World Bank adopts key Transparency International goals in new procurement policies

Construction works for the Panama Canal expansion project

The World Bank funds 1,800 procurement projects to the tune of US$42 billion in 172 countries, often in challenging environments. It is therefore important to have strong measures to counter corruption. Last week, the Bank announced a new procurement framework that includes many of the recommendations and suggestions Transparency International and Transparency International USA have been advocating.

The impact of this new framework will be felt globally as it will both reduce corruption and improve the quality of important projects the Bank funds, including roads, power plants and hospitals.

In December, we submitted formal written comments on how to improve Bank procurement policies. This June, Transparency International USA drafted a letter to the Bank signed by 107 civil society organisations urging the Bank to collect and publish beneficial ownership information for legal entity bidders on Bank-financed procurements.

The new framework incorporates our suggestions on beneficial ownership transparency and on civil society procurement monitoring, anti-corruption policies and capacity building.

First, the framework commits Bank management to examine how to begin collecting and publishing beneficial ownership information for bidders on Bank-financed procurements. Collecting and publishing such information has the power to reduce conflicts of interest and other forms of corruption in contracting. World Bank leadership on beneficial ownership transparency has the potential to influence policy around the world, and we urge the Bank to embrace a leadership role on this issue.

Second, the framework recognises that third party procurement monitoring can help to improve the integrity of procurement processes and specifically allows for procurement monitoring by civil society. We now urge the Bank to put this policy into practice and to provide funding to experienced, independent civil society organisations to monitor high-risk procurements financed by the Bank.

Third, the Bank has committed to implementing regulations that specifically relate to fraud and corruption prevention. While the exact content of these new regulations remains to be seen, we are hopeful that they will provide a robust framework for fighting corruption in Bank-financed procurements.

The Bank has also acknowledged the importance of broadening its oversight of procurement corruption risks to include the project implementation phase. There will be more resources for contract management, and “as part of performance monitoring, there will be greater interaction on integrity matters with integrity specialists in relation to actual contract delivery and results measurement.”

Fourth, recognising that procurement is a critical component of the Bank’s governance agenda, the framework commits the Bank to building borrower procurement capacity. Unfortunately, the Bank has not committed to increase funding for capacity building, but instead wants shareholders to create a separate fund for this. This could be a stumbling block. The Bank should commit sufficient resources to implement this part of its agenda. Weak procurement systems in borrower countries serve as a brake on economic development and poverty alleviation.

Finally, the Bank should increase the overall transparency of Bank procurements, preferably by developing a centralised procurement website that would publish relevant data and documents on a procurement by procurement basis. We strongly believe that the Bank should follow the advice in Transparency International’s “Curbing Corruption in Public Procurement” guide and the Open Contracting Partnership’s Open Contracting Global Principles and publish relevant data and documents such as bids, contracts, contract modifications and audits.

The Bank has taken an important first step with these new guidelines. Transparency International and Transparency International USA will continue to closely monitor the development of the regulations that will accompany this new framework as well as how it is implemented.