Proposals for strengthen the public procurement system of the Kyrgyz Republic

Proposals for strengthen the public procurement system of the Kyrgyz Republic
14/11/2020
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Akylbek Umetaliev

The Organization for Economic Cooperation and Development (OECD) and the World Bank on November 10, 2007, in close cooperation with a group of specialists established by the Government of the Kyrgyz Republic, assessed the public procurement system. The OECD methodology was based on four elements that assessed: (a) legal and regulatory framework; (b) institutional framework and good governance; (c) procurement operations and market practices; (d) reliability and transparency of the public procurement system. Figure 1 shows the scoring results for the four elements of the OECD. The highest composite score (2.1) was given to the legal and regulatory element (Element I). In other words, according to the assessment based on the baseline indicator (BI), in general, laws and regulations in the Kyrgyz Republic meet acceptable international standards. Conversely, the scores for the remaining three elements indicate serious deficiencies.

However, in subsequent periods, clear and relevant results of the assessment did not serve as the basis for an action plan for the development of the public procurement system. The Public Procurement Agency was reorganized into the Department of Public Procurement Methodology (DPPM) and subordinated to the Ministry of Finance. The National Training Center for Procurement (NTCP), which achieved stable and good results, was privatized, and its functions were later restored with great difficulty in the Training Center of the Ministry of Finance.

In February 2012, a regular country procurement review (CPR) was carried out and a report on the results of the review was drawn up by a joint mission of the World Bank (WB) and the Asian Development Bank (ADB). The most important recommendations for the Government of the Kyrgyz Republic to improve the efficiency of the public procurement system and to bring it in line with international best practices are proposed:

1. The legal framework for procurement should be reviewed and changed;

2. A strategy for improving the public procurement system for the next few years should be developed;

3. Annual reports on public procurement should be prepared and published through the procurement website;

4. The Department of public procurement Training Center should conduct frequent procurement training workshops for government officials involved in procurement activities and auditing of procurement transactions.

The above and other important recommendations are mainly implemented by the Government of the Kyrgyz Republic:

1. The authorized state body, the Department of Public Procurement, has been reinstated with broader regulatory and coordinating powers.

2. With the support of the World Bank, amendments were made and the Law on Public Procurement was adopted in 2015.

3. An electronic public procurement portal has been developed and is operating.

4. Interaction with suppliers / contractors and civil / expert community has improved.

5. The mechanism for handling complaints and claims has been active.

Following this assessment, all stakeholders were constantly and efficiently working again on Element I - a legislative and regulatory framework that was at a high international level 2.1 points out of 3, instead of working to improve the other three Elements. I can only assume that the incompetence of knowledge or the group interests of the participants in the public procurement process led them to the conclusion that the main obstacle “supposedly for the development of public procurement” was the Law “On Public Procurement”. As a result, the Law, passed in 1997, amended in 2004 and well received by the OECD, has undergone so many changes that it has become voluminous, unreadable, complex, controversial and incomprehensible. Especially for the direct users of the Law - procurement specialists, it has become unbearable and difficult to apply such a Law in practice. In the Law, you can find many errors not only of a semantic nature, but also grammatical, contradictory points and articles. The well-known principle of economics - the effect of reverse return (proverbs proving this principle: many cooks spoil soup, seven nannies have a child without eyes, when there are many shepherds, sheep die) worked, it was impossible to endlessly improve the Law, and stop still in 2008. Several examples can be given, reducing the basis for the application of the law: threshold amounts, unjustified exemption from the regulation of the Law - Article 2, paragraph 3.4.5, Article 21, paragraph 4.5., strengthening punitive measures for business-"black list", bureaucratization of complaints, the excessive complication of procedures by electronic procurement as a method, protectionism.

In my opinion, further it is necessary to suspend any interference with the existing legislative and regulatory framework under far-fetched reasons and conduct a complete revision (reengineering). Optimize, synchronize, harmonize and unify all regulations immediately, by a competent consulting company with the participation of all stakeholders.

As can be seen from the results of the 2007 assessment, for the baseline indicator “Institutional framework and governance of the public procurement system” (Element II), the average score was 1.0 on a three-point scale. Such an assessment meant the need to significantly strengthen the institutional framework - personnel and improve the efficiency of the management of the public procurement system. However, subsequently, it was not possible to ensure significant progress on this indicator, and the 2012 assessment indicated the following shortcomings and recommendations:

1. The level of procurement competence among government officials is low and there is no sustainable procurement capacity building strategy.

2. The Government of the Kyrgyz Republic needs to strengthen and support the training center of the Ministry of Finance and other qualified educational institutions, universities as one of the sustainable mechanisms for strengthening procurement capacity.

3. The Government of the Kyrgyz Republic needs to assess the needs for capacity development and, based on the results obtained, prepare and implement a national strategy for the development of procurement capacity, taking into account all available resources - such as existing mechanisms for training civil servants, universities, colleges, institutes, associations.

The successful implementation of this task was the main goal of the education strategy in the public procurement system of the Kyrgyz Republic. On my personal initiative, in order to achieve this goal in 2009, I established the Department of Logistics at the Kyrgyz State Technical University named after I. Razzakov to study bachelors, masters and doctoral students in public procurement. Universities should become a center for knowledge, research and excellence for procurement professionals. The authorized public procurement body, procuring entities, suppliers and contractors, business and civil society involved in public procurement processes should work closely and interact with Universities. Bachelors and masters have the knowledge and skills to manage the complete procurement process - planning, specification development, supplier market analysis, customer requirements, transportation delivery design, administrate of contract, conduct research on efficiency issues in public procurement. We have built close relationships with procuring entities, suppliers, contractors, the expert community and civil society.

The World Bank Group, recognizing the importance of institutional strengthening of the public procurement system of the Kyrgyz Republic, on May 13, 2020 launched the project "Establishment of public procurement and logistics observatory in the Kyrgyz Republic" at the Department of Logistics of the Kyrgyz State Technical University named after I. Razzakov. The public procurement and logistics observatory (PPLO) is a platform for observing procurement processes and promoting best practices, initiating dialogue between relevant stakeholders. PPLO will carry out qualitative and quantitative analysis of procurement processes in the Kyrgyz Republic, and share them with government officials and citizens through this portal, blogs, tweets, newsletters, seminars and trainings. It will also oversee procurement processes, disseminate innovative forms of public procurement, and advocate for best procurement practices in the Kyrgyz Republic. All this stimulates cost savings and improved procurement efficiency.