Title: Procurement Efficiency Project
Principal Investigators: Professor Oriana Bandiera, Dr. Michael Best, Dr. Adnan Qadir Khan, Professor Andrea Prat
Implementing partners: Punjab Public Procurement Regulatory Authority (PPRA), Punjab Information Technology Board (PITB), Planning and Development Board Punjab, Finance Department Punjab, Punjab Resource Management Program, Higher Education Department, Agriculture Department, Health Department and Communications and Work Department.
Donors: IGC, JPAL and Government of Punjab
Project type: Phase 1 Pilot Phase 2: Implementation
Start Date: Phase 1: Pilot November 2012 Phase 2: Implementation 2014
End Date: Phase 1: December 2013 Phase 2: June 2016
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:
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.
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:
- Releasing procurement budgets earlier and in larger chunks,
- 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.
- 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.
To achieve ‘better value for money’ by incentivizing procuring officers and making procurement procedures more efficient
- Identifying which policies are most effective at aligning interests of different stakeholders and reducing red tape to make procurement more efficient,
- Analyzing how procuring officers utilize greater autonomy in achieving better value for money.
- Identifying motivational factors that drive bureaucrats in more proactively driving the procurement process.
The final report was completed by principal investigators; Oriana Banderia, Michael Best, Adnan Qadir Khan and Professor Andreas Prat. To view the paper please visit the link below: