TOPIC TWO

INTERNATIONAL LEGAL INSTRUMENTS GOVERNING PUBLIC PROCUREMENT

Learners being able to:-

a) Identify and analyse the global public procurement reforms.

b) Identify and analyse public procurement reforms in Tanzania.

c) Assess the effects of global public procurement reforms.

d) Describe the functions of World Bank (WB), World Trade Organization (WTO), United
Nations Commission on International Trade Laws (UNCITRAL), European Union (EU), and
their roles in promoting public procurement.

e) AGA, African machinery.

Global public procurement reforms

Public procurement reform refers to changing or amending of public procurement laws and
regulations in order to make improvements.
Worldwide public procurement is guided by the United Nations Commission on International
Trade Law (UNCITRAL) model law on procurement.
The guide is considered to be the Mother Law for enactment and amendment of public
procurement acts for the countries mostly for the developing countries.

Currently, 2011 Model Law is in place. It is intended to enable government purchasers to take
advantage of modern commercial techniques, such as e-procurement and framework agreements,
and to enhance integrity in public procurement and to assist States in formulating a modern
procurement law.

Public Procurement Reforms in Developing Countries

In developing countries public procurement reforms have been attributed from rapid changes of
economy, globalization and pressure from international donors’, old regulations proved to be
ineffective. The demands for international institutions are to harmonize national and international
procurement systems and eliminate weakness in public procurement.

Public Procurement Reforms in Tanzania

• The history of public procurement system in Tanzania traces back to pre and post-colonial era.

• Prior to the enactment of the Public Procurement Act No.3 of 2001; public procurement was
regulated by the “Exchequer and Audit” Ordinance of 1961 and the Financial Orders Part III in
Public sector adopted from British colonial masters.

2.4. Public Procurement Reforms in Tanzania

• Pre - PPA No.3 of 2001
• PPA No.3 of 2001

• PPA No. 21 of 2004

• PPA No. 7 of 2011

• PPA 2016

The history of public procurement system in Tanzania trace back to pre and post-colonial era.
Prior to the enactment of the Public Procurement Act No.3 of 2001; public procurement was
regulated by the “Exchequer and Audit” Ordinance of 1961 and the Financial Orders Part III in
Public sector adopted from British colonial masters.
Government of Tanzania in 1989 embarked on public sector management reform process which
consisted of: Civil Service Reform, Financial Sector Reform, Planning and Budget System
Reform.
In 1996 the Country Procurement Assessment Report prepared by the World Bank, identified a
number of weaknesses in public procurement system in Tanzania and recommended urgent
reform. As result of that the Public Procurement Act 2001was enacted as extension of Public
Finance Act 2001 to regulate public procurement.
The recommendations of Country Procurement Assessment Report 2003 resulted to repeal of the
Public Procurement Act 2001 and enactment of the Public Procurement Act 2004 with.

Public procurement reforms will be discussed in details on topic four.

EFFECTS OF GLOBAL PUBLIC PROCUREMENT REFORMS

a) Reducing paper work procurement due to introduction of E-procurement.

b) Decentralization of procurement functions to individual units.

c) Increasing VFM of procurement due to introduction of methods of procurement which

emphasize on 3Es

d) Minimization of procurement administrative lead time.

e) Increasing competition, fairness and accountability by allowing bids protest mechanism.

Etc.

DRIVERS OF GLOBAL PUBLIC PROCUREMENT REFORMS

i. Procurement model laws issued by UNCITRAL.
ii. Technological innovation.
iii. Formation of World trade organization (WTO).
iv. Creation of European Union (EU).
v. International development institutions e.g. WB shifted the focus of procurement with
emphasize of Due diligence and requires borrowers to comply with policies and procedures
which accepted globally.

WHY REFORM PUBLIC PROCUREMENT

I. Public procurement for governance and social accountability.

II. Public procurement for best service delivery to the public.

III. Public procurement for private sector development and trade.

IV. Public procurement for transparency, fairness, value for money etc.

V. Capacity development for public procurement to stake holders.

Etc.

THE WORLD BANK

The background of WB formally was known as IBRD (International Bank for Reconstruction
and Development) created at the END of World war2 with the purpose of helping in the
reconstruction of EUROPE. Within the following years the IBRD would expand its operations
and today known as WB which is International Institution whose main purpose is to reduce
poverty by promoting sustainable economic growth in its client countries.

Functions of WB
• Providing loans to governments for agriculture, irrigation, power, transport, water supply,
educations, health, etc.

• To provide advice and technical assistance

• To serve as Catalyst to stimulate investment in developing countries

• Granting reconstruction loans to war devastated countries.

• Granting developmental loans to underdeveloped countries.

Project cycle
Project cycle is the basic framework used by bank to design, prepare, implement, and supervise
projects. For the whole duration of the project cycle bank and borrower will work together.

The project cycle divided into six different parts i.e.

i. IDENTIFICATION; the bank will identify the project that is also supported by the borrowing
country. Where both share interests of the borrowing country will propose the project (s) for the
bank’s assistance. Procurement planning also starts at the identification stage. For each project
proposed task team is formed which include procurement specialists who will evaluate the
implementing Agents to determine their ability to carry out project procurement with risks
associated in procurement operations.
ii. PREPARATION; Preparation aims to design a detailed proposal that will consider various
aspects of the project(s). The technical, Institutional, economic, environmental and financial
issues facing project will be studied and alternative methods proposed. An assessment is required
by financing bank to ensure that the project is environmentally sound and sustainable. The
procurement planning will continue at the preparation stage, the PS will assist the borrower in
preparing the optimum contracting strategy for the project.
iii. APPRAISSAL; Proposal prepared by the borrower will be analyzed by the bank. The bank
will reassess the Technical, financial, economic, social, environmental and institutional impacts
of the project.
iv. NEGOTIATION AND LOAN APPROVAL; at this stage the negotiation between borrower
and the bank will be done in order to arrive at the loan agreement. Procurement is also included
in negotiation and the bank will require the
adoption of BANK’S GUIDELINES when procuring goods, works or services.
v. IMPLEMENTATION AND SUPERVISION; It is implementation stage that the
procurement procedure and the contract will often take place. The borrow will obliged to follow
the procedures agreed in the loan document rigidly and the bank will not only supervise this
activity but will also called many times to approve the draft of advertisement, bidding documents
and final award. Also the bank will supervise the actual fulfillment of procurement plan.
vi. EVALUATION; final the bank will evaluate the actual results of the project and compare
with what was expected from the beginning. The causes of eventual successes and failures will
be identified and lessons for future reference will be identified.

THE WORLD BANK GUIDELINES: The bank’s interest in procurement is to ensure the loan
allocated for the purpose for which the loan was granted and also will be done in efficient way.
The guidelines under WB provides the procedure to be followed in procurement of goods, works,
services and using of standard bidding documents set out by the bank. Also the guide lines need
to ensure the principles of public procurement are adhered to by Borrower’s procurement
officers. The bank believes that the most efficient way to achieve the Public procurement
objectives is when procuring of goods, works or services conducted through ICB.
In summary WB guidelines gives the series of procurement procedures to be followed. For
example how to invite bidders, the procedure to be followed when opening bidding documents,
evaluation and award of contract, rules on specifications and all other important aspects.

THE ROLE OF WB IN PROMOTING PUBLIC PROCUREMENT

The WB is praised by many for engaging in development of projects around the world by
financing loans to support procurement especially in developing countries to improve living
standards and reduce poverty.
The WB role in public procurement focus on the following key issues;
a) Increased transparency.

b) Expanding or promoting social issues in the fight on poverty.

c) Improves in countries competitiveness and increasing Exports

d) Motivating and development of private sector.

ETC.

THE WTO’s GOVERNMENCE PROCUREMENT AGREEMENT (GTA).

The General Agreement on Trade and Tariffs (GATT) in the signature of GTA in 1994 and
creation of WTO in 1995 were the ones among drivers of changes in public procurement. GATT,
WTO, and GTA aimed to achieve greater liberalization, and Expansion of world trade.
The WTO addresses the state to state. As regards to procurement the GTA addresses the
harmonization of procurement law with express aim of opening up markets to international
competition by preventing states parties from discriminating against suppliers from other states
parties and applying rules of transparency and open competition in procurement.The World
Trade Organization (WTO) is the only international organization dealing with the global rules of
trade between nations.
It was established on the basis of an international treaty approved by participating countries.

Functions of WTO

Its main function is to ensure that trade flows as smoothly, predictably and freely as possible

To implement rules and provisions related to trade policy review mechanism.

To provide a platform to member countries to decide future strategies related to trade and
tariff.

To provide facilities for implementation, administration and operation of multilateral and

bilateral agreements of the world trade.

To administer the rules and processes related to dispute settlement.

To ensure the optimum use of world resources.

To assist international organizations such as, IMF and IBRD for establishing coherence in
Universal Economic Policy determination.

United Nation Commission on International trade laws

UNCITRAL; Is the main legal body of united nations legal system in the international trade law
with general mandate to further progress harmonization and unification of law of international
trade.

UNCITRAL recognized as the core legal body of the United Nations system in the field of
international trade law.
It is a legal body with universal membership specializing in commercial law reform worldwide.

It is responsible for business modernization and harmonization of rules on international business.

It formulates modern, fair, and harmonized rules on commercial transactions.
Prepares model laws and rules which are acceptable worldwide
Provides Legal and legislative guides and recommendations of great practical value.
Updated information on case law and enactments of uniform commercial law

Technical assistance in law reform projects

UNCITRAL formulates modern, fair, and harmonized rules on commercial transactions.

It prepares agreements for model laws and rules which are acceptable worldwide
Provides technical assistance in law reform projects

A same principle applies when dealing with international procurement.

• Many developing countries faces governance challenges, citizens are demanding transparency,
accountability, and a greater say in their governments.

• There is great need to improve the efficiency of managing public finances.

• The challenges can be viewed as opportunities change and fundamental improvements through
public procurement reforms.

Public procurement is vital to the delivery of public services, results, and performance. Used as a
strategic tool to enhance government performance and the quality of services, it requires a
multifaceted approach for reform. Public procurement systems should be measured not merely
by formal compliance with procedures but also by the achievement of development and other
policy objectives.

ROLE OF UNCITRAL MODEL LAW IN PUBLIC PROCUREMENT

i. The law is a model/template available to national governments seeking to introduce or reform

procurement legislation for their domestic economies.

ii. It is intended to provide the essential procedures and principles for conducting various types
of procurement proceedings in a national system with the view to achieve value for money.
iii. Avoiding abuse and corruption.
OBJECTIVES OF UNCITRAL MODEL LAW

Same as of Tanzania ACT of 2011 and Its Regulation of 2013 since the ACT of TZ was enacted
by looking the provisions of the model law and almost all provisions of our act was copied from
UNCITRAL model law of 2011.

SOME PROVISIONS OF 2011 UNCITRAL MODEL LAW

i. The Model law allows government purchasers to take advantage of modern commercial
techniques such as E-PROCUREMENT, and frame work agreement allows in maximization of
VFM in procurement.

ii. The law contain provisions to allow several types of procurement methods to match with
normal or standard procurement, emergency procurement, low value procurement, and large or
complex procurement in which governments can interact with potential suppliers, contractors
and service providers to get the best solution of its requirements.

iii. The law provide all procedures that promote transparency, competition and objectivity
through which allow procurement process to be challenged by potential suppliers i.e. appeal
mechanism.

EUROPEAN UNION

Public procurement has become an important policy tool for EU member states because of the
size of the public procurement markets in those economies.
EU developed standard rules of procurement which had to be complied by all European countries
joined in the UNION. The rules require all public entities for all EU countries to be adhered to
the principles of equal treatment, non- discrimination, mutual recognition, and transparency.
The objective of EU’s procurement rules and principles are based to strengthen the single market
and the EU’s competitiveness.

Role European Union (EU) in Promoting Public Procurement

EU law sets out minimum harmonized public procurement rules which organize the way public
institutions purchase goods, works and services.

AGA, African machinery

The African Governance Architecture (AGA) is a Constitutive Act of the African Union (AU)
that:
Promotes and protects human and people’s rights,
Consolidate democratic institutions and culture and ensure good governance and the rule of law.

In terms of governance AGA promotes:-

✓ Public service and administration.

✓ Local governance and decentralization.

✓ Anti-corruption and accountability.

Put clearly by Sirsong