PEFA Comments on PI-19

[harnett]

For what it's worth, here is my comment, sent to PEFA, on PI-19

"I have a concern with the revision for PI-19, in particular the proposed dimension (iv).

XXXX and myself have been carrying out a PEFA in Serbia.  Under the existing scoring system dimension (iii) scores a "C" because:

"A process exists for submitting and addressing procurement complaints, but it is designed poorly, is located within the PPO, and does not operate in a manner that provides for timely resolution of complaints. It is also questionable whether it conforms to the new Procurement Law (in terms of its independence).  The provisions of the new Public Procurement Law regarding the complaints procedure have not been implemented yet, with the National Assembly in July 2009 declining to ratify a new Complaints commission. "

To paraphrase:  it is a relic of the old law in desperate need of modernisation.

However,  we thought it a good idea to test the new proposed indicator, thinking it would provide a "bridge" for any future PEFA in Serbia.  The result was interesting.  In the words of the Serbian Procurement Specialist (with my comments also attached) who scored both dimensions - existing and revised:

"Complaints are reviewed by a body comprised of experienced professionals, familiar with the legal framework for procurement (Commission for protection of rights in public procurement procedures). This body, which includes members drawn from outside government is not involved in any capacity in procurement transactions or in the process leading to contract award decisions[PH1] ,  does not charge fees that prohibit access by concerned parties (there is a fee but it is minimal – approximately 600 euro’s regardless of the value of the contract[PH2] ). The Commission has the authority to suspend the procurement process and can issue decision that is binding for both parties. Because of the lack of staff, the Commission has problems with meeting the timeframe specified in PPL for issuing decisions."
It should be noted that the current Commission resides within the PPO and is not a body which emanates from the new Law but rather is a residual from the previous Law whilst the National Assembly ratifies a new body, which was due to occur in July 2009 but failed to reach a majority. SCORE B[PH3]

 [PH1]But it is inside the PPO!

 [PH2]Is this minimal?

 [PH3]So they get a B under the new system!!!!  The old system was better as they have a bad complaints mechanism and with the old one they got a C!

The fact is, whichever way you look at it, they have at least 3 of the 5 criteria
(i) is not involved in any capacity in procurement transactions or in the process leading to contract award decisions;  They can argue so even though the Commission is located within the PPO
(ii) does not charge fees that prohibit access by concerned parties;They have argued so
(iii) has the authority to suspend the procurement process;  YES
(iv) issues decisions within the timeframe specified in the rules/regulations; and  They will concede this
(v) issues decisions that are binding on both parties. YES

I hope this helps with the refinement of the new indicator (which XXXX and myself welcome as the old one needed revision).

Maybe a way to further refine is:  for (i) the complaints institution should be independant of the procurement office. (as well as the other criteria - and as is under the present dimension).  Also think carefully about what is a reasonable amount to charge so as not to prohibit access (500 x Local big mac price equivalents?  Is €600 reasonable?).

[John Short]

Some sobering comments on UK procurement (and budget formulation) to be found in http://download.cabinetoffice.gov.uk/efficiency/sirphilipgreenreview.pdf.  Wonder what the PI-19 scoring would be?

Separating out the budgeting from the procurement elements there are the following bullet points which suggests that the concept of multi-year budgeting is not fully appreciated and that there is a difference between operationalising the multi-year budget and planning it. 
•   The Treasury devolves budgeting to departments.
•   Departmental overhead and project spend is set for multiple years at the Spending Review. This is usually for three years, but the current review will be in place for four years.
•   Change can be made, but only exceptionally (for example, the Emergency Budget in May 2010).
•   Spend and forecast data are returned to the centre monthly, but are often not challenged if they are in line with budget or the previous year’s spend.

However some of the statements are indeed worrying, if correct, particularly
•   There is no process for setting and challenging detailed departmental budgets.
•   Budgets are not usually prepared “bottom up”.
•   Budgets are only reviewed by the centre at the highest level and rarely against any key performance indicators.

Recommendations made are
•   A team of three to four individuals, with financial and commercial expertise, should review departmental spend with an emphasis on efficiency and accountability.
•   A proper quarterly review process, including spend to date and forecast should be submitted to the centre, detailing spend against budget, previous forecast and last year.
•   Reporting should be standardised, to give a total Government view across categories.
•   Budgets should be prepared “bottom up” where appropriate.
It would be interesting to see a definition of “bottom” up and if it is different from the Departmental Spending Review process.