3RF Anti-Corruption, Public Financial Management, Public Procurement, Civil Service and Public Administration Reform Working Group:
The objective of this working group is to promote the transparent, accountable, and inclusive governance of Lebanon’s economic and social resources, across three strategic priorities: (i) public financial management (PFM) and public procurement; (ii) Anti-Corruption, integrity, and transparency; and (iii) civil service reform. This working group includes representatives from the newly established Public Procurement Authority (PPA) and the National Anti-Corruption Commission (NACC). This working group serves as a policy dialogue among all stakeholders to discuss and assess needs, and interventions, and provide a platform of coordination between all stakeholders. Key actions include supporting the development of an e-procurement platform, monitoring compliance with access to information law, supporting the National Anti-Corruption Commission, and supporting actions that enable civil society to become better informed and empowered.
Minutes of meeting:
Resources:
World Bank Comments 11th January 2024
Web stories
Lebanon’s Public Procurement Law
Where do we stand on the Law enactment?
The Public Procurement Law is one of many critical reforms Lebanon urgently needs to implement in order to support its recovery and long-term development path. In this Q&A with Lina Fares, World Bank Senior Procurement Specialist, we learn more about this Law and take stock of where we stand now on its implementation.
a. Why was the Public Procurement Law introduced: what needed to be reformed and why? What needed to be reformed and why?
Public procurement is a key pillar of good governance and sustainable development. It is essential to improve fiscal governance and the quality of public services, strengthen accountability and transparency, and encourage investment inflows.
Up until the new public procurement law was ratified in 2022, public procurement in Lebanon was governed by the 1963 Public Accounting Law and supplemented by several decrees. The 1963 law was outdated and needed serious modernization. In 2011/2012, the Government of Lebanon drafted a public procurement law that was never ratified by the Parliament.
In addition to the 1963 public procurement law being outdated, other procurement challenges included: (i) a weak control environment that does not enforce the implementation of regulations and procedures; (ii) the absence of an institutional and independent mechanism to handle procurement complaints; (iii) lack of procurement performance information/data; (iv) lack of private sector competitiveness; and (v) weak capacity at the level of implementing agencies.
Public procurement reform is a whole-of-government reform endeavor. It is also a key requirement for international aid to be channeled to support the economic recovery of Lebanon.
The Government of Lebanon’s commitment to modernize the public procurement framework started back in 2018. The then Minister of Finance mandated the ‘Institute of Finances Basil Fuleihan’ to lead on the various components of this reform, prior to the establishment and operationalization of the Public Procurement Authority (PPA), which was established under the Public Procurement Law (PPL) in 2021 and made effective in July 2022, notably:
a) An assessment of the current public procurement system to help Lebanon identify the areas that need to be reformed;
b) The drafting of a new Public Procurement Law, in line with international standards;
c) The elaboration of practical recommendations to advance public procurement reform;
d) The development of standard bidding documents and other mandatory forms and templates, to be submitted to the Public Procurement Authority, once operational, for validation and adoption.
In order to launch this process and build national momentum and consensus around the design of the reform, a reform vision (2019-2023) was developed to pave the way for the actions to be undertaken.
It was followed by secondary legislation, guidelines, and professionalization to ensure the sound entry-into-force of the law, once approved.
Based on a request to the World Bank from the Minister of Finance in October 2018, a Methodology for Assessing Procurement Systems (MAPS II) was deployed in March 2019, and completed in December 2020. It then received the quality seal by the Organization for Economic Co-operation and Development in February 2022. The assessment was used to draft the Public Procurement Law, through and inclusive and consultative process. The law was then voted by Parliament and published in the Official Gazette in July 2021 and that came into force in July 2022. Certain articles of the law were subsequently further amended by the parliament in April 2023.
With the support of the World Bank, a Public Procurement Reform Strategy and action plan (2022-2024) was developed to implement the newly voted Public Procurement Law. It was approved by the public procurement Inter-Ministerial Committee in April 2022.
b. What has been achieved following the ratification of the Public Procurement Law?
Following the ratification of the Public Procurement Law, several actions were taken to facilitate its implementation. With the recommendations of the MAPS II, essential activities were identified to bridge the period between the vote on the law in July 2021 and its effectiveness in August 2022. The objective was to allow the law to be ready to enforce the day it became effective, which was also the start date of Public Procurement Authority operations. Therefore, all strategies, secondary legislation (Terms of Reference (ToR) and decrees for the establishment of Public Procurement Authority and Procurement Complaint Authority) in addition to the basic three Standard Procurement Documents (Goods, Works, Consulting Services) were developed to allow the Public Procurement Authority to start its role as soon as it was established. These include the following:
i. Development of the Public Procurement Reform Strategy (May 2022) and action plan (2022-2024)
ii. Development of the Capacity Building Strategy:
- At the country level for public procurement practitioners, businesses, and at a higher level for decision makers and oversight bodies, complemented by a detailed action plan, a cost estimate and a log-frame for implementation (technical assistance under the World Bank project; completed in September 2021)
- Under the Agence Française de Developpement (AFD) project (March 2022), the areas of intervention focused on specialized training in public purchasing and future certifications; training of national trainers; training for the two new authorities, while defining the different target audiences and the approach to collaboration with stakeholders.
iii. Development of the E-Procurement Strategy (World Bank, April 2022; submitted later for approval by the Public Procurement Authority)
iv. Development of the Public Procurement Law Communication Strategy (World Bank, August 2021)
v. Mapping of the Public Procurement Stakeholders
- The World Bank project (2020-2021) included a detailed analysis of stakeholders and a data-based tool I-MAP delineating roles and responsibilities of institutions, flagging discrepancies with international practices and complemented with recommendations to move forward
- The AFD project developed a monitoring and evaluation framework for the reform and a data collection system. The Institute of Finance has developed a monitoring and evaluation framework for the reform, including the activities to be carried out and the Key Performance Indicators (KPIs) to be achieved, along with a timetable.
vi. Development of Standard Procurement Documents (Works, Goods, Consulting Services):
- Under World Bank financing, the Standard Procurement Documents were submitted to the Public Procurement Authority in June 2022. The World Bank extended additional support to the Authority in reviewing these documents and in January 2024, the Standard Procurement Documents for Goods were further enhanced.
- Under the AFD project, the Institute of Finance developed draft simplified standard documents for works, supply and consulting services contracts. These are currently being reviewed and validated by the Public Procurement Authority.
vii. Drafting of the decrees and ToR related to the administrative and financial work of the Public Procurement Authority and the Procurement Complaint Authority (World Bank- August 2021).
Several decrees texts were also drafted under an AFD funded project.
viii. Awareness-raising for the public and private sectors and civil society organizations (World Bank financing videos, awareness material, and webinars 2020-2023).
ix. A future assistance program to support the implementation of the new Law funded by the European Union and implemented by Expertise France with the goal of developing a coherent and clear public procurement system regulated by independent authorities, in line with international standards to improve competitiveness, attract quality service providers and strengthen accountability and transparency.
c. What are the Public Procurement Authority and the Procurement Complaint Authority? What is their current status?
The Public Procurement Law aims to establish two independent oversight bodies, the Public Procurement Authority and the Procurement Complaint Authority.
i. The Public Procurement Authority was established based on the Law articles (under Chapter 6- Article 74 onward), by modifying the mandate of the former Central Tender Board from a central procurer in charge of processing all procurements on behalf of the ministries to a policy and regulatory authority. To avoid disruption, the head of the Central Tender Board was appointed, on an exceptional basis, without competition, as the President of the Public Procurement Authority. However, the members of the Public Procurement Authority are yet to be selected through a competitive process according to the Civil Service Board regulation and as per the criteria and methodology described in Article 78 of the Law. A committee composed of the heads of the National Anti-Corruption Commission, Court of Audit, Civil Service Board, and Central Inspection shall evaluate the applications against the required qualifications and specializations. An interview will confirm the selections, which will then be validated by the Civil Service Board. A shortlist of candidates for each position shall be submitted to the Prime Minister who will assign the final selected candidate from the qualified pool. The Public Procurement Authority has not yet been allocated a budget line as per the Budget law of 2023, nor an account at the Central Bank. The Public Procurement Authority members’ term is five years, renewable only once.
ii. The Public Complaint Authority (PCA) has not yet been established. It should consist of a president and three members who would be appointed by a decree issued by the Council of Ministers. The board members would be appointed based on set criteria and upon the proposal of the President of the Public Complaint Authority and following the same procedure as the Public Procurement Authority. The Public Complaint Authority members’ term is four years, renewable only once.
d. What are the consequences of the delays in the institutionalization of the Public Procurement Authority and the Public Complaint Authority?
In the absence of political will to operationalize the Public Procurement Authority, international assistance is currently extended to support the operations financially and technically. In the absence of a board, the head of the Public Procurement Authority is operating within a very limited mandate. For sustainability purposes, the establishment of the board is crucial to allow the Public Procurement Authority to fulfill its mandate and functions legally and officially. Furthermore, the absence of the Public Complaint Authority jeopardizes the effective and efficient processing of any procurement transaction, should a complaint be raised by a bidder. If a bidder is not satisfied with the resolution of their complaint by the procuring entity, the bidder cannot currently escalate the complaint to the relevant oversight body, which should be the Public Complaint Authority.
e. What capacity building or training activities are underway to support the implementation of the Public Procurement Law?
Training, communication, and awareness-raising are key activities in the roll-out of the public procurement reform. Change in the management and mode of operation is often met with resistance, which can obstruct or delay the implementation of any reform or worse, even reverse it. The capacity building strategy to accompany the implementation of the Public Procurement Law comprises over 20 modules, covering the entire procurement cycle (from planning to contract execution), as well as procurement techniques such as sustainable procurement, new evaluation mechanisms, and others. The following training activities have already taken place:
i. Development of a training module and Training of Trainers on the Public Procurement Law.
ii. Training of more than 2,000 civil servants on the new Law.
iii. Capacity building activities Trust Fund extended to further enhance the capabilities of the Institute of Finance as a training center. Development of training manuals, building up a solid pool of experts as trainers, improving training techniques and providing creative methodologies. Piloting training modules on different topics and in alignment with the Capacity Building Strategy (completion in June 2024).
f. One of the questions raised is how can the decentralization of the Public Procurement Law be implemented in the absence of a digital system?
Decentralization is one of the features of the Law. This goes hand-in-hand with enhancing the governance of the system through the establishment of the Public Procurement Authority and Public Complaint Authority. Digitalization is a tool for transparency and not an objective in itself. Digitalization coupled with Artificial Intelligence can help in identifying patterns of corruption or collusion, and in collecting data to evaluate the performance of the public procurement system as a whole.
g. Does the placement of the Public Procurement Authority under the Presidency of the Council of Ministers raise concerns of likely political interference or influence?
The Public Procurement Law established the Public Procurement Authority as a totally independent oversight body, to avoid any political interference in public procurement transactions. Its legal status is comparable to that of the National Anti-Corruption Commission. Like any public institution, it falls under the umbrella of the Government of Lebanon, specifically in this case, the Presidency of the Council of Ministers. That said, neither the Prime Minister nor the Council of Ministers has a veto or objection power over the Public Procurement Authority, which makes it independent administratively, technically and financially.
h. What are the issues and obstacles that hinder the proper implementation of the Public Procurement Law
Several obstacles are hindering the proper implementation of the Law, including:
a. Delay in finalizing the staffing of the Public Procurement Authority.
b. Delay in establishing the Public Complaint Authority.
c. Need for capacity building of public procurement practitioners within the government, members of parliament, private sector practitioners, and other public procurement stakeholders such as PPA, Court of Accounts, and the PCA, according to their respective mandates.
d. Delay in the establishment and operationalization of a help desk.
e. Delay in the establishment and operationalization of an electronic central platform for e-procurement.
March 2024