Three ways World Bank procurement can drive collaboration for the SDGs

This post was originally published on the ODI Global blog. 

As aid budgets shrink and the pressure to end aid dependency grows, governments are under growing pressure to maximize domestic resources and value for money. Improving public procurement, which accounts for one in every three dollars spent by governments, is one of the core ways countries can do more with the same – or less.

As the Open Contracting Partnership, we support transformational procurement reforms in over 50 countries. From lowering the cost of school meals and critical medicines to building better climate adaptation infrastructure, we’ve seen first-hand how better procurement can make funds go further and achieve greater development effectiveness.

It should be central to the World Bank’s mission – which is to support development – to help countries maximise the impact of that spending. Recognising this opportunity the Bank introduced a new Procurement Framework in 2016 that included new tools and approaches including Project Procurement Strategy for Development (PPSD), Hands-on Expanded Implementation Support (HEIS), Alternative Procurement Arrangements (APA), and the new Systematic Tracking of Exchanges in Procurement (STEP) to improve procurement outcomes for development.

Building on those reforms, here are three vital ways that we think the Bank can operationalise these recommendations and elevate procurement – from a compliance-based, transactional process, to a strategic lever for development effectiveness and value for money:

1. Using – and investing in – country systems

World Bank projects are an opportunity to invest in and improve the robustness of domestic procurement systems, leaving stronger institutions and systems behind.

Currently, the Bank conducts procurement for these investment projects, putting pressure on internal procurement capacity at the Bank, and missing an opportunity for domestic procurement teams to modernise their own country’s systems and upskill procurement teams.

Instead, the Bank could make a concerted effort to build procurement capacity at the country level over time, tailored to the starting point of each country. Among other things, this will mean investing in public financial management (PFM) projects that increase the number of country systems for procurement – including procurement for Bank-funded projects – in turn reducing the workload of the Bank’s procurement teams.

How can the Bank leverage this opportunity?

• Invest systematically in country procurement systems by supporting PFM projects such as e-procurement (e-GP) digitisation efforts to modernise domestic procurement systems.
• Ensure PFM reforms have measurable success indicators to monitor progress as the systems are iterated and improved.
• Expand and deepen capacity-building support for government procurement teams, including how to procure for best value rather than strictly on cost. Traditional procurement approaches prioritised lowest price, which led to unintended consequences like accepting bids of lower quality, a lesser performance record or that did not adequately allow buyers to consider equity, sustainability or socio-economic objectives like creating local jobs. This support should take the long view and strengthen capacity sustainably, targeting countries with persistent procurement challenges.
• Set a target for the share of investment projects using country systems, and set domestic procurement targets on a country-by-country basis to improve and strengthen the use of country systems iteratively over time.

2. Engage with the market and make contract opportunities attractive to more suppliers

Alongside investment in domestic country systems, the World Bank can strengthen its own procurement, through the stronger use of strategic procurement plans for each project. The goal here is to foster more capable and competitive market players, so that both the Bank and country governments have a richer range of options when they procure from the market.

Better procurement practices can make these projects more attractive to a wider range of market players, which will help the Bank attract high quality and more vendors. Better procurement should be agile, goal and outcome-oriented, happen early on in the project cycle, and allow for ample bid windows to avoid the risk of a time-constrained ‘race to the bottom’ on lowest cost alone.

How can the Bank attract a wider diversity of suppliers, to optimise value for money and stimulate economic opportunity?

• Strengthen rated criteria, and ensure these are clearly communicated and used in procurement, to account for factors beyond lowest cost alone. These could include quality, past performance, sustainability, and social criteria.
• Expand and deepen market engagement, to ensure that tender requirements and terms of reference closely correspond to what the market can deliver, and what suppliers are well positioned to offer for the project at hand.
• Bundle contracts of similar requirements and types to make opportunities economically more attractive and worthwhile to a wider range of suppliers.
• Collect and analyse beneficial ownership data at the award stage, to ensure the Bank knows who it is doing business with, and that a true diversity of suppliers are participating.

3. Collect and publish open data on the Bank’s procurement for improved oversight and insight

One of the key measures introduced in 2016 was the Systematic Tracking of Exchanges in Procurement (STEP) platform, which is used to collect and monitor procurement data. While usage of STEP has increased over the past decade, it is still not fully integrated with other World Bank systems, as well as lacking robust benchmarks, and is difficult for stakeholders to use.

This is a missed opportunity to provide more actionable insights for risk mitigation or performance improvement quickly and easily. Data is currently input manually, when countries with existing digital systems could automate this process with a modern, interoperable system. This limits its utility and efficiency for both the Bank and its clients.

In updating STEP, it will be important to consider which data and indicators to prioritise collecting and plan for the ambition to connect STEP directly to country procurement data systems over time. Currently, STEP lacks benchmarks to monitor performance and the full spectrum of risks. If such gaps are addressed, the system could give insights on which procurements or projects need the most support, and enable more evaluation, learning and feedback.

This could provide the Bank’s management, stakeholders and oversight organisations a holistic real-time view of the full project planning and procurement process, strengthening trust and allowing the data to be used for insights on trends in procurement and how these correlate to development outcomes. Using standardised open data will increase the opportunity to link to country data in a growing number of countries and adapt open-source data and business intelligence tools.

Other investment banks are doing a good job here: the Inter-American Development Bank’s MapaInversiones (investment map) project is a good example of a more proactive and data-driven approach.

How can the Bank build on STEP to increase the value of its procurement data?

• Adopt and use open data standards to fully unlock and share its procurement information with local systems across the whole procurement cycle from planning to tendering to implementing projects. It’s exactly the use case that our free, widely used Open Contracting Data Standard was designed for.
• Publish more granular procurement data, including outcomes, to enable better oversight and accountability.
• Leverage the data for risk monitoring, using predictive analytics to identify and address procurement risks early, ensuring that resources reach beneficiaries efficiently.
• Simplify processes for clients by providing user-friendly dashboards and automated tools to ease data entry, ensure data quality, and enable evidence-based decision-making.

The path forward

A new report by the World Bank’s Independent Evaluation Group reviewed progress on public procurement since the Bank’s 2016 reforms, and put forward a number of findings and recommendations.

The report reveals how the reforms have led to meaningful increases in efficiency, value for money, speed, and satisfaction with project implementation. It provides three recommendations to build on this progress:

1. Improve change management support for the reform’s implementation
2. Strategically strengthen country-level procurement capacity
3. Consistently manage the full spectrum of procurement risks to maximise project success

The Bank has long been a leader in global development, and its procurement framework plays a critical role in delivering results for millions of people worldwide. By doubling down on country systems, embracing open data standards, and fostering a culture of innovation and accountability, the Bank can transform its procurement processes into a model of efficiency, transparency, and impact.

At the Open Contracting Partnership, we stand ready to support these efforts. Together, we can ensure that every dollar invested through World Bank projects delivers maximum value for the people who need it most. The report provides momentum to turn World Bank procurement from transactional to transformational – and we will be doing our best to make sure the Bank hears and acts at this critically important time for the Sustainable Development Goals.