Country Procurement Assessment Report - 2003

29055 Vol. 1

COUNTRY PROCUREMENT ASSESSMENT REPORT - 2003

June 2003

Ghana Country Department Africa Region PREFACE

This Country Procurement Assessment Report (CPAR) was prepared between October 2002 and May 2003 by a team consisting of World Bank staff, a Government Team of senior officials, Development Partners, and Consultants.1 National consultants carried out data collection, interviews and analysis of the current procurement practices and prepared the reports, except for the reports on Labour Standards and Monitoring and Evaluation, which were done by ILO and OECD consultants, respectively. The assessment benefited from the reports2 prepared under the ongoing procurement reforms (which include the Public Procurement Bill submitted to Parliament for enactment) and from other fiduciary bills, i.e. the Financial Administration Bill, the Central Internal Audit Agency Bill, the Freedom of Information Bill, and the Protected (Public Interest) Disclosure Bill.

The main CPAR mission took place during March 17-21, 2003, and included a National Workshop. About 110 participants attended from the public and private sectors, civil society, Development Partners and politicians. The National Workshop’s observations and recommendations were taken into account in the preparation of this Report. The National Workshop evidenced the participatory spirit of stakeholders by engaging government officials to pursue sound procurement fiduciary management.

The CPAR Team thanks the Government of Ghana for the valuable support from the MFEP and Economic Planning (MFEP) through the World Bank Desk, the Consultants team for their comprehensive assistance; DFID, ILO and OECD for their advice and financing the participation of their staff and consultants; the Peer Reviewers for their insightful comments, and the Development Partners and all persons who provided information, for their useful contribution and collaboration. 1 The World Bank CPAR team was led by Mbuba Mbungu, Senior Procurement Specialist, World Bank/AFTPC. The Government’s team was led by Michael Ayesu, Team Leader/Head, World Bank Desk, MFEP, and other officials, including Naana Dontoh, Chief State Attorney, Ministry of Justice; Freda Bartels Mensah, Ministry of Local Government, Frederick Boakye Yiadom, Ministry of Roads and Transport; and Robert Kuwornu, Ministry of Local Government. Team members from participating donors included: George Otoo, Procurement Adviser, DIFID, UK. Other World Bank team members included Oladipupo O. Adamolekum, Lead Public Sector Management Specialist; Roch Levesque, Senior Counsel; Gerhard Tscharnnel, World Bank Consultant; Tsri Apronti, Procurement Specialist. The Consultants team consisted of Richard V.C. Addai; Charles Taylor, Team Leaders, Cornelius Addablah; R.E. Asante; Daniel Kwagbenu; and Peter Pease, Sjoerd H. Visser, OECD Consultants; David Siedl, ILO Consultant; David Taigman, ILO Consultant; Amanda Duff, Engineering Adviser, DFID; and Ibrahim I. Alkabilla, Program Officer, ISODEC ; Peer Reviewers from World Bank were Michael L.O. Stevens, Lead Public Sector Mgt. Specialist; Rogati Kayani, Lead Procurement Specialist – AFTPC; Els Hinderdael, Lead Procurement Specialist - ECSPS [ECA]; and K. Abbey Sam, Civil Engineer, Private Consultant and Former Head of Ministry of Roads and Transport, Ghana. Bernard Abeille, Regional Procurement Adviser, and V.S.Krishnakumar, Lead Procurement Specialist Africa Region World Bank, gave valuable professional support and overall guidance. Special thanks to John Schwartz, Senior Procurement Consultant for his excellent contributions, and to Joanne Young, IT specialist, for her most valuable assistance.

2 The analysis of public procurement practices was completed in 2001; the assessment team confirmed the analysis as still valid.

- 1- This Report contains an Executive Summary, including the Action Plan and main recommendations; the Main Report, and Annexes with analysis and data.

Disclosure

The Government has given its consent that the CPAR is a public document and that it may be distributed to all interested parties. Broad dissemination of the findings of the CPAR will create the necessary awareness of the importance of good procurement for the national finances and the well-being of Ghana’s civil society.

- 2- CURRENCY EQUIVALENTS

Currency Unit = Cedis Cedis = US$0.0001194 US$1 = Cedis 8375

FISCAL YEAR January 1 – December 31

ABREVIATIONS AND ACRONYMS used in the EXECUTIVE SUMMARY

BPEMS Budget and Public Expenditure Management System CIPS Chartered Institute of Purchasing and Supplies CPAR Country Procurement Assessment Report DA District Assembly GCNET Ghana Community Network System GDP Gross Domestic Product GIMPA Ghana Institute of Management and Public Administration GPRS Ghana Poverty Reduction Strategy MDA Ministries, Departments and Agencies MDBS Multi-Donor Budgetary Support Group MDPI Management Development and Productivity Institute PPA Public Procurement ACT PPOG Public Procurement Oversight Group PUFMARP Public Finance Management Reform Program SMMC Supplies and Materials Management Class VFM Value for Money

- 3- EXECUTIVE SUMMARY AND RECOMMENDATIONS

Context of the CPAR

1. Importance of Good Procurement for Public Finance in Ghana. Based on the Budget Statement of 2003 estimates3, total planned public procurement is estimated at Cedis 8.6 trillion or about 14 % of GDP. Excluding donor financed procurement (estimated at Cedis 2.6 trillion), domestic public procurement expenditure of Cedis 6 trillion would amount to 10 percent of GDP. With an estimated total tax revenue of Cedis 11.4 trillion, domestic procurement represent more than 50% of tax revenue. These simple figures illustrate the utmost importance of good procurement as an element of the public expenditure process.

2. The analysis presented in the attached Country Procurement Assessment Report (CPAR), prepared by a team of Government officials, World Bank and donor staff, and national consultants, reveals substantial inefficiency in public procurement and concludes that the principle of “value for money” is not achieved. This is true for both government financed and donor financed procurement. The main findings of the 2002 Country Portfolio Performance Review of World Bank projects were slow project implementation and disbursement, due to a large extent to inadequate procurement planning, non- transparent procurement procedures and poor contract management. A review in 2002 of 132 works contracts which constitute an important part of public expenditure, indicated that some 84% incurred cost-overruns of up to 30% of the initial amount.

3. Ghana’s Poverty Reduction Strategy (GPRP) recognizes the inadequacy of procurement procedures. Estimates of potential savings from improved procurement vary and have not yet been analyzed precisely in quantitative terms, but many among those who are directly involved, including the outcomes of the “Value for Money Assessment Project”, believe that at least 25 % in cost savings could be achieved by better procurement management. If based on the estimated government financed procurement for 2003 alone, this could imply annual savings of some 1.5 trillion Cedis (or close to US$150 million). Such savings from improved procurement practices could help Ghana reduce current fiscal imbalances and increase expenditures required to accelerate poverty reduction.

4. Similar findings of public procurement weaknesses were recorded in the 1996 CPAR. Since then, the Government has followed-up on a number of recommendations. Procurement reforms were launched under the Public Finance Management Technical Assistance Project (1998), which emanated into the Public Finance Management Reform Program (PUFMARP). The Procurement Reforms Proposal (PRP), prepared since 1999 in the context of PUFMARP under the oversight of the Public Procurement Oversight Group (PPOG), included among others the draft Public Procurement Bill (PPA), which the Government,

3 Excluding wage bill, total debt service and transfers.

- 4- following extensive consultation of the stakeholders, sent to Parliament in early 2003 for enactment, as part of the groundwork for Ghana’s PRSC.

5. Progress made since 1996. Since the 1996 CPAR, a number of positive developments have taken place in the area of public procurement. Considerable investments have been made in the areas of Capacity Building and production of Procurement Procedures Manuals, which have engendered good procurement practices in key sector ministries in Ghana.

(i) A number of Senior Officials in Ministries of Health; Education, Youth and Sports; Roads and Transport; Local Government and Rural Development and Food and Agriculture have attended procurement courses supported by the World Bank. These courses have considerably improved the procurement skills of the staff, which has positively impacted procurement performance in their respective agencies. In these Ministries, single source procurement as a practice has been reduced, wherever competition is possible.

(ii) Shopping and selective tender procedures continues to be used extensively in cases where annual budgets for government departments and District Assemblies are in too small sums to warrant open tendering. However National Competitive and International Competitive Tender procedures have generally become the norm in Ministries of Education, Youth and Sports; Health; Road and Highways and in the Ministry of Local Government and Rural Development.

(iii) Use of procurement procedures manuals has improved procurement planning, processing and stores management in a number of Ministries, Departments and Agencies, notably Ministry of Health. The manuals also include codes of conduct for procurement officers. These manuals have made substantial improvements in ensuring transparency, economy and efficiency, in addition to encouraging preparation of more accurate schedules of requirements for restocking and for fast moving consumable items.

(iv) The Ministry of Health has separated procurement functions from stores functions. The separation has enabled the Ministry to develop capacity in the area of stores management. This practice should be adopted by other agencies.

(v) Most senior public managers now pay more attention to procurement as they see it as part of their core business and not a responsibility of junior staff. Senior Managers see the value that the Country derives from efficient use of public funds through good procurement practices. This changed attitude makes them receptive to (and is the driving force behind the) proposed public procurement reforms.

- 5- 6. The hideous issue of corruption, highlighted in this Strategy, has also been addressed and specific measures have been incorporated in the PPA to deal with complaints and offences in this regard. Paragraph 656 of the 2003 Budget Statement specifically refers to the Government policy of “zero tolerance for all acts of corruption” and states that it “in 2003, will strive to continue to improve good governance in Ghana through an increase in the operational efficiency of the Auditor General’s office, assurance of full staffing of internal audit positions, implementation of the Anti-Corruption Action Plan, including through the passage of a Freedom of Information Act and whistle-blower legislation.” In addition, clear roles and responsibilities will be defined for the Office of Accountability, the Commissioner for Human Rights and Administrative Justice, and the Serious Fraud Office.

Objectives of the CPAR

7. The CPAR is a framework for periodic in-depth analysis of a country’s procurement fiduciary management performance, carried out in close association with Government leaders and specialists. The analytical work carried out for the CPAR constitutes an important input for the Country Assistance Strategy (CAS), which is drawn up with the Government and emphasizes the need for good governance and effective service delivery to Ghana’s citizens. The CPAR measures public procurement against the five basic pillars of a well functioning procurement fiduciary management: (i) existence of a comprehensive and transparent legal and institutional framework, guided by an independent procurement oversight body for policy and quality control; (ii) use of modernized procurement procedures and bidding documents, including transparent bid- evaluation and award procedures, and transparent contract management; (iii) a proficient procurement staff applying the regulations and procedures efficiently and transparently; (iv) existence of an independent control system, with audit and recourse mechanisms separate from the procurement implementation function, with effective enforcement of sanctions, and (v) anti-corruption measures incorporated in the procurement laws and also accompanied by the application of effective sanctions.

8. These five pillars are, in fact, embedded in the fifth pillar of the GPRP: “Ensuring good governance by improving the transparency and accountability in government operations, strengthening the capacity of the public sector, and decentralizing management of public policy to empower people to participate in and influence the development process”. Transparent and accountable public finance, including the new procurement rules provided for in the PPA, are expected outcomes of the Poverty Reduction Support Credit (PRSC). This leads to the main findings of the CPAR and the recommendations on how to achieve these outcomes. These findings and recommendations are shared by the Government’s CPAR team and the donor participants of the Multi-Donor Budgetary Support Group (MDBS). The recommendations below follow from the premise that good procurement is a condition sine qua non of good fiduciary management and have all a direct impact on an improved quality of the nation’s

- 6- budget expenditure, in turn contributing to the overall poverty reduction strategy of the government.

MAIN FINDINGS AND RECOMMENDATIONS

Pillar 1: A Strong Legal and Institutional Framework

Findings

9. New Strengths in the Procurement Function. The Government’s efforts to strengthen procurement fiduciary management are based in the PPA now before Parliament. This is a major achievement compared to the status of the findings of the 1996 CPAR and the fruit of extensive discussions at all levels of Government and civil society during the past years. With this Act, a Public Procurement Board (PPB) will be created as a central oversight function, as well as Tender Review Boards and Procurement Units in the Procurement Entities (Ministries. Departments and Agencies – MDAs and District Assemblies - DAs), which will apply the policy and procedures developed by the PPB. As stated in the Letter of Development Policy of the PRSC, “the Procurement Board will be vested with the requisite autonomy to determine the strategic focus of future procurement policy, set standards and practice, ensure compliance with policies, enforce sanctions, evaluate effectiveness of national procurement practices, and oversee the development of requisite skills within the implementing agencies.” A solid basis for effective procurement fiduciary management has thus been laid, solidifying the Government’s commitment to procurement reform.

10. Trust towards Making the Legal Framework – and in general the Procurement Function - Work. Recognizing the conceptual progress in Ghana’s public procurement reform, the onus is now on its successful implementation. Enactment of the PPA, creation of the PPB, Tender Review Boards, Procurement Units in Procurement Entities, and the auditing mechanisms will only yield the desired results if they receive the unrelenting and consistent support from the Ministry of Finance and Economic Planning (MFEP), the guardian of public expenditure control, as well as the broad cooperation from civil servants and civil society. Donors may assist with finance and advice, but the core of the actions will have to come from within, since the civil servants responsible for the new framework and its implementation, and the private sector responsible for adequate bidding and contract execution, ultimately share the collective accountability for the success of the new framework. In this regard, the leadership of the MFEP will be paramount to keeping the momentum thus far achieved, creating a culture of compliance in general, and accomplishing this critical part of the GRSP/PRSC.

Recommendations

11. Transition towards the New Framework.

- 7- (a) With the PPA before parliament, and the new institutional framework pending, all efforts should be made to maintain the momentum to refurbish the public procurement function. It will, therefore, be important to give broad support to MFEP, which played such a pivotal role in the preparation of the procurement reforms. MFEP should ensure that the implementation of the procurement reforms succeeds, i.e. (i) pursue the enactment of the Procurement Act with the necessary revisions that have been discussed and still need to be made, (ii) oversee and motivate the implementation of priority actions, including the determination on the chairmanship and staffing of the PPB, Tender Review Boards, and separate Procurement Units in the Procurement Entities, starting with the Ministries, Departments and Agencies (MDAs) with the largest budget expenditure, and (iii) begin with capacity building where needed most immediately.

(b) A strongly committed Task Force should be created in the MFEP to support the work of carrying out the priority tasks mentioned above.

(c) Important clarifications still to be made in the PPA include:

(i) the limitation on bidders participation on the basis of nationality (art.24 (1)) which should be clarified as it – as currently drafted - conflicts with the general principles of transparency and equal access to bids;

(ii) under “National Competitive Tendering” (art. 43), the PPA should clarify that national competitive bidding shall not exclude foreign firms from consideration, except where the Government has made -- and publicly disclosed -- specific exceptions to this rule in their regulations;

(iii) in the section on Evaluation and Comparison of Tenders (Sub-part III), the PPA should mandate the use of bid evaluation criteria quantified in monetary terms and of objective bidders qualification criteria (past experience, managerial, technical and financial capability) as part of the determination of qualifications of the successful bidder prior to contract award;

(iv) as regards the Margin of Preference (art.59), a) the PPA should require that all details pertaining to the application of domestic preference shall be disclosed; b) the PPA should specify the percentage of, and eligibility for, the margin of preference which domestic bidders would be given in international competitive bidding, for example, by defining the level of national intrants and the percentage to be added to the price offered by foreign bidders when compared to the prices offered by domestic bidders; and c) the preference shall be applied only when specified in the bid invitation.

These improvements are standard procurement requirements practiced internationally and the Government is acting to include the necessary changes in the Bill.

- 8- Pillar 2: Good Procurement Procedures and Practices

Findings

12. The CPAR highlights a broad array of poor procedures and practices throughout the tendering and contract management process4, which have been the cause of many of Ghana’s public procurement problems, and where most of the leakages in public procurement funding occur and substantial savings could be realized. Although most of the procedural anomalies are now being corrected by the PPA, which includes the new regulations for the procurement of goods, works and consulting services to be applied by all Procurement Entities, the provisions for Standard Tender Documents and Standard Request for Consulting Proposals, which are being completed, will detail the general principles embedded in the PPA, including evaluation and selection criteria. Standard Contract documents, also being completed, will streamline current problems with contracting and payment procedures, labor standards, and dispute resolution. Good procurement manuals and training should leave no room for lack of understanding by procurement staff. The positive results on the ground depend largely on how well the new policies are put into practice and the extent to which this is done without political interference to the contrary.

Recommendations

(a) Improve Procurement Planning and Budgeting. Procurement Entities and Budget authorities should collaborate closely in preparing the procurement plans in the early phases of expenditure preparation. This could be done in the context of the Budget and Public Expenditure Management System (BPEMS). This will facilitate timely budgetary appropriations and avoid the use of exceptional procedures circumventing the normal competitive tendering process and causing unnecessary cost increases and delays.

(b) Improve Achieving Value for Money (VFM). The government has been awarding very large value contracts using Supplier Credit lines, which normally favor the suppliers who offer such credits. Contracts awarded under such Credits do not achieve value for money, as they are predominantly sole sourced. The principle of “value for money” is basic to good public procurement and should become the “mantra” of the Procurement Entities. Efficient management of supplier credits would be achieved to a much larger extent by subjecting the credits to competition, including the financing part. Particularly important is the need to draft precise technical specifications for goods and works, select the most economic technical alternative, prepare clear terms of reference for consulting services, and introduce competitive selection, rather than using suppliers’ credits. The VFM analysis and experience demonstrates that this will have a substantial impact on the prudent use and savings of public funds.

4 “ For example, of the 291 contracts reviewed, 55% suffered delayed completion. 60% of the civil works contracts reviewed, had cost overruns of more than 30%”.

- 9- (c) Improve Contract Management. The CPAR analysis shows that 53 % out of 291 contracts for goods, works, and services concluded between 1997-2002 suffered completion delays, among others due to lengthy payment delays5, poor implementation performance because of choice of uneconomic technical alternatives, inadequate specifications, insufficient contractor qualifications, difficult access to bank credit for local contractors, and poor supervision by the implementing agencies. This entailed substantial cost overruns exceeding up to 30% of the original contract price, high interest payments to contractors, and resulting budgetary shortages. This problem will not disappear with the improvement of the legal framework alone and needs to be addressed by a greater professionalism in the procurement function. Among other measures, the use of performance securities should be enforced. It is recommended that the Government adopt a holistic approach to normalize this situation, and use the assistance of technical expertise to review the CPAR findings and to prepare and execute practical guidelines and procedures for much needed improved contract management.

Improve Stores Management. Government Stores represent a large sum of public expenditure, but the CPAR analysis indicates that there is a considerable amount of waste. Heads of Procurement entities should be required to put their stores in order immediately, especially those at the Ports where goods worth millions of dollars are waiting to be cleared and collected. The clearing of the stores at the ports should include authorizing auctioning of unwanted stores sent as donations. The Stores Inspection Unit should be reinstated (following appropriate Government procedures) to advise the Minister of Finance when Procurement Entities do not carry out their function so that corrections can be made swiftly and decisively, and to prepare annual reports for action by the Ministry. [Note although the CPAR made the observation and this recommendation, this recommendation is withdrawn and removed from the action plan because Stores Management and the Stores Inspection Unit is not referred in the Financial Administrative Act nor in the Public Procurement Act]

(d) Ensure Use of Modern Labor Standards in Works Contracts. Fair wages, good conditions of work and equitable opportunity for waged employment are important parts of the GPRP. Good labour standards are rarely used by small and medium size contractors. This is especially important when the use of intensive labour techniques is recommended in projects where such techniques offer clear economic advantages. It is intended that such standards shall be included in the Standard Contract Documents being prepared under the PPA. The Government should monitor compliance with labor standards to heed its promises for poverty reduction.

5 Payment Delays are a result of poor budget/cash management systems, which contribute to various pitfalls for “money going down the drain” (‘money’ meaning scarce resources including tax payers money) – by contractors inflating their prices to take into account the high interest charges on delayed payments, unfinished work leading to incomplete investments which cannot be put to use, additional completion time leading to additional payments, fuelling corruption as unpaid contractors try to corrupt the system to get their hands on the limited monetary resources, etc.

- 10- (e) Improve Procurement Record Keeping. It is often not recognized, but it is very costly not to keep good procurement records. The costs are hidden in lack of transparency, improper applications of procedures, long search of documents when complaints arise, and rendering audits more difficult. Record keeping is not popular for many reasons but it is an important element of good fiduciary management. For useful control of procurement procedures and audits, and also to ensure adequate budget expenditure, good record keeping is essential. Tender Review Boards and Procurement Entities should be compelled to set-up and maintain solid procurement record systems, as required by art. 27 of the PPA.

Pillar 3: Procurement Proficiency

Findings

13. In most MDAs and DAs staff responsible for procurement are not procurement proficient, even though they have been trained. The application of the PPA and the Standard Tender and Contract Documents will not be successful without a broad training and “refresher” program and encouragement of officials in charge of procurement.

Recommendations

(a) MFEP and its new Task Force should start with the development of training modules based on the PPA and the new procurement documentation. They should secure as soon as possible the necessary external financing to supplement the national training effort and to help prepare the needed training modules and procurement manuals. Much of this can be based on existing material. Procurement manuals are essential for new comers to the job and serve as reference for more experienced staff and internal on-the-job training.

(b) PPB and the Procurement Entities should carry out a skills and training needs assessment of national staff, starting in the short-term with the MDAs with the largest budget expenditure, subsequently prepare programs for medium and longer term needs, and consider training as an investment in achieving the desired savings in budget expenditure.

(c) Existing training institutions (GIMPA, MDPI and others) should be tapped to support this program.

(d) Staff trained in procurement should be employed in procurement functions and be given the necessary recognition in staff evaluation, promotion and salary emoluments to show that they are doing an essential job without which good fiduciary management is impossible.

(e) Government should establish a national standard procurement certification (”accreditation”) for procurement staff in the public sector, and establish a scale of thresholds for responsibility – and accountability – for each level of accreditation.

- 11- Pillar 4: Independent Oversight, Audits and Recourse

Findings

14. Articles 77-81 and 90-92 of the PPA stipulate PPB ‘s obligations with regard to review and thresholds, the rights of review in the case of complaints, and the obligation of annual procurement audits by the Auditor General with support from the PPB. These oversight and review functions are critical to exercising good procurement fiduciary management. This pillar is often one of the weakest in many countries and it is encouraging to see that Ghana is taking the necessary measures to strengthen it.

Recommendations

(a) PPB and the Tender Review Boards should develop clear procedures for the prior and post review of procurement activities by the Procurement Entities. While post review should have a control function to verify compliance of Procurement Entities, it should also be used as an internal educational tool how to do better.

(b) An effective sanctions system should be put in place to ensure that the rules are taken seriously, both for post review and audits. Prevention will save misspending scarce budget resources. Annual Reports with detail on performance and the possible review of thresholds should be prepared.

(c) Since financial audits usually do not cover procurement, procurement audits should be done separately and by competent experts. Annual Reports should be published to give broad dissemination of the results of the control function. Adequate resources should be made available for this purpose because in final analysis this will save money.

(d) Adequate provisions for capacity building should be made to achieve these objectives. Donor assistance may complement the national effort.

Pillar 5: Fight Costly Corruption

Findings

15. The Government has made the fight against corruption a center piece of its GRSP. It is embedded in the Budget Statement for 2003 (paragraph 656). Corruption is a human element that will not be eradicated just by the diagnosis of the disease. Diminishing it means establishing and maintaining a strong system of checks and balances to keep human greed under control and avoid misuse of scarce budget resources. The GRSP states that the Action Plan prepared by the Ghana Anti Corruption Coalition must be implemented expeditiously and without fear. In procurement, a number of actions can be taken to support this fight.

- 12- Recommendations

(a) Broad dissemination of the PPA, and give important weight to the Auditor General, PPB and the Tender Review Committees.

(b) Use of Standard Bidding and Contract Documents, preparation of clear procurement manuals for goods, works and consultant services, and training of procurement staff in the negative consequences corruption can have on the State’s finances and human society.

(c) Enforcement of the Code of Conduct for Civil Servants, and the Ethics Code of the Chartered Institute of Purchasing and Supply (CIPS), as well as the measures provided for in the PPA.

(d) Involve the private sector and the media, and make it aware of the various means in the national laws by which it can contribute to preserving transparency and accountability.

Findings and Recommendations for Other Important Areas

16. Customs and Port Clearance Procedures: Cumbersome procedures for clearing of cargo, corruption of customs staff to avoid payments of duties, and fraudulent shipment inspections are costing money to the State. The Ghana Community Network System (GCNET), an information technology solution designed to facilitate a fast and effective processing of customs related operations, and a key innovation of the nation’s “Gateway Project”, has had a successful pilot experience at Kokota International Airport. It should be reviewed to what extent GCNET could be used at all major entry points. Greater use of bonded warehousing is also recommended. In any event, professional pre-shipment inspection and inspection on arrival are standard procurement measures that remain recommended to avoid abuse and losses to the State, and should be systematically applied.

17. Electronic Procurement. E-procurement is fast becoming a universal tool in the computer information age, and Ghana’s economy, at least at the national level, is increasingly reaching the stage where electronic communication may be the norm. The PPB should approach expert assistance to make use of this cost and time- saving medium in areas where efficient use of e-procurement is possible.

Action Plan

18. The Action Plan Table is shown on the next page.

- 13- Action Plan

Short Term (2003-mid-2004)

Pillar 1 Pillar 2 Pillar 3 Pillar 4 Pillar 5 Legal and Institutional Procedures and Practices Procurement Proficiency Independe Anti- Framework nt Corruptio Oversight, n Audits and Recourse

Enactment of the PPA, with Satisfactory completion of Satisfactory completion and Implement Implement recommended revisions by Standard Bidding Documents implementation of capacity ation of the ation of the March, 2004 for Goods and Works and building program for immediate institutiona institutiona Request for Proposals for needs, start to develop sustainable l and l and Responsibility: Parliament, Consulting Services, as well medium and long-term capacity regulatory regulatory with assistance from as Standard Contract building program, prepare provisions provisions MFEP/PPOG Documents. detailed cost-estimates, and seek of the PPA of the PPA additional donor financing if (2003-04) (2003-04) needed. by June, 2004 Responsib Responsibi Responsibility: PPB/MFEP ility: lity: By June, 2004. Donors to Responsibility: MFEP/ Task PPB/ PPB review documents early 2004 Force and PPB, once created, MFEP and /MFEP and using PRSC funding. Donors to Donors Donors and review the capacity building and Governme program by June, 2004 Governme nt PRSC nt PRSC team team during during 2003/5. 2003/5.

Establishment of Task Force Review CPAR findings on Develop Procurement Manuals in support of MFEPto contract management to draft based on the PPA and the pursue and oversee specific guidelines to correct Standard Bidding and Contract procurement reforms: issues for implementation, documents for use by MDAs and Immediately using VFM practices by DAs June, 2004 Responsibility: MFEP Responsibility: MFEP/PPOG/Task Force and - 14 - Action Plan

Short Term (2003-mid-2004)

Pillar 1 Pillar 2 Pillar 3 Pillar 4 Pillar 5 Legal and Institutional Procedures and Practices Procurement Proficiency Independe Anti- Framework nt Corruptio Oversight, n Audits and Recourse

Responsibility: PPB, once created, using PRSC Ministry of Roads and funding. Donors to review draft Transport/PPB/ MFEP, with manuals by early 2004 assistance from technical expertise

Create PPB and its Enforce preparation of Secretariat procurement plans in liaison June 2004 with budget authorities, starting immediately Responsibility: MFEP/PPOG/Task Force Responsibility: Procurement Entities in cooperation with PPB and MFEP

Create Tender Review Set-up efficient procurement Boards and Procurement filing system and make use Units. mandatory in all public by June 2004 organizations with responsibility for Responsibility: procurement. MFEP/PPOG/Task Force

Responsibility: Procurement Entities in cooperation with PPB and MFEP

Action Plan - 15 - Medium Term (early 2004- 2005 )

Activities on Pillars 1-5 Responsibility 1 Review Progress with Action Program and capacity building, MFEP/PPOG/PPB in context of PRSC spirit and requirements 2 PPB to take stock of status of the reform of the national PPB with assistance procurement function and achieving “value for money” by from MFEP and mid 2004, to take steps to correct and improve where needed donors and to prepare steps for 2004/5 3 PPB to produce first annual procurement report and organize PPB and MFEP Procurement Forum by March 2005 4 PPB to act on review recommendations during 2005 to ensure PPB and MFEP that the objective of “value for money” is achieved

- 16 - Cost of the Action Program. PPOG has prepared initial cost estimates of the Action Plan for the period 2003/5, amounting to about US$5 million equivalent. The main components are creation of the procurement institutions, preparation and dissemination of procurement documents, temporary expert assistance for start-up, and the implementation of a capacity building program. MFEP/PPOG will prepare the detailed cost estimates to determine a cost effective reform program and review this with participating donors. Funding will be provided from the PRSC. Should additional funding be needed, this should be discussed with the donors.

19. Risk Assessment. The main risks are delay in the enactment and implementation of the PPA. The CPAR team considers this risk relatively moderate. Ghana has placed a high stake on achieving this goal, to which it has been working hard during the last few years. Vested interests may attempt to block implementation or diminish its impact. 2004 is an election year, and priorities may become distracted.

20. However, in the interest of sound fiduciary management and economic well-being of Ghana’s citizens, government officials, the business community and civil society would have much to lose if the new procurement framework failed, and they are therefore likely to join forces to make sure it succeeds.

21. If no sustainable action is taken as regulated by the PPA, and long delays would occur to implement the enacted reform, Ghana’s procurement function would remain the same as the inefficient system analyzed in the CPAR, and – as proven – at a great cost to the economy. After the many years of discussion and investment to modernize the system, this does not seem a plausible way forward. If obstacles do arise, strong collaboration in the context of the PRSC should provide the enabling environment to move ahead with the reform program.

June 25, 2003

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