Public Procurement Transformation - Background
OMSAR has been coordinating governmental efforts to reform a multitude of governance and anti-corruption laws since 1997. Contributing specialist knowledge and facilitating and coordinating stakeholder contributions, OMSAR succeeded in bringing all stakeholders to the table to discuss policies, laws, decrees, regulations, etc. While a number of policies and laws were successfully endorsed, public procurement was not. Despite multi-stakeholder efforts since 1997 and despite the success in dispatching a draft PP law to the Parliament in 2012, this latest initiative was aborted. Attempts by the Parliamentary committee for Administration and Justice (in the years 2016-2017) to introduce PP reforms through the Central Inspection draft law also failed due to lacking consensus and politicization. Thrust has been reintroduced again in late 2019 through a draft Procurement Law presented by Government based on the recommendation of the Ministry of Finance; the law is being discussed in Parliament as a MAPS assessment is being concluded by the Institute of Finance – Basel Fuleihan with support from the World Bank.
The only concrete breakthrough in PP reform, was a ministerial decision to limit the use of single sourcing by setting detailed measures and criteria; this decision of May 2017 was pioneered by the then Minister of State for Administrative Reform and an ex-Minister of State for Administrative Reform.
The PP system in Lebanon still suffers politicized tensions, debates, conflicts and abuse as is witnessed in newspapers on an almost daily basis in the past 5 years. Global, regional and local circumstances in 2020 as well as topmost dedication to transform the Lebanese procurement framework are anticipated to culminate in the endorsement of the above-mentioned draft Law.
Public Procurement Transformation – OMSAR perspective
In addition to being very old, Lebanon’s PP framework permits the manipulation of some legal texts and grants discretion to officers when such discretion is not warranted facilitating abuse. On another front, the framework is very weak when it comes to the constraints of effective competition, transparency, and equal treatment. The procedures used for conducting procurement are lacking and do not regulate modern procedures such as the following: repetitive rounds of bidding (e.g. competitive dialogue or multiple stage procurement); the conduct of prequalification; the procurement of consulting services; framework contracts; e-procurement; procurement of physical services; etc. For example, in the current framework, consulting services can be awarded using single sourcing and there is no room for using e-procurement.
The framework still relies on 100-years old general conditions of contract and has not yet regulated the use of standard bidding documents. Procuring entities can use whichever templates they want, and in many instance such templates are not complete and not proportional to the type, nature and complexity of the project being procured.
Strategic procurement planning is completely absent in the legal texts; there is a simple obligation to announce open tenders in a general annual procurement plan. Aspects of strategic and operational PP planning are rarely practiced despite their strategic importance.
Legal texts are silent on the use of procurement as a secondary policy tool to support sustainable development, social justice, innovation, etc. Today, the use of PP to attain much farther economic, environmental, and social goals is widespread.
The legislation in Lebanon does not identify “procurement” as a civil service function; procurement is conducted by several civil servants entrusted with various tasks without clear regulation of roles and responsibilities. This renders accountability very difficult.
The PP framework is a highly centralized system when it comes to bid evaluations dissociating the evaluation process from the owners of the procurement activity and creating threats of abuse including but not limited to dissecting a procurement activity into smaller portions to resort to decentralized procedures or resorting to discretionary single sourcing. There is no clear regulation of the complaints management process; some aggrieved bidders resort to the State Council for quick relief; but even then, there are no detailed provisions.
The institutional setup includes the Tender Board (forming and supervising evaluation committees for open tenders in excess of 100,000,000 LBP); the Ministry of Finance (budget expenditure controllers) conducting ex-ante review prior to reserving budget for every contract; the Court of Accounts engaged in ex-ante control of procurement decisions above certain thresholds.
Legislation is silent on the authority to regulate and supervise the PP function. The current setup has created a number of issues and obstacles as follows:
1- Procuring entities engaging in practices to circumvent the recourse to the open tender procedure;
2- Budget controllers at the MoF are considered to be a duplicate ex-ante control and a bottleneck delaying the award of contracts;
3- The CoA is overburdened by ex-ante controls due to the very low value of thresholds;
4- There is no reference entity for data collection/analysis, guidance, streamlining, support and unification of procedures and systems; and
5- Each procuring entity adopts its own bidding documents without any reference or use of standard documents.
OMSAR’s Strategic View on PP Reform
At the institutional level, the vision is to transform the current Tender Board to a Public Procurement Management Authority (PPMA) reporting directly to the President of the Council of Ministers and entrusted with regulatory, supervisory and associated functions. The PPMA will be the leader in PP continuous modernization and the central authority to which all support to PP in Lebanon should be directed.
It is OMSAR’s mandate to provide the TB with utmost support to enable this central authority assume all the functions required and to accomplish its role. The future PPMA will be the central authority for all procurement operations implemented using public funds (including all public administrations, independent entities, municipalities and municipal unions).
The Court of Accounts role should be transformed to concentrate on performance-based audit, which will become the key engine behind effective and efficient accountability measures. Ex-ante control should be reduced to high value / high complexity procurement activities.
Both the staffing of the PPMA and the CoA needs to be increased with the required numbers and qualifications of professionals.
At the framework level, OMSAR’s vision is based on the following key principles and policies:
1. Separating Goals from constraints: the policy should clearly establish primary and secondary goals of the PP system and, for each, define the constraints that must be met;
2. Decentralization of execution: all procuring entities should procure all their requirements themselves;
3. Central Regulatory body: The PPMA will handle supervisory and regulatory functions of all procurement activities in addition to data collection and analysis, compliant management, capacity building, etc.
4. Reduction in Ex-ante controls:
a. By Ministry of Finance (by budget expenditure controllers) and
b. By Court of Accounts (raising the threshold for ex-ante review);
5. Increase in performance-based control (ex-post) by the Court of Accounts coupled with regulating and developing internal control systems;
6. Heavy reliance on automation and technology: utilizing the readily available e-procurement system and the development of automated classification, complaint management, and suspension (debarment) systems; in addition to the adoption of Open Contracting Data principles and systems;
7. Professionalization of the PP function through capacity building, certification and the funding of research and graduate academic degrees in PP;
8. Robust accountability systems commensurate with decentralization and performance-based control measures;
9. PP Ethics- the most important paradigm that should inspire the regulation and practice of PP; and
10. Time is of critical importance in achieving the above due to the huge economic, environmental and social repercussions.
Public Procurement Transformation benefits directly every economic operator by granting them a modern, equitable, consistent, transparent and effective procurement system within which to compete and implement Public contracts. It benefits directly also every Contracting Authority and every Control Agency in Lebanon starting with the smallest municipality to large Ministries. Impact of procurement transformation will inevitably be felt by the citizen when the quality of public services are enhanced with an efficient use of scarce public resources, the environment is protected, social justice is fortified and Lebanon advances sustainably.
Source of funds & Value
During the period 1997 – 2020, the majority of funds and resources were own resources; in addition, several donors have contributed to some phases of this transformation journey including the following:
- Development Gateway Foundation: US$ 100,000
- World Bank: US$ 2,000,000
- European Union: EUR 1,700,000
Achievements and deliverables
In addition to gaining unique specialist knowledge and experience in the legal modernization process, OMSAR recently delivered the following sustainable achievements
1. 7 Standard Bidding Documents (4 published and disseminated starting 2019; simplified version is being used by some municipalities in Beqaa and at OMSAR)
2. Procurement Code of Ethics (printed, disseminated and published online since 2018 and sent to the Council of Ministers)
3. Capacity Building Masterplan (90% of Tier 3 courses implemented and continuing)
4. 14 Training courses on advanced topics in PP prepared and delivered (922 trainees) with two e-learning self-paced modules
5. E-procurement system (100% completed in English; Arabic translation being enhanced) https://omsar.eprocurement.gov.lb/en/home/
6. Practical Guidance on Public Procurement (done in English in 2018) and being translated to Arabic
7. Awareness Campaign Video Spot completed and disseminated (starting 2019)
In parallel with the above, OMSAR has developed a robust set of Key Performance Indicators for PP at the output and outcome levels. The first round of reporting on those indicators was successfully completed, and the second round is approaching. This is part of the sectoral performance indicator management system jointly developed with the Central Inspection.
Ongoing, persistently and steadfast.
Publications: brochures, strategy, manuals…
- Standard Bidding Documents
- Code of Ethics
- E-procurement System Link and Guidance Documentation
- Link to e-learning courses
- Other reports/deliverables available upon request
- Public Procurement Training Masterplan
- Training Implementation Report 2017-2019
- Integrity Enhancement Guidelines
- Draft Decree to Complement Public Accounting Law
- Draft Decree to Complement Roles and Responsibilities of Tender Board
- E-procurement System Design and Specifications
- Draft PP Law of 2012
- Draft PP Law of 1997