Corruption risk assessment of public procurement in Jordan, SIGMA, Amman 30 January 2017

© OECD
AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
CORRUPTION RISK ASSESSMENT OF THE
PUBLIC PROCUREMENT SYSTEM IN JORDAN
Presentation of the main findings
Amman, Jordan, 30 January 2017
Erika Bozzay / Steen Bruun-Nielsen / Zoran Blazevic
OECD/SIGMA

Content
• SIGMA in a nutshell
• The background, outline and objectives of the
Review
• Impact of the corruption in public procurement
• Review of the Jordanian public procurement
system
• Recommendations for the improvement of the
procurement system
2

SIGMA = almost 25 years working together
to improve public administrations
3

How do we work?
We review and give feedback on:
• Governance systems and institutions
• Legal frameworks
• Reform strategies and action plans
• Progress in reform implementation
We provide:
• Recommendations for improving laws and administrative
arrangements
• Methodologies and tools to support implementation
• Advice on the design and prioritisation of reforms
• Opportunities to share good practice from a wide range of countries,
including regional events
• Policy papers and multi-country comparative studies
4

SIGMA brings…
• Almost 25 years of experience working with
countries in transition
• Experts from EU national public administrations
• Long-term relationships with in-country partners
• Practitioner-to-practitioner support
• Flexibility in project design and implementation
• A combination of EU and OECD expertise
• Support that complements other EU institution
building instruments
5

PART I.
– The background, outline and objectives of the
Review
6

The background of the Review
• The main aim was to conduct a review of the public
procurement system in Jordan focusing on integrity and
transparency.
• The review covered the four main pillars of the public
procurement system:
 policy, legal and regulatory framework;
 institutional framework and capacity;
 operational capacity and market functionality;
 control, monitoring structure and integrity mechanisms.
• The Review is the outcome of the joint efforts of the SIGMA
team and the JIACC project team.
7

Objectives and methodology
• The methodology was tailored to Jordan’s political,
regulatory and institutional contexts while also being in
line with international standards.
• The main objectives:
 mapping the integrity risks related to the procurement
system in Jordan – reviewing the current system and
drafting a report,
 developing recommendations for risk mitigation strategies,
 raising awareness on corruption risks in public procurement.
8

PART II.
– Impact of the corruption in public
procurement
9

Public procurement and corruption
• Public procurement is a major risk area for corruption, for two
main reasons:
 a large share of public money, paid by the taxpayers, is spent
through public procurement.
 close interaction between the public officials and the private
sector and high potential gains from bribery.
• In the Review, corruption is defined as referring primarily to any
situation in which a public position is being misused for private
gain.
10

Typical corruption risks during the public
procurement process
• Basic corruption risks in the report are divided into three main
categories:
 the pre-tender stage risks,
 the tender stage risks,
 the post-tender stage risks.
• Specific corruption risks for the Jordanian public procurement
system are explained and highlighted in Chapter 5 and 6 of the
Review.
11

Prerequisite to fight against corruption in
public procurement
Conclusion of the EU funded study “Identifying and
Reducing Corruption in Public Procurement in the EU”:
• effective detection and prevention of corruption is
possible if administrative data on tenders, bidders,
projects and contractors are collected and stored in a
structured way, accessible for controls, investigations
and analyses.
12

PART III.
– Review of Jordanian public procurement
system
13

Pillar A
The Policy, Legal and Regulatory Framework on
Public Procurement
• Jordan has a long tradition for regulating public procurement
with the first legislation introduced in the 1920’es.
• The legislation on public procurement is divided with separate
by-laws for supplies and works and for the supplies of
medicines and medical equipment to the health sector.
• Institutionally this is reflected in having three different
Government entities: Government Tenders Department – GTD,
General Supplies Department – GSD and Joint Procurement
Department – JPD.
• The three sets of laws are reviewed from the point of view of
integrity.
14

Pillar A
The Legislation examples of too much discretion
• Possibilities for adjusting technical specifications
• Possibilities for admitting non-compliant bids
• Room for the use of other criteria than price without
indicating any requirements or limitations in this
respect.
15

Pillar B
The Institutional Framework and Capacity
• There is no entity with a clearly mandated policy-making function to
initiate, implement and monitor procurement development
strategies.
• There are three central procurement bodies in charge of procuring
different items (one for works and services, one for supplies and one
for medicine and medical equipment).
• In addition to these main actors of procurements, large parts of the
procurement market are dominated by other entities. These are the
special committees established ad hoc by the Government for
specific projects, including tenders involving international financing.
• There is no overall strategy for the development of the Jordanian
pubic procurement system.
• Statistical information about the public procurement system in
Jordan is missing.
16

principallyfinancedbytheEU Pillar C
Operational Capacity and Market
• The lack of proper statistics makes it difficult to estimate the
distribution of procurements between State and regional level.
• The interview with various groups uniformly pointed as lowest
price being the criterion mostly used.
• The criteria of suitability are putting too much emphasis on
resources (number of staff, size of offices etc.) and financial
capacity rather than technical capacity in terms of skills and
experience (including references) from previous contracts.
• The interviews showed that the tender specifications are
generally perceived as being of low quality.
• The various committees involved in the procurement processes
lack the technical capacities, for example for the purpose of
evaluating tender specifications proposed by consultants.
17

Pillar D
Control, Monitoring Structure and Integrity
Mechanisms
• Without one authority in charge of overall public procurement
matters there is no dedicated centralised supervision of public
procurement activities.
• There is a limited possibility to object to the procuring entity as
regards planned awards, albeit within very short time limits.
• Contract management has been mentioned as a problem due
not least to failing resources on the part of the beneficiary,
respectively the receiving committee and high percentage of
variation orders.
• Another problem in connection with contract management is
that it apparently often happens that the winner of the tender
leaves the contract to be implemented by a less qualified
“subcontractor”.
18

PART IV.
– Recommendations for the improvement of
the Jordanian procurement system
19

Summary of the main risk factors within
legislation and institutional setup
• There is no central policy making institution and complaints
system.
• The public procurement legislation is fragmented.
• Capacity problems in relation to tender evaluation and contract
supervision.
• No specific requirements to the planning of procurements.
• Lack of monitoring and processing of statistical information.
20

Recommendations for enhancing integrity in
the Jordanian procurement system I.
A. The establishment or the designation of a central body in
charge of policy issues regarding public procurement.
B. Rationalisation of the legal and regulatory system: the three
by-laws should be unified under one law in connection with
various legislative reform.
C. Introduction of a clear policy concerning preparation of
procurements, especially for the purpose of variation orders.
21

Recommendations for enhancing integrity in
the Jordanian procurement system II.
D. Introduction of a clear policy for dealing with integrity
standards and conflicts of interest.
E. Professionalisation of the function of public purchaser and
creation of a database of all members of technical, tendering,
receiving and special committees.
F. Capacity building of the public and private sectors
G. Increased integrity in relations between the public sector and
the business sector (potential bidders) by ensuring easy access
to legal protection (remedies).
22

Conclusion on recommendations
• The seven components (from A – G) constitute a strategy for
dealing with what is identified as main corruption risks in the
Jordanian legislation and structures for public procurement.
• As it was pointed out from the start of the review, nearly any
institutional or legislative shortcoming can be exploited for
corruptive purposes.
• This is why the above seven-component approach covers such a
wide range of measures.
• An added effect of implementing the strategy would therefore
be not only the mediation of corruption risks but also a general
improvement of the efficiency and integrity of the Jordanian
public procurement system as a whole.
23

Time for….
Questions and comments ?
24

Thank you for your attention!
More information can be found at:
www.sigmaweb.org
25

Corruption risk assessment of public procurement in Jordan, SIGMA, Amman 30 January 2017

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