Document of The World Bank FOR OFFICIAL USE ONLY Report No: 76109-BD PROJECT PAPER ON A PROPOSED ADDITIONAL CREDIT IN THE AMOUNT OF SDR 22.8 MILLION (US$34.5 MILLION EQUIVALENT) TO THE PEOPLE’S REPUBLIC OF BANGLADESH FOR A PUBLIC PROCUREMENT REFORM PROJECT II APRIL 8, 2013 Procurement Unit South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. 2 CURRENCY EQUIVALENTS (Exchange Rate Effective March 10, 2013) Currency Unit = Taka (Tk) Tk 80.10…… = US$1 US$1.51483 = SDR1 FISCAL YEAR July 1 – June 30 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank ADP Annual Development Program BAPD National Academy for Planning and Development BCC Behavioral Change Communication BCSAA Bangladesh Civil Service Administration Academy BIM Bangladesh Institute of Management BPATC Bangladesh Public Administration Training Center BWDB Bangladesh Water Development Board C&AG Comptroller and Auditor General CAO Chief Accounts Officer CAS Country Assistance Strategy CFAA Country Financial Accountability Assessment CGA Controller General of Accounts CIPS Chartered Institute of Purchasing & Supply, UK CPAR Country Procurement Assessment Report CPTU Central Procurement Technical Unit DC Direct Contracting DFID Department for International Development (UK) DG Director General DRC Disaster Recovery Center ECNEC Executive Committee for National Economic Council e-GP Electronic Government Procurement ESCB Engineering Staff College Bangladesh FAPAD Foreign Aided Project Audit Directorate FBS Fixed Budget selection FM Financial Management FMC/ FMS Financial Management Consultant/ Specialist GAAP Governance and Accountability Action Plan GOB/ GoB Government of Bangladesh IC Individual Consultant ICB International Competitive Bidding IDA International Development Association IFB Invitation for Bids IFR Interim Un-audited Financial Report ITC-ILO International Training Center of International Labor Organization- Turin IMED Implementation Monitoring & Evaluation Division 3 LGED Local Government Engineering Department MIS Management Information System MOP Ministry of Planning MTR Mid-Term Review NCB National Competitive Bidding NGO Non-governmental Organization NS National Shopping OECD Organization for Economic Cooperation and Development PDB Power Development Board PDO Project Development Objective PE Procuring Entity PFM Public Financial Management PIP Project Implementation Plan PMC Procurement Monitoring Coordinator PPA Public Procurement Act PPR Public Procurement Rules 2008 PPRP Public Procurement Reform Project PPRPII Public Procurement Reform Project II PROMIS Procurement Mgmt Information System PPSC Public-Private Stakeholders Committee PSC Project Steering Committee QBS Quality-Based Selection QCBS Quality- and Cost-Based Selection REB Rural Electrification Board RHD Roads and Highways Department RFP Request for Proposal SA Special Account SAc Social Accountability SBD Standard Bidding Documents SOE Statement of Expenditures SSS Single-Source Selection SWAps Sector-wide Approaches TA Technical Assistance Target agencies RHD, LGED, REB, and BWDB TOR Terms of Reference TPP Technical Assistance Project Proposal TWG Technical Working Group UNCITRAL UN Commission for International Trade Law UNDP United Nations Development Program Vice President: Isabel M. Guerrero Acting Country Director: Salman Zaheer Sector Director Idah Z. Pswarayi-Riddihough Sector Manager: Felipe Goya Task Team Leader: Zafrul Islam 4 BANGLADESH ADDITIONAL FINANCING OF PUBLIC PROCUREMENT REFORM PROJECT II CONTENTS Project Paper Data Sheet Project Paper I. Introduction II. Background and Rationale for Additional Financing III. Proposed Changes IV. Appraisal Summary Mandatory Annexes 1. Revised Results Framework and Monitoring Indicators 2. Operational Risk Assessment Framework Other Annexes 3. Detailed Description of Modified or New Project Activities 4. Revised Estimate of Project Costs 5. Revised Implementation Arrangements and Support A: Implementation B: Financial Management C: Procurement D: Governance and Accountability Action Plan MAP: IBRD 35508 5 BANGLADESH ADDITIONAL FINANCING OF PUBLIC PROCUREMENT REFORM PROJECT II ADDITIONAL FINANCING DATA SHEET Basic Information - Additional Financing (AF) Acting Country Director: Salman Zaheer Sectors: General Public Administration Sector Manager/Director: Felipe Goya/ Idah Themes: Public expenditure, Z. Pswarayi-Riddihough procurement, financial management Team Leader: Zafrul Islam Environmental category: (C) Project ID: P132743 Expected Closing Date: Expected Effectiveness Date: June 15, 2013 Joint IFC: Lending Instrument: Technical Assistance Joint Level: Credit Additional Financing Type: Basic Information - Original Project Project ID: P098146 Environmental category: (C) Project Name: Public Procurement Expected Closing Date: December 31, Reform Project II 2016 Lending Instrument: Technical Joint IFC: Assistance Credit Joint Level: AF Project Financing Data [ ] Loan [X] Credit [ ] Grant [ ] Guarantee [ ] Other: Proposed terms: 40 years AF Financing Plan (US$m) Source Total Amount (US $m) Total Project Cost: 36.00 Cofinancing: Borrower: 1.50 Total Bank Financing: 34.50 IBRD IDA 34.50 New Recommitted Client Information Recipient: People’s Republic of Bangladesh Responsible Agency: Implementation Monitoring and Evaluation Division Contact Person: Mr. Amulya K. Debnath Director General, Central Procurement Technical Unit (CPTU ) Telephone No.: + 880 2 9144252 Fax No.: + 880 2 9144250 Email: cptudg@cptu.gov.bd 6 AF Estimated Disbursements (Bank FY/US$m) FY 14 15 16 17 Annual 3 10 12 11 Cumulative 3 13 25 36 Project Development Objective and Description Original project development objective: Improve performance of the public procurement system progressively in Bangladesh, focusing largely on the key sectoral ministries and targeting their implementing agencies. Revised project development objective: Improve performance of the public procurement system progressively in Bangladesh, focusing largely on the four target agencies. . Project description: Component 1: Furthering policy reform and institutionalizing capacity development would support the expansion of capacity development program to additional agencies beyond the original four target agencies (RHD, LGED, BWDB, and REB). Component 2: Strengthening procurement management at the sectoral level would strengthen monitoring of procurement performance at the target agencies. Component 3: Introducing e-Government procurement (e-GP) would support the implementation of full electronic bidding in the four agencies. Component 4: Communication, Behavioral Change and Social Accountability would support awareness about e-GP and enforcement of procurement laws against fraud and corruption. Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) [ ]Yes [X] No Natural Habitats (OP/BP 4.04) [ ]Yes [X] No Forests (OP/BP 4.36) [ ]Yes [X] No Pest Management (OP 4.09) [ ]Yes [X] No Physical Cultural Resources (OP/BP 4.11) [ ]Yes [X] No Indigenous Peoples (OP/BP 4.10) [ ]Yes [X] No Involuntary Resettlement (OP/BP 4.12) [ ]Yes [X] No Safety of Dams (OP/BP 4.37) [ ]Yes [X] No Projects on International Waterways (OP/BP 7.50) [ ]Yes [X] No Projects in Disputed Areas (OP/BP 7.60) [ ]Yes [X] No Does the project require any waivers of Bank policies? [ ]Yes [X] No Have these been endorsed or approved by Bank management? [ ]Yes [ ] No Conditions and Legal Covenants: Financing Agreement Description of Condition/Covenant Date Due Reference 7 Section I.A, Schedule 2 The Recipient shall maintain throughout the Recurrent implementation of the Project the CPTU, the E-GP units in the 4 Target Agencies, the Project Steering Committee, and the Public Private Stakeholders Committee, with functions, staff and resources satisfactory to IDA. Section I.B, Schedule 2 The Recipient shall carry out the Governance and Recurrent Accountability Action Plan approved by IDA in accordance with its terms. Section II.A, Schedule The Recipient shall prepare and furnish to IDA semi- Recurrent 2 annual Project Reports, based on the key performance indicators specified in the Financing Agreement. Section II.B, Schedule The Recipient shall prepare and furnish to IDA Recurrent 2 quarterly interim unaudited financial reports, and annual financial audit reports. Section IV.B, Schedule Provision allowing retroactive financing of eligible Recurrent 2 expenditures under the additional financing, incurred on or after July 1, 2012 up to $2 million equivalent Terms and conditions of disbursement against DLI- based expenditures upon satisfactory evidence for compliance with the respective DLIs for each respective DLI period and each Target Agency Section V, Schedule 2 The Recipient shall put in place, and thereafter Not later maintain arrangements satisfactory to IDA to ensure than that the E-GP system developed under the Project is September sustainably financed through a retention of the E-GP 30, 2013 system generated revenues within IMED and/or through the provision to IMED of other adequate funds on an annual basis for the management, operation and maintenance of the e-GP system, with a distinct budget code and financial authority for IMED/ CPTU to spend such funds. Schedule 3 Matrix containing all applicable DLI targets and periods for each Target Agency, and amounts allocated for each target/period for each Target Agency I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an additional credit in an amount of US$34.50 million equivalent to the Bangladesh: Public Procurement Reform Project II (PPRP-II; P098146). 2. The proposed additional financing would help finance the costs associated with the funding gap and the scaling up of activities to enhance the impact of a well-performing project implemented by the Central Procurement Technical Unit (CPTU) of the Implementation Monitoring and Evaluation Division (IMED) of the Ministry of Planning (MoP). The proposed financing will support expansion of the capacity development program and rolling out of electronic government procurement (e-GP) combined with procurement performance monitoring. 3. The project made an extensive effort in enhancing procurement management capacity of the key sectoral organizations by developing a pool of 20 additional national trainers to the earlier pool of 25, providing three-week training to over 2900 public procurement officials of which 75% are from the four target agencies (Roads and Highways Department- RHD, Local Government Engineering Department- LGED, Bangladesh Water Development Board- BWDB, and Rural Electrification Board- REB), and developing about 40 professionals with international procurement accreditation. The government established a comprehensive national web portal for electronic government procurement- e-GP (www.eprocure.gov.bd) which is now at its rolling out phase at the four target agencies, after completing the pilot. Also, an on-line procurement performance monitoring system is in its initial stage of implementation at the four agencies. All of these actions are contributing to building and institutionalizing the country system with improved procurement outcomes/ results on the ground as demonstrated by reduced procurement delays, increased competitiveness, and enhanced transparency. 4. In light of the need for better procurement outcomes using electronic means and huge demand for increased procurement management capacity, the additional financing is proposed to expand the scope: first, by enhancing the capacity development program beyond the four target agencies to cover about 20 additional agencies in health, education, power, public works department; second, by increasing the use of electronic government procurement (e-GP) at the four target agencies to cover them fully under e-GP by 2016; and third, by improving the use of on-line procurement performance monitoring (PROMIS) at the four agencies, followed by the other additional agencies. E-GP is automation of the public procurement process while PROMIS monitors on-line the performance of the public procurement system based on indicators. A sustainable business model for the e-GP system has been worked out which will be implemented in a way that by the end of the project, the system would be mostly self-financed; this will be achieved by substantially expanding the transaction level of e-GP tenders by the four target agencies, using a performance based approach (Disbursement-linked Indicators- DLIs). 5. The project objective is proposed to be adjusted to “improve performance of the public procurement system progressively in Bangladesh, focusing largely on the four target agencies” as the focus is on target agencies. To ensure continuity of the activities, CPTU/IMED will 8 9 continue to be responsible for overall implementation of the project, while the four target agencies will be responsible for the actual implementation of e-GP and PROMIS. II. Background and Rationale for Additional Financing of $34.5 million Country and Sector Background 6. Country Context: Situated in a low-lying river delta, Bangladesh combines the world’s highest population density with the greatest vulnerability to earthquakes, natural disasters and the impacts of climate change. Despite this vulnerability, the Bangladeshi population has proven remarkably resilient, and the country has developed beyond expectations. Economic growth has accelerated in each decade since independence in 1971 – averaging 6 percent in the last 10 years - and the poverty headcount has fallen from nearly 60 percent in the late 1980s to around 30 percent today. This progress has occurred against a backdrop of weak governance and partisan political rivalry. Despite considerable economic and social progress across multiple governments, Bangladesh remains a low-income country (per capita GDP of US$770) with around 47 million people still living in extreme poverty. 7. Bangladesh’s record on improving public sector performance and reducing corruption has been mixed. While the present government has built on the positive changes introduced earlier in some areas, it has had limited success in meaningfully combating corruption. Bangladesh’s mixed performance on economic management and governance is reflected in the Bank’s Country Policy and Institutional Assessment rating, which rose modestly in 2007 before falling back in 2011 to below pre-2007 levels. 8. This mixed governance performance notwithstanding; there is growing recognition within the country that enhancing accountability and improving governance is a prerequisite to expediting poverty reduction, improving the investment climate, and accelerating private sector- led growth that are priority objectives of the Government’s Sixth Five Year Plan (SFYP FY11- FY15)—Accelerating Growth and Reducing Poverty. Aligned with the Government’s priorities, the World Bank’s Country Assistance Strategy 2011-1014 (CAS) has enhanced accountability and promoting inclusion as one of its four core pillars, under which increasing effectiveness and efficiency in the utilization of public resources is seen as important for improving the investment climate and accelerating the pace of poverty reduction. 9. Sector policy and strategy: Bangladesh’s annual development outlay alone is over US$6 billion along with a considerable amount of non-development expenditure in the revenue budget. It is estimated that annual expenditure on procurement of goods, works and services in the public sector of Bangladesh (the focus of the proposed additional financing) accounts for 20-24% of the annual national budget and 60-80% of the annual development budget. Thus, annual procurement volume is over US$3 billion. According to some estimates, the economic loss due to inefficient procurement and misappropriation of funds costs the country over 1.5% GDP growth per annum. 10 10. Public procurement is a core area within the framework of governance and accountability. Accordingly, a Country Procurement Assessment Report (CPAR) was published in 2002 that identified series of deficiencies in the system that, among others, include absence of legal framework and institutional mechanism, protracted bureaucratic procedures allowing multi- point rent seeking; lack of critical mass of professionals to manage public procurement; inordinate delays; and ineffective contract administration. Following the recommendations of the CPAR, the Government made a strategic road map to tackle the problem systematically in a phased manner with a sequential approach. Key features of the road map includes: preparation of laws/ rules/ procedures, establishment of a nodal procurement policy unit, developing a critical mass of procurement professionals including provisions for capacity development program initially focusing on the key spenders of the Government, and introduction of e-GP with performance monitoring. 11. The Government has been steadily improving the procurement since 2002, including through two consecutive IDA-financed projects. A Public Procurement law has been enacted (2006), a policy unit established, procedures simplified and made more transparent, electronic procurement (e-GP) introduced, procurement performance monitoring system piloted, and capacity strengthened in central and sector procurement units. While much has been achieved – and a promising foundation for further improvement has been put in place - yet there are challenges ahead in particular reference to procurement performance monitoring by the agencies combined with incidence of inappropriate practices including fraud and corruption (F&C), collusion, coercion, etc. at local levels. Also, allegations of interference by vested quarters and/or political groups exist. So, more needs to be done, especially to keep pace with changing government structures (for example decentralization and local government), the increasing volume and complexity of public procurement, the rising demand for public services, and the increasing risks of fraud and corruption. 12. The on-going PPRPII has focused on improving capacity in the CPTU and in four target agencies which account for about 50-60% of the total annual public procurement of the country. While it has been successful in achieving its objectives, a continued effort is needed to keep up with increasing demands on the public procurement system, improve the system’s transparency and efficiency, and enhance public perception and accountability. Recognizing these needs, the Additional Financing of PPRPII (PPRPII AF) proposes to focus more on the rapid expansion of e-GP and on-line procurement monitoring (PROMIS) at these agencies, combined with the capacity development efforts which is mainly focused to about 20 additional agencies in health, education, power, public works, etc. 13. The World Bank, as part of its enhanced focus on development outcomes/results, is seeking to strengthen country systems, moving away from transaction based approaches to a principle-based approach. The above-mentioned procurement reforms initiated by Bangladesh align well with this framework under which the World Bank has already launched a major initiative to align its procurement policies and guidelines with those of country systems. Thus, the support for scaling up activities of PPRPII is fully aligned with the Bank’s procurement effort for long-term sustainability of the system yielding benefits to the country. 11 Project Implementation Status 14. With a credit amount of $23.6 million equivalent, the PPRPII became effective in September 2007 with the project development objective of improving performance of the public procurement system progressively in Bangladesh, focusing largely on the key sectoral ministries and targeting their implementing agencies. The project started with the major component of capacity development by programing a three-week course for procurement practitioners of the four target agencies and others through an international-local twinning arrangement. By December 2012, it exceeded the target by training over 2900 public procurement officials in a way that about 85% of the procuring entities of those four agencies have at least one person trained. It developed an additional pool of about 20 national trainers, and the local training institute developed a procurement faculty, headed by a Dean and four trainers. Concurrently, on procurement core competence front, about 40 procurement officials, as top-performers in three- weeks course, have successfully completed the international procurement accreditation program of the Chartered Institute of Purchasing and Supply (CIPS), UK including a top-up Masters in procurement and supply management from the BRAC University- Institute of Governance (BRACU-IGS). In addition, several short courses for variety of target audiences have been completed though behind schedule. The capacity development framework of Bangladesh is considered as an emerging model. Nevertheless, more work is needed for better sustainability of the program in future. 15. Under the second component for sectoral strengthening, the Government of Bangladesh (GoB) established an on-line procurement management information system (PROMIS) for tracking performance with a set of indicators to measure efficiency, transparency, and competiveness of the system including fraud and corruption elements. The four target agencies are at its early phase of implementation. The monitoring and evaluation framework functioned reasonably well to capture and analyze data. Nevertheless, given the mandate in procurement law, staffing of CPTU continues to be a challenge because of frequent rotations/ vacancy. 16. As regards electronic tendering, with high level commitment, the GoB developed a comprehensive national e-GP web portal that is fully functional. After completing the pilot, all four agencies are at the rolling out phase. As of December 2012, 179 tenders, valued about US$21 million, have been invited, with registration of 622 suppliers/ contractors and 9 scheduled commercial banks (with 325 branches of which two are on-line) in the e-GP portal. Overall the initial implementation target up to December 31, 2012 has been achieved 100% by inviting at least one tender in e-GP for about 50% of procuring entities of each target agency, that is, one e- GP tender in each of the 104 procuring entities. Target agency wise coverage is as follows: RHD in 80 entities against a target of 52 entities (150%), followed by REB in all three target entities (100%), BWDB in 48 entities out of 58 (82%), and LGED in 27 entities out of 37 (73%). With this trend, the overall target up to March 2013 is expected to be fully achieved to cover about 300 entities, each at least with one e-GP tender. To run the e-GP system effectively, a self- sustainable model is required with substantial increase of transactional base covering wider bidding community which is planned for future. 17. Behavioral change communication with social accountability elements under the project contributed considerably in demystifying procurement at the grass root level of the community 12 and making them aware about good procurement outcomes by following three pronged approach: media campaign; advocacy interventions; and capacity building. Notable contributions include: (i) advocacy interventions: at both local and national level through Future Search Conferences (FSC) in all 64 districts, and Government-Contractor Forum (known as Kroi Sanglap Forum) in seven divisions; (ii) Mass Media Communication: to create awareness and to popularize PPR including TV/ radio shows, cartoon series, etc.; (iii) Capacity Building: interventions like curriculum development and implementation of training to a cross section of stakeholder. In addition, there has an effective public-private stakeholders committee (PPSC) with services of a leading think-tank. PPSC created the forum of procurement policy discussion that has contributed to more stakeholder engagement. 18. The project is consistently rated Satisfactory over the last two years in achieving the development objectives and overall implementation progress. The project impact has been consistent with expectation set out in the Project Appraisal Document (PAD). The project is in compliance with the legal covenants including the financial reporting requirements and audit, and it does not have any unresolved fiduciary, environmental, social or safeguard issues. Procurement rating continued to be Satisfactory; as regards financial management (FM), though overall performance was good, its rating was downgraded to Moderately Satisfactory in 2011 mainly due to the position of Deputy Director (Finance) remaining unfilled and slippage in hiring the internal auditor. Disbursement Status 19. In PPRPII, the disbursement as of January 25, 2013 is US$ 22.1 million equivalent which constitutes 92.6 % of the credit amount. An amount of about $600,000 was reallocated from the operating cost to goods/works/ consultancy services category as the expense need for operation was much less while for consultancy there was need for additional fund. The revised approved allocation of about $0.77 million for operating costs is substantially utilized. After reallocation, about $22 million is already spent out of the total amount of about $24 million and the remaining amount will not only be fully utilized within the credit closing date (all committed), even there is likelihood of a small financing gap which is being taken into account in the additional financing. Table: Disbursement Status of Credit (4350-BD) as of January 25, 2013 Amount in US$ Category Category description Original Revised Disbursed Un- Disbursed allocation allocation 1 Goods, works & 22,960,000.00 23,732,281.50 21,987,867.00 1,744,414.50 consultants’ services, training, salaries of incremental Project staff, and allowance for Project staff 2 Operating costs 640,000.00 76,803.50 70,685.10 6,118.40 Total 23,600,000.00 23,809,085.00 22,058,552.10 1,750,532.90 Note- The USD Amount changes due to XDR exchange rate. 13 Rationale for Additional Financing 20. The key rationale for the additional financing is to continue support for the Project that is directly contributing to bringing about systemic changes in the procurement environment of Bangladesh and building an effective country system and its institutions to fulfill the Government priorities that are fundamental to the Bank’s development mission. The Bank has joined developing countries and other development partners in endorsing the Paris Declaration on Aid Effectiveness, the Accra Agenda for Action (AAA), and the Busan declaration, which express the international consensus in favor of strengthening and expanding the use of country systems. In the case of Bangladesh, it is understood that about 70% contracts by number in the Bank’s portfolio are subject to post reviews most of which are following national competitive bidding (NCB) procedures. Thus, the project framework is fully aligned with the concept emanating from the investment lending (IL) reform, that is, moving from transactions to systems with due consideration of risks. 21. Despite the challenging environment, with the implementation of the capacity development program, the introduction of procurement performance monitoring, and piloting of e-GP in the four target agencies, most outcome/ results indicators have either been already achieved or are being achieved as demonstrated by: the reduction of procurement delays specifically for large number of small value contracts at decentralized level (in 2012, about 65% contracts are awarded within initial bid validity period as opposed to only about 10% in 2007); improvement of competitiveness in bidding (average number of bidders increased to six in 2012 from four in 2007); enhancement of transparency as demonstrated by the publication of contract award notice (about 60% contract awards are published in website in 2012 from about 15% in 2007); and increased stakeholders engagement in following procurement issues. 22. The GoB at its highest level (Prime Minister) attaches high priority to overcome project implementation difficulties in particular reference to overcoming procurement difficulties and the use of electronic tendering (e-GP) as part of its “Digital Bangladesh” program. The GoB has a target of covering all key sectoral agencies under electronic tendering by 2016 including on-line performance monitoring. Following the guidelines of the Multilateral Development Banks (MDBs) and the Bank, a recent assessment of the e-GP system of Bangladesh has been carried out by an independent expert who viewed the system as the most comprehensive one starting with procurement planning and up to the final payment, and recommended for its use by the Bank with some minor adjustments. Subsequently, the standard bidding documents for works in NCB (e-GP version) has been fully harmonized between the Bank and the GoB, that is, the GoB will use a single harmonized document in e-GP regardless of the source of financing. Also, the Bank has agreed to start using the e-GP initially for two of its projects: rural transport and primary education under SWAps with other Development partners. This is a significant step forward in using ICT for improving procurement outcomes. 23. Concurrently, the existing capacity development program with built-in incentive mechanism has been recognized as an emerging model with international appreciation. To augment and institutionalize the procurement management capacity, much effort is needed to expand the existing program to other public sector agencies beyond the existing four target agencies, for instance, in sectors like health, education, power, and public works. 14 24. In light of the need for expansion, the GoB requested IDA to consider follow-up financing, and thus the key reasons for additional financing is to meet costs associated with financing gap beyond the current credit closing date of March 31, 2013 and scaled-up activities to enhance the impact of this well-performing project in specific reference to the following: e-GP combined with procurement performance monitoring and capacity development, followed by sectoral strengthening and social accountability actions associated with the e-GP. Additional financing will help consolidating these two areas with greater sustainability along with strengthening management capacity of CPTU and the four target agencies. 25. Alternatives were considered before proposing this additional financing. The option of closing the project and preparing a new project was considered. This option was discarded in consideration of the possible long drawn processing time for a new project combined with the shortage of fund within the current credit to continue uninterruptedly certain critical services/ activities. For example, continuation of the functioning of e-GP system that has direct bearing not only upon the procuring entities but also on the bidding community at a time when it has taken momentum. 26. In consideration of recognizing the results on the fore front of Bank operations and taking the experience of implementing PPRPII in the last few years, under the proposed additional financing, an innovative approach has been taken to include two financing modalities: direct input-based financing of US$28.5 million for CPTU, and performance-based financing of US$7.5 million for the four target agencies where disbursements will be linked to attainment of specified indicators- DLIs (Improving procurement performance by using e-GP in four target agencies, and Improving procurement performance monitoring using PROMIS by four target agencies). The DLIs for e-GP and PROMIS by agency are in Annex 5. III. Proposed Changes 27. Project Development Objectives: The current project development objective is “to improve performance of the public procurement system progressively in Bangladesh , focusing largely on the target agencies”. As the proposed additional financing is largely focused on the four target agencies, the project development objective is adjusted to “improve performance of the public procurement system progressively in Bangladesh, focusing largely on the four target agencies.” Significant part of the additional financing will support the expansion of e-GP with performance tracking at the four target agencies while under capacity development about 20 additional agencies will be covered beyond the existing target agencies. 28. The project would be rated as “satisfactory” if the principal outcomes at t he end of the project period are as follows: about 80% percent of contracts in all four target agencies have been awarded within the initial bid validity period; at least 80% procurement in NCB have been conducted using e-GP in four target agencies; e-GP awareness has been made in all 64 districts. 15 Project outcome indicators Indicator Original target Current Revised/ New Comment progress target Reduced delays in making 60% 65% 90% In revised contract awards by at least target, the three target agencies percentage a. within the initial bid is for four validity period target agencies Improved transparency and In the disclosure of information in revised procurement a. 100% a. 70% a. 90% target, the a. Published contract b. 80% (two b. 30% b. 80% (four percentages awards in CPTU’s agencies- (four agencies- are for four website ICB at agenci NCB) target b. Introduced e-GP in HQ) es- c. 90% (new agencies. target agencies c. None NCB) indicator) For item b, c. Published quarterly c. None current procurement progress and monitoring reports revised (PROMIS) on bids/ target is for contracts invited by NCB; four target agencies (iii) item c is a new indicator. Percentage of procuring None None 70% New entities of 20 additional indicator agencies with one trained/ certified procurement staff 29. Project Components: CPTU/IMED has been successfully managing the project in collaboration with the four target agencies, that is, RHD, LGED, BWDB, and REB. Under the additional financing, the four target agencies will have direct role in the implementation of e-GP and procurement performance monitoring in a way that within the next three years most of their procurement will be through e-GP. There will be about 20 additional agencies (as mentioned in Annex 3), beyond the four target agencies who will also participate in the capacity development program and initiate e-GP with support from the project. In order to ensure continuity of the activities, under the additional financing, CPTU/IMED will continue to be responsible for overall implementation of the project, while the four target agencies will be responsible for the actual implementation of e-GP and procurement performance tracking system (PROMIS). CPTU will also coordinate with the additional agencies for the capacity development program, and promoting e-GP as a new starter. 30. All four project components will continue with necessary adjustments under the proposed additional financing as follows: 16 a. Component 1: Furthering Policy Reform and Institutionalizing Capacity Development (US$ 9.50 million): The component will now expand the scope of the capacity development program to about 20 additional agencies, beyond the four target agencies, with greater institutionalization. The key activities include: procurement compliance training, procurement core competence course along with Masters in procurement, and further institutionalization of capacity in Bangladesh. The compliance training, designed for the procurement professionals, will have 90 three-week courses covering about 2700 participants, conducted at Engineering Staff College Bangladesh- ESCB (60 courses) and Bangladesh Institute of Management- BIM (30 courses) with support from FINEUROP/Italy, an international firm. In addition, there will be about 15 types of short courses including e-learning modules for various audiences. Similar to the ongoing arrangement, an incentive mechanism has been built in a way that over 100 top- performers from among the three-week participants will undertake a core competence course, conducted by the Chartered Institute of Purchasing and Supply- CIPS/UK in collaboration with BRAC University- Institute of Governance- BRACU-IGS. b. Component 2: Strengthening Procurement Management at Sector Level & CPTU/IMED (US$7.50 million): This component will further strengthen the organizational capacity for procurement performance management. Key activities will include: full implementation of on-line procurement performance monitoring (PROMIS) using a set of indicators, monitoring and evaluation (M&E) framework, and strengthening capacity of CPTU, and four target agencies. The four target agencies will monitor their procurement performance in terms of efficiency, transparency, and competiveness as built into PROMIS by entering on-line procurement data for all bids invited within the next three years as follows: RHD- 4000; LGED- 4000; BWDB- 1200; and REB- 150. The strong M&E framework based on the revised results monitoring indicators will be implemented. CPTU/IMED and the four target agencies will strengthen capacity by creating dedicated e-GP/PROMIS cell with adequate staff and provision of IT/ equipment/ training. c. Component 3: Introducing e-Government Procurement- e-GP (US$17.00 million): This component is to make the e-GP system self-sustainable by substantially increasing transaction level of the four target agencies and initiating e-GP network to about 20 additional agencies. The four target agencies will have 100% e-GP within the next three years up to the district level with annual coverage of bid invitations as follows: RHD- 4000; LGED- 4000; BWDB- 1200; and REB- 150. Though challenging, a progressive self-sustainable model has been worked out in a way that towards the end of the project, the system is fully operated using its own revenues, while during the transition, the project will support on a declining basis. While CPTU owns the e-GP system, the existing service provider will continue to manage and operate the e-GP system applications and data center including support to the four target agencies through a dedicated team in each agency, trainings to: about 1500 officials of the four target agencies, 1600 bidders for the four target agencies, and 700 officials of additional agencies. 17 d. Component 4: Behavioral Change Communication and Social Accountability- BCC & Sac (US$2 million): This component will enable to sustain the gains from earlier interventions of raising awareness and will further generate public demand for electronic procurement. This component will strengthen efforts to raise awareness regarding the reforms in public procurement and e-GP message across public sector organizations, the bidding community, and other stakeholders through behavioral change communications and social accountability mechanism. Key activities will include: awareness about the use of e-GP at the local level in reference to the reform agenda, and possible third party monitoring of procurement outcomes taking the demand side of governance into account with specific focus on the enforcement of laws against fraud and inappropriate practices. 31. Extension of original credit: At the request of the Government, IDA recently extended the existing credit for six months beyond the original closing date of March 31, 2013, that is up to September 30, 2013, mainly to ensure continuity of the program and enable timely processing of PPRPII AF including its effectiveness within the PPRPII time period. Now in order to have the same closing date for both PPRPII and PPRPII AF, the closing date of the original credit will need to be extended up to December 31, 2016. 32. Project costs: PPRPII AF will be for about four years (FY14 to FY17/Q1) and have two financing modalities: direct input-based financing for CPTU, and performance-based financing for the four target agencies where disbursements will be linked to attainment of specified indicators (DLIs) relating to e-GP and procurement performance monitoring (PROMIS). The DLIs for e-GP and PROMIS by agency are in Annex 5. 33. Total cost estimate of the project is US$60.90 million of which US$24.9 million is in PPRPII and US$36 million is in PPRPII AF. Out of the US$60.9 million, IDA will finance a total of US$58.10 million of which US$23.60 million under PPRPII, and US$34.50 million under PPRPII AF. Component-wise costs are summarized below. Further cost details are presented in Annex 4. Costs by component (US$ million) Component Original cost Changes with Revised cost AF Policy Reform and Capacity 8.9 9.50 18.40 Development Sector and Central Procurement 8.4 7.50 15.90 Management E-GP 4.2 17.00 21.20 Behavioral Change Communication 3.4 2.00 5.40 and Social Accountability Total 24.9 36.00 60.90 IDA Financing 23.6 34.50 58.10 18 34. Credit conditions: Prior to Board presentation: None Prior to effectiveness: None 35. Credit covenants: Financing Agreement Description of Condition/Covenant Date Due Reference Section I.A, Schedule The Recipient shall maintain throughout the Recurrent 2 implementation of the Project the CPTU, the E- GP units in the 4 Target Agencies, the Project Steering Committee, and the Public Private Stakeholders Committee, with functions, staff and resources satisfactory to IDA. Section I.B, Schedule The Recipient shall carry out the Governance Recurrent 2 and Accountability Action Plan approved by IDA in accordance with its terms. Section II.A, The Recipient shall prepare and furnish to IDA Recurrent Schedule 2 semi-annual Project Reports, based on the key performance indicators specified in the Financing Agreement. Section II.B, The Recipient shall prepare and furnish to IDA Recurrent Schedule 2 quarterly interim unaudited financial reports, and annual financial audit reports. Section IV.B, Provision allowing retroactive financing of Recurrent Schedule 2 eligible expenditures under the additional financing, incurred on or after July 1, 2012 up to $2 million equivalent Terms and conditions of disbursement against DLI-based expenditures upon satisfactory evidence for compliance with the respective DLIs for each respective DLI period and each Target Agency 19 Financing Agreement Description of Condition/Covenant Date Due Reference Section V, Schedule 2 The Recipient shall put in place, and thereafter Not later maintain arrangements satisfactory to IDA to than ensure that the E-GP system developed under September the Project is sustainably financed through a 30, 2013 retention of the E-GP system generated revenues within IMED and/or through the provision to IMED of other adequate funds on an annual basis for the management, operation and maintenance of the e-GP system, with a distinct budget code and financial authority for IMED/ CPTU to spend such funds. Schedule 3 Matrix containing all applicable DLI targets and periods for each Target Agency, and amounts allocated for each target/period for each Target Agency IV: Appraisal Summary Economic and Financial 36. The direct benefits envisaged under the project would include faster and better use of public resources with increased transparency, the reduction of corruption, increased aid utilization capacity and a better investment climate. In the longer term, all the above would create a powerful force toward more transparent and accountable institutions, resulting in accelerated economic growth and faster poverty reduction. 37. In view of the nature of the project, since benefits cannot be quantified in monetary terms, no calculation of economic rate of return has been attempted. To gauge the impact of the proposed interventions, a set of well-defined procurement performance indicators have been developed to monitor the performance of target agencies. Nevertheless, a financing model has been developed for the e-GP system in a way that the system will be fully operated using its own revenues in the third year of the project. This is based only on the transaction level of the four target agencies, without including additional agencies. The model shows revenues of US$1.25 million in the third year, against expenditures of US$1.43 million, meaning that the earnings and expenditures will be close to each other within the third year of its operation with the system becoming sustainable (details are at Annex 3, paragraph 23, Box 2). In the fourth year, the system will have earnings more than expenditures. With the addition of agencies, over time, the earnings of the system will improve further. Besides, ESCB and BIM have initiated short courses on procurement for participants having financing from their own agencies, leading to greater institutionalization and self-sustainability of the Government’s efforts in procurement capacity building. The details are in Annex 3. 20 38. The Government will fund the CPTU staff salaries and part of operating expenses. The project's direct fiscal impact is minimal in consideration of its small contribution of about US$1.50 million as part of operating expenses, constituting about four percent of the project cost. The project, however, would have significant fiscal impact on GoB's overall budget in terms of reduction of corruption, more effective competition, decrease of contracting costs, and timeliness of contract execution. Technical 39. From technical view point, design of the project is sound. The project uses well established advanced technology in developing the national e-GP web portal (www.eprocure.gov.bd) and on-line performance monitoring. The e-GP system developed and established under PPRII is assessed by an international independent expert (report of November 2012), following the guidelines of the multi-lateral development banks (MDBs), as one of the most comprehensive one covering procurement plan, invitation for bids, bid evaluations, contract awards, and contract management up to the final payment. The system also covers e-purchasing, e-payment, etc. Special attention were given as regards how to (i) develop the in-country capability to deliver quality procurement training programs in an efficient and demand-driven manner; (ii) strengthening procurement monitoring at target agencies to help achieve quality procurement transactions, and (iii) sensitize the target groups of both the public and private sectors including the bidding community for acquiring and applying procurement knowledge in their work. 40. To continue uninterrupted support, the capacity development program will be managed by the currently employed international firm in collaboration with the two local institutes, ESCB and BIM. Also, the core competence part will remain unchanged with CIPS/UK’s collaboration with BRACU-IGS. Similarly, the existing service provider will manage and operate the e-GP system applications and data center. Institutional 41. CPTU/IMED will continue to be responsible for overall implementation of the project, while the four target agencies will have greater role and be responsible for actual implementation of e-GP and PROMIS using a performance-based approach (disbursement- linked indicators- DLIs) as verified by an independent consultant. Given the high importance of continuity of the reform activities and its institutionalization within the country, the key project officials (Director General, three Directors, and other identified staff) will continue to serve in CPTU at least for its initial years, with appropriate arrangements permissible within the government rules. The Procurement Monitoring Coordinator (PMC) of each target agency will act as the link between the CPTU and those agencies, with support from the technical working group (TWG) members of each target agency. The GoB will assure that the e-GP system developed under the project is sustainably financed through a retention of the e-GP system generated revenues within IMED and/or through the provision to IMED of adequate funds on an annual basis for the management, operation and maintenance of the e-GP system, with a distinct budget code and financial authority for IMED and CPTU to spend such funds. The project will provide support in developing an M&E system and strengthening capacity at CPTU for regular measurement and evaluation of economic impact of procurement reform. 21 42. To oversee and review project activities, the Project Steering Committee (PSC) will be reconstituted with more focused role. It is expected that a specific task force would oversee the implementation of e-GP and PROMIS, with an agreed terms of reference. The existing system of PMC and TWG will remain unaltered, with the PMCs responsible for implementation of e-GP and PROMIS at the agency level and accordingly the TOR will be adjusted. In all deliberations/ meetings of the above committees’ of the Government, the Bank representative will be present as observer. Selection of criteria for the entire capacity development program including any foreign training will require specific clearance from the Bank. Also, various teams of consultants, while producing reports or documentations as per contracts, will share a copy with the Bank concurrently as it sends such reports to CPTU/IMED. Financial Management 43. The CPTU, with assistance of a financial management (FM) consultant, implemented Bank financed PPRP and has been implementing PPRPII with moderately satisfactory FM performance, though it does not have its own FM organization. Under PPRPII, it could not put in place a Deputy Director (Finance) as per the plan, and internal audit is yet to be conducted. Thus, FM capacity with adequate fiduciary assurance through internal audit and segregation of duties on FM functions needs improvement. The project will have provision of retroactive financing of about US$2 million to cover expenditures related to capacity development actions, management and operation of e-GP system, and sectoral strengthening including Period0 DLIs for four target agencies that are expected to be incurred before effectiveness of the PPRPII AF. The FM arrangement as agreed for PPRP II will be applicable for the additional financing as well with add on arrangement for limited financial management function at four target agencies for implementing e-GP and PROMIS. Awarding the contract for internal audit per agreed TOR will be completed by April 15, 2013 and the appointment of a Deputy Director (Finance) will be completed within the first month of the credit effectiveness. The target agencies- LGED, RHD, BWDB and REB have the experience of implementing Bank financed projects. These agencies will receive project funds through CPTU in their dedicated project bank accounts. Funds will be disbursed to the agencies on achievement of targeted results in the form of Disbursement Linked Indicators (DLIs), and should not exceed the DLI expenditures incurred during the DLI period. The overall FM risk is assessed as substantial, considering dispersed financial transactions in four agencies and previous records of slippages of CPTU on staffing and internal audit. Procurement 44. The procurement risk rating is “moderate” since, CPTU, being the key implementing agency, has been implementing two successive procurement reform projects (PPRP & PPRPII) since 2002 without significant procurement problems/ issues. The four target agencies may be responsible for very small value procurement relating to implementation of e-GP under the performance based financing. Large procurement includes three major consultancies as all of them are continuation of their previous services: capacity development; core competence program; and management and operation of e-GP system. The selection of these three consultancies is at the advance stage of completion. A draft procurement plan has been prepared. 22 Social 45. With the objective of capacity building, behavioral change, and public awareness, the major social issue is the behavioral change communication combined with social accountability. Extensive efforts under PPRPII have contributed positively to the change of the “mind-set” of stakeholders, in particular public procurement officials and the bidding community. Under PPRPII AF, the involvement of civil society/ beneficiary groups/ non-profit organizations will further contribute in the monitoring of procurement with specific reference to e-GP awareness and taking the reform agenda at the grass root level. The framework for stakeholder participation envisages: (i) initiating a gradual approach to the concept of social accountability in procurement; (ii) conducting public awareness campaigns in the beneficiary/ user communities; and (iii) instituting a communications strategy to build support for the reform. Environment 46. The PPRPII AF continues to be assigned Category “C” for Environment. The additional financing has provision to support the vertical extension of the CPTU building (from 2 storied building to 3 storied building) and no significant and irreversible environmental impacts are expected to arise as a result of project implementation, subject to proper adoption of environmental code of practice (ECoP) including occupational health and safety issues. The bidding document will include the environmental clauses and keep provision of better occupational health and safety for the workers. The Public Works Department (PWD) will supervise and ensure proper implementation of the ECoP. Monitoring and evaluation of outcomes/ results 47. Project outcomes/ results will be measured using the revised results framework with indicators. The CPTU will continue to use the existing monitoring and evaluation (M&E) framework used for PPRPII, with adjusted indicators as agreed (Annex 1). A M&E team (consulting firm) will assist CPTU and prepare semi-annual reports on the overall project M&E including progress on the results indicators for review by the Bank. Results monitoring in PPRPII AF covers: (a) procurement performance by the target agencies; (b) capacity development by the additional agencies; (c) procurement monitoring by the target agencies using procurement management information system (PROMIS); and (d) conducting procurement using electronic government procurement (e-GP). Risks 48. The overall project risk rating is “Moderate”, however, there are two risks that may affect the achievement of the project’s development objective: (a) “project stakeholders risks” associated with GoB and target agencies policy makers primarily because of the perceived issues in the management and monitoring of procurement, despite their expressed willingness to become part of the program; and (b) “operating environment risk” associated with interference at the decentralized level procurement. The project is more prone to that risk because of the sensitive nature of reform that is being pursued. The PMC and TWG members of each target agency have been playing and are expected to play critical mitigating roles in exposing detractors 23 and building the constituency of support for reform. The Project Steering Committee (PSC), with target agency heads included in it to oversee the implementation of e-GP and PROMIS, is also likely to contribute to reducing the risk. In addition, the existing Public-Private Stakeholders Committee (PPSC), with members from civil society/ think-tank/ business apex body/ and senior government officials, will create further traction and broader constituency of reform leading to a possible third-party monitoring mechanism with due capacity development. Governance: 49. Opposition to reforms may to a great extent be related to corruption, which is an endemic issue in the region. Project activities to increase transparency, introduce checks and balances in the public sector, and educate the society at large could increase respect for ethics and law and increase the likelihood of detection. However, the broader issues of public sector inefficiency and corruption will require sustained effort over time to resolve. The proposed project’s support can educate the community and foster openness but cannot assure that the lessons will be absorbed by all; therefore there remains a risk to achieving the desired objectives fully. The project activity under the social accountability component involving civil society group deals directly with the demand side of the reform process which to a large extent is beyond the control of the procuring entities. With the implementation of Right to Information Act, the concept of procurement monitoring by a civil society organization (CSO) other than the procuring entity or CPTU would contribute considerably in bolstering the openness of the system though building such a CSO is still a challenge due to capacity as well as funding constraints Policy exceptions and readiness 50. There are no exceptions to World Bank policies. 51. The project meets the readiness filters of the Region. The financial management and procurement arrangements will be in place at the start of the project. The project is expected to be ready for implementation by the time it is presented to the Board, and the first year’s activities could start immediately upon effectiveness. All three major consultancies will continue their services and the project will have provision for retroactive financing. Annex 1: Results Framework and Monitoring BANGLADESH: Additional Financing of Public Procurement Reform Project II Results Framework Revisions to the Results Framework Comments/ Rationale for Change PDO Current (PAD) Proposed Improve performance of Improve performance of the public Adjusted to focus on the target public procurement system procurement system progressively in agencies. progressively in Bangladesh, Bangladesh, focusing largely on the four focusing largely on the target target agencies. agencies PDO indicators Current (PAD) Proposed change* About 60% contracts in at About 80% contracts awarded within Revised indicator to reflect scale- least three target agencies initial bid validity period by the 4 target up under additional financing reduce delays by making agencies contract awards within the initial bid validity period Four target agencies publish PROMIS New indicator reflecting quarterly report for monitoring of measurement of an important procurement performance covering 90% of outcome under additional bids invited/ contracts awarded financing Electronic government Four target agencies expand electronic Revised indicator to reflect scale- procurement (e-GP) government procurement (e-GP) to all 64 up under additional financing and introduced in at least two districts using national competitive bidding covering all NCB contracts instead target agencies at their HQ procurement of ICB level for international procurement Increased stakeholder Dropped Target largely achieved during engagement in following original project procurement issues in at least two target agencies Procuring entities of 20 additional agencies New indicator reflecting with one trained/ certified procurement measurement of new outcome staff under additional financing Intermediate Results indicators Current (PAD) Proposed change* Course curriculum and Dropped Target achieved during original training materials developed project for all courses Local training institute Dropped Target achieved during original develops a two-member project 24 Revisions to the Results Framework Comments/ Rationale for Change procurement faculty At least one local institute/ Dropped Target achieved during original university introduces project procurement core competence skill certification/ accreditation About 60% procuring entities About 70% procuring entities of 20 New indicator reflecting new of each target agency with one additional agencies with one trained/ activities supported under trained/ certified procurement certified procurement staff additional financing staff 55 weeks of procurement training New indicator reflecting new delivered by the local training institute activities supported under (ESCB) with its own resources additional financing Computer hardware and Dropped Target achieved during original software for all target project agencies delivered and installed All contract awards above About 90% contract awards published by Revised indicator to reflect scale- PPR specified thresholds four target agencies in CPTU’s website up activities under additional published in CPTU’s website for awards above PPR specified threshold financing for at least three target agencies About 60% complaints in at About 70% of complaints handled Revised indicator to reflect wider least three target agencies satisfactorily by four target agencies coverage under additional handled satisfactorily financing Annual implementation plan Dropped Target achieved during original submitted by Target agencies project Four target agencies publish PROMIS New indicator reflecting quarterly report for monitoring of measurement of an important procurement performance covering 90% of activity under additional financing bids invited/ contracts awarded e-GP developed and installed Dropped Target achieved during original at CPTU and target agencies project at HQ agencies Network and connectivity for Dropped Target achieved during original MIS established at the district project level of at least two target agencies e-GP piloted at HQ level for About 80% of bids invited through e-GP in Revised indicator to reflect scale- all international procurement national competitive bidding in 64 districts up activities under additional in at least two target agencies by the four target agencies. financing A comprehensive government Dropped Target achieved during original communication strategy project developed and launched Workshops for communication Dropped Target achieved during original campaign and advocacy project campaign held in all districts for target agencies and stakeholders Training program on public Dropped Target achieved during original procurement and social project accountability for mass media Revisions to the Results Framework Comments/ Rationale for Change professionals and civil society organizations held Government-contractors forum Expanding government-contractors forum Revised indicator to reflect wider established for all target to all districts and holding semi-annual coverage under additional agencies and semi-annual meetings financing meetings held e-GP awareness workshops held at all New indicator reflecting new districts activities under additional financing * Indicate if the indicator is Dropped, Continued, New, Revised, or if there is a change in the end of project target value REVISED PROJECT RESULTS FRAMEWORK Project Development Objective (PDO): Improved performance of public procurement system progressively in Bangladesh, focusing largely on target agencies Baseline Cumulative Target Values4 Original Progress Responsibility 2013 2014 2015 2016 Data Source/ PDO Level Results Indicators1 UOM2 Project To Date Frequency for Data Comments Core Methodology Start (2012)3 Collection (2007) 1. Percentage of contracts awarded Target Target agencies/ agencies/ Revised PDO1 from within initial bid validity period by % 10 65 68 73 78 80 Quarterly CPTU/ M&E CPTU & M&E original. the 4 target agencies report Consultant 2. Four target agencies publish PROMIS quarterly report for Target Target Four target agencies monitoring of procurement agencies/ agencies/ % 0 5 20 50 70 90 Quarterly publish PROMIS report performance covering 90% of bids PROMIS Independent with indicators invited/ contracts awarded report consultant annually 3. Four target agencies expand Target The indicator data will electronic government Target agencies/ include NCB agencies/ procurement (e-GP) to all 64 % 0 3 10 35 60 80 Quarterly Independent Independent procurements in all districts using national competitive consultant entities of each target consultant bidding procurement report agency Additional 4. Percentage of procuring entities agencies/ Additional of 20 additional agencies with Capacity % 0 2 10 30 50 70 Quarterly agencies/ Cap. New PDO Indicator one trained/ certified procurement development Dev. consultant staff consultant’s report 1 Please indicate whether the indicator is a Core Sector Indicator (for additional guidance – please see http://coreindicators). 2 UOM = Unit of Measurement. 3 For new indicators introduced as part of the additional financing, the progress to date column is used to reflect the baseline value. 4 Target values should be entered for the years data will be available, not necessarily annually. Target values should normally be cumulative. If targets refer to annual values, please indicate this in the indicator name and in the “Comments” column. 27 Intermediate Results and Indicators Baseline Target Values Unit of Original Progress Responsibility 2013 2014 2015 2016 Data Source/ Intermediate Results Indicators Measur Project To Date Frequency for Data Comments Core Methodology ement Start (2012) Collection (2007) Intermediate Result 1: Capacity development program institutionalized locally and target agencies develop skilled procurement professionals 1. Percentage of procuring entities Four target Four target of 20 additional agencies with agencies & % 0 10 30 50 70 Quarterly agencies/ one trained/ certified procurement Cap. Dev. Reports staff Consultant 2. Number of weeks of procurement training delivered by ESCB/ Cap ESCB & Cap New indicator in PPRPII Local training institute (ESCB) Number 0 2 5 25 45 55 Quarterly Dev. Consult. Dev. AF with its own fund/resources reports Consultant outside of PPRPII AF Intermediate Result 2: Target agencies manage and monitor their procurement at all levels to improve sectoral objectives 3. Percentage of contract awards CPTU, Four published by four target agencies CPTU, Four Revised indicator in % 10 70 75 80 85 90 Quarterly agencies/ in CPTU’s website for awards Reports agencies PPRPII AF above PPR specified threshold 4. Percentage of complaints Four target Four target handled satisfactorily by four % 5 25 35 45 55 70 Quarterly agencies/ agencies/ Impl. target agencies Reports consultant 5. Four target agencies publish Four target Four PROMIS quarterly report covering agencies & New indicator in PPRPII % 5 20 50 70 90 Quarterly agencies/ 90% of bids invited/ contracts independent AF; total contract: 9350 Reports awarded consultant Intermediate Result 3: Four target agencies fully introduce electronic government procurement (e-GP) in national competitive bidding 6. Percentage of contract/bid Four target Four target invited through e-GP by four target agencies & New indicator in PPRPII % 0 3 10 35 60 80 Quarterly agencies/ agencies using national Independent AF; total contract: 9350 Reports competitive bidding in 64 districts consultant Intermediate Results and Indicators Baseline Target Values Unit of Original Progress Responsibility 2013 2014 2015 2016 Data Source/ Intermediate Results Indicators Measur Project To Date Frequency for Data Comments Core Methodology ement Start (2012) Collection (2007) Intermediate Result 4: Stakeholder engagement in following procurement issues increased 7. Expanding Government- Social Social Semi- accountability contractors forum to all districts Number 0 5 10 20 40 64 annual consultant/ accountability and holding semi-annual meetings consultant Reports 8. Number of e-GP awareness Social Social accountability New indicator in PPRPII workshops held in all districts Number 0 10 20 45 64 Quarterly consultant/ accountability AF. scope consultant Reports 9. Number of Public-Private BRACU-IGS Stakeholders Committee (PPSC) Number 6 10 14 18 22 Quarterly report BRACU-IGS New indicator workshops/ meetings held ANNEX 2- OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) Bangladesh: Additional Financing of Public Procurement Reform Project II (PPRP II AF) Stage: Board Project Stakeholders Risks Stakeholder Risks Rating Substantial Description: Perceived issues in the monitoring and Risk Management: An extensive targeted program for bidders’ capacity development on e -GP is management of procurement by GoB and target agencies included in the project to cover as many bidders as possible. policy makers may affect the project. Also, the bidding Resp: Client Stage: Preparation Due Date : 02/15/2013 Status: Done community’s slow progress in becoming aware of the e-GP combined with inadequate capacity may negatively impact the Risk Management: The PMC and TWG members of each target agency has been playing and are pace of full e-GP implementation plan. expected to play critical mitigating roles in exposing detractors and building the constituency for fast e-GP implementation. The GP system management and operational service provider will implement the training program of bidders. This will help mitigate the risk as opportunities to more and more bidders become available. Resp: Client Stage: Implementation Due Date : 03/31/2016 Status: Not yet Due Implementing Agency Risks (including fiduciary) Capacity Rating: Moderate Description: Rotation and/or transfer of key staff may Risk Management: Assurance is sought that the key project officials will continue to serve in CPTU at negatively impact the performance of the project at CPTU least for its initial years (Director General, and three Directors). level. In addition, non-filling out few vacant positions may Resp: Client Stage: Preparation Due Date : 07/01/2013 Status: Not yet Due affect efficient implementation. Inadequate number of dedicated staff at the four target agencies may also impact the Risk Management: CPTU will fill out all vacant but approved positions (Deputy Director-2; Assistant speedy implementation of e-GP and PROMIS. Programmer-1; computer operators-2). A Deputy Director (Finance) will be in place in CPTU. Technical experts will be added: individual consultant to assist the Director (Training) in coordination; e-GP/MIS (Senior System Analyst , M&E expert).The four target agencies will create e-GP/PROMIS cell and provide at least 5 counterpart staff (PMC, TWG, others) , with provision of logistics/ equipment/ training from the project. Resp: Client Stage: Implementation Due Date : 09/30/2013 Status: Not yet Due 30 Governance Rating: Moderate Description: No significant governance risks is anticipated for Risk Management: Each agency will publish quarterly PROMIS report with detailed results of CPTU. As regards target agencies, certain risks exist with indicators for bids invited/ contracts awarded. Each target agency will maintain a roster of complaints; regard to the effective internal control mechanism for the also, there is provision of CPTU’s semi-annual review to validate data at PROMIS. Trainee selection eligible expenditures under the project that will be expended criteria will be cleared with the Bank. by those agencies. Selection of trainees may pose certain Resp: Client Stage: Implementation Due Date : 12/31/2013 Status: Not yet Due risks. Risk Management: To further improve the internal control mechanism, there will be one FM expert; also, internal audit provision is made to be conducted regularly. Resp: Client Stage: Implementation Due Date: 09/30/2013 Status: Not yet due Project Risks Design Rating: Moderate Description: Challenging coordination mechanism: Risk Management: A designated consultant will assist the Director (Training) and Deputy Director Constrained capacity of CPTU in coordinating the capacity (Training) to coordinate with the existing four target agencies and the additional agencies in health, development component in light of the additional agencies education, power, and public works. involved (about 20), beyond the existing four target agencies. Resp: Client Stage: Implementation Due Date : 09/30/2013 Status: Not yet Due Limited scope of performance-based financing: As only the Risk Management : Scope of performance-based financing will be clarified further to the four target existing four target agencies will be eligible for performance- agencies while other additional agencies will provided with more guidance and specific training as how based financing, leaving the additional agencies out of it, it to start the process with e-GP. may create a sense of non-uniform treatment among the Resp: Client Stage: Implementation Due Date :01/06/2014 Status: Not yet Due agencies although it is a known that those four agencies have played the most critical role over the past four years in the Risk Management:. Specific training and awareness sessions have been included in the project for all capacity development program and introduction of e-GP. associated agencies’ bidders with local levels. Weak private sector (bidding community) capacity in moving fast with the needed IT skills and infrastructure at local level Resp: Client Stage: Implementation Due Date : 03/31/2015 Status: Not yet Due may delay the e-GP process. Social & Environmental Rating: Not Applicable? Description : It is a category C project involving reform Risk Management : The bidding document will include Environmental Code of Practice (ECoP) without having any major social and environmental impact. including proper occupational health and safety guidelines for the workers. The Public Workers The minimum civil construction relating to the CPTU building Department (PWD) continues to supervise the construction including the enviornemntal and safety vertical extension is within the existing planning ministries provision. campus, thereby no major impact. Resp: Client Stage: Preparation Due Date : Status: N/A Program & Donor Rating: Low Description : No major risk of donor coordination exists. Risk Management : All concerned key partners with interest in procurement reform are being Most of the key development partners, both multilateral consulted as the project preparation moves (e.g., ADB, DFID, JICA) and bilateral, are supporting the procurement reform agenda and following its progress regularly. Resp: Partners Stage: Prep Due Date : 03/31/2013 Status: Not yet Due Delivery Monitoring & Sustainability Rating: Substantial Description : Sustainability: Sustainability of capacity Risk Management: A self sustaining business model has been developed in a way that the revenue development program and e-GP system beyond the project generated through the e-GP system is either retained within IMED/CPTU or GoB allocate sufficient period are two risks. fund against it to run the system. Specific assurance of GoB has been sought in this regard.. Resp: Client Stage: Preparation Due Date : 03/20/2013 Status: Not yet Due Risk Management: Each target agency will need to meet specific target of tenders/ contracts through e- Data collection and analytical capacity: Currently, M&E is GP every year against which they will receive DLI-based financing. For capacity development being done with sample data of the four target agencies; sustainability, ESCB will arrange series of course (3-week, 2-week, 1-weeh, short, etc.) with its own eventually, it needs to capture all data of those agencies with resources, outside the project fund, and such courses are identified as milestones/ deliverables (in their the full functioning of the on-line performance measurement TOR) against their payment under the project. . system (PROMIS) that has just been piloted. Resp: Client Stage: Implementation Due Date : Progressive Status: Not yet Due Overall Risk Implementation Risk Rating: Moderate Comments: Annex 3: Detailed Description of Modified Project Activities Component 1: Furthering Policy Reform and Institutionalizing Capacity Development 1. The objective is to complete the remaining small part of the tasks on documents associated with secondary legislations and expand the scope of existing capacity development program beyond the four target agencies with greater institutionalization and sustainability. 2. Furthering policy reform: This involves remaining tasks concerning secondary legislations that, among others, incudes: part of a few bidding documents, guidelines for evaluation, procurement post review guidance note, and translated version of rules to reflect the latest state of play. Whatever those updating/ adjustments might be in the existing documents, they will imply consequential amendments to all concerned documents. 3. Capacity development program: The capacity development program includes provision of a series of long and short term training and academic programs in public procurement for procurement practitioners and other stakeholders. The key components include: procurement compliance training (three-week and short courses), procurement core competence combined with top-up Masters in procurement and supply management, and further institutionalization of capacity in Bangladesh. Under PPRPII, the main training is on target (2866 staff trained exceeding the target of 2700 staff) and its objective of having at least one person trained in each procuring entity of the four target agencies will be mostly achieved. The effectiveness of the capacity development program in the four target agencies has been demonstrated by increased competitiveness, and enhanced transparency of the system, with value added in terms of quality of procurement documentation of the agencies. 4. Procurement compliance training: The two key components are main procurement training and short procurement training. For the main training, out of the target of 2700 staff (2175 from four target agencies and 525 from others), as of now, GoB already trained over 2800 staff, of which over 2000 staff (72%) are from the four target agencies, and over 800 staff are from other public sector organizations.  Main procurement training: The three-week main procurement training will continue but with updating the contents to reflect the latest adjustments including course contents for procurement of goods, works, and services along with a basic short module on e-GP. The course content will further update the module to act as bridge between the main training course and the follow on course on core competence for the best performers in a way that all three-week participants have at least basic competence training. Under the additional financing, the training program will cover the remaining staff of the four target agencies plus all concerned staff of health, education, power, and public works. The training is planned to be conducted in the same training institutes (Engineering Staff College Bangladesh- ESCB, and Bangladesh Institute of management- BIM) with due focus for sustainability. All four target agencies will remain in this program to ensure its viability for other additional agencies. A total of about 2700 officials will be trained under the project.  Short procurement training : The short courses for various target audiences will continue with some adjustments; for instance, policy makers, government mid-level officers, project directors, junior officers, refresher courses, judiciary and anti-corruption staff (if applicable), auditors/ accountants (C&AG and other agencies), estimators, journalists, etc. Assistance will be provided to various existing public training institutes and universities to continue appropriate courses within their current syllabus. The following short courses are envisaged with scope of further adjustments/ additions depending on actual need (Attachment 2): (i) Short training course for junior level officers (E): Junior level staff of procuring entities who assist in estimates, accounting and/or associated with procurement activities will be trained on a short course after adjusting the module to a 4-5 days course. (ii) Short-training course for policy makers (F): Most of the key policy makers and officials at various tiers of GOB will undergo this short course (1 day) specifically designed on the basis of procurement rules and associated approval process. The objective is to help facilitate an efficient procurement approval process with reduced time lag. (iii) Short-training for civil service officers (G1, G2, G3, G4, G5, G7, G8): These short courses (1-5 days) or awareness workshops were developed under PPRP-II and targeting entry, mid and senior level civil servants, administration and economic cadre, National Board of Revenue (NBR) and municipality chairpersons. Except G1, G2, G3 and G5 where designated training institute such as Bangladesh Public Administration Training Centre (BPATC- G1, G2 and G3) and Bangladesh Civil Service Administration Academy (BCSAA- G5), the consultant is free to select other rented space for course delivery. (iv) Short training for auditors, finance and accounts officers (I): Given the importance of the role of auditors in public procurement, the public auditors will be provided with targeted course on procurement (2-3 days) that is appropriate for them. Since their role is different from the roles of public procurement officials, the course module will concentrate on the type of deficiencies in bids and actual contract implementation issues including delayed payments and imposition of liquidated damages for delayed implementation (v) Short course for project managers (M): This 3-day course is demanded by Government for smooth implementation of projects funded by either or both among Government and Development Partners. Project staff involved in management such as project directors, deputy project directors, managers and coordinators will receive this training. (vi) Orientation for judiciary staff (N): This 1-day orientation is targeted for supreme court and district judges as well as public prosecutors and attorneys to have good interpretation of local procurement law and good understanding of international treaties affecting procurement decisions. (vii) Orientation for anti-corruption officials (Q): This 1-day orientation is targeted for officials of the Anti-Corruption Commission (ACC) or similar officials deals with anti- corruption matters with specific reference to procurement and contracting to have good understanding and interpretation of local procurement laws in the context of sanctions and associated matters. (viii) Orientation for journalists (P): This 1-day orientation is to give journalists from newspapers, TV and radio channels a broad perspective of public procurement and how to prepare quality reports on procurement decisions and usage of public money. The journalists can also act as a third party audit of development activities and contribute in determining accountability. (ix) Orientation for Members of Parliament (R): Recognizing the involvement of the Member of Parliament in development related matters at the local level, this 1-day orientation course will provide orientation as regards the procurement law and associated rules with specific reference to the integrity of bidding process and contract implementation. (x) Business outreach program (S): This is a 1-day short orientation to the business community including bidders/consultants as appropriate in reference to the application of procurement laws/rules and key elements of bidding mostly in the form of workshops/ seminars. (xi) Refresher Course (T): This is a one day refresher course aimed at the participants who underwent three-week course for procurement of goods, works, and services in the past under the procurement reform project and has been practicing procurement for at least four years since the participant's training. The course will cover PPA, PPR with associated amendments and procurement processes/ tools such as PPP, framework contracting, and e-GP.  E-learning modules/ open source materials: In addition to face to face course, it is envisaged that a number of open source training materials and/or short e-learning modules for procurement will be developed for distant learning or e-learning at officers own convenience, preferably with provisions of on-line certificates. The consultant will develop these modules and will host them appropriately with CPTU’s website. 5. Procurement core competence program (MCIPS): This is an incentive program in PPRPII, designed only for the top performers in three-week courses. As of now, about 40 top- performers of initial 54 three-week courses have undergone international procurement accreditation program (MCIPS) of the Chartered Institute of Purchasing and Supply- CIPS/UK in collaboration with BRAC University- Institute of Governance Studies (BRACU-IGS), most of which are already completed. Under the extended program, staff from the remaining three-week courses of PPRPII as well as planned additional three-week courses under PPRPII AF will be eligible for the continued accreditation program after appropriate scrutiny/ selection of qualified candidates. CIPS meanwhile has also developed three study centres in Bangladesh, namely, BRACU-IGS, NAPD, and ESCB, of which BRACU-IGS has been the twinning partner under PPRPII. Under PPRPII, Level 4 and level 5 were being conducted at BRACU-IGS while level 6 was at the CIPS/UK. Now, with enhanced capacity of BRACU-IGS combined with increased national pool of resources (trainers), it is expected that, in going future, BRACU-IGS will have greater role in managing and conducting the MCIPS course for an estimated number of over 100 participants by conducting all three competence levels at BRACU-IGS (face-face-learning) with overall quality assurance and consistency of deliverables by CIPS. 6. Top-up Masters- procurement and supply management: This is an incentive program as well for the top-performers in three-week courses. As part of the program, the MCIPS accredited staff (about 40) are undergoing a top-up Masters program in procurement and supply management at BRACU-IGS (first 20 awaiting degree award). Under the extended program covering other agencies’ staff, this will continue at BRACU-IGS. 7. Master in Public Procurement Management for Sustainable Development/ Law/ others: This is an additional incentive program for a limited group of public procurement practitioners selected through a rigorous screening process from among the participants of three- week courses. With the advent of globalization and the increased role of private sector in governance, public procurement features as an important market-based incentive for promoting Corporate Social Responsibility (CSR). Thus, in addition to traditional regulatory obligations, procurement practitioners also have to demonstrate their governments’ adherence to international agreements in human rights, labor and the environment, and mitigation of corruption., and thereby improving the “quality of jobs” while facilitating sustainable development. This is a one-year Master’s in Public Procurement Management for Sustainable Development in the Turin School of Development (University of Turin - ITC- ILO, Turin/Italy). Similarly, for legal training in public procurement by obtaining a thorough understanding of: the nature of law and the legal process, University of Nottingham/UK offers a two-year (part time) Masters course. Also, University of Rome Tor Vergata/ Italy offers Masters in public procurement with focus on interdisciplinary content which is meant to attract public purchasers with relevant experience in procurement as well as young students interested in preparing for a career in public procurement. It is expected that about 25 participants may be able join the program with significant focus on sustainable development. 8. Training on e-procurement: This is an incentive program for the e-GP practitioners at the agency level in particular reference to the four target agencies. As e-GP is at its initial phase of implementation and is planned to make the four target agencies under full e-GP within three years, expansion of the basic knowledge base at the decentralized level is essential. In addition to the in-country training, a limited number of potential practitioners at focal point level will be given opportunity to have experience abroad. It is planned that over 100 procurement practitioners of the target agencies will be given one week training at ITC-ILO, Turin using their comprehensive module on e-GP (LGED: 50, RHD: 30, BWDB: 30, and REB: 10). Four target agencies will directly arrange this training with ITC-ILO/ Turin. 9. Training to national pool of resources: Out of the total of 25 TOTs, actually about 15 are available in-country; in addition to that 14 have been added recently who went through a rigorous selection process, thus raising the total TOTs to about 40. Also, some more TOTs could be developed. CPTU and the agencies are expected to take advantage of the knowledge of this pool of resources on a continuous basis through a networking arrangement which CPTU will coordinate. This group of resources will be attached to CPTU and will be involved in the process of technical and knowledge dissemination dialogue. To promote this purpose, these resource persons will also have opportunity to take advantage of short training abroad (one week or so) on the evolving areas of procurement, like e-GP, public-private participation (PPP), sustainable procurement, etc. It is planned that CPTU will arrange training of about 50 such resource persons at ITC-ILO/ Turin. 10. Sustainability of capacity development at ESCB: With support from PPRPII, ESCB, the main three-week training provider, has developed a procurement faculty with a Dean and four trainers, and completed the targeted 80 course, covering about 2200 staff. Similarly Bangladesh Institute of Management- BIM, the other institute, completed 28 covering over 700 staff. BIM in parallel runs many courses while ESCB since late 2010, as part of its effort for greater institutionalization and self-sustainability, has been arranging other short courses outside the purview of PPRPII. In PPRPII AF, the main training will continue at these two institutions. Nevertheless, ESCB still require strengthening its capacity to manage such program independently in a sustainable manner and will require professional support for long-term strategic marketing which is included in the project. The main consultant, in collaboration with ESCB will complete around 60 three-week courses (Attachment 2). 11. As part of the sustainability effort, ESCB is expected to conduct courses on public procurement separate from those funded under PPRPII AF. And towards this, an incentive mechanism has been developed for the consultant/ ESCB. The incentive mechanism will be based on an agreed minimum number of courses to be provided each year over a three year period. These additional courses are expected to be funded by the organizations and agencies of the participants themselves, and may be the identified target agencies, additional agencies, or any other government organizations and agencies or private sector organizations that wish to participate in the training. ESCB, with consultants overall guidance, is expected to conduct 12, 24 and 36 weeks of procurement training in FY14, FY15 and FY16 respectively using its own resources, outside the training programs in PPRPII. This course on procurement could be of a duration of three-week or two-week or one-week; however, ESCB will need to meet the total number of weeks in each FY. Concurrently, ESCB will conduct short courses for the bidding community and bidders on charge-basis (1-5 day duration); such short course for bidding community will constitute at least 33% of the annual aggregate target set out above. Both these two types of trainings, however, will form part of the milestones/ deliverables for payments to the consultant/ ESCB. In case of failure, there will be provisions for disincentive/ penalty in the consultant’s contract. An indicative schedule of deliverables of the consultant/ ESCB is at Attachment 3. Component 2: Strengthening Procurement Management at Sector Level & CPTU/IMED 12. This component will further strengthen the procurement management capacity of public sector agencies through: (a) the provision of technical advisory services to identify specific sets of arrangements for the four target agencies to address the deficiencies identified in bidding practices, contract management, and procurement planning and budgeting; (b) the provision of technical support and equipment to the target agencies for developing a strategy and plans for the implementation of new procurement rules and practices; (c) the provision of physical, infrastructural and logistical support to the target agencies to collect data for tracking and monitoring of procurement, including the establishment and integration of the CPTU’s monitoring system “PROMIS” into a fully functional system. The detailed features are described below. 13. Strengthening procurement performance monitoring: The on-line procurement performance monitoring (PROMIS) with indicators developed under PPRII to measure efficiency, transparency and competitiveness of the system is being piloted at the four agencies; this tool has already been found effective for measuring performance. In PPRPII AF, this effort will be further strengthened with targets for each agency over a specified period of time so that procurement activities are monitored in a more systemic and transparent manner with the provision of publishing monitoring reports in website. To enhance the social control, training of local media and relevant NGOs will be provided. The details of performance targets are described in Component 3 (e-GP). 14. Monitoring and evaluation framework: PPRPII AF will have a strong M&E framework based on a revised results monitoring indicators after appropriate adjustments taking into account the expanded scope of the project, both in terms of the project development objective, and the intermediate outcome indicators against each project component. Also, the M&E framework in its design will recognize the need for appropriately catering the performance-based financing and/or disbursement-linked indicators (DLIs). 15. Strengthening four target agencies’ procurement management capacity : In PPRPII AF, while CPTU will be responsible for overall coordination and the management and operation of the national e-GP portal, each of the four target agencies will actually implement the e-GP and procurement monitoring task using a performance-based financing approach where the agencies will have access to such finance through CPTU upon meeting specified performance targets. Taking cognizance of the four target agencies (RHD, LGED, BWDB, and REB) more direct role in the implementation of e-GP, more support will be provided at these agencies for their institutional strengthening. Such support, among others, will include: provision of the consultant’s extended e-GP team at each agency, beyond its core team at CPTU; creating a dedicated e-GP/ PROMIS cell in each agency with adequate counterpart staff; provision of incremental project staff and/or consultants; and provision of IT equipment/ connectivity/ training. 16. Strengthening of CPTU and IMED: The CPTU with its current staffing is is constraint to cope with the given mandate of procurement monitoring across all public sector organizations. Under PPRPII AF, CPTU will remain as the key implementing agency for the entire project and will be responsible for contracting out at least three large value contracts associated with capacity development, e-GP system management and operation, and core competence program As part of strengthening its staffing, CPTU will need to fill out all vacant positions (5 positions) and recruit the remaining 10 staff as per the approved Technical Assistance Project Proposal (TPP) after obtaining necessary permission from the Ministry of Public Administration (MoPA). CPTU’s additional strengthening measures, among others, will include: creating an e- GP/PROMIS cell within CPTU with Sr. System Analyst as its focal person; strengthening its analytical/ research capabilities using services of incremental project staff and/or consultant; delegating appropriate authority to the Directors in CPTU (three); ensuring continuity of key project staff (Director General, Directors, and other level appropriate staff) at least for the initial years of PPRPII AF; provision of equipment and/or IT facilities. 17. The project is expected to support CPTU to carry out the day-to-day administration of the project including the verification of DLIs by independent consultant and e-GP systems audit. The project will also support to start developing an M&E system and capacity at CPTU for regular measurement and evaluation of the economic impact of procurement reform. The project will provide support in strengthening the other associated units of IMED concerning implementation monitoring of project procurement at national level that, among others, will include some equipment and logistical supports including technical assistance in the form of consultancy services. 18. Strengthening bidding community: it is recognized that the bidding community can contribute positively to the development of the procurement regime in the country through their experience and hands-on issues. Toward this, various options will be explored including development of a nation-wide contractors’ database and development of local construction industry. CPTU will undertake this task with assistance of consultants. 19. CPTU Building: Depending on the future need, CPTU may opt for vertical extension of the CPTU building with one more floor subject to fulfillment of all technical and procedural requirements. Component 3: Introducing e-Government Procurement (e-GP) 20. The objective of the revised component is to expand the e-GP networking and its scope in a way that the key sectorial agencies are under full e-GP within three years, with specific reference to the four target agencies, thus, demonstrating its fair play, value-for-money, transparency, and open competition with enhanced accountability. Under PPRPII, this component achieved the design and implementation of e-GP in the areas of publication of notices and contract awards, e-bidding, e-purchasing, and e-contract management, development of a single web-based system, and formation of an e-GP technical support unit. In PPRPII AF, this will further include capacity development support and training for the target agencies’ staff to implement the e-GP system; provision of technical services for the management, operation and maintenance of the national e-GP system; and provision of technical support and equipment for the development of a procurement information back-up mirror site and disaster recovery center. Details of the proposed activities under this component are provided below. 21. Expanding scope of e-GP: The e-GP system, developed under PPRPII, is fully functional with its national web portal. The four target agencies, after completing pilot, are now at the rolling out phase with a target of inviting at least one tender through e-GP in each of its identified procuring entities by March 31, 2013 (total about 300 entities) which is on target. Nevertheless, it is slow and needs substantial augmentation to expand the scope of transactions. Under the expanded program, while the four target agencies are planned to have full e-GP within three years, there will be further rolling out of e-GP in about 10-15 other public sector organizations covering health, education, power, public works, etc. in a way that the transaction level is enhanced substantially. Rolling out will seek 100% conversion of certain procuring entities (champion) in concurrence with gradual ramp-up across-the-board. Also the existing functionality will be reviewed to consider the enhanced scope. 22. Management and operation of e-GP system: The current contract of CPTU with the third party service provider will expire by March 31, 2013. Taking cognizance of this scenario and the PPRPII AF, while the Government/CPTU will be the owner of the e-GP system with all its legal right, its management and operation will be done by a third party service provider. To run the e-GP system effectively, a self-sustainable model is required in a way that the system is self-financed with all its associated expenses within the next three years. However, at present there is not enough business opportunity to attract prospective M&O service providers for a self- sustainable model. A transactional trend analyses has been done for the four target agencies by obtaining information for the past three financial years (FY10-FY12). After marginalizing the data on a relatively conservative estimate, a target for e-GP implementation for the four target agencies is set out below in a way that all contracts up to the district level are covered in e-GP within the next three fiscal years. Also, the 20 additional agencies at their choice will initiate e- GP and its transactions within the PPRPII AF period may be in the tune of 5 percent of the total of four target agencies. Box 1: Estimated Transaction of four target agencies Agency Average FY14 e-GP FY15 e-GP FY16 e-GP FY17 e-GP name number of bids target (35%) target (60%) target (80%) target (100%) invited annually RHD 4000 1400 2400 3200 4000 LGED 4000 1400 2400 3200 4000 BWDB 1200 420 720 960 1200 REB 150 55 90 120 150 Total 9350 3275 5610 7480 9350 23. Self-sustainability of the e-GP system: Considering the current constraint, a progressive self-sustainable model has been worked in a way that towards the end of PPRPII AF, the system is fully operated using its own revenues, while during the transition, support from the project will be included. An initial outline of the e-GP financing model is provided below which may require further adjustments. Box 2: e-GP Self sustainable model: Year Expenditure Revenue Considerations (annual average) Year 1 $1.43 M $0.55 M Revenue:  Yearly renewal fee for bidders: BDT 2,000 (US$ 25) Year 2 $1.43 M $0.95 M Cost of bidding document to submit bid: Slab1 (tenders < BDT 5M): BDT 1000 (US$12) Year 3 $1.43 M $1.25 M Slab2 (tenders < BDT: 20M): BDT 2000 (US$25) Slab 3 (tenders > BDT: 20M): BDT 4000 (US$50)  Four target agencies will implement e-GP as per the set Year Expenditure Revenue Considerations (annual average) out targets (Box 1 above).   Each bidder participates in at least three tenders (invited) annually  Average number of bids per bidding is four. Expenditure:  The model is based on a five-year life cycle of hardware.  Costs have been annualized for modeling purpose; in reality the hardware cost will be at one time (5 th year).  Cost for the M&O of the e-GP system is of the service provider on contract basis. 24. The e-GP system will generate revenues through its operation and to ensure sustainability of the system and its operation in a most efficient way. Thus, it is critical that IMED/CPTU has the full authority to run the system as any other revenue earning organization. GoB will assure that the e-GP system developed under the project is sustainably financed through a retention of the e-GP system generated revenues within IMED and/or through the provision to IMED of adequate funds on an annual basis for the management, operation and maintenance of the e-GP system, with a distinct budget code and financial authority for IMED and CPTU to spend such funds. Taking the above into account, IDA will finance part of the M&O contract of the service provider on a declining basis. 25. TOR of M&O contract: The proposed service provider for the e-GP system will have two major tasks: operation and maintenance of the system at CPTU, and support four target agencies to implement the e-GP expansion program. Thus, it will cover the management and operation of the e-GP system application, e-GP data center, supporting the four target agencies for the entire PPRPII AF period through a dedicated team for each agency, trainings to all concerned staff of the four target agencies, training to bidding communities, arranging workshops and business outreach program to meet specified target of e-GP implementation, rolling out the e-GP system across the four targets agencies and other specified procuring entities of the Government of Bangladesh. 26. Third party e-GP system audit: In order to ensure appropriate functioning of the system including authentication of the system security, IMED/ CPTU will hire an international firm to do third party independent e-GP system audit on an annual basis, starting in early FY13. 27. Disaster recovery center: At present there is no disaster recovery center (DRC) for the e-GP system. Bangladesh Computer Council (BCC) is responsible for national DRC and its maintenance. At present BCC has selected the site for national DRC (Jessore or similar site at distance) and will go for procurement process soon. If CPTU uses the national DRC for its e-GP system then it will be cost effective and more suitable from operational view point. It is envisaged that CPTU will have a back-up mirror site at BCC building premises at Dhaka, and when BCC will have the DRC up and running, CPTU will also house its DRC there. 28. Implementation of on-line procurement performance monitoring (PROMIS): The on-line procurement performance monitoring of the target agencies needs strengthening in terms of its implementation as the system issues are now resolved. E-GP implementation will largely help by default in achieving PROMIS information as it will capture large data by itself, leaving room for manual entry of those tenders that are not covered in e-GP. Based on the tendering information provided above, an implementation schedule/ targets have been worked out which is summarized below by financial year. Box 3: Implementation of PROMIS Agency Average number FY14 FY15 FY16 FY17 name of bids invited PROMIS PROMIS PROMIS PROMIS annually target (50%) target (70%) target (90%) target (100%) RHD 4000 2000 2800 3600 4000 LGED 4000 2000 2800 3600 4000 BWDB 1200 600 840 1080 1200 REB 150 75 112 135 150 Total 9350 4675 6552 8415 9350 Component 4: Behavioral Change Communication and Social Accountability (BCC & SAc) 29. The objective is to further strengthen efforts to raise awareness and public demand for the reform and e-GP across public sector organizations, the bidding community, and other stakeholders. Under PPRPII, efforts were made through: provision of technical advisory services and equipment to facilitate the implementation of the rules and regulations governing public procurement. It included: design and implementation of (i) a communication strategy; (ii) an education program; and (iii) carrying out of behavioral change activities, and advocacy campaigns; (iv) possible entry point for engagement of beneficiary groups (civil society groups, business chambers, or media apex bodies, etc.) to improve public access to procurement related information, establish a government-contractors forum, etc. Under PPRPII AF, the component will mainly focus on e-GP awareness campaign for bidders, journalists, policy makers and other stakeholders and local level beneficiaries. Also, this will include possible third party monitoring of the reform activities. Key features are described below. 30. e-GP awareness and reform agenda: To sustain the gains for increased awareness on e-GP and public procurement reforms, it is imperative to continue behavioral change communications to the target audience through using strategic mix of different communication channels. It is envisaged that future activities under PPRPII AF will take it to a different level with specific reference to deepening the reform agenda and its value to target groups at local levels, bidding community, journalists, and policy makers. Major activities are: i. Awareness and advocacy campaign: This component will launch a campaign targeting to the procuring entities, bidding community and other stakeholders to raise awareness on e-GP. It will also promote issues as anti-corruption (“no bribe”) and transparency targeted to procuring entities and bidding community; and best use of public resource or tax payer’s money. ii. Media training: The awareness campaign will focus on strengthening media capacity for better and more reporting on public procurement and e-GP. Possible activities may include training for journalists and competition on investigative journalism. iii. Advocacy: The Government-contractors forum formed under the PPRPII will be continued on a larger scale. It may consider replication of future search conference to continue the dialogue. The activities of public-private stakeholders committee (PPSC) may continue. 31. Assessment developmental effectiveness/ impact: It is recognized that given the nature of the project, by default since procurement success is measured in terms of economy, efficiency, and transparency of the system, assessment of developmental impacts could be challenging, Nevertheless, within this constraint, the project will attempt using social accountability tool to conduct study capturing the notion of developmental effectiveness and on the ground results with specific reference to governance challenges. 32. Third Party Monitoring: The reform activities will also be grounded at the local stakeholders level with possible involvement civil society organizations including their own capacity development in the area of behavioral change and accountability through procurement outcome monitoring with specific focus on the enforcement of laws against fraud and corruption. Attachment 1: Summary of Training Needs of Implementing Agencies Remaining needs of target agencies Agency Original Number Remaining and Additional Required Target Trained RHD 470 387 100 LGED 876 874 100 BWDB 361 342 120 REB 468 455 100 Total 420 Training needs of additional agencies Organization* No. Agencies No. of Number of Procuring potential Entities trainees Ministry of 1 Directorate of Technical Education (DTE) 122 320 Education 2 Directorate of Second. & Higher Education (DSHE) 26 400 3 Education Engineering Department (EED) 100 4 National Curriculum and Textbook Board (NCTB) 1 12 Power Division 5 Electricity Generation Co. Bangladesh (EGCB) 4 15 6 Power Grid Company of Bangladesh (PGCB) 63 49 7 Bangladesh Power Development Board (BPDB) 125 300 8 Dhaka Power Distribution Company (DPDC) 34 45 Ministry of 9 Department of Primary Education (DPE) 4 19 Primary Mass Education Energy & Mineral 10 Gas Transmission Company Limited (GTCL) 1 23 Resources 11 Bangladesh Petrolium Exploration Co. (BAPEX) 1 15 Division Ministry of Health 12 Central Medical Stores Depot (CMSD) 1 15 & Family Welfare 13 Directorate General for Family Planning (DGFP) 7 15 14 Health Engineering Department (HED) 21 25 Local 15 Department of Public Health Engineering (DPHE) 190 Government Division 16 Dhaka City Corporation (North) 1 10 17 Dhaka City Corporation (South) 1 10 Ministry of 18 Public Works Department (PWD) 121 308 Housing and 19 National Housing Authority (NHA) 9 32 Public Works 20 Rajdhani Unnayan Kortripokkho (RAJUK) 1 38 Total 1941 Attachment 2: Details of Indicative Training Courses Duration Indicative Class Indicative venues Total Name of Course No. of Size No. of courses Main Target Audience Trainees Procurement of Goods, Works and B1 3 weeks 60 30 ESCB 1,800 Services Target Agencies + Additional Agencies Procurement of Goods, Works and B2 3 weeks 30 30 BIM 900 Services Target Agencies + Additional Agencies E Junior Level Short Training 5 days 16 30 ESCB/BIM Target Agencies + Additional Agencies 480 F Orientation for Policy-makers 0.5 day 12 15 Rented facilities All Key Ministries (Additional Secretaries and above) 180 G1 Training for entry-level civil servants 2 days 6 50x4 BPATC Civil servants 1200 G2 Training for mid-level civil servants 1 day 16 20 BPATC Civil servants 320 G3 Training for senior civil servants 1 day 8 40 BPATC Civil servants 320 G4 Training for Economic Cadre 5 days 10 25 Rented facilities Planning Commission, ERD, IMED, Planning Wings, 250 Economic Cadre and Development Project Staff G5 Training for Administration Cadre 2 days 12 25 BCSAA Entry-level Administration cadre civil servants 300 G7 Awareness Workshops for Municipalities 1 day 30 100 Rented facilities Elected Municipality Chairpersons and Members 3,000 NBR Staff (Income Tax, Value-Added Tax and G8 Training for NBR Staff 2 days 5 20 Rented facilities 100 Customs) I Procurement Training to Auditors 3 days 10 30 Rented facilities Public Auditors and Accountants 300 Project Directors (PDs), Deputy PDs and Project M Training for Project Management Rented facilities 500 3 days 20 25 Managers Supreme Court Bar, District Judges and Public N Orientation for Judiciary Staff 1 day 10 15 Rented facilities 150 Attorneys P Orientation for Journalists 1 day 20 25 Rented facilities Media (Newspaper, TV and Radio) Executives 500 Q Orientation for Anti-corruption officials 1 day 4 25 Rented facilities Officials of Anti-Corruption Commission or similar 100 R Orientation for Members of Parliament 1 day 6 60 Rented facilities Members of Parliament, Parliament Secretariat 360 S Business outreach program 1 day 8 30 Rented facilities Business community, bidders, consultants 240 T Refresher course 1 day 50 40 IEB or similar Past three week participants 2000 TOTAL 13,200 Note: The table excludes refresher courses Three-week course participant : 2,700 Short course participant : 10,500 Attachment 3: Indicative List of Deliverables Tasks FY13 FY14 FY15 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 1. 3-week Main Course (ESCB & BIM) B1(4) B1(3), B2(2) B1(5), B2 (3) B1(6), B2(3) B1(6), B2(3) B1(4), B2(2) B1(6), B2(3) B1(5), B2(3) 2. Junior Level Short Training (ESCB) E(1) E(2) E(1) E(2) E(1) E(2) E(1) 3. Short Training Programs (Policy G1(1), G2(1), F(1), G2(1), F(1), G1(1), F(1), G2(1), F(1), G1(1), F(1), G2(1), F(1), G1(1), Makers, Civil Servants, Planning, G3(1), G4(1), G4(1), G5(1), G2(2), G3(1), G3(1), G4(1), G2(1), G4(2), G3(1), G4(1), G2(1), G4(2), Admin Cadre, Municipalities, NBR, G5(1), G7(1), G7(2), G8(1), G4(2), G5(1), G5(1), G7(2), G5(1), G7(2), G5(1), G7(3), G5(1), G7(2), Auditors, Project Managers, Judiciary P(1) I(1), M(2), N(1), G7(3), I(1), G8(1), M(2), I(1), M(1), P(1), G8(1), M(2), I(1), M(2), N(1), staff , Journalists, Parliament Members, P(2), S(1), T(4) M(2), N(1), P(1), N(1), P(2), S(1), Q(1), R(1), T(4) N(1), P(2), S(1), P(1), Q(1), R(1), Business Outreach, Anti-corruption, Q(1), R(1), T(4) T(4) T(4) T(4) Refresher) 4. Sustainability at ESCB(any 3 weeks: X3(1) 3 weeks: X3(1) 6 weeks: X3(2) 6 weeks: X3(2) 6 weeks: X3(2) 6 weeks: X3(2) combination of courses allowed to meet or X2(2) or or X2(2) or or X2(3) or or X2(3) or or X2(3) or or X2(3) or minimum weeks mentioned) X1(3) and BC X1(3) and BC X1(6) and BC X1(6) and BC X1(6) and BC X1(6) and BC Tasks FY15 FY16 FY17 Q9 Q10 Q11 Q12 Q13 Q14 Q15 1. 3-week Main Course (ESCB & BIM) B1(4), B2(2) B1(5), B2 (3) B1(6), B2(3) B1(6), B2(3) 2. Junior Level Short Training (ESCB) E(2) E(1) E(2) E(1) 3. Short Training Programs (Policy Makers, F(1), G2(2), F(1), G1(1), F(1), G2(1), G4(1), F(1), G1(1), G2(1), G2(1), G4(1), G2(2), G3(1), P(1) Civil Servants, Planning, Admin Cadre, G3(1), G4(1), G2(1), G3(1), G5(1), G7(2), G3(1), G4(2), G5(1), G7(2), I(1), G7(3), I(1), M(1), Municipalities, NBR, Auditors, Project G5(1), G7(3), G4(2), G5(1), G8(1), I(1), M(2), G5(1), G7(3), M(1), N(1), P(2), N(1), P(1), R(1), Managers, Judiciary staff , Journalists, G8(1), I(1), M(1), G7(2), M(2), P(2), S(1), T(4) M(2), N(1), P(1), S(1), T(5) S(1), T(5) Parliament Members, Business Outreach, N(1), P(2), S(1), N(1), P(1), Q(1), R(1), S(1), T(4) Anti-corruption, Refresher) T(4) R(1), T(4) 4. Sustainability at ESCB (any combination 6 weeks: X3(2) or 9 weeks: X3(3) 9 weeks: X3(3) or 9 weeks: X3(3) or 9 weeks: X3(3) or 9 weeks: X3(3) or 9 weeks: X3(3) or of courses allowed to meet minimum weeks X2(3) or X1(6) or X2(5) or X2(5) or X1(9) X2(5) or X1(9) X2(5) or X1(9) X2(5) or X1(9) X2(5) or X1(9) mentioned) and BC X1(9) and BC and BC and BC and BC and BC and BC Note: 1. Each quarterly target will be elaborated through quarterly capacity development report. There will be 14 quarterly reports (Q1-Q14) and a final report in Q15.. All quarterly reports will be simultaneously submitted to CPTU and the Bank. 2. For sustainability at ESCB part of the deliverables, any target not achieved during the designated quarter will be allowed to be completed within the following or subsequent quarters of one fiscal year. 3. Example- B1(2) means 2 course of type B1 in Annex 2. 4. BC will cover at least 33% of the target of each quarter and 33% of the aggregate target of each fiscal year. Annex 4: Revised Estimate of Project Costs 1. PPRPII AF will be for over three years (FY14 to FY17/Q2), with two financing modalities: direct input-based financing for CPTU, and performance-based financing for the four target agencies where disbursements will be linked to attainment of specified indicators (DLIs) relating to e-GP and procurement performance monitoring- PROMIS (Improving procurement performance by using e-GP in four target agencies, and improving procurement performance monitoring using PROMIS by four target agencies). Given the continuity of PPRPII, PPRPII AF will have provision for retroactive financing of about US$2 million to cover expenditures related to capacity development actions, management and operation of e-GP system, and sectoral strengthening including Year0 DLIs for the four target agencies that are expected to be incurred before effectiveness of the PPRPII AF. 2. Cost estimates are summarized below. CPTU prepared a Technical Assistance Project Proposal (TPP) included in it the cost details. Project cost by component1/ Local Foreign Total US$ million US$ million US$ million Furthering Policy Reform and Institutionalizing Capacity 3.30 6.20 9.50 Development Strengthening Procurement Management at Sector Level & 6.50 1.00 7.50 CPTU/ IMED Introducing Electronic Government Procurement (e-GP) 10.65 6.35 17.00 Communication, Behavioral Change and Social 2.00 0 2.00 Accountability Total Project Cost 22.45 13.55 36.00 Total Financing Required 22.45 13.55 36.00 Financing IDA GoB Total 34.50 1.50 36.00 Project cost by category1/ Local Foreign Total US$ million US$ million US$ million 1. Goods, works, consultants services, training, 11.95 8.55 20.50 salaries of incremental Project staff, and allowances for Project staff 2. Operating costs 1.50 - 1.50 3. Consultancy services for e-GP system management 1.50 5.00 6.50 and operation 4. DLI-based financing 7.50 - 7.50 Total financing required 22.45 13.55 36.00 Financing IDA GOB Total 34.50 1.50 36.00 1/ All costs are inclusive of physical contingencies (3%), price contingencies (2%), and local taxes. Consultancy services include project incremental allowances for staff of CPTU. Annex 5: Revised Implementation Arrangement and Support A: Implementation 1. Overall Project Implementation: To ensure continuity of the activities under PPRPII, CPTU/IMED will continue to be responsible for overall implementation of the project, while the four target agencies will be responsible for actual implementation of e-GP and procurement performance monitoring system (PROMIS) using a performance-based approach (disbursement- linked indicators- DLIs) as verified by an independent consultant. The Procurement Monitoring Coordinator (PMC) of each target agency will act as the link between the CPTU and those agencies. 2. To oversee and review the project activities, the Project Steering Committee (PSC) needs to be reconstituted with more focused role. There will be a specific task force with adjusted TOR to oversee implementation of e-GP and PROMIS. The existing system of PMC and technical working group (TWG) will remain unaltered; however, the PMC will be responsible for implementation of e-GP and PROMIS at the agency level. In all deliberations/ meetings/ events concerning the project, the Bank representative will be present as observer and/or invited guest. All ToRs and selection of criteria for the entire capacity development program including any foreign training will require specific clearance from the Bank. Also, various teams consultants, as produces reports/ documents, will share a copy with the Bank concurrently as it sends such reports to CPTU/IMED. 3. Strengthening CPTU and IMED: The Director General of CPTU will continue to function as the Project Director (PD) of PPRPII AF, with support from three Directors (Director- Rules & Procedures, Director- Training, and Director- MIS/ e-GP). This is also consistent with GoB’s announced policy for continuation of Project Directors/ key project officials. All Directors will have more delegation to execute day to day functions in their respective fields with adjusted TORs as shared with the Bank. Given the high importance of continuity of the reform activities and its institutionalization within the country, the key project officials will continue to serve in CPTU at least for its initial years, with appropriate arrangements permissible within the government rules (Director General, three Directors, and other identified staff). Also, GoB will assure sustainability of the e-GP system with provision of adequate funds to IMED/ CPTU as described in Annex 3. 4. As part of strengthening CPTU’s activities under the additional financing, supports will be needed to strengthen its e-GP/ PROMIS function with more improved analytical/ research functions contributing to system improvement. In terms of staffing, following additional staffing are anticipated at this stage: Sr. System Analyst (1 Person) as the head of e-GP/ PROMIS cell who will report directly to the DG/CPTU; part-time international e-GP consultant- 1P; Sr. national e-GP consultant-1P and local e-GP support consultant- 2P for the entire duration of the project, procurement reform implementation advisor, and other logistical supports including equipment and transports. CPTU staffs are funded from the revenue budget. The existing arrangements in PPRPII for project staff incremental allowances, as permissible within the Government rules but not exceeding 30% of salary, will continue. For consistency purpose, project staff will include staff of CPTU, PMCs and TWG members, and counterpart staff of e- GP/PROMIS cells in each of the four target agencies. In addition, there is specific arrangement for strengthening IMED’s other associated units relating to project procurement with provision of consultants and equipment. 5. Implementation of Capacity Development: Because of the importance of continuity of existing arrangements and consistency of approach, most of the current arrangements will continue with appropriate adjustments combined with other additional arrangements:  Main capacity development consultant: Recognizing the need for continuation of the program and its consistency, the current contractual arrangement between the IMED/CPTU and the consultant (FINEUROP) will continue as per the agreed revised terms of reference. The consultant will undertake the capacity development task in collaboration with the Engineering Staff College Bangladesh (ESCB) and Bangladesh Institute of Management (BIM) with the following approach: the main consultant will update the course materials/ curriculum and provide quality assurance of the delivery of courses while ESCB and BIM will actually deliver the courses and prepare proposal accordingly using resource persons from the market, and the consultants will be paid based on actual delivery of courses unlike the current arrangement where payments are input based. As part of the sustainability effort, IDA will finance training costs upon the consultant/ ESCB meeting certain performance triggers related to additional training by ESCB using its own resources.  Core competence program: Under the adjusted arrangement, BRACU-IGS will be jointly and severally liable for the course delivery: CIPS role will be more for ensuring overall quality and consistency of deliverables while BRACU-IGS will actually deliver the courses using mainly the national pool of resources with additional support from CIPS. The top-up Masters of BRACU-IGS will remain unaltered.  Other Master’s Program/ Training on e-GP/ National Trainers: IMED/CPTU will have arrangement with University of Turin - ITC-ILO/ Turin for (i) Master’s program in procurement management for sustainable development, and (ii) short training on e-GP/ PPP/ sustainable procurement. For e-GP practitioners at the agency level in particular reference to the four target agencies, the agencies will have direct arrangement with ITC- ILO for short e-GP training under their performance based financing modality. 6. Implementation of Strengthening and Monitoring: Strengthening of CPTU will entail recruitment of staff under revenue budget and a number of project funded staff. While CPTU as a transition measure may hire project staff from the market based on the revised need under PPRPII AF with specific reference to e-GP and PROMIS, the key focus should be to strengthen CPTU with its own revenue budget. Also, a model of CPTU could be envisaged where CPTU will be allowed to have its own autonomy for its recruitment/HR/staffing/ function; however, this will require Government’s prior approval. Project staff be recruited in a way that all such key staff is onboard by the time of the effectiveness of the proposed PPRPII AF. 7. Strengthening implementation capacity of four target agencies: In order to strengthen the e-GP implementation capacity, each target agency will create an e-GP cell within its organization to focus issues relating to e-GP and implementation of PROMIS with specified performance targets. Such cell will have a support team of consultants (from the M&O firm) but also will have agency’s counterpart staff (at least 5) so that there is adequate knowledge transfer; the cell will have adequate office facility and equipment which could be financed under the DLI. 8. Implementation of M&E: IMED/CPTU is likely to continue the current arrangement with adjusted TOR to report mainly on results framework with indicators where a firm (SRGB) is conducting the M&E functions based on data from the agencies. CPTU with assistance from the consultant will report the results monitoring framework with indicators quarterly. 9. Implementation of e-GP M&O: In light of the unique nature of the e-GP system that has been specifically developed for Bangladesh and taking into account the need for initial sustainability of such a high-tech system with possible enhanced features within the country operating environment, IMED/CPTU will maintain the existing arrangement with the consultant (GSS with Dohatech) for future management and operation of the system with revised TOR as agreed, included in it performance targets. B: Financial Management 10. Financial Management and Disbursement: PPRPII Additional Financing is envisaged to have two financing modalities: direct input based financing for major part of the project to be directly implemented by CPTU and performance based financing for meeting specified performance targets on e-GP and PROMIS by the four target agencies. Ongoing financial management and disbursement arrangement for PPRP II will be applicable with regard to $28.50 million input-based financing in PPRPII AF. The project will have provision for retroactive financing. 11. $7.50 million performance based financing will be disbursed on attaining the targeted results in the form of Disbursement Linked Indicators (DLIs), as agreed with the four target agencies, CPTU and the Bank. On achieving one or more DLIs, the Bank will disburse value of the DLI (s) to the CPTU that will in turn transfer the relevant amount to the respective target agencies. As PPRPII AF is an investment lending instrument, the disbursement on meeting targets will be on reimbursement basis and will be required to be identified with project expenditures as evidenced by quarterly Interim Financial Reports (IFRs). The DLI based disbursement amount should not exceed the amount of DLI expenditures incurred during the DLI period. The total value of DLIs pertaining to each agency and their distribution against implementation of e-GP and PROMIS is shown in Attachment to this Annex. 12. The eligible expenditure under DLIs will include goods, consultant’s services, training, and operating costs related to e-GP and PROMIS covering the economic heads of account of the government (budget code) as shown in the table. Disbursement for DLIs attained for any period including such disbursements in the previous period will not exceed the total eligible expenditures for each agency on a cumulative basis. PPRP II AF: Financing table with disbursement categories Project financing by category Total GOB IDA % of Financing US$M US$M US$M 1. Goods, works, consultants - 100% services, training, incremental 20.50 20.50 project staff, and allowances for project staff 2. Operating costs 1.50 1.50 3. Consultants Services for e-GP 6.50 1.50 5.00 100% until June system management and operation 30, 2014, 80% until June 30, 2015, and 60% thereafter 4. DLI based financing for four 7.50 - 7.50 100% target agencies Total Financing Required 36.00 1.50 34.50 Eligible expenditure heads for DLI based disbursement for four target agencies: RHD, LGED, BWDB, REB Economic code Heads of expenditure Economic codes Heads of expenditure 4800 Supplies and Services 4900 Repair and Maintenance 4827 S&S- printing and binding 4901 R&M- motor vehicles 4842 S&S- Seminar/ conference 4911 R&M- computer and office exp. equipment 4822 S&S- fuel and gas 4916 R&M- machineries & equipment 4816 S&S- telephones 4921 R&M- office building 4814 S&S- Miscellaneous 6800 Capital Expenditure 4813 S&S- custom duty and VAT 6815 CE- computers & accessories 4854 S&S- consumable store 6819 CE- office equipment 4874 S&S- consultancy 6821 CE- furniture & fixture 4840 S&S- Training allowances 6822 CE- laboratory 4883 S&S- honorarium/ fees/ 6823 CE- telecommunication remuneration equipment 4884 S&S- examination fees and 6827 CE- electrical equipment expenses 4886 S&S- copying charges 4700 Allowances 4888 S&S- computer consumable 4701 A- dearness allowance Economic code Heads of expenditure Economic codes Heads of expenditure 4889 S&S- audit fee 4729 A- foreign allowance 4891 S&S- subsistence 4753 A- daily subsistence allowance 4893 S&S- hiring charges 4769 A- overtime 4895 S&S- committee meeting 4777 A- training allowance 4898 S&S- special expenditure 4793 A- telephone allowance 4795 A- other allowance- project allowance 13. Designated Account: The Designated Account (DA) currently being used for PPRPII will also be used for AF. A new advance amount will be agreed between the Bank and the CPTU. Funds will be transferred from the DA to the dedicated project bank account to be maintained by all the target agencies. 14. FM arrangement with the Target Agencies: Except RHD, the remaining agencies LGED, BWDB and REB are currently implementing Bank funded projects. For REB and LGED, the FM support for the project transactions will be made by the FM unit of the bank funded ongoing RERED II and RTIP 2 projects. For BWDB, FM support will be provided by Dhaka Regional Accounting Center. For RHD, FM support will be made by the Directorate of Accounts and Audit. 15. External Audit: External audit will be carried out by the Foreign Aided Project Audit Directorate of the Comptroller and Auditor General. A Statement of Audit Needs (SAN) (cleared by IDA) will be agreed between the CPTU and the FAPAD. Audited Financial Statements will be submitted to the Bank no later than six months from the end of a fiscal year. 16. Internal Audit on the basis of a TORs agreed with the Bank will be conducted by a reputed firm of Chartered Accountant for every two years of AF operations. Adequate resource will be included as part of the project costs. 17. FM Staffing: A Deputy Director (Finance) will be made onboard within the first month of effectiveness of PPRRPII AF credit. The existing FM consultant will continue to provide support to CPTU with provision of training and transfer of knowledge to the Deputy Director (Finance). 18. FM Risks: Overall FM risk is assessed as Substantial having regard to the FM staffing and internal audit slippage in PPRP II and additional project financial activities in the target agencies. Mitigation measures include suggested FM staffing in the CPTU and FM arrangement in the target agencies, undertaking of external and internal audits. C: Procurement 19. Overall procurement: Total value of PPRPII AF is US$36 million; IDA Credit will finance US$34.50 million. Procurement under the project by CPTU will largely involve consultancy services and training of US$25.85 million, followed by goods of US$2.85 million and works of US$0.35 million; there is incremental operating costs of US$1.50 million for CPTU. Large consultancy packages with their approximate estimated costs are as follows: capacity development consultant- US$5.8 million; management and operation of e-GP system- US$6.5 million; core competence contract- US$2 million. Besides, the project has performance based financing of about US$7.5 million for the four target agencies (RHD, LGED, BWDB, and REB) upon meeting disbursement-linked indictors (DLIs). 20. Re-assessed procurement capacity. The Bank’s recent capacity assessment of CPTU by using Procurement Risk Assessment and Management System tool, as well as the fact that PPRP-II was rated ‘Satisfactory’ in procurement performance, indicates that CPTU has adequate capacity to carry out procurement activities envisaged under the project. Under PPRPII AF, all major consultancy contracts will be either extension of the current contract or single source selection of the same firm in view of continuation of assignments. One area that needs improvement is time taken to make payments to contractors and consultants. Besides, the procurement capacity of the four target agencies has also been assessed in light of their expected expenditures under DLI based payments which includes very small value procurement. All of these agencies are currently executing Bank-financed projects except RHD. RHD has previous experience of implementing Bank projects; though there was incidence of misprocurement involving few large value contracts in 2006. Given the nature of very low value transactions, RHD’s capacity is also assessed to be adequate like the other three agencies with areas of improvement: record keeping and complaints handling mechanism. All four agencies will have procurement trained designated official to minimize procurement associated risks. 21. Procurement risks and mitigation measures. Given the nature of the project and based on the procurement capacity assessment, the project risk is ‘Moderate’ from procurement operation and contract administration viewpoint. Risk mitigation measures include: (i) handling procurement by designated procurement officials; (ii) establishment of a credible complaint handling mechanism at the four target agencies; and (iii) improvement of record keeping. 22. Use of the World Bank’s Guidelines. Procurement of goods and non-consulting services valued US$ 2,000,000 or more per contract and procurement of works valued US$ 6,000,000 or more per contract will be carried out in accordance with the World Bank's "Guidelines: Procurement of Goods, Works, and Non-Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers" dated January 2011 (Procurement Guidelines). Procurement of all consulting services by firms and individuals will be carried out in accordance with the "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers" dated January 2011 (Consultants Guidelines) irrespective of value. However, shortlist of consultants for services estimated to cost less than US$300,000 equivalent per contract may be advertised locally and composed entirely of national consultants. World Bank’s standard documents will be used for procurements following World Bank Guidelines. 23. Application of the Procurement Laws. Within the overall context of the Bank’s Procurement Guidelines, local procurement of goods and non-consulting services valued less than US$ 2,000,000 per contract, and local procurement of works valued less than US$ 6,000,000 per contract will follow the Government's Public Procurement Act 2006 (with first amendment of 2009) and Public Procurement Rules 2008 (PPA/PPR), with the number of exceptions as mentioned in the PPRPII Financing Agreement. The local procurement following National Competitive Bidding (NCB) will be done using the Standard Tender Document (STD) agreed with or satisfactory to the Bank. 24. Procurement plan: An initial procurement plan for the project has been prepared. This plan will be the basis for selecting methods for procurement as agreed by the World Bank, updated semi-annually or as required to reflect the latest circumstances. 25. Review by the Bank. The procurement plan sets forth those contracts which shall be subject to the Bank’s prior review. IDA will carry out sample post review of all other contracts. Procurement post review of contracts below the threshold will constitute a sample of about 15% (fifteen percent) of the post-review contracts in the project. Procurement post-reviews will be done on annual basis depending on the number of post-review contracts. 26. Initial procurement plan agreed with the borrower for the first eighteen months identifies the following as prior review contract packages: (i) each contract for goods, works and non- consulting services procured on the basis of International Competitive Bidding (ICB); (ii) all contracts for goods and non-consulting services estimated to cost equivalent of US$2,000,000 or more, regardless of the procedure; (iii) all contracts for works estimated to cost equivalent of US$6,000,000 or more, regardless of the procurement method applied; (iv) each contract for consultants’ services provided by a firm, estimated to cost the equivalent of US$300,000 or more; (v) each contract for services of individual consultants, estimated to cost the equivalent of $100,000 or more; (vi) all contracts for goods/works procured through Direct Contracting; (vii) contracts for consultants’ services procured through Single Source selection. For consultancy, all TORs need to be cleared with the Bank. The mentioned thresholds will be updated annually in the procurement plan based on the review of the capacity and performance of CPTU. 27. Single source selection of consultants’ services: Contracts that are envisaged as single source selection are described below along with justifications, mainly due to the need for continuity and consistency of deliverables. All of them were selected through competitive selection under PPRPII, except CIPS contract:  Capacity development consultant: Recognizing the strong need and importance of uninterrupted continuation of the program and its consistency of deliverables, the current contractual arrangement between IMED/CPTU and the consultant (FINEUROP Support) will continue as per the agreed revised terms of reference. ESCB will remain as nominated-sub-consultant to FINEUROP. Also, Bangladesh Institute of Management (BIM) will remain as the other sub- consultant. The main consultant will update the course materials/ curriculum and provide quality assurance for delivery of courses while ESCB and BIM will actually deliver the courses.  Management and operation of e-GP system: In light of the unique nature of the e-GP system that has been specifically developed for Bangladesh and taking into account the need for initial sustainability of such a high-tech system with possible enhanced features within the country operating environment, IMED/CPTU will maintain the existing arrangement with the consultant GSS America Infotech Ltd. (India) with Dohatech New Media Ltd. as its nominated sub-consultant for future management and operation of the system with revised TOR as agreed.  Core competence program: The Chartered Institute of Purchasing and Supply (CIPS), UK was hired on a single source basis under PPRPII as it is one of the only two such institutions that has such procurement accreditation program to develop skills in procurement planning, budgeting, supply-chain management, strategic procurement. BRACU-IGS was their local partner. Under the adjusted arrangement in PPRPII AF, given the need for continuity, BRACU-IGS will be jointly and severally liable with CIPS for the course delivery: CIPS role will be more for ensuring quality of deliverables while BRACU-IGS will actually deliver the courses.  M&E program: Taking cognizance of the experience gained by the existing firm (SRGB Bangladesh) in compiling and analyzing procurement data in reference to indicators, lIMED/CPTU is likely to continue the current arrangement with adjusted TOR to report mainly on the results framework with indicators where SRGB is conducting the M&E functions based on data from the agencies.  Behavioral change and communications consultancy: Bangladesh Center for Communication Programs (BCCP) has been providing the service under PPRPII, and under the PPRPII AF, the same arrangement will continue to ensure continuity of services and consistency of deliverables which is critical, and its benefit outweigh a competitive selection at this stage of the project. 28. Operating cost: The operating costs will include operations and maintenance of equipment and vehicles, costs of office and vehicle rental, costs of consumables, fuel, office utilities and supplies, bank charges, and advertising expenses but excluding the salaries of civil servants. D: Governance and Anti-corruption Action Plan 29. Objective: The Governance and Accountability Action Plan (GAAP) for the proposed Additional Financing of Public Procurement Reform Project II (PPRPII AF) is designed to further improve the overall risk management, enhance efficiency and development impact and ensure allocated resources are spent for the intended purpose. The GAAP will be updated as issues emerge. 30. GAAP Methodology: The draft GAAP has been developed by CPTU/IMED in consultation with the World Bank project team. The GAAP is based on an assessment of the governance risks, including fraud and corruption, and overall country governance context. Given that this is additional financing, the methodology is mainly based on the operational risk assessment findings in light of the already implemented PPRPII. In the implementation of PPRPII, no major governance issue has arisen in the last few years. Nevertheless, certain approaches are intended to be strengthened to ensure risk management and transparency with particular reference to complaints handling and disclosure of information. 31. Country Context: Bangladesh has been making modest progress in recent years in terms of international governance indices. While cases of coercion and collusion in public procurements still occur, the Government of Bangladesh is making efforts to bolster its legal framework to counter corruption, including the empowerment of an Anti-Corruption Commission, passage of an Anti-Money Laundering Act, joining the UN Convention against corruption, and approval of a National Integrity Strategy. These efforts have not yet yielded substantial gains, as institutions of accountability and country systems to deter corruption are not yet robust. 32. The Bank’s strategy for improving governance in Bangladesh, laid out in its 2011 -2014 Country Assistance Strategy, focuses on developing accountability mechanisms in public sector operations, especially through increased transparency in the procurement process. The Bank seeks to align with Government priorities in developing the means of accountability, especially strengthening of public financial management, procurement, support for local government, and use of information and communication technology (ICT) and the adoption of a Right to Information (RTI) regime. In particular, the Bank is working with the Government to improve budgeting practices among line agencies in conjunction with enhanced accountability mechanisms. The Bank is also supporting the Government to strengthen the role of the Parliamentary Accounts Committee to provide quality oversight of public finances; and improve the capacity of the Comptroller and Auditor General’s Office to provide reliable and timely audits. The Government’s public financial management program includes promoting greater public understanding of public financial management, and reforming the public procurement environment; which has been supported through two successive World Bank technical assistance operations. The procurement operations have already assisted the government with: mandating good public procurement laws and rules setting out the rules of the game; establishing a procurement policy unit; increasing the use of IT in the procurement process and practices, and developing procurement management capacity and mechanisms to measure performance of the system. The proposed additional financing, among others, is specifically focused on full coverage of e-GP within the next three years at the four target agencies (RHD, LGED, BWDB, and REB) and is expected to contribute significantly in mitigating the risk of collusion and coercive practices at decentralized local level for small value contracts. 33. Governance risks at IMED/ CPTU: The risks of fraud and corruption in the CPTU is small since this is the very unit, with the legal mandate for implementing sound procurement practices as enshrined in Public Procurement Laws and Rules. There is also no evidence of previous fraud and corruption concerns with this agency. CPTU has its own website where all public procurement policies and associated documents are disclosed (www.cptu.gov.bd). It also maintains the e-GP central server which is recognized as a critical milestone to enhance transparency of procurement process (www.eprocure.gov.bd). A few key attributes of CPTU includes: national e-GP web portal; on-line procurement monitoring system (PROMIS) with contract details including value of contracts; website with a list of nationally debarred firms; procurement capacity development information agency by agency; social accountability activities through Public-Private Stakeholders Committee (PPSC); formation of government- contractors forum; publication of contract awards above a specified thresholds, etc. 34. Nevertheless, as there are provisions of large number of trainings under component 1 of PPRPII AF including considerable foreign training at various levels, likelihood of inappropriate selections cannot be ruled out and this may pose certain risks. Rotation/ transfer/ non-retention of trainees at the institution are also a risk. In addition, use of PROMIS by the four target agencies with appropriate validations of data may also have certain risks. Recognizing this, following mitigation measures could be put in place:  Integrity of trainee selection process: The selection criteria for all levels of training to be shared and cleared with the Bank. For any training/ study tour/ academic course abroad, the participants list will require Bank’s no objection.  Retention of participants in long trainings abroad: All participants undergoing long term training and/or academic course abroad shall require to sign appropriate surety bond with their employer to serve the institution for a minimum period or provide a penalty as per GoB rule.  Integrity of contract data in PROMIS: The CPTU will carry out semi-annual check of actual data entry in PROMIS by the target agencies including actual number of contracts with values, with assistance of independent consultant. CPTU will share such report with the target agencies and the Bank. 35. Large part of the project fund relates to the four major consultancies, all of which are continuation of services under PPRPII (capacity development, management and operation of e- GP system; core competence program; and M&E). There is also a behavioral change communication and social accountability consultant. Given this nature, procurement associated governance risks are minimized. 36. Governance risks in four target agencies (RHD, LGED, BWDEB, and REB): Besides CPTU, the four target agencies will implement e-GP and procurement performance tracking system (PROMIS) at their respective agencies with a performance-based financing approach based on disbursement linked indicators (DLIs) upon meeting certain performance target as regards the above two parameters. Among this four target agencies, LGED is the most decentralized, followed by BWDB, and both deal with a large number of small value contracts (about 80 percent of contracts are less than $300,000 each). With the exception of RHD, these agencies are also implementing Bank financed projects. In 2006, there were incidences of few cases of misprocurement in couple of these agencies. The project will maximize the positive impact on governance through the introduction of e-GP by significantly improving the transparency of the procurement process with reduced delays combined with reducing coercive practices. A set of indicators to measure such improvement are included in the results framework which will be monitored to ensure that there is transparency and adherence to due process once the e-GP adopted. 37. The risk of fraud and corruption with this project is small in the four target agencies since the sums of procurement in those agencies are very small. Nevertheless, there is some risk relating to the overall governance at the decentralized level. For project expenditures, the use of the training might be abused and the wrong officers identified to participate, especially in overseas training. In addition, trainee selection may have some risks similar to described for IMED/ CPTU above. Taking cognizance of this, a number of risk mitigation approaches have been proposed that, among others, include the following (details in GAAP Matrix):  Internal integrity. Integrity mechanisms (e.g., public information disclosure, vigilance, grievance redress mechanism), while in place, are still not fully used and need substantial improvement to demonstrate their effectiveness.  Transparency in procurement process and contract management: Extensive disclosure of bid invitations and contract award information combined with disclosure criteria for bid evaluation will improve the transparency of the process. Concurrently, enforcement of the rules of the game through e-GP will contribute to minimize collusive and coercive practices.  Citizen oversight: Either very few complaints or no grievances of complaints reported which could be indication of inadequate functioning of grievance redress mechanism and/or issue of poorly disclosed project information.  Internal accountability: Trainees selection criteria by CPTU and four target agencies need to be disclosed. The M&E framework has been developed under PPRPII AF needs to become fully operational to serve its purpose of improving effectiveness of performance.  Integrity of trainee selection process: Similar provisions as described for IMED/ CPTU.  Retention of participants in long trainings abroad: Similar provision as for IMED/ CPTU. 38. Implementation of GAAP: The overall responsibility for the GAAP implementation will rest with CPTU and four target agencies. The Director General, CPTU will provide overall guidance whereas the agencies will implement their own actions based on alerts. Quarterly report will include status of governance matrix regularly. Attachment: Disbursement Linked Indicators (DLIs) for Four Target Agencies I: Improving procurement performance by using e-GP in four target agencies DLI DLI- Target (No. DLI- Target DLI- Target DLI- Target DLI- Target Protocol of bids)/ (No. of bids)/ (No. of bids)/ (No. of bids)/ (No. of bids)/ Value(US$M) Value(US$M) Value(US$M) Value(US$M) Value(US$M) DLI Period Period 0* Period 1 Period 2 Period 3 Period 4 (July 1, 2012 – (July 1, 2013 – (January 1, 2014 (July 1, 2014 – (July 1, 2015 – June 30, 2013) Dec. 31, 2013) – June 30, 2014) June 30, 2015) June 30, 2016) DLI# 1: Minimum Definition: All bids number of bids invited invited under national in NCB using e-GP by competitive bidding each of the four target (NCB) across the target agencies agency regardless of location of its procuring entities (HQ, districts, sub-districts) will be eligible. Target agency means RHD or LGED or BWDB or REB as appropriate. Source/ Verification: Target agency’s e-GP/ PROMIS cell reconciled data/ reports based on actual invitations of bids by various procuring entities. Procurement Monitoring Coordinator of the target agency will report DLIs to CPTU for validation by IDA. DLIs will be verified by an independent consultant contracted DLI DLI- Target (No. DLI- Target DLI- Target DLI- Target DLI- Target Protocol of bids)/ (No. of bids)/ (No. of bids)/ (No. of bids)/ (No. of bids)/ Value(US$M) Value(US$M) Value(US$M) Value(US$M) Value(US$M) by the CPTU. RHD 100/0.20 400/0.20 1000/0.20 2400/0.20 3200/0.20 LGED 100/0.30 400/0.30 1000/0.30 2400/0.30 3200/0.30 BWDB 60/0.19 120/0.19 300/0.19 720/0.19 960/0.19 REB 8/0.06 15/0.06 40/0.06 96/0.06 128/0.06 II: Improving procurement performance monitoring using PROMIS by four target agencies DLI DLI- Target (No. DLI- Target DLI- Target DLI- Target DLI- Target Protocol** of bids)/ (No. of bids)/ (No. of bids)/ (No. of bids)/ (No. of bids)/ Value(US$M) Value(US$M) Value(US$M) Value(US$M) Value(US$M) DLI Period Period 0* Period 1 Period 2 Period 3 Period 4 (July 1, 2012 – (July 1, 2013 – (January 1, 2014 (July 1, 2014 – (July 1, 2015 – June 30, 2013) Dec. 31, 2013) – June 30, 2014) June 30, 2015) June 30, 2016) DLI# 2: Minimum Definition: Monitoring number of tenders of procurement steps entered into published forward for all bids PROMIS report, with invited under national procurement competitive bidding performance indicators (NCB) during the covering various corresponding period of stages from bid the respective DLIs invitations to award of across the target agency contracts regardless of location of its procuring entities (HQ, districts, sub- districts) or . Target agency means RHD or LGED or BWDB or REB as appropriate. Source/ Verification: Target agency’s e-GP/ DLI DLI- Target (No. DLI- Target DLI- Target DLI- Target DLI- Target Protocol** of bids)/ (No. of bids)/ (No. of bids)/ (No. of bids)/ (No. of bids)/ Value(US$M) Value(US$M) Value(US$M) Value(US$M) Value(US$M) PROMIS cell reconciled data/ reports based on actual invitations of bids by various procuring entities. Procurement Monitoring Coordinator of the target agency will report DLIs to CPTU for validation by IDA. DLIs will be verified by an independent consultant contracted by CPTU. RHD 200/0.20 800/0.20 1200/0.20 2800/0.20 3600/0.20 LGED 200/0.30 800/0.30 1200/0.30 2800/0.30 3600/0.30 BWDB 120/0.19 240/0.19 360/0.19 840/0.19 1080/0.19 REB 16/0.06 30/0.06 45/0.06 112/0.06 144/0.06 * Disbursement will be on reimbursement basis of eligible expenditures as reported in IFRs. ** Proportionate Disbursement will be admissible against partial achievement of DLI targets with the minimum achievement of 60% of the target value with the exception of Period 0 target for which no minimum threshold is applicable. Unmet portion of any partially achieved DLI target will be eligible for disbursement if met within the immediate next target date. . GAAP Matrix Issues / Risk Mitigating Actions to be taken Agency Timeline Early Warning Responsible Indicators Fraud and Corruption Issue of internal Carry out annual review of vigilance, public CPTU and Four Annually Lack of disclosure of public information integrity information disclosure, internal controls, suggestion Target Agencies Delays in procurement audit and complaint mechanism to suggest improvements of internal integrity mechanisms. Adopt transparent and effective suggestion and CPTU and Four By start of the Absence of reporting on grievances complaint mechanism ensuring annual reporting on Target Agencies project redressal and complaints handling. complaints received and actions taken Absence of complaints even though repeated rebidding occurs Issue of Set-up systems to prevent fraud and corruption CPTU and Four Check-list of red flags not provided in transparency in during bidding process and contract Target Agencies tender evaluation reports procurement implementation: Low number of bidders process and (a) Adequate disclosure of procurement plan and Continuously Significant gaps between bids and effectiveness of invitation for tenders; engineer’s estimates contract (b) Mainstream use of red flags to identify risk of Prior to 1st bidding Absence of systematic follow up on management fraud and corruption in tender evaluation bidders’ complaints (c) Implement e-Procurement As per agreed plan Unwarranted payment delays High number of major observations in ex- post procurement reviews. Weak Accountability Inadequate citizen Enhance a Suggestions and Complaints Mechanism Four Target 1st year of project No suggestions and comments from oversight to cover all aspects of project implementation and Agencies implementation project stakeholders involve project stakeholders at local level Adopt disclosure policy and disclose project 1st year of project Project information not updated information on website implementation Set up board signs with contract information as part 2nd year of project No board signs at project roads of social accountability actions implementation Inadequate Obtain Bank’s clearance on the selection criteria for CPTU/ Four Target Before No comments from project stakeholders integrity of traineeall trainings Agencies commencement of selection process training Retention of Adopt surety bond to serve the agency for a CPTU/ Four Target Before Reluctance in signing the bond participants in long minimum period and/or provide penalty as per GoB Agencies commencement of Issues / Risk Mitigating Actions to be taken Agency Timeline Early Warning Responsible Indicators trainings abroad rule training or penalty before leaving agency Integrity of Check validity of actual contract data entry both for CPTU/ independent Semi-annual Signs of numerous wrong or manipulated contract data in numbers and value of contract consultant entry PROMIS IBRD 35508 89° 90° 91° 92° Tis ta R. Panchagar BANGLADESH PUBLIC PROCUREMENT PANCHAGAR REFORM PROJECT II THAKURGAON LA Thakurgaon LM 26° 26° NILPHAMARI O N Nilphamari IRH AT Lalmonirhat R. utra KURIGRAM DINAJPUR Rangpur map Kurigram DISTRICT CAPITALS DISTRICT BOUNDARIES Brah Dinajpur RANGPUR DIVISION CAPITALS DIVISION BOUNDARIES NATIONAL CAPITAL INTERNATIONAL BOUNDARIES Gaibandha GAIBANDHA JOYPURHAT Joypurhat SERPUR NAOGAON Sunamganj 25° 25° Serpur Jamalpur NETROKONA SYLHET Netrokona SUNAMGANJ Naogaon BOGRA Sylhet Jam JAMALPUR Bogra Mymensingh SYLHET una NOWABGANJ RAJSHAHI MYMENSINGH R. Nowabganj RAJSHAHI DHAKA Kishorganj MOULVI BAZAR Serajganj Moulvi Ga HABIGANJ ng es Rajshahi Natore TANGAIL KISHORGANJ Bazar R. SERAJGANJ NATORE Tangail Habiganj . aR ghn Me PABNA GAZIPUR Pabna Gazipur NARSINGDI BRAHMAN 24° 24° BARIA INDIA KUSHTIA Narsingdi Brahmanbaria Kushtia Manikanj DHAKA MEHERPUR MANIKGANJ Meherpur RAJBARI Rajbari DHAKA NARAYNGANJ Ma dh Naraynganj Chuadanga u ma CHUADANGA Faridpur ti Jhenaidah MUNSHIGANJ Pa dm Munshiganj COMILLA R. Magura FARIDPUR a JHENAIDAH R. Comilla MAGURA HARI INDIA SARIATPUR CHANDPUR RACH MADARIPUR Sariatpur Chandpur Jessore Narail Madaripur Khagrachhari KHAG JESSORE NARAIL GOPALGANJ 23° 23° KHULNA Gopalganj Feni LUXMIPUR Luxmipur FENI BARISAL NOAKHALI Khulna Noakhali Satkhira KHULNA Barisal M PEROJPUR Bhola eg Bagerhat Jhalukathi SATKHIRA C H I T TA G O N G Rangamati hn aR JHALUKATHI Perojpur . BAGERHAT RANGAMATI li R. BARISAL CHITTAGONG na phu Kar Patuakhali BHOLA PATUAKHALI Chittagong Borguna Bandarban BARGUNA 22° BANDARBAN COX’S BANGLADESH MYANMAR Dhaka BAZAR Cox's Bazar INDIA 0 25 50 75 100 Bay KILOMETERS of MYANMAR Bay of Bengal 21° This map was produced by the Map Design Unit of The World Bank. 21° The boundaries, colors, denominations and any other information Bengal shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. SRI LANKA 90° 91° 92° MAY 2007