Procurement Efficiency Project

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Principal Investigators: Professor Oriana Bandiera (London School of Economics), Dr. Michael Best (Stanford University), Dr. Adnan Qadir Khan (London School of Economics), and Professor Andrea Prat (Columbia University).

Implementing Partners: Punjab Public Procurement Regulatory Authority (PPRA), Punjab Information Technology Board (PITB),Planning and Development Board, Government of Punjab,  Finance Department, Government of Punjab, Punjab Resource Management Programme (PRMP), Higher Education Department, Agriculture Department, Health Department, Communication and Works Department.

Donors: IGC award; JPAL, Government of Punjab

Start Date:                                                                                                   Expected Completion Date:
Exploratory & Design Phase: November 2012                                             Phase 1 trials: June 30th, 2014
Trial Phase: July 1st, 2013

Project Completion: June 30th,2016.

Project Type: Large Scale

Goal: To achieve ‘better value for money’ by incentivizing procuring officers and making procurement procedures more efficient.

Objectives:

  1. Identifying which policies are most effective at aligning interests of different stakeholders and reducing red tape to make procurement more efficient,
  2. Analysing how procuring officers utilize greater autonomy in achieving better value for money.
  3. Identifying motivational factors that drive bureaucrats in more proactively driving the procurement process.
 
 

Background

Countries such as Pakistan, and in particular the provincial governments to whom much responsibility for service delivery has been devolved, face growing spending needs and must meet them with limited resources. In this context it becomes crucial to ensure that the available resources are spent in a cost-effective manner. Arguably one of the most important tasks in this respect is to ensure greater efficiency of public procurement, without which cost effective service delivery is impossible.

The availability of timely and accurate information on value for money achieved during procurement is central to evaluating the effectiveness of interventions to increase efficiency in public procurement.

To this end, Punjab Online Procurement System has been developed, implemented and adopted across 1200 public offices. It digitizes the existing Procurement System and allows for transactions to be evaluated across offices in Higher Education, Agriculture, Health and Communication and Works controlling for different attributes.

There are different narratives from which the interventions being evaluated in this project have been derived. The first is that procurement officers may not have sufficient incentives to exert the right effort.  The second narrative is that the rules governing public procurement may be generating low value for money.

In order to address both these, the project introduces two major reform packages:

First Reform:

Introduction of financial incentives for drawing and disbursement officers to improve procurement effectiveness.

Data collected through Punjab Online Procurement System is evaluated for cost effectiveness controlling for different attributes and based on a rigorous econometric design methodology. This is complemented through an exercise of Physical Verification across Cost Centers that also surveys the staff and collects additional information on procurement processes and purchases.

Second Reform:

Through this intervention by effecting required changes in the financial rules disbursement autonomy is being provided to drawing and disbursement officers.

The effect would be generated by:

  1. Releasing procurement budgets earlier and in larger chunks,
  2. Promoting transparency and reducing undue delays by oversight-authorities (by providing a streamlined procedure at the Accountant General’s office to approve and release payments to vendors expeditiously )

“Guide to Pre-Audit Requirements” has been circulated amongst DDOs part of the ‘Constraints’ and ‘Constraints and Rules’ Group to help prepare documents for quick clearance at A.G. Office / DAOs.

  1. Empowering the procuring public body by authorizing it to make payments directly to suppliers / vendors (by increasing the cash in hand).

The project then aims to evaluate these two policy interventions and compare the effect of increased autonomy (change in rules) and more aligned incentives.