Tuesday, November 18, the World Bank Procurement Team visited the Netherlands to discuss the progress being made with the Procurement Review. Now in its last stages, the procurement review seeks to update the procurement policy of the World Bank, which applies to countries who borrow resources from the World Bank. This was the third time the team visited the Netherlands, and the new policy will be presented for approval to the Board of Directors in January 2015. This was the last time both the Netherlands public and private sector were able to provide input.

Public sector consultations

The procurement team of the World Bank had two separate meetings. The first meeting was with various stakeholders in the Dutch public sector, including the Ministries of Foreign Affairs, Finance, Infrastructure & Environment, and Rijkswaterstaat. After presenting the proposed policy, a discussion took place about various important aspects. One element was the newly proposed inclusion of Public Private Partnerships (PPPs), and how to structure these in the best (efficient, effective, purposeful) possible way. The Netherlands has quite some experience when it comes to PPPs, and is happy to share its experiences with the World Bank team going forward.

Another part of the discussion was ways to ensure that projects feature the best, brightest, and most innovative ideas when tackling the challenge at hand. An open call for information or competitive dialogue might be necessary to attract the latest insights and innovations. The idea here is to pose the challenge that needs to be solved, rather than what the solution needs to look like – it would be up to the vendors to propose the best solution for the problem, rather than to dictate the solution. This, however, would perhaps be too ambitious to be within reach in this procurement review.

The last part of the discussion focused on sustainability. The Netherlands has always been a vocal supporter of sustainable procurement. Sustainability takes many forms, including social, environmental, and economic sustainability. Currently, the decision whether to include sustainability in procurement is left to the borrowing entity. The Netherlands is critical of this, but is aware of the history and context of this issue. Therefore, the Netherlands is eager to share experiences where value for money, and economic sustainability of procurement, can yield the same outcome as when environmental sustainability is included in the process.

Private sector consultations

The second session was with the private sector. Here, the focus of the decision was on the complaint mechanism, responsiveness of the World Bank, contract management, and again sustainability. There was also criticism on price considerations, as this drives away the best and the brightest. Some participants voiced their concern that the World Bank is becoming an unattainable partner: too cheap, not responsive, and not involved enough. This applies to both corporate procurement as well as operational procurement. Although this issue is partly tackled through the Value for Money approach, it remains a valid concern as the instructions concerning the evaluation of bids are not yet public.

The procurement review envisions a more active role for the World Bank in contract management. However, the WB continues to hold the legal position that a contract under operational procurement is between the government and a private entity, and the World Bank is merely a third party. It does seem to be possible to find a middle ground under the banner of contract management. What the private sector is really looking for is not to have the World Bank involved in a legal battle, but to be a mediator and honest broker during the execution of the project, so that any minor disagreements do not end up in battles that can ruin the partnership. The World Bank took this concern to heart.

Another important point was the operations in the context of fragile and conflict-affected states. In such countries, it may be necessary to have payments of contracts done through the World Bank. Although this would be far from ideal from a development perspective, it would provide the guarantees and assurances of payment that the private sector needs to operate in such countries. The procurement team indicated it would take a serious look at the options for such a construction.

The private sector was critical of the procurement review process in which the Procurement Policy needs to be approved by the Board of Directors, while the Procurement Guidelines and Directives are up to World Bank management to approve. The private sector feels it is impossible to properly discuss the Policy if the underlying Guidelines and Directives are yet unknown. They are concerned about the instructions to borrowing countries and WB staff. The Procurement Team understood these concerns, and assured the Netherlands that the comments and input from both public and private sector, is heard loud and clear. Going forward, the Ministry of Foreign Affairs, the Netherlands Embassy in Washington, DC, and the Office of the Executive Director representing the Netherlands, will continue to monitor this process.