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World Bank Document Report No. 28446-BR No. Report Brazil Country Procurement Assessment Report Assessment Procurement Country Brazil Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of the World Bank World Document of the (LCOPR) Team America Procurement Latin 2004 March Assessment Report Country Procurement Brazil Report No. 28446-BR Brazil CPAR Table of Contents Table of Contents ABBREVIATIONS AND ACRONYMS .................................................................................................. i1 PREFACE ............................................................................................................................................... VI EXECUTIVE SUMMARY .................................................................................................................. vi11 1. BACKGROUND ..................................................................................................... 1 2 . FINDINGS ............................................................................................................. 1 A . Public Sector ............................................................................................................................. 1 (i) Legal Framework.......................................................................................................................... 1 (ii) Procedures and Practices ............................................................................................................. 5 (iii) Organization and Resources ....................................................................................................... 9 (iv) Audit and Anti-corruption measures ....................................................................................... 17 (v) Public Sector Management Performance ............................................................................... 18 B. Performance on WB-financed Projects .................................................................................... 23 (i] Decentralization .......................................................................................................................... 23 (ii) Thresholds for Procurement Methods, Prior Review and Standard Disbursement Percentage ...................................................................................................................... 23 (iii) Performance ................................................................................................................................. 24 (iv) Anti-Corruption and Misprocurement .................................................................................... 25 (v) The Hiring of Individual Consultants .................................................................................... 26 (v) Special Conditions of Schedule 4 of the Loan Agreement ................................................. 27 (vi) Use of National Rules for Low-value Procurement ............................................................. 28 3 . GENERALRISK ASSESSMENT............................................................................. 30 4 . ACTION PLAN FORTHE IMPROVEMENT OF THEPROCUREMENT FUNCTION....... 3 1 ANNEX 1 - QUESTIONNAIRE ON PUBLIC PROCUREMENT SYSTEM.......................................... 33 ANNEX 2: BRAZIL’S COMPRASNET ................................................................................................. 63 ANNEX 3: CHANGE IN LAW OR CHANGE IN CULTURE?.............................................................. 69 ANNEX 4: INTERNATIONAL GUIDELINES FOR GOOD PROCUREMENT LAW; HOW DO BRAZILIAN REGULATIONS FIT IN THIS MODEL ? ........................................................ 71 ANNEX 5: PROCUREMENT OF PHARMACEUTICALS .................................................................... 77 ANNEX 6: UN AGENCIES PARTICIPATION IN PROJECT IMPLEMENTATION ............................ 79 ANNEX 7- CONFERENCE ON NORMATWE BODIES ...................................................................... 83 ANNEX 8: SAMPLE QUALIFICATIONS OF A FULLY ACCREDITED GOVERNMENT PROCUREMENT OFFICIAL ................................................................................................. 85 ANNEX 9: THE VIEWS OF THE CONSTRUCTION INDUSTRY ....................................................... 87 ANNEX 10: EXAMPLE OF A CODE OF ETHICS ................................................................................ 89 iv Brazil CPAR Table of Contents V Brazil CPAR Preface Data and Basis for Report Preparation of this Country Procurement Assessment Report (CPAR) began in November 200 1 immediately after the Government of Brazil received the Country Procurement Issues Paper. The report was managed by Efraim Jimenez, Lead Procurement Specialist acting as Country Procurement Specialist in Brazil. The report is the work of a World Bank (WB) team consisting of Bernard Becq, Lucian0 Wuerzius, Alexandre Borges de Oliveira, Anemarie Proite, Tiinia Lettieri and Andre L. Ramalho, Consultant. Mr. Jose August0 Carvalho and Mr. Jose Baigorria Pera, Consultant, provided useful comments to the report. Meetings with the consulting industry in Rio de Janeiro were organized and executed by a Professional Association on Consulting Services (ABCE) team managed by Mr. Helio Amorin. Construction industry consultations in Siio Paul0 were organized and managed by Dr. Darcylo de C. L. e Valle, Executive Director, Heavy Construction Industry National Association. We would also like to thank the support provided at a Global Distance Learning activity in Brasilia by Morgan Bono and David Gray. The assessment of the internal and external audit capabilities of the Federal Government in the June 2002 Country Financial Accountability Assessment (CFAA) prepared by Mr. David Shand, Financial Management Advisor, Task Manager, and his team are relevant to this assessment, and portions ofthe CFAA are reproduced in this report as acknowledged. WB peer reviewers were Messrs. Robert Hunja, and V.S. Krishnakumar. Mr. Surendra Agarwal made valuable contributions at the outset of the studies. Dr. Michael Barzelay, Reader in Public Management, from the London School of Economics and Political Science, provided guidance and stimulating comments. Valuable comments were also received from Mmes. Franqoise Bentchikou and Pamela Bigart, and Mr. Giovanni Casartelli. Ms. Sabine Engelhard represented the Inter-American Development Bank at the review meetings. We acknowledge with many thanks the editing work by Ms. Suzanne Snell-Tesh, Consultant. The Government of Brazil, through the Ministry of Planning and Budgeting, approved the draft CPAR and submitted to the Bank an action plan for the improvement of the procurement function in January 2004. Acknowledgements Support from the Government of Brazil was outstanding. The report, recommendations and action plan were confirmed by the head of the Executive Secretariat of the Ministry of Planning, Dr. Nelson Machado. Special thanks to Dr. Rogerio Santanna dos Santos, Secretary of Logistics and IT (SLTI), Dr. Demian Fiocca, Secretary of International Affairs (SEAIN) and Mr. Marcos Ozorio de Almeida, SLTI Adviser, from the Ministry of Planning. Mr. Jesiel Soares da Silva from SEAIN vi Brazil CPAR Preface contributed to reviewing of the report, and together with Mr. Ozdrio prepared the Technical Note ofthe Ministry of Planning. Mmes. Renata Vilhena and Elisabeth Braga, former officials of the Ministry of Planning, contributed greatly in the early stages ofthe study. Finally, the report would not have been possible in its current form without the extraordinary support of Vinod Thomas, Armando Araujo, Bernard Becq, Mary Sheehan, and Joachim Von Amsberg and the other sector leaders of the WB Brazil Country Management Unit (CMU). vii Brazil CPAR Executive Summary INTRODUCTION THECPAR This study is the Country Procurement Assessment Report (CPAR) ofBrazil. The CPAR is intended to contribute to a dialogue with the government on its procurement policy and management agenda by surveying the existing situation, assessing the situation in light of appropriate standards, indicating a meaningful array of issues that could be incorporated into the government’s agenda, and examining the desirability and workability of practices that would address those issues. Through the CPAR, the World Bank (WB) is capable of making this contribution due to its long-standing engagement with the country’s public management policies, including those related to procurement, and to its knowledge of worldwide government practices in this area of public management. Therefore, this report represents an effort by the WB to seek further ways to support the reform and modernization ofgovernment procurement in Brazil. Consequently, two main audiences will benefit from this report: (i) the Government of Brazil, which may wish to marshal its program of modernization of the government’s procurement by taking the findings presented in this report into account and (ii)the staff of the WB assigned to Brazil. Such findings are based on interviews carried out with representatives from about 50 public agencies of the Federal Government, close cooperation with local counterparts, and workshops with key stakeholders. The next section presents a summary of the main findings, including an assessment of key aspects that characterize federal government procurement. Additionally, it also signals the aspects of the national law or regulations to which exceptions should be made in the individual loan agreements
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