71398 Procurement and Service Delivery An Overview of Efforts to Improve Governance of Public Procurement at Local Levels in South Asia Table of Contents Acknowledgements 2 Abbreviations and Acronyms 3 List of Boxes and Figures 3 Introduction 4 Part One: Challenges of spending effectively at the local level 6 Local Level Procurement 6 Part Two: Taking the debate forward: Pilot Activities supported under the Norwegian Trust Fund 9 Changing the Nature of Contracting – Value for Money in Community Procurement 10 Expanding Auditing – Activating Social Audits in Orissa 12 Expanding Oversight - Third Party Monitoring and the Role of Local Media 14 Changing the Rules – Improving Procurement Practices at the Local Level in Pakistan 14 Part Three: Looking Ahead – Some Key Challenges 17 Getting the ‘Mix’ Right 17 Supporting Relations not Capture 17 Cooperation and Cooptation 18 Sequencing Community Engagement 18 What to do when local governments do not want to be partners 18 Conclusion 19 References 20 1 Acknowledgements This activity was supported by the Norwegian Governance Trust Fund on ‘Procurement and Service Delivery: Monitoring Procurement Outcomes’ which was implemented by the South Asia Agriculture and Rural Development Unit, in collaboration with the South Asia Procurement Hub of the World Bank. The task was jointly managed by a team led by Asmeen Khan, Joel Turkewitz and Benjamin Powis. Partners in this activity include The Centre for Youth and Social Development in Orissa, The Water and Sanitation Program in Pakistan, Mass-line Mass Centre in Bangladesh, and the South Asian Procurement Hub – World Bank. The World Bank Institute assisted in the development of ‘International Case Studies’, and capacity building activities in partnership with Administrative Staff College of India, Yashada, and the Centre for Good Governance. This overview paper has been prepared by Joel Turkewitz and Benjamin Powis. Cover photo by Sanchita Ghosh Cover design by Colorcom Disclaimer: The �ndings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its af�liated organizations, or to members of its Board of Executive Directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. 2 Abbreviations and Acronyms CBO Community Based Organization CDD Community Driven Development CSO Civil Society Organization CYSD Centre for Youth and Social Development LGSP Local Governance Support Project NREGA National Rural Employment Guarantee Act OREGS Orissa Rural Employment Guarantee Scheme TMA Tehsil Municipal Administration UP Union Parishads List of Boxes and Figures Box 1: Where Communities Succeed 11 Box 2: Activating Social Audits in Orissa 13 Box 3: Analysis of Local Media Monitoring in Bangladesh 15 Box 4: Procedure and Practice: Local Level Procurement in Pakistan 16 Figure 1: Modalities of Civic Engagement in Procurement 10 3 Introduction O ver the past decade, the overly centralized governance structures commonly found across South Asia have begun to change, contracting practices at local and community levels is also fundamental for the development of trust in government since public procurement with program and �scal responsibility being has often been at the center of public sector devolved to local level government authorities mismanagement and the wastage of public and community-based organizations. This has money due to corrupt practices. led to greater participation of ordinary citizens Despite its importance, there exists no clear model in governance and public decision-making. for how to establish effective public procurement The move to localize decision-making creates practices at local levels. Traditional approaches enormous opportunities for increasing the to improving procurement – standardizing rules effectiveness of public spending since it creates and professionalizing the procurement function, the potential for establishing direct accountability emphasizing competition and enforcing strict of governance mechanisms to citizens. It also compliance with regulations – may not yield raises a number of signi�cant challenges in the expected results given the environmental ensuring that public funds are spent effectively constraints caused by thin private sector at the local level, and provokes important new markets, low capacity, and daunting dif�culties questions regarding the manner by which in monitoring a small number of transactions governments can maintain oversight over the spread across an enormous number of locations. quality of assets. Enabling direct participation – the driver of many The movement of funds to community levels has improvements in government performance at the occurred concurrently with changes in the role of local level – may similarly have restricted impact governments in the provision of public services. due to the technical nature of many dimensions As governments have extended the scope of of contracting. There exists very limited literature their work increasingly down to community levels on the topic, with a notable scarcity of conceptual they have at the same time become less involved frameworks to analyze the challenge or empirical in the direct provision of services or the creation research �ndings to guide policy makers and of assets. The situation that existed across South practitioners. Asia ten years ago – with the government acting Starting in 2007, the World Bank, with support from as the monopoly provider of social services and a Norwegian Government Trust Fund, undertook the direct builder of infrastructure – has changed an innovative project that aimed to support efforts dramatically, as governments increasingly on improving public procurement outcomes at the contract with private sector and other parties to local level. The program was designed to build do public work. This evolution in the role and upon on-going innovations in the region and function of government has made public sector support new approaches and thinking on how performance strongly dependent on the ability governments and civil society organizations can of the state to initiate and manage contracts work together to promote ef�cient and effective effectively and the ability and skills of the public spending at the local level. contracted parties to deliver. This paper provides an overview of the activities The two concurrent developments – the supported under the project, with the aim of decentralization of spending authority and contributing to a broader perspective on improving service responsibility and the rise of contracting – governance and service delivery at the local level. combine to situate enhancing public procurement The paper is divided into three parts. In Part One performance at local and community levels at the we explore the challenges of spending money core of the governance challenge of improving effectively at the local level, with a special focus public services. Moreover, establishing effective on the governance challenges that exist in public 4 procurement. In Part Two, we explore different effectively and sustainably when formal approaches to addressing those challenges accountability structures are shaped to by discussing innovative work that has taken encourage and include the results of non- place with the support of the Project in the areas traditional mechanisms for oversight and of regulation, contracting, transparency, and monitoring. accountability. In Part Three, we analyze some • Increasing transparency in regard to broader themes and key questions that remain procurement processes and outcomes is a to be addressed while developing a strategic key factor in driving improved procurement research and operational agenda around local outcomes at local levels. The link between level procurement. enhanced transparency and strengthened The key themes arising out of this discussion can accountability is strongest if there has been be summarized as follows: careful consideration of what information is needed, by which audiences, in what form, • Public procurement procedures can be and with what frequency. The wave of new developed for use by local-level governments right to information laws that have been that encompass core procurement principles created in South Asia creates an enormous and reflect the capacity of public and private opportunity to increase access to information actors at the local level. Suitable practices and non-governmental groups have a critical that generate value for money can be de�ned role in making this information relevant and through dialogue between government and useable by communities and stakeholders. core stakeholders and can be shaped to maximize reliance on the resources that exist • Improving procurement outcomes at the local at community levels. level requires leadership from government as well as non-governmental parties. Reforms • Community engagement in procurement are most sustainable when leadership comes can signi�cantly enhance accountability for from a coalition of groups and includes performance. Enhancing accountability for inspirational, technical, and transactional local procurement is accomplished most dimensions. 5 Part One: Challenges of Spending Effectively at the Local Level T he movement of funds, functions, and functionaries away from central governments to local authorities is a phenomenon that has provision of services and the creation of assets. Reporting and oversight practices and rules similarly develop over time as accountability been witnessed across South Asia and the rest arrangements expand to ensure that money is of the world. Within this dynamic, sub-national spent in accordance with budgets. Of�cials in governments have sometimes been vested ministries and agencies become increasingly with responsibility for executing programs skilled and experienced as they acquire the (deconcentration) while at other times they expertise required to perform the complex task have been empowered to make decisions about of spending public money. spending priorities and the authority to implement their own budgets (decentralization). Shifts in In sharp contrast to historical norms, local the locus of decision-making and responsibility governments are often expected to make for public sector activities has been driven by a quantum leaps in their ability to spend money. broad range of factors – one of which has been The introduction of new decentralization policies, the expectation that the shift will engender more often enacted by executive action taken in capital responsive and effective use of public monies and cities, can exponentially increase the amount authority. Reducing the space between decision- of money local governments are expected to makers, implementers, and the communities they spend and the volume of services that they are serve is seen to be a fundamental step towards responsible to provide. As would be expected in more accountable government that better serves these circumstances, local governments often the needs of the people. do not have systems designed to spend large volumes of money or staff with the necessary The extent to which empowering local skills and expertise. In such a situation, the governments with greater �scal authority and mechanical task of spending money effectively responsibility generates better services is can be overwhelming threatening to preclude the determined by the ability of local governments possibility of better service delivery from the very to spend money effectively. This is a deceptively start. dif�cult task. At the most mechanical level, budgets are complicated documents and the processes required to implement an approved Local Level Procurement budget, or to spend a given amount of money in a year in the ways prescribed by regulations, is Extensive use of public procurement is vital to an enormous task that is beyond the capability the spending strategies of local governments of even many central governments. To translate and their ability to meet their expanded service spending into the provision of services and the responsibilities. Contracting with private sector achievement of policy objectives complicates the businesses for the provision of services or the task even further since it requires that procedures creation of infrastructure assets enables rapid to spend money result in actions that deliver expansion in the scope of government-sponsored services to the public. activity and can allow the government to access skills and expertise that would otherwise take Historically, governments build up their systems years to acquire. for spending money and delivering services over time, with system sophistication growing Rede�ning the role of local government – as economies and budgets expand. Spending from provider to contractor – carries with it rules and regulations evolve in order to support considerable challenges. In this section we and enable ever larger volumes of money �rst review some of the key governance issues to move out of public treasuries to fund the around procurement, and then look at the unique 6 issues that arise when contracting takes place at markets. In the case of local level procurement, local levels. markets are often ‘thin’ with a small number of suppliers operating in a local area. The absence of Recent years have seen a growing appreciation completion restricts the ability of the government of the close association between public to get a “good deal� at the same time that the procurement and corruption, with procurement weaknesses of the private sector restricts the identi�ed as the ‘area of government activity that capacity of contractors to provide services and is most vulnerable to corruption’ (OECD 2007, perform contacts. Campos et al. 2006, Transparency International 2006, Søreide 2002). The link between corruption The third major set of challenges of local level and procurement is based on a number of factors, procurement relates to monitoring. The vast including: the high degree of discretion that majority of local level contracting takes place public of�cials, politicians, and parliamentarians in rural localities that are often hard to access, typically have over public procurement programs; and which are spread across large geographic the amounts of money involved especially in areas. Moreover, individual assets tend to be high-value transactions; and the fact that public comparatively small in �nancial value, yet the oversight and control systems are not designed aggregate value of multiple works in a state, with commercial activity in mind. province or project area can be signi�cant. Monitoring these diffuse processes requires a Local level procurement does not offer all of the tremendous dedication of resources, which often same corruption inducements since contracts vastly exceeds the capacity of accountability are often relatively modest in size (generally systems to undertake auditing or physical below US$10,000). At the same time, local inspections. Even if accountability resources level governments must deal with a range of were available, the cost of oversight would often governance issues across the entire procurement exceed the value of the individual contract, cycle that can constrain performance. creating an unsustainable cost structure for public activities. First, the technical capacity of local level actors – be it communities, local governance institutions The factors identi�ed above shape the overall or local bureaucrats – tend to be limited when governance context for public procurement at local it comes to interpreting and applying complex levels and present a sobering picture. Accessing procurement procedures. Overcoming this people, expertise, and skills from the private capacity gap requires mass training, as the sector is essential to most local governments number of actors involved in implementation if they are going to be able to be able to ful�ll at the local level is often very large. Capacity their expanded functions. At the same time, the development is a long term processes, yet the elements which are widely understood to be demand for asset creation requires short-term essential for achieving good value for money in solutions to ensure that established practices are procurement are largely missing in many local- followed for the use of public funds. level government structures. Reliance on public procurement in environments that appear to be Secondly, the nature of the market in which ill-suited for effective outcomes is especially local tendering takes place, is an important troubling given the potential for badly organized factor that has received less attention to date. and supervised procurement to engender The assumption of active, competition among corruption and pervert the development of both suppliers is one of the key principles of standard public and private sectors. Given the nature of procurement processes that seek to obtain value the challenges, high-performing procurement for money through the operation of competitive systems at local levels are unlikely to resemble 7 smaller versions of central procurement new partnerships and arrangements among systems but instead are likely to be innovative government, civil society, and the private sector constructions that serve to build upon the that serve to modify the distribution of power and strengths of local governments (greater access public authority. We turn now to an examination to communities) and minimize dependency on of the emerging governance models in local level those public resources that are in the shortest procurement – the heart of the work undertaken supply. These innovations are likely to de�ne under the Norwegian Trust Fund. 8 Part Two: Taking the Debate Forward: Pilot Activities Supported under the Norwegian Trust Fund C onstructive responses to the governance challenges around public procurement at the local level require changes in public sector are joint efforts on the part of government and civil society that feature greater inclusion of non-governmental participation in public behavior, community engagement, and the practices and behavioral adaptations on the structure of relations among the government, part of both government and non-governmental the community, and the private sector. The last organizations. decades have seen a growing interest in “social The second key message emerging from these accountability mechanisms� that are designed cases is that effective collaboration between to enhance the active participation of citizens in state and society is rarely a linear, or planned, governance processes. Civil society organizations process. Rather, it is one that builds on the have played a key role in experimenting with opportunities (or entry points) created by social these new approaches to governance, which and political changes or policy initiatives, and have been driven by an ever growing number of integrates these over time into a sustained innovative practices across the world (Arroyo and process of systemic reform. The importance Sirker 2005). Procurement remains a relatively of creating space for learning and change is new area of governance for civic engagement, demonstrated repeatedly in the case studies as but one that can have important bene�ts for both is the need for leadership in creating that space government and citizens. and authorizing change. Another important In order to develop broader understanding of theme that emerges relates to the importance of the dynamics of civil society engagement in information. Innovative provisions that establish procurement, the World Bank supported the broad based ‘right’ to access information can documentation of eight international cases have an important catalyzing effect in terms of studies with the objective of further understanding encouraging constructive collaboration between the diverse mechanisms of engagement as state and society. well as the dynamic process of state-society It is equally important to note what the cases do collaboration over time. The cases were drawn not reflect. None of the eight cases center around from Latin America, South Africa and East Asia stand alone actions by either the government and cover a range of different sectors and levels or civil society – such as government efforts to of government, from national to local (see ‘Civic enforce compliance through traditional structures Engagement in Procurement: Eight International or civil society efforts to act as solitary watchdogs Case Studies ’ in this series). on the procurement process. The best examples While the focus of these case studies is on that we have been able to locate of sustained procurement, in most cases ‘procurement work’ improvement in procurement at local levels is just one part of a broader process of improving feature hybrid forms of governance arrangements governance and transparency in public sector built upon joined and collaborative efforts and expenditure. These case studies underline appear to be relatively far removed from static the array of mechanism upon which effective roles – like demand or supply of governance. collaboration between state and society can Many of these cases contain impressive evidence be based, including autonomous research and of impact in terms of reduced contracting costs, monitoring, proactive disclosure of information as well as time and quality of �nal delivery. In for public access, state-civic partnerships in the most case, however, quanti�able evidence of implementation of public expenditure decisions, impact is dif�cult to assess which makes the task and engagement of civic actors to support the of advocating for the need for civic engagement process of reform. Most importantly, they also in procurement processes more complex. While reveal that most constructive engagements 9 monetary assessments of impact are important level procurement. While the process driven for policy advocacy, citizen engagement in cases studies highlight the potential for effective governance processes tend to be influenced state-society collaboration for development, they more by tangible outcomes in terms of quality. also highlighted that each of the multiple forms of engagement have different drivers and success In most countries, civic engagement in factors and that scaled-up these innovations procurement is fairly nascent. As such, ‘impact’ will require a thorough understanding of the needs also to be understood in term of the environmental contexts in which they operate. As contribution towards a long term and sustainable such, it is important to emphasize the fact that change in state-society relations based on multi- these pilots explore the challenges and potentials stakeholder models of delivery. In considering of four aspect of civic engagement, as a part of a these new scenario, it is important to underline long term approach that would seek to support a the fact that civil society can operate effectively combination of all of these as part of a new model alongside government, but cannot be a substitute of local level procurement. for government or the formal system that support formal accountability. As such, civic engagement in local level procurement are most effective Changing the Nature of where they modify the distribution of public Contracting – Value for Money authority and the manner in which governmental in Community Procurement power is used. South Asia has seen a rapid proliferation of large Taking this broader analytical perspective, a scale experiments based on the principles of tentative analytical framework is presented below community driven development (CDD), resulting which situates some of the key typologies of in a signi�cant increase of funds allocated for local partnership between civic actors and the formal asset creation by community based organizations procurement system (�gure 1). In term of the (CBOs) of various kinds (Mansuri and Rao 2004, mode of engagement, the civic actors can be De Silva 2000). Has this new development engaged either as active ‘participants’ who are trajectory resulted in improved outcomes? As part conferred direct implementation responsibilities of the project, innovative research was carried or ‘collaborators’ who play an indirect role in out that aimed to assess the quality of both asset supporting the process. Similar, engagement can creation and the processes that are followed. The be understood to take two forms, either at the study, which was carried out in four states in India state of implementation or monitoring. (Box 2), highlights the signi�cant achievements of community driven procurement in terms of This tentative framework provides a useful reducing costs and contributing to the long term starting point to contextualize the design of the sustainability of local assets. The study also pilot activities that were supported under the shows that the performance of CBOs in terms Norwegian Governance Trust Fund, which seek of ‘standard procurement principles’ is good in to further the debate on new approaches to local Figure 1: Modalities of Civic Engagement in Procurement Mode of Engagement/ Participant Collaboration Arena of Engagement Implementation Community Based Procurement Changing the Rules of Procurement Monitoring Community Based Auditing Third party oversight 10 Box 1: Where Communities Succeed In their review of eighty-four local infrastructure works that have been implemented by four different state level programs in India, Kumar et al. (this series) present new evidence of the comparative advantages of community driven procurement. Using a 1-5 rating scale tool of performance indicators at various stages, a clear trend emerges as shown in the �gure below. 6 5 4 3 MP DPIP 2 TN ERP AP IKP 1 Kerala PRI 0 s t ns rs s n e n en es es tio ur io de tio et em os oc oc ua id ca pl cl Pr Pr rB al ur om ifi is Ev oc n iry ec D fo C tio Pr d Sp al qu ch nd an ca ci g En ar ta d er in ifi s ile Se nt l m es du en g a e in m oc t et he em Id ke dl Aw Co D Pr an Sc d ar ag ee g nd M d H in an d ar N la op an d M an ca el g ct ev n g ni ct tra ni rin ch tra D an on de Te on Pl C n C Te From this data, it is possible to draw the following conclusions: 1. Communities excel in their performance at the need assessment and planning stages. 2. Performance in terms of managing technical bids according to prescribed processes tends to be poor. 3. Despite poor technical performance, outputs in terms of contract management and completion are high. 4. The ‘relationship based procurement’ can improve outcomes through a signi�cant reduction in cost, and can contribute to the sustainability of public assets. See ‘Community Driven Procurement: A Value for Money Analysis, In this series 11 terms of need assessment and outcomes, but that This innovative assessment tool suggests adherence to technical principles of procurement the need to incorporate new types of �lters to planning are often weak. ensure that communities are ready to assume a more proactive role in implementation. Equally The �ndings of this study have provided a important, the study highlighted the some of signi�cant contribution to the on-going debate the innovative ‘supply side’ mechanism that can surrounding the reliance on formal standards support localized transparency including ‘parity of procurement monitoring in the context of charts’, grievance redressal mechanisms and CDD projects. In particular, it shows how limited integrated planning processes. capacity and thin markets do not necessary imply malpractice. Community representatives Expanding Auditing – Activating reported that, at times, getting three reliable quotations was dif�cult. Moreover, their informal Social Audits in Orissa relations to the suppliers often enabled them to Devolving discretionary power to local level actors negotiate between different suppliers to arrive as – be it local governance institutions or community cost effective solutions. based organizations – is a double-edged sword. Just as there are immense opportunities there are While ‘standard’ procurement frameworks tend to also signi�cant threats. These include the danger view these types of informal relations as collusion, that locally powerful actors will ‘capture’ local it is also possible to argue that ‘relationship resources by dominating decision-making and based procurement’ can succeed where formal excluding the poor and powerless. More benign, processes fail (see Erridge and Greer 2002). but no less threatening, is the lack of capacity The broader objective of CDD programs is to of local actors to perform the tasks expected develop institutions and capacities at the local of them, which could also result in distorted level – or social capital. Just as social capital can implementation at the local level. contribute to the deepening of democracy (Fung and Wright 2003) this study highlighted the extent The limited capacity of centralized agencies to to which the strength of local social networks can monitor processes of project implementation positively affect procurement outcomes. across rural localities demands new approaches to monitoring. One of the most innovative of these Regularizing these kinds of informal processes is the concept of social audits (Goetz and Jenkins could have potential bene�ts in terms of 2001), or participatory monitoring (Mondal and improved outcomes. However, considering Dutta 2007), as an important addition to the the scale on which many CDD projects are concept of community driven development. In the now being implemented, it is also an immense broadest sense, this approach entails the parallel challenge. While the overall quantum of funds for development of institutional arrangements that local asset creation that is channeled to CBOs are autonomous from the system of community is increasingly signi�cant, the positive potential level implementation, and the establishment of of relationship based procurement needs to be semi-formal powers of sanction and veri�cation. assessed against the potential for highly localized malpractice, commonly termed as ‘elite capture’. While there is little doubt that communities One of the signi�cant contributions of this study possess a comparative advantage in terms has been to initiate the discussion on the types of of monitoring local procurement processes, it indicators that can be used to preempt ‘capture’, is equally important to recognize the need to including assessments of levels of participation, support these ‘informal’ systems with formal institutional capacity, and the extent to which civic mechanisms of oversight. In the Indian state of works are designed around ‘felt needs’. Andhra Pradesh, community based monitoring 12 Box 2: Activating Social Audits in Orissa The National Rural Employment Guarantee Act (2005) is an ambitious and visionary step by the Government of India towards ensuring the fundamental right to life with dignity in the rural areas of India. Besides guaranteeing every eligible household one hundred days of employment at a minimum wage, it gives citizens the right to audit the process of implementation through social audits. Social auditing is an ongoing process through which the potential bene�ciaries and other stakeholders of an activity or project are involved at every stage: from planning to implementation, monitoring and evaluation. This process helps in ensuring that the activity or project is designed and implemented in a manner that is most suited to the prevailing local conditions, appropriately reflects the priorities and preferences of those affected by it, and most effectively serves public interest. With a view to realizing these provisions, the World Bank supported the Centre for Youth and Social Development to implement a pilot research project in six villages in Orissa, with the objective of developing guidelines and processes for the sustainable implementation of social audits in the state. The key �ndings of this project can be summarized as follows: • A community-based process requires the support of the community. While the focus of much of the current experimentation has been on exposing irregularities – or ‘�nger pointing’ – the long term success of this process will depend on the judicious management of opposition or dissent. As such, rather than looking back to past failures, an endogenous process of social auditing needs to focus on future civil works based on a common understanding of the bene�ts this will yield • Social auditing cannot be the answer to poor implementation capacity. The distinction between auditing and implementation is often overlooked in the attempt to create a new �x to persistent problems. Many of the ‘malpractices’ identi�ed in these pilots were rooted in the lack of awareness among local government functionaries or blockages in higher level of administration. While social auditing can identify these issues, solving them requires attention to strengthening the systems of implementation. • Technical support needs to be planned in a way that supports long-term sustainability. The role of the local development agency is vital in the initial stages of establishing effective social audits. Understood as an incremental process, this role needs to be planned in a way that can support the process until such a time when it can be withdrawn. Support agencies can also play a key role in developing and rede�ning information products that can enable communities to perform their role as auditors. These include locally appropriate material that demystify the procurement process (see Community Procurement Manual) and suo moto information disclosure. See ‘Activating Social Audits in Orissa’: in this series has been supported by a web-based monitoring state level society. Another important means to and information system as part of the National ensure formal support for informal processes is Rural Employment Scheme. This portal enables through randomized evaluations by accredited citizens to access ‘of�cial’ data on the scheme as auditors in the context of regularized community well as access reports from social audits, which based monitoring systems. are implemented through a semi-autonomous 13 As the pilot study supported under this activity of formal monitoring. Most specialist non- showed (Box 3), implementing community based governmental actors are based at the national auditing as part of a state wide program requires level and have limited reach to the local signi�cant inputs in terms of human resources level. Harnessing the potential of local non- both to support local level audit institutions, as well governmental organizations, on the other hand, as long term oversight over the implementation would often require signi�cant capacity building process at a higher level. In the initial stages, to enable effective monitoring, and scaling this requires clear guidelines to be developed, up this type of local engagement requires the as well as a strong commitment by government establishment of national or provincial networks to institutionalize auditing as part of a long-term or coalitions. In addition, engaging a broader set strategy to support positive collaboration between of non-governmental actors in process monitoring the state and civil society. requires the development of simpli�ed manuals on procurement that are designed with local Expanding Oversight - Third audiences in mind. Party Monitoring and the Role In order to explore these issues further, the World of Local Media Bank supported a pilot study in Bangladesh that set out to explore the use of local journalists as A third type of new initiative in civic engagement is ‘third party monitors’ of procurement by local commonly referred to as ‘third party monitoring’. government institutions. As one of the �rst This is a term that is widely used in current initiatives of its kind, the pilot set out to develop literature on social accountability. There is, insights into the types of training that are required however, a paucity of both exacting de�nitions of to support journalists in carrying out investigative the various forms of third party monitoring and the reports of this program and, to assess the evidence of the challenges in implementing this effectiveness of reports in terms of improving as part of new governance approaches. Arguably awareness and, ultimately development the most challenging aspect of this is the degree outcomes (Box 4). of autonomy of the ‘third party’ and the extent to which this determines their effectiveness in Changing the Rules – Improving mediating between provider and the bene�ciary. Procurement Practices at the Much of the current understanding of ‘third party’ Local Level in Pakistan monitoring derives from the growing phenomenon The fourth major set of innovations relates of specialist non-governmental actors that to improvements of local level procurement perform the role of watchdogs at the national or regulations. The �rst of these is to simplify even international level. Over the last few years procedures in a way that reflects both the capacity the role of the non-state actors in monitoring of local actors and the speci�c context in which governance processes, and in particular local level procurement takes place. The second, corruption (Holloway 2006, UNDP 2008), has and most challenging, is to formalize the role of increased signi�cantly as part of a broader shift civil society in the procurement process. towards enhancing accountability in the public sector. The role of ‘third party’ actors in supporting Recently a number of cases have emerged across broader concerns relating to implementation the world where state and non-state actors have processes and optimizing outcomes has received worked together to support the development of far less attention to date. improved governance standards and procedures at the supply side as partners in the reform Effective third party monitoring at the local level process. Among the best known examples of is hindered by many of the same challenges this is the application of ‘Integrity Pacts’ by 14 Box 3: Engaging Journalists in Monitoring Local Level Procurement in Bangladesh The World Bank assisted Local Governance Support Project (LGSP) is the centerpiece of a broader program to strengthen public sector accountability in Bangladesh. LGSP is being implemented by the Local Government Division of the Ministry of Local Government, Rural development & Cooperatives and supports the lowest tier of rural local government - Union Parishads (UP) in providing services that meet community priorities., Launched in July 1, 2006, LGSP is a �ve-year project and has already covered 75% of 4500 UPs in 2009. Starting from May 2009, a total of 64 district level journalists and 64 community leaders were trained in the LGSP rules, especially the UP level procurement and accountability systems; and social audit methodology, so that they were able to monitor UP activities and disseminate �ndings through local and national media. A rapid assessment was commissioned during October- November 2009 to capture the emerging lessons from this innovative experiment in third party monitoring, and interim understanding of the process. This was carried out through focus group discussions with journalists, local and national level editors, UP functionaries, and community ‘auditors’. Some of the key issues arising from this review included: • Print journalism is very vibrant in Bangladesh, especially at the level of district publications. However, there are signi�cant differences in circulation between districts. While in some districts the average circulation of dailies was as high as 25,000, in other districts penetration is far lower. The same applied to wages for district level journalists, which varied from 1000 taka in Narsingdi to 3000-9000 Taka in Jessore. • Investigative journalism on issues of corruption or malpractice is a costly and risky pursuit. In a number of cases, journalists were threatened by local vested interests not to involve themselves in local government issues. Journalists also reported that gathering reliable information these issues demanded time and expenses that they were not able to meet. • It is dif�cult to publish UP level news in the national newspapers as the editors prioritize other important global and national news and events. As a result, there is a disconnect between local and national news. Local journalists do not get opportunities to write in national papers and not able to develop their capacity. There is a need for mentoring and assisting the local journalists and networks to make a bridge among the national and local media. • The awareness levels on the detailed process of procurement practices under LGSP were generally low among both villagers and many representatives. While general training was important in that it gave the journalists a background to the project, most request that modules were directed towards speci�c issues that the project felt should be ‘flagged’ for attention. • Community auditors felt that they gained from the insights given in training, but found it hard to bring the issues they encountered to the attention of key stakeholders. Most community auditors were not recognized as community leaders and many were young. Most felt that their effectiveness was contingent on recognition of the role among local representatives and other leaders. Transparency International which established a The other important role of civic engagement in new set of norms for formal contracting processes supply side reform is in the generation of empirical and provides a role for non-governmental actors evidence that can support new policy proposals. to oversee the adherence to these standards In order to explore the use of research to support (Transparency International 2002) improvement in local government procurement 15 rules, the World Bank supported a study of de jure can offer new perspectives on enabling greater and de facto procedures and practices followed civic oversight as part of the design of formal by four Teshil Municipal Administration (TMA) processes. However, as the pilot initiative of�ces in the North Western Frontier Province of in Pakistan highlighted, ensuring that these Pakistan. proposals are integrated into the reform process depends on both political will at the policy level Assessments of procurement practices by civil and, upfront engagement by civic society in order society actors can offer new perspectives on to develop a long term, and mutually agreed upon implementation processes and in particular, path of state-society partnerships. Box 4: Procedure and Practice: Local Level Procurement in Pakistan The Tehsil Muncipal Administration (TMA) in North West Frontier Province are the recipient of 30 percent of the provincial funds allocable through the Provincial Finance Commission Award, and have the responsibility to provide, manage, operate, maintain and improve the municipal infrastructure and services. In addition, the TMAs handle a range of donor funded projects which follow different procurement procedures from the provincial guidelines which are currently being revised. A number of key issues were identi�ed as part of this review: • Coherent, user-friendly and rule-based standard bidding documents have not been developed; • The public policy for circulation of tender notice through the Provincial Information Department results in delays and in limited circulation; • The absence of simpli�ed procurement guidelines covering both donor and public sector funded projects creates confusion and duplication of efforts; • Old ‘Composite Scheduled Rates’ are still applicable in sharp contrast to the market rates; • Absence of training in public procurement, the law and the rules, Pakistan Engineering Council guidelines and donor guidelines creates limitations in capacity and competence; • Procurement Law and Rules of the provincial Government are not available with the TMA of�cials. However, the compendium of rules made by Local Government department of the provincial government are available with the TMA of�cials that includes TMA rules of business, Citizen Community Board rules, budget rules, �nancial rules and work rules; • Most of�cials have spent their entire career in the same TMA and have not been rotated in other TMAs, reducing the advantage of exposure to better practices; 16 Part Three: Looking Ahead – Some Key Challenges A s demonstrated by the case studies and some of the pilot activities undertaken under the Norwegian Trust Fund, it is possible accountability alone is not likely to have any signi�cant impact on corruption. Conversely, signi�cantly increasing formal auditing by to improve the quality of local level procurement. government can have an incremental effect on Successful efforts �nd ways to address capacity reducing corruption. and organizational limitations that often challenge Informal processes are evolving as an important our assumptions concerning formal government part of community driven development and local processes and the nature of public-civil society governance processes. The choice between interactions. Many of these pilots combine degrees of formal control (based on diminishing concerted work on establishing simpli�ed marginal returns) now has a new dimension: contracting processes that reflect principles What is the appropriate mix between informal of good practice with equally focused work on and formal controls? There are at least two institution building, participation and inclusion. conceptual issues to this question. What level of One of the key themes that emerge from this formal monitoring is needed to offer assurance project is that civic engagement in local level when relying on informal controls? More procurement cannot be ‘mapped’ directly on importantly, according to Olken, what level of to the procurement chain. While there is scope formal monitoring is needed to ‘activate’ informal to enhance capacity for monitoring technical controls, or make them effective? Far from process like bid submission and evaluations, being theoretical questions, these are issues that the comparative advantage of civic actors is demand far more innovative experimentation as more naturally oriented towards tangible social well as impact based assessments of pilots in development concerns (see Hawkins and Wells ‘live’ contexts. 2006), and in particular planning processes and the achievement of outcomes. Moreover, it has been Supporting Relations not argued that the context in which local procurement Capture takes place implies that strengthening the ‘rules’ Perhaps the most challenging aspect of local level and monitoring of mechanisms of contracting are monitoring is the need to reassess the relational unlikely to overcome the enduring constraints of basis of procurement, and in particular the thin markets, low capacity and limited access in informal networks that link suppliers, purchasing project locations. parties, and even local level monitoring actors. In looking forward, developing new approaches As mentioned above, relations between to local level procurement need to be done in a these various parties (normally understood as way that is mindful of the broader conceptual and collusion) are probably the most prevalent types practical challenges. In lieu of a conclusion, the of vulnerability in the procurement chain. remainder of this paper examines �ve such key When considering the local context, relations issues as a means to encourage further debate between these actors are often hard to avoid. and innovations on this subject. More important, community sanctioned relations of this kind can signi�cantly contribute to improved Getting the ‘Mix’ Right outcomes. According to some theorists, such In this paper we have followed the standard relationships are the very basis of social capital and practice of distinguishing between formal hence a vital ingredient in effective development. processes (implying centrally managed and In the context of local level procurement (Erridge state driven) with informal processes (implying and Greer 2002), relationship based contracting community based, and hence localized). As (or personally informed decision making) is often Ben Olken (2007) shows, relying on informal the only option in the context of ‘thin markets’. 17 However, it is important not to downplay the support the development of a new development potential for locally powerful actors to distort local trajectory as much as it can undermine the potential level procurement processes in ways that serve for this to emerge. In the context of community their own interest – just as they can in high value driven development projects, entry point activities contracts. The ‘threat’ of elite capture (Platteau usually consist of public works that are planned 2000, Powis 2007) is therefore an important on the basis of participatory needs assessment reason to remain cautious when seeking to at the local level. These initial exercises require encourage the potential for relationship based intensive facilitation in the absence of vibrant local procurement to emerge. institutions and capacities. Taking a longer term view, it is important to Cooperation and Cooptation ensure that entry point activities are not one A related issue to capture is that of cooptation, off processes, and instead are a part of a in the context of state-society relations more strategic engagement in which responsibilities generally. Civil society can play an important role for planning, implementation and monitoring are in augmenting the capacities of the state and this gradually transferred to sustainable community is most effective where this is based on a close based institutions that can endure beyond the cooperative relationship. As the international project. The support of facilitating agencies needs cases have sought to show, cooperation can to be planned in a way that provides a basis for take a number of different forms, from direct sustainability in the long term. engagement in the process of implementation through citizens’ forums or public hearings, What to do when local to partnerships in strategic planning through governments do not want to be evidence based research or policy support. partners The virtue of civic engagement is largely The discussion so far has focused solely on premised on the notion of autonomy. Much as those situations where local governments are the bene�ts of civil society involvement as a interested in improving procurement outcomes. watch-dog on governance processes needs to Unfortunately, we know that such situations are be emphasized, it is equally important to highlight not the rule and it is expected that of�cials in the potential for cooptation of civic actors to many locations will not be inclined to introduce occur in ways that undermine the core principle new procedures and processes that serve to of autonomy. Cooptation can take various forms, reduce their own control over procurement and can manifest itself at the organizational level as well as constraining opportunities for as well as the individual level. As such, the broad accumulating wealth. This critical challenge concept of civic engagement demands a more needs to be addressed and the current work, exacting de�nition, of oversight by non-partisan while exploring a range of useful strategies in and impartial civic actors. certain circumstances does not provide direct guidance on improving procurement in less Sequencing Community conducive environments. At the same time, Engagement increasing understanding of what success might look like in local procurement should contribute Effective civic engagement takes time to develop to thinking on how to generate the dynamics and requires a long term, strategic approach. The necessary to achieve improvement. choice of a starting point is critical, in that it can both 18 Conclusion E ffective public procurement systems at local levels are vital to the delivery of public services, the development of local infrastructure, This paper and the work that has been sponsored by the Norwegian Trust Fund represent a modest effort to contribute to a critical developmental and the reduction of poverty. This paper has challenge in South Asia and the rest of the identi�ed the nature of the governance challenges world. We hope that this work will help to change associated with executing procurement at local the conceptualization of the effort away from levels that serve the needs and interests of frameworks that envision relatively static views communities. It has also identi�ed examples of “supply� and “demand� sides of governance of localities that have worked to address these towards models that envision a much more governance challenges and described a set varied and dynamic set of interactions among of pilot activities that elaborate strategies for multiple stakeholders. Seen in this light, the changing the distribution of authority and the challenge of procurement at the local level manner in which power is exercised in ways provides an extraordinary high-stakes arena for that promote good procurement outcomes. new governance models in development. 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