Simplify World Bank Procurement

Probably the most influential publications that the World Bank has ever put out are the Guidelines for Procurement of Goods, Works, and Non-Consulting Services Under IBRD Loans and IDA Credits and Grants by World Bank Borrowers and its sister document covering consultant selection. They went through multiple editions, translations, and accrued numerous bits of related how-to guidance on issues from procuring for urgent needs through public private partnerships to what to do if you are procuring under French civil law. And they governed procurements under the considerable majority of the World Bank’s financing over the decades until they were replaced by the omnibus World Bank Procurement Regulations for IPF Borrowers and related documentation in 2016—currently about $15 billion a year in contracts. They also helped shape the procurement rules of many client countries, not least through ongoing technical assistance.

The World Bank’s Independent Evaluation Group has just issued a report on the Bank’s mechanisms for supporting procurement. I was a peer reviewer on the evaluation, and think it is well worth a read—providing considerable new insights into a topic of concern if the Bank is to play a larger role in delivering sustainable development.

World Bank management is responding to pressure from both clients and donors to make the processes of working with the institution faster and more client friendly. Beyond enhancing development impact, those improvements are important to ensure demand for the Bank’s services. That “World Bank Group’s processes too slow and complex” ranks near the top of answers to surveys about the institution’s greatest weakness amongst large IBRD clients in particular is a worry at a time when many of them can borrow from the market as cheaply as they can borrow for the Bank. This report has strong, evidence-based recommendations that can both increase development impact and help foster demand for services through greater ease of doing business.

The report makes clear that clients value simplicity in procurement rules. Borrowers clearly prefer to use or at least default to simple processes unless they get support from the Bank to use more complex ones. Not least, for most clients (and especially for some of the clients with the most World Bank projects), Bank-financed procurement is a fairly insignificant part of their total procurement budget, and so becoming an expert in World Bank procurement rules will be a niche specialty with low returns.

And simplicity does notably speed outcomes: reduced prior review and use of simple procurement approaches helped reduce procurement turnaround from 85 days in FY17 to 57 days most recently. In particular, Bank-wide prior review fell from 8500 contracts before the reform to 800 contracts annually more recently.

But the time costs of procurement are still a major problem in Bank-financed projects, and beyond the prior review threshold change, it isn’t clear from the findings of the evaluation that the reforms helped. Projects that sign contracts within the first year are more likely to get satisfactory implementation ratings, but half of projects still take a year between implementation start and first contract signing. In part that is because the consultant contracts that tend to come at the start of the project still take 91 days to process (and considerably longer for selections that look at both the quality and cost of bids).

Across procurements, IBRD non-fragile-state client-side procurement processing (still) takes an average of 114 days. Client-side process times are actually shorter in fragile states (88 days) because of additional World Bank procurement staff support, and shorter again on projects that benefit from “hands on expanded implementation support” which provides even more World Bank procurement staff time. Given that, it is unsurprising that 60 percent of World Bank project managers say clients (still) need significant World Bank support to process procurement contracts and only 36 percent of project managers think that the procurement system is working well.

The reform added a project-level procurement strategy document that clients fill out primarily to comply with World Bank requirements and rarely use. And 58 percent of World Bank project managers report clients have difficulty uploading information to the new procurement-tracking system while only 18 percent of project managers say that system helps clients. Meanwhile, World Bank projects still mostly use the same procurement approaches as always (innovative approaches are used more in fragile and IDA countries, again because of more World Bank procurement support).

In terms of a client-facing orientation, perhaps the most damning line in the report is that no World Bank project uses the procurement rules and procedures of a client’s agency because World Bank staff lack the incentives or knowledge to adopt that approach.

And while there is clearly an impact on processing times and outcomes of greater support from Bank procurement staff, they do not have the time to provide much of it—with each staffer working on an average of more than ten projects. Within investment projects, procurement capacity strengthening project development objectives are only achieved about one third of the time. The Bank is doing more country-level procurement capacity work, but it is focused on countries which already have higher capacity, and doesn't target the systemic procurement issues that emerge from World Bank projects. 

This leaves me strongly supportive of the Independent Evaluation Group’s recommendations to further simplify procedures, use country systems with greater (i.e., any) frequency, and provide support above the project level, but I wonder a little at the cost effectiveness of more World Bank support to use more complex procurement models. This provides support that, given client country staff turnover, may usually have the life of one procurement. There would have to be strong grounds to believe a complex approach would have a far better result under the circumstances. Again, as a rule, more simplification is the way to go.