know these facts.
Policymakers needed information to make decisions and to monitor the progress of projects under different agencies. Public opinion was another crucial component.
Felipe Goya
Sri Lanka could lead in the region in terms of governance and procurement systems, Mr. Goya, a regular visitor to the country, said. “To be honest, I cannot judge the (political) will of the current government but, at least from my perspective, I see signals that Sri Lanka definitely has more possibilities than before,” he reflected.
The country already had a framework, including a committee that reviewed tenders. Public financial management laws were in place with some procurement regulations. The fact that highways and other infrastructure had been built indicated there were people who understood how to carry out tenders. The government was now revising procurement guidelines and looking at introducing new concepts.
Open tendering was crucial, Mr. Goya said. “Direct awarding or contracts should not be more than 10 percent of the cases,” he explained. “Everything else should be competitive. Otherwise, how do you know what the possibilities are?”
An agency’s target should be to secure more than three-hopefully five or six-applications per tender. If the domestic market was incapable of providing that level of competition, it would be a good idea to open the tender out globally.
“In more liberal countries, all tenders are open to international competition by default,” Mr. Goya related. “What happens in practical terms is that, if the tender is not attractive enough, it will probably be local vendors that respond.”
The key argument put forward in favour of unsolicited proposals or sole-sourced projects by Sri Lankan policymakers was that they were quicker. Open tendering took time.
“Could be,” said Mr. Goya. “But what is the consequence of being quicker? You don’t see that kind of approach in developed economies. It is much better to plan and the results will last longer. The lack of planning usually leads to this kind of strategy. But it is not a good one. Things need to be done the right way.”
As a region, countries in South Asia were wondering how to move forward. “I think the main problem is the lack of human and financial resources,” Mr. Goya said. “I think they are trying to understand what the possibilities are without having to be a wealthy country.”
A first step would be to gather basic information and register what was happening. One way is through an e-procurement application that a country could buy or develop. Agencies could then run their tenders through the application instead of using papers and documents. The information is immediately recorded in the database, making it easier to make queries.
“After a few years, you will end up with a database of civil servants, vendors or transactions and you can connect ends and points,” Mr. Goya observed.
Good governance takes decades to achieve. “So it’s very important to have consistency of public policy in this regard,” he continued. “You see in some countries around the world, the next government will try to erase what the previous one did. This is really not good for anyone. Obviously, if there are mistakes you can change the process. But it cannot be the rule. The rule is to build on what the others left.”