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businessSelling to the Government Methodology

Table 1 - What do the selling to the government topic measures

Doing Business measures public procurement regulations through the selling to the government indicator set, a pilot project that includes 78 economies (table 1). The indicators have been developed by the Benchmarking Public Procurement project, an initiative developed at the request of the G20 Anti-Corruption Working Group, in order to measure transaction costs of public procurement contracts.  The selling to the government indicators are not included in the distance to frontier score nor in the ease of doing business ranking.

Information is collected using a questionnaire administered to an extensive network of local contributors with expertise in public procurement. Contributors are mainly attorneys, consultants and academics specializing in government contracts. Other contributors include private sector suppliers and chambers of commerce. Data from the private sector is complemented with input from government officials involved in procurement activities on a regular basis. Such professionals are knowledgeable about the legal and regulatory frameworks for public procurement in their respective economy.

The legal and regulatory framework measured encompasses all public procurement regulations, other legal texts of general application, judicial decisions and administrative rulings setting precedent in connection with national public procurement procedures. It includes all the rules applicable to the tendering process, from the needs assessment phase to the completion of the work, as governed by the national legal framework of the economy.

To make the data comparable across economies, case study assumptions covering the procurement of works are used. These assumptions were reviewed by experts to ensure data cross-comparability and relevance.

Assumptions about the procuring entity

The procuring entity:

  • Is located in the economy’s largest business city.
  • Is a local authority.
  • Is planning to resurface a road.

Assumptions about the bidding company

The bidding company (BidCo):

  • Is a limited liability company (or its legal equivalent).
  • Operates in the economy’s largest business city.
  • Is 100% domestically and privately-owned.
  • Has never previously responded to a public call for tender.

Assumptions about the call for tender

The public call for tender:

  • Is initiated by the procuring entity.
  • Follows an open and competitive process.
  • Concerns the resurfacing with asphalt of a flat two-lane road for a value equivalent to 91 times the economy’s income per capita or $2 million, whichever value is higher.
  • Does not include any other work (such as site clearance, subsoil drainage or bridge work or further routine maintenance).
  • Attracts 3 offers including the offer from the bidding company, BidCo. BidCo’s offer is complete and includes all required documents. It provides a price quotation free from mistakes on the part of BidCo.

The selling to the government indicators focus on two thematic pillars. These are:

  • The procurement process, from the needs assessment to the implementation of the procurement contract.
  • The complaint mechanisms throughout the process.

Procurement Process

Figure 1 - Thematic coverage of the procurement process indicators

The procurement process indicators measure the accessibility and transparency of particular aspects of the procurement process as well as constraints that private companies can face during the course of the procurement process such as bid security requirements and payment delays (figure 1). The indicators also measure the incentives for small and medium-size enterprises.

Accessibility and transparency

The indicators for accessibility and transparency measure the ease of access by potential bidders to information on public procurement opportunities. Data collected include the existence of an online procurement portal and the publication of procurement plans, notices of calls for tender and tender documents. It also assesses whether the call for tender and tender documents include sufficient information such as required bidder technical and financial qualifications, grounds for exclusion of bidders, forms of the bid security (if required), criteria for bid evaluation, method used to assess bids (that is, the weighting allocated to each criteria during the bid assessment), main terms and conditions of the contract and payment schedule under the procurement contract. Data are also collected to measure the ease of the bidding process, in particular during bid submission (whether the bid submission can be made via an electronic platform or via email) and bid opening (whether or not the bids can be opened electronically).

Bid security

The indicators for bid security measure the amount (as a percentage of the procurement contract) of the bid security requested from bidders as well as the timeframe imposed on the procuring entity to return the bid security to the bidder. Bid security is required from suppliers by the procuring entity and provided to the procuring entity to secure the fulfillment of obligations. It excludes any security for the performance of the contract. 

Payment delays

The indicators include a measure of the time needed, in practice, for the supplier to receive payment once the invoice is submitted to the procuring entity. Time is measured in calendar days. The measure captures the median duration needed for a supplier to receive a payment after submission of the invoice, once a procurement contract is awarded and executed. The time is presented in the following intervals: 0 to 30 days, 31 to 90 days, 91 to 180 days and more than 181 days.

Incentives for small and medium-size enterprises

The indicators measure either there are specific legal provisions or policies to promote fair access for small and medium-size enterprises to government contracts and what those specific legal are.

Complaint Mechanisms

Figure 2 - Thematic coverage of the complaints mechanisms indicators

The indicators also measure some aspects of the complaint mechanisms available to suppliers (figure 2). These focus mainly on the process of filing a complaint in order to challenge:

  • The tendering process before the award is granted (that is, to contest the specifications of the tender documents or a flaw in the bidding process).
  • The award decision (that is, a complaint filed following the award decision but before the implementation of the contract).

For both the pre-award and post-award stages the indicators assess who can file the complaint (actual bidders and potential bidders) and the remedies that can be awarded to them. Data is also collected on the time, in practice, needed to render a decision during the pre-award phase. It reflects the median duration for both first-tier and second-tier review bodies (where applicable) to issue a decision, in practice, on the complaint submitted by the bidding company, BidCo.

Finally, the indicators look at the standstill periodthe period after the notification of the award decision during which bidders can challenge the decision before the signature of the contract.

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Notes:
1. For more information, consult the benchmarking public procurement website: http://bpp.worldbank.org/
2. UNCITRAL (United Nations Commission on International Trade). 2011. Model Law on Public Procurement (http://www.uncitral.org/pdf/english/texts/procurem/ml-procurement-2011/2011-Model-Law-on-Public-Procurement-e.pdf).