How will new indicator on public procurement in WB Doing Business report work?

Finance Materials 18 January 2020 18:32 (UTC +04:00)

BAKU, Azerbaijan, Jan. 18

By Eldar Janashvili - Trend:

Assessment of a new indicator on public procurement of road infrastructure, titled “Contracting with the Government”, in the World Bank's Doing Business international report, will be regulated on the basis of relations between a state body responsible for road construction and a business entity, Trend reports referring to Azerbaijan’s Center for Analysis of Economic Reforms and Communications.

Effective public procurement is an important factor to achieve the Sustainable Development Goals, according to the report of the center.

"The biggest buyer in most national markets in the world is the public sector, which strategically plays the role of a catalyst for economic growth. States foster economic growth and employment by encouraging the participation of small and medium-sized enterprises (SMEs) in public procurement through changes in the legislative framework," said the report.

"Globally, public procurement covers an average of 10-25 percent of GDP. Developing countries spend over $820 billion annually on public procurement. According to a report by the Asian Development Bank on the role of SMEs in public procurement and inclusive development, SMEs in developing countries account for 33 percent of GDP and 45 percent of employment, and in developed countries - 64 percent of GDP and 62 percent of employment," the center said.

In addition, procurement plays a productive role in the policies of states interested in providing innovation-based economic and social development.

"The main objective of the “Contracting with the Government” indicator is to evaluate the reforms carried out by the countries of the world in this field and to create a transparent database of investment opportunities for entrepreneurs. Assessment of indicator and reforms in this area will be evaluated on the basis of the legal framework and joint provision of practical activities. The indicator will be evaluated in accordance with the methodological base. If the executive structure determines that it isn’t being properly implemented in practice, the assessment will be low," the center said.

"The indicator will be formed by such factors (stages) as determining the needs of the purchasing organization and preparing the budget, collecting tender proposals, reviewing, evaluating and signing tender proposals, managing the contract and re-negotiating its terms, as well as making payments," said the report.

Each of the above mentioned factors (stages) of the public procurement process will be taken into account on the basis of the principles of efficiency, transparency and accountability, said the report.

When collecting available information, assessment will be formed by two expert groups.

The first group will be composed of experienced lawyers in the field of administrative law and procurement processes. They will consider information in terms of law and legislation, the relations between a buyer and a contractor.

The second group will include specialists working in the construction and engineering sectors. These persons are directly involved in the practical stage of projects’ implementation and are widely aware of compliance with legal requirements and law in connection with quality control and payments and play an important role in the formation of an objective database.

"The above mentioned provisions were determined by the 'Doing Business' team on the basis of studies conducted among 80 countries, indicators and sub-indicators for monitoring the procedure and quality were formulated," said the report.

Based on the research and analysis, it was established that further improvement of the procurement procedures leads to the formation of satisfaction of the business sector, increasing the reputation of the responsible body and discipline in financial management, which is the main condition for the effective use of these funds.

"In addition to the stages of the procedure, the indicator methodology will be divided into four subsystems, for a more streamlined and smooth implementation of the procurement laws. They will include quality, transparency and accountability at each stage of the public procurement process, effectiveness of time management in the public procurement process, as well as cost estimation, related to the safety, execution and completion of these offers," said the center.

The estimated indicator of the public procurement process is related to road construction, as a type of interaction between government structures and SMEs.

According to the Global Competitiveness Report by the World Economic Forum (WEF) for 2019, Azerbaijan ranked 27th in terms of Quality of Roads index. The indicated position was calculated based on the WEF survey methodology.