Procurement Capacity Assessment Project Number: 51107-002 October 2018

Sri Lanka: Health System Enhancement Project

CONTENTS

ABBREVIATIONS I

EXECUTIVE SUMMARY II

A. Legislative and regulatory framework 4

B. Organization and Staff Capacity 7

C. Competitiveness and Participation of Private Sector in Public Procurement 11

D. Information Management 12

E. Procurement Manual and Guidelines 13

F. Procurement Practices 18

G. Summary of Procurement Assessment carried out by ADB 19

H. E-Procurement 21

I. Effectiveness 22

J. Accountability Measures 22

APPENDIXES

1. Procurement Capacity Assessment of the Ministry of Health, Nutrition, and Indigenous Medicine 29

2. Procurement Capacity Assessment of the Provincial Authority 36

3. Organizational Structure of Procurement Branch of Mohnim 42

4. Organizational Structure of DOH/ Engineering Services 43

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CURRENCY EQUIVALENTS (as of 1 October 2018)

Currency unit – Sri Lanka rupees (SLRe/SLRs)

SLRe1.00 = $0.00591 $1.00 = SLRs169.080

ABBREVIATIONS

ADB – Asian Development Bank BMES – Bio-medical Engineering Services Division BOQ – bill of quantity CAPC – cabinet appointed procurement committee CDDA – cosmetics drugs and devices authority CECB – Central Engineering Consultancy Bureau CIABAC – commission to investigate allegation of bribery and corruption CIDA – Construction Industry Development Authority COPE – committee on public enterprises DGHS – director general of health services DPF – development policy framework HSEP – health system enhancement project ICB – international competitive bidding ICTAD – Institute for Construction Training and Development ISO – International Standards Organization JICA – Japan International Cooperation Agency MOF – Ministry of Finance MOHNIM – Ministry of Health, Nutrition and Indigenous Medicine MSD – medical supplies division NPC – national procurement commission OPD – Out-patient department PDHS – provincial director of health services PHC – primary health center PMCU – primary medical care unit PIU – project implementation unit PMU – project management unit PPP – public private partnership PPTA – project preparing technical assistance SBD – standard bidding document TEC – technical evaluation committee USFDA – United States Food and Drugs Administration WHO – World Health Organization

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EXECUTIVE SUMMARY

The proposed investment under the Health System Enhancement Project (HSEP) is expected to help strengthen the primary health care (preventive and curative) delivery system in Sri Lanka. It will target four provinces (Central, North Central, Sabaragamuwa, and Uva) which have geographically, socially, and economically deprived populations. The procurement proposal involves civil works pertaining to renovation/upgradation of PMCUs, Ministry of Health, Nutrition and Indigenous Medicines (MOHNIM) outreach facilities, migrant health assessment, supply of equipment and Vehicles including engagement of consulting services. The proposed investment shall rely heavily on the credibility of national systems for the success of the program to achieve the desired outcomes. The procurement of various products shall be shared between the MOHNIM and the provincial councils, the latter assuming a larger role. The assessment, therefore, is based on the review of the procurement system, capacities and practices both at MOHNIM and targeted four provinces following the methodologies prescribed in Asian Development Bank (ADB) Procurement Capacity Assessment (PCA) and Procurement Review for Effective Implementation questionnaire and tools. In arriving at the conclusions and recommendations, field visits were conducted, detailed discussions were held with the stakeholders and the staff besides scrutinizing the audit reports of MOHNIM and the four provinces. Sri Lanka has a functional public procurement system based on comprehensive National Procurement Guidelines 2006/2007 supplemented by detailed manuals and standard bidding documents and are updated from time to time. Public procurement in Sri Lanka both at central and the provincial level is governed by these documents. MOHNIM which is the apex agency in health sector has extensive experience in implementing government led sector initiatives and donor assisted projects. Through the technical support from the various agencies, MOHNIM as an institution has gained the required experience and knowledge on the principles and guidelines of national and donor procurement processes and practices. Other than the procurement branch operating under the additional secretary, other operational divisions involved in the procurement include Bio Medical Engineering Services (BMES), Medical Supplies Division (MSD) and Building and Logistics Division under the administrative control of the Director General of Health Services (DGHS). These divisions provide technical wherewithal and are involved in procurement planning, bill of quantities (BOQ), bid evaluation and contract management. However, there is no systematic procurement training currently in place. Procurement capacity is reasonable at central level but weak at the provincial department level, more specifically, for the procurement of goods as the provincial department of health services do not have independent procurement entities. However, Provincial engineering services is comparatively of better capacity for the procurement of civil works because of the organizational structure in place at the provinces. At the central level, MOHNIM has been undertaking major development projects in health sector but has limited experience of international best practices in procurement. While they are well-versed with the national procurement guidelines but in the absence of guidance or compliance monitoring, the capacity of the staff is limited. There had been challenges of procurement planning, deviations of procurement rules and regulations, delays in procurement processes, delay in delivery, installation and commissioning of equipment, follow up of contract management etc; (refer to Auditor General reports of MOHNIM for the years 2013 to 2015 and of provincial councils Sabaragamuwa, Central, North Central and Uva for the years 2014 to 2016).

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Findings of the assessment conclude the following key risks both at executing agency (EA) and implementing agency (IA) levels relating to procurement for implementation of HSEP; (i) lack of detailed knowledge on procurement guidelines among the staff who manage and handle procurement; (ii) lack of experience in selection of consulting services; (iii) lack of procurement performance and compliance monitoring and (iv) weak procurement planning. ADB shall organize procurement capacity building as per ADB procurement guidelines. Prior review of procurement packages may further ensure compliance to ADB procurement guidelines. The procurement classification is assessed as moderate at the central level but at provincial level it is high as per ADB questionnaire. One of the principal deficiencies identified is lack of handling consulting services. Since, consulting services are to be looked after centrally at MOHNIM level, overall classification for execution of ADB project is ‘moderate’. Procurement planning, procurement performance and compliance monitoring are required to be strengthened. Following key interventions are proposed to mitigate the identified risks.

Systematic procurement capacity building program Training and capacity building is proposed as a key element in risk mitigation plan.

(i) Procurement capacity for MOHNIM and provincial council institutions. (ii) Technical assistance for this program will be provided as part of capacity

development under the HSEP.

Central role of MOHNIM

(i) To impart efficiency and to maintain quality of the services, it is proposed that MOHNIM should assume a major role in respect of (i) procurement packaging, planning and coordination (ii) budgeting (iii) managing procurement (iv) monitoring and reporting (v) audit and (vi) supporting these aspects at the provincial levels.

(ii) A separate skill enhancement program needs to be carried out by MOHNIM for provincial, divisional and districts levels.

(iii) Since provinces have never carried out recruitment of consultants, procurement of consulting services shall be carried out centrally.

(iv) Procurement specialists are proposed to be retained in PMU which will be set up under MOHNIM till the training of the staff is completed.

Bunching and packaging of goods, works and vehicle procurement packages It is proposed that procurement packaging should be appropriately carried out to enhance procurement efficiency, factoring in geographical location of the program component, market dynamics, quality issues, economy, implementation schedule etc.

(i) Procurement of goods. It is proposed to be carried out by MOHNIM so as to ensure quality, economy and uniformity as well as effective and efficient management because it is well supported by BMES division and independent procurement branch

(ii) Procurement of works. It should be carried out at provincial level. It is recommended that all civil works in a province/division/district may be clubbed together wherever feasible to maintain economy and efficiency. Further design and supervision of the civil works shall be handled by design and supervision consultants hired for the purpose.

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(iii) Procurement of vehicles. It is proposed to be carried out by MOHNIM to ensure quality and economy as well as effective and efficient management as MOHNIM can seek support from other central agencies having expertise in automobile and transport industries.

Transparency and Tracking. World Bank and Asian Development Bank in earlier reports have commented adversely on the lack of transparency of procurement process. In case of civil works, design and supervision consultant shall be monitoring and providing oversight to the construction work. It is proposed that MOHNIM should set up program specific links to disseminate information, details of bid invitation, details of rebidding, bid opening, number of bids received, number of bidders rejected as non-responsive, complaints received if any, action taken and contract details. It should also upload procurement plans, invitation to bids/RFP, after contract finalization, name of the bidders, name of the winning firm, contract value, complaints received/handled and the implementation period.

Procurement reviews and audits. It is proposed that ADB shall carry out a mid-term review that shall include procurement processes and performances both at national as well as provincial levels to identify and system-wide procurement related deficiencies using ADB’s Procurement Review for Effective Implementation or similar tool. The review reports would help in updating procurement action plan.

Health System Enhancement Project (RRP SRI 51107)

I. INTRODUCTION 1. Sri Lanka has better health indicators than most developing countries and many lower middle-income countries. The life expectancy is at 75 years in 2011 to 2013 and decreased fertility to 2.2 children per woman.1 The maternal and infant mortality has reduced to 28.6 per 100,000 live births and 8.2 per 1,000 live births respectively. Most of the vaccine preventable diseases are at near elimination stage with immunization coverage at more than 99%.2 However, maintaining and enhancing these achievements will require continued efforts. The concern of Sri Lanka government is to address the health problems like inequities in health services provision, care of elderly and disabled, a new burden of noncommunicable diseases, accidents and suicides, substance abuse, and malnutrition. 2. There are considerable disparities in perceived quality and availability of healthcare provision. Consequently, patients tend to bypass primary and secondary healthcare public facilities in preference to tertiary care institutions. The resulting imbalance of utilization has led to long waiting lists and overcrowding in tertiary institutions.

3. The demand of healthcare is affected by ageing population, lifestyle factors and increasing purchasing power. About 65% mortality and 80% morbidity is a result of non-communicable diseases. Provision of diagnostics is a key element in healthcare delivery in Sri Lanka. The market for diagnostic services has grown in Sri Lanka in the last 5 years at a compound average growth rate of 19.2% to an estimated SLR6 billion.

4. Procurement of goods, works and consulting services is a key element of strengthening of Sri Lanka health systems. If the borrowing agency has a sound, effective and efficient system, it shall contribute significantly to achieve overall objectives. One of the building blocks out of six identified is the provisioning of quality assured medical products, vaccines and technologies for strengthening health systems to improve the outcomes.3

5. Procurement capacity assessment was carried out in accordance with the Asian Development Bank’s (ADB) “Guide on Assessing Procurement Risks and Determining Project Procurement Classification”. The assessment was undertaken from November 2017 to December 2017. To facilitate it, the meetings and discussions were held at Central Level Procurement Branch, Biomedical Engineering Services Division (BMES), Building and Logistics Division, Medical Supplies Division (MSD) all of the Ministry of Health, Nutrition and Indigenous Medicine (MOHNIM), and at the provincial level provincial director of health services (PDHS) and provincial engineering services at selected provinces of Central and Uva which were sampled out of four provinces (Central, North Central, Uva, and Sabaragamuwa) covered in the project.

Key institutions related to Health System Procurement at MOHNIM level are:

I. Procurement Branch II. Biomedical Engineering Services Division III. Building and Logistics Division Ministry of Health

IV. Medical Supplies Division V. Chief Accountant, MOHNIM VI. National Medicine Regulatory Authority

1 Government of Sri Lanka, Census and Statistics Department. Sri Lanka Life Expectancy Tables, 2011–2013.

Colombo. http://www.statistics.gov.lk/PopHouSat/CPH2011/Pages/Activities/Reports/FinalReport/LifeTables.pdf; Government of Sri Lanka, Department of Census and Statistics and Ministry of Health, Nutrition and Indigenous Medicine (MOHNIM). 2017. Demographic and Health Survey, Sri Lanka 2016. Colombo.

2 Government of Sri Lanka, MOHNIM, Medical Statistics Unit. 2017. Annual Health Bulletin 2015. Colombo. 3 World Health Organization. 2007. Everybody’s Business: Strengthening Health Systems to Improve Health

Outcomes (WHO’s Framework for Action). Geneva.

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Key institutions related to Health System Procurement at Provincial level are:

I. Directorate of Health II. Chief Secretary of provincial council III. Chief Accountant Provincial Council IV. Engineering Services Division

II. DESCRIPTION OF THE INVESTMENT PROJECT

6. The Health Sector Enhancement Project (HSEP) will support the government’s health sector development framework and program.4 The focus of HSEP is aligned to the Government of Sri Lanka Health System Development Framework Program and focuses on a subset of outputs which relate to strengthening equity and quality of primary health care delivery. ADB’s financing will support strengthening curative and preventive primary health service delivery (including disease prevention targeting four provinces Central, North Central, Sabragamuwa and Uva). The indicative procurement includes the procurement of goods (medical equipment, other equipment, furniture and information technology equipment), civil works (construction, renovation and refurbishment of primary health service facilities), consultancies to support design and supervision of civil works, implementation of behaviour change, design of information, education communication materials, digital media and hiring of experts, software consultancies. 7. Project preparatory technical assistance (PPTA) procurement expert had extensive discussions with various stakeholders as detailed below:

Table 1: List of Stakeholders Met

Date/s Division / Department

Name of the persons Brief Description of Discussion

8 Jan 2018 PWC Team Dr. Kumari Navaratne and other team members

Discussion about various aspects of the project; roles and the expectations from the individual consultants; way forward for conducting field visits. Four provinces covered are Central, North Central, Uva, Sabaragamuwa.

9 Jan 2018 ADB Sri Lanka

Mr. K.M. Tilakaratne, consultant

He discussed about the scope of the project as well as challenges regarding the communication with MOHNIM. He also shared proposed project management structure and project implementation units at Central as well as Provincial level

10 Jan 2018 Procurement Division MOHNIM

Mr. A.L.M.Navavi, Additional Secretary; Ms. Kaushalya Jayasinghe, Senior Assistant Secretary (Procurement), and Ms. Gayani Wijesooriya

Mr. Navavi discussed activities carried out by Procurement Division of the Ministry of Health. He also indicated that MOHNIM is undertaking projects assisted by donor agencies. He specifically referred to JICA assisted Project. He informed that Ms. Kaushalaya from procurement angle and Ms. Gayani from Finance angle shall assist PPTA team. Deputy Director General (Planning) shall be a focal person for the project

10 Jan 2018 Directorate of Health Services, MOHNIM

Dr. Eshani Fernando, Director Planning

She discussed about Primary Health Care Units that are proposed to be strengthened. She also referred to Human Resource requirement and minimum package at PHC as per WHO

Central Province Kandy

4 ADB. 2017. Aide Memoire, Consultation Mission for Sri Lanka Proposed Health System Enhancement Project (27–

30 November 2017).

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Date/s Division / Department

Name of the persons Brief Description of Discussion

11 Jan 2018 Central Province Kandy

Director Provincial Health Services

A workshop was organized and concerned officers from three districts Kandy, Matale and Nuwara Eliya were involved. Dr Kumari made a ppt. about the scope of the project. Each District MO discussed individual requirement in term of refurbishment of PMCU and proposed requirements of equipment and vehicles.

11 Jan 2018 Directorate of Health Services, Central Province

Mr. GMK Eakonayake Chief Accountant

He discussed about the structure in Central Province. He indicated that there are five accounting units including Kandy, Matale, Nuwara Eliya plus two major hospitals. He also apprised the accounting system (Central Integrated Government Accounting System) Further, following points were also discussed: (i) payment to vendors through cheque, (ii) delay in payment, (iii) dead stock register, (iv) stock verification system, and (v) internal audit Unit.

11 Jan 2018 Directorate of Health Services, Central Province

Mr. Sampath, Procurement Official, Mr. Naleen, Planning Officer

• Discussions on procurement processes followed by the Central Province.

• Role of the Planning department • Challenges faced in the procurement process • Bid Evaluation Process

12 Jan 2018 Procurement Section, Directorate of Health Services, Central Province

Dr. Madawee Kumar, Deputy Provincial Director of Health and Mr. TMPG Sampath Lalitha Bhandar, Management Assistant Procurement

Dr. Kumar informed that all procurement is carried out as National Procurement Manual and Procurement Guidelines. He informed that Electrical Engineer assist in framing specification. He discussed preventive and curative health facilities in the Province. Primary care is handled at PMCU (OPD) and Divisional Hospital A, B and C (OPD+IPC+Spl. Clinic); Secondary Care at Base Hospitals (Specialists) and Provincial General Hospital and National Hospital provide Tertiary care. Annual need assessment starts from Distts- collated at Provincial Director—vetted by Secretary—approved by Chief Secretary/ Financial Commission.

12 Jan 2018 Chief Secretary, Central Province

Chief Secretary A meeting was organized with senior officials of the Central Province. All the officers were sensitized. PPTA was promised all the necessary help for the implementation of the project to achieve the desired objectives

12 Jan 2018 Engineering Division, Central Province

Eng HWSP Jayawardhane, Provincial Director (Eng. Services) and Eng. Sagara Senarathna, Deputy Provincial Director (Eng. Services)

All Civil works in the Province are planned and executed by the Engineering Services Division. Mr Samad, Civil Engineer attached to PPTA team shall help in preparing primary estimates of various civil works proposed to be undertaken in the province in consultation with Directorate of Engineering Services.

12 Jan 2018 Directorate of Audit, Central Province

Mr. RMKSB Ranasinghe, Provincial Director of Audit

He informed that there are six Accounting units. Internal Audit is done annually and biennially in some hospitals whereas as Districts/ regional director of health services are audited annually. Internal audit is done as per Internal Manual developed by Department of Internal Audit, Ministry of Finance (MOF), Government of Sri Lanka

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Date/s Division / Department

Name of the persons Brief Description of Discussion

MOHNIM

29 Jan 2018 and 30 Jan 2018

Procurement Division MOHNIM

Ms. Kaushalaya, Senior Assistant Secretary/ Mr. Whwipula Admn. Officer

Discussed about the ADB Questionnaire and the response of the Ministry. Also requested to provide last four years procurement carried out by the Division along with Organizational Chart in the required format

30 Jan 2018 Building Division

Ms Deepika, Admn. Officer

Discussed about the process flow in the Division and contract management

30 Jan 2018 Biomedical Engineering Division

Eng. Karunathilake, Director

Discussed about the role of Biomedical Engineering Division in procurement contract management

1 Feb 2018 Provincial Council Uva

1 Feb 2018 Engineering Services

• Eng. LPSS Vithanage Director Eng.

• Ms Roopika, Planning Engineer

Discussed about the different activities of Engineering Services. He explained the process flow of his Department from Concept Planning state to Construction of Buildings. Also provided replies to the ADB Questionnaire

1 Feb 2018 Directorate of Health Services

• Dr Nimal Shantha Senanayake, Director Health Services

• Dr JCM Tennekoon, Regional Director Health Services

• Mr. DMNP Dissanayake, Accountant

Discussed about the procurement processes initiated by the Department. Compositions of various committees (Procurement Committee, Tender Opening Committee, Technical Evaluation Committee), mode of tendering, complaint redressal mechanism. Contract management post award of contract and challenges were also discussed

MOHNIM and ADB

2 Feb 2018 Family Health Bureau, MOHNIM

Workshop with Govt. Officials, ADB mission and Consultants

Dr. Kumari brought out the various elements of outputs proposed to be covered under the projects and provided clarifications from the Officials of MOHNIM

4 Feb 2018 ADB Consultation workshop with ADB mission

Interaction between ADB mission and Consultations with the team leader and International Consultants and PwC officials

5 Feb 2018 Family Health Bureau, MOHNIM

Workshop with Provincial officials, MOHNIM officials along with ADB mission

Interaction with Provincial Officials for identification of the sites in various Districts which are proposed to be covered for refurbishment /alteration /upgradation/addition

5 Feb 2018 Procurement Division

Ms. Kaushalaya, Senior Assistant Secretary

Follow up for providing primary data

III. PROJECT PROCUREMENT RISK ASSESSMENT

A. Legislative and regulatory framework

8. The health programs are guided by the Vision 2025 document released by the Government of Sri Lanka in 2017, the Sri Lanka National Health policy 2016–2025 and the National strategic framework for health development of the MOHNIM (2016–2025). 9. Sri Lanka has a functional public procurement system based on comprehensive national procurement guidelines issued in 2006/2007 which in the absence of a central public procurement statue, have the force of law. These guidelines are supplemented with detailed manuals and standard bidding documents (SBDs) by the Institute for Construction Training and Development

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(ICTAD), now Construction Industry Development Authority (CIDA) for the procurement of civil works and are updated from time to time with hierarchy being on the basis of the date of issue of amendment. Public procurement in Sri Lanka, both at central and provincial levels is governed by these. The guidelines, manual and SBDs are updated through various amendments issued from time to time would need to be consolidated for reference and accessibility of the stakeholders. 10. Government of Sri Lanka has published manuals and guidelines for public procurement for goods, civil works and consulting services at central and provincial levels. They have also issued ‘bidders guide for success in public procurement’ for the benefit of the bidders to respond in pursuance of the provisions of procurement guidelines. The ‘procurement guidelines for procurement of pharmaceuticals and medical devices’ are not applicable to medical equipment and medical devices which are not of consumable in nature. 11. Procurement guidelines–goods and works (2006), and guidelines on selection and employment of consultants (2007) that have been issued with the approval of the cabinet of ministers under a presidential directive. Along with the guidelines detailed manuals for the procurement of goods and works and recruitment of consultants have also been issued. These procurement guidelines and manuals for all govt. and semi-govt. institutions are applicable and have been adopted by provincial councils with certain modifications for specific provincial councils. The Supreme Court has repeatedly ruled these guidelines have the force and effect of law. These guidelines and manuals are relatively clear and comprehensive, and the procurement manual of goods and works has been updated 27 times since first issue by the Government. The frequent changes through amendments make it further difficult for provincial level government staff to easily access and understand which are the most updated and applicable versions. The guidelines have the provision of the international competitive bidding (ICB). It is also stated in that the guidelines that in case of conflict in the applicability of provisions with that of development partners, the procedures of the development partners will be applicable depending on financing. 12. The ministries and departments under Government of Sri Lanka have administration and finance divisions. Similarly, provincial councils are also supported by administration and finance sections to manage their financial affairs. Finance personnel (planning officials, budget officials, accounts officials, procurement officials and internal auditors) are placed in all the budgetary bodies across the country. 13. Open competitive bidding procedures are mandatory for all procurement over SLR5 million ($40,000 approximate) for goods and works. The threshold/procedure currently applicable are as follows:

(i) At the central level of MOHNIM, the procurement division within MOHNIM processes all procurement. The sector divisions under Directorate General of Health Services provide bill of quantity (BOQ) and cost estimates.

(ii) At the provincial level, account section under Directorate of Health Services

processes all procurement except civil works. The sector divisions under Directorate of Directorate of health services provide BOQ and cost estimates. In case of civil works, engineering services department under provincial council carries out all the procurement using procurement committees with different authorities in the province.

(iii) Each procurement (at both central and provincial levels) is evaluated initially by a

technical evaluation committee (TEC) comprising of at least three members

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including at least one subject specialist, and a representative from the ministry However for large and complex procurements above SLR5 million for goods and services, and above SLR10 million for works, the minimum TEC size is five members, with at least one external member). The evaluation and recommendation of TEC are reviewed by designated procurement committee depending on the value of the package and delegation of authority, the recommendations are approved. Appointing authorities, composition, and the thresholds/approval authority levels of procurement committees are defined in the procurement manuals and guidelines and are followed both at National and Provincial levels. However provincial councils do make changes in the threshold values, composition of procurement committees, tender opening committee and tender evaluation committees depending on the local requirements. Approving authority for various levels of procurement committees as per procurement guidelines are as follows (at the ministry level) are:

Table 2: Procurement Thresholds of MOHNIM

Authority Government- Funded

Projects (SLR) Foreign-Funded Projects (SLR)

Standing Cabinet Appointed Procurement Committee

Cabinet Appointed Procurement Committee

More than 250 million More than 600

million

Ministry Procurement Committee Up to 250 million Up to 600 million

Department Procurement Committee /

Project Procurement Committee

Up to 100 million Up to 300 million

Regional Procurement Committee Up to 10 million Up to 10 million

Source: National Procurement Guidelines, March 2017.

(iv) Similarly, in case of donor-funded projects, enhanced threshold levels have been

permitted in Provincial Councils. Implementing a foreign project when the direct responsibility of the project is carried out by the department, the project design will depend on the project and provincial procurement authority limitations. Accordingly, depending on the value of the project, the threshold limit of the Project Implementation Unit (PIU) is suitably modified. In the following tables, figures obtained from engineering services, Uva are detailed. According to the following tables for the provincial procurement authorities, there are deviations from province to province on procurement thresholds.

Table 3: Procurement Thresholds of Uva Province

Authority Government-Funded

Projects (SLR) Foreign-Funded Projects (SLR)

Cabinet Appointed Procurement Committee for Works Up to 10 million or more Up to 50 million or more

Cabinet Appointed Procurement Committee for Goods and Services

Up to 10 million or more Up to 30 million or more

Major Contracts - Ministry Procurement Committee for Works

Less than 10 million Less than 50 million

Minor Contracts - Ministry Procurement Committee for Works

Less than 3 million Less than 7.5 million

Major Contracts - Ministry Procurement Committee for Goods and Services

Less than 10 million Less than 30 million

Minor Contracts - Ministry Procurement Committee for Goods and Services

Less than 1.5 million Less than 3.0 million

Source: Director, Engineering Services, Uva.

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Table 4: Procurement thresholds of Central Province

Authority Government-Funded

Projects (SLR) Foreign-Funded Projects (SLR)

Cabinet Appointed Procurement Committee for Works, goods and services

More than 200 million More than 600 million

Chief Secretary’s Procurement Committee for Works, Goods and Services

Less than 200 million Less than 600 million

Ministry Procurement Committee for Works, goods and services

Less than 100 million Less than 200 million

Minor Contracts - Ministry Procurement Committee for Works, goods and services

Less than 10 million Less than 25 million

Department Procurement committee for works Less than 50 million Less than 100 million

Department Procurement Committee for Goods and Services

Less than 10 million Less than 25 million

Project Procurement Committee Less than 5 million Less than 10 million

Source: Financial Regulation of Central Province, 2008.

Table 5: Procurement Thresholds of Sabaragamuwa Province

Authority Government-Funded

Projects (SLR) Foreign-Funded Projects (SLR)

Cabinet Appointed Procurement Committee for Works, good and services

More than Rs. 150 Mn More than Rs. 400 Mn

Chief Secretary’s Procurement Committee for Works, Goods and Services

Less than Rs. 150 Mn Less than Rs. 400 Mn

Ministry Procurement Committee for Works, Less than Rs. 30 Mn Less than Rs. 100 Mn

Ministry Procurement Committee for goods and services

Less than Rs. 15 Mn Less than Rs. 40 Mn

Department Procurement committee for works Less than Rs. 10 Mn As mentioned in the project document Department Procurement Committee for Goods and

Services Less than Rs. 5 Mn

Project Procurement Committee Less than Rs. 20 Mn

Source: Revised Thresholds of Financial Regulations of Sabaragamuwa Province issued 24 August 2016

(v) The threshold values of ADB specific to Sri Lanka for the implementation of HSEP

shall prevail both at executing agency and implementing agency levels.

(vi) The procedure for the recruitment of consulting services are laid in the guidelines given in Consulting Services Manual. The terms of reference are developed by the requisitioning division / Department of Directorate General of Health Services and approved by Secretary, MOHNIM / procurement committee. In case of recruitment of consultants, similar process as indicated under procurement is applicable except that TEC and Procurement Committee review the proposal together and no tier review and approval process are required.

(vii) No recruitment of consultants for health sector will be undertaken at the provincial level for the project.

B. Organization and Staff Capacity

14. Staff undertaking procurement are required to have adequate qualifications and knowledge or training on procurement. Procurement capacity at the central level is reasonable but at the provincial level improvement is needed in particularly for the foreign funded projects. The executing agency for procurement of goods, works and consultancies at national level is the procurement branch at MOHNIM whereas at the provincial level PDHS and engineering services departments. A full-time Additional Secretary heads procurement division at MOHNIM whereas

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in the Provinces, PHDS administers the operations for the procurement of goods whereas Deputy Chief Secretary (engineering services) heads the department of Engineering Services. Organization structures of procurement branch at MOHNIM and DOH/Engineering Services Provinces are given in Appendix 3 and 4. 15. At the national level, the Procurement Branch is supported by BMES division, building and logistics division, medical supplies division and planning division. Each of them is headed by Deputy Director General operating under overall control of DGHS. All Technical Evaluation Committees operate under the respective divisions. These committees are responsible for finalizing BOQs, technical specifications and contract management after procurement division awards contract to the shortlisted bidder. BMES division ensures effective installation/commissioning/maintenance of medical equipment and their maintenance for efficient functioning and operations. Building and logistic division is responsible for preparing project proposal with the involvement of Central Engineering Consultancy Bureau (CECB), concept planning, detailed estimate and drawing before tendering and after tendering contract management, oversighting along with CECB. Medical supplies division deals with pharmaceuticals and medical devices including receipt, inspection, quality control and distribution. 16. At the provincial level, there are two separate procurement entities at provincial level one operating under DOH whereas the other under the administrating control of engineering services. Under PDHS, in some provinces Deputy Director (Central province) and in others Regional Director of Health Services (Uva) are second in command. The planning unit finalizes BOQ-based on the requirements obtained from the accounting units (districts and major hospitals). Procurement of goods is carried out by a section under the control of accountant. The biomedical engineering unit in each province provides technical specification of medical equipment and is responsible for contract management including installation/commissioning, maintenance and ensuring liabilities under warranty obligations. There is no dedicated section for procurement. In case of engineering services, Deputy Chief Secretary heads the department under him Director (Building) is second in command. Concept planning is initiated by DOH approved by Secretary, Health. Designing, costing, geotechnical investigation, preliminary estimate comes under the domain of Director (Building). Approval is sought from the competent authority based on the threshold value. Award of contract is issued by Deputy Chief Secretary. Site management is done at the divisional level. Any alteration/deviation/substitution if warranted can be done by Director (Engineering Services) up to 10% of the value and more than 10% by Deputy Chief Secretary. Dispute resolution is through adjudication as per CIDA guidelines. 17. At the national level, total employees under procurement divisions are 32 including Additional Secretary, two Senior Assistant Secretaries and one Administrative Officer drawn from Sri Lanka Administrative Services and they have a long experience in the procurement. 18. At the provincial level, so far procurement of goods is concerned PDOHS, there is no dedicated section, but it operates under the Accountant under the overall administrative control of Deputy Director of Health Services/Regional Director of Health Services. 19. In case of Engineering Services, Director (Engineering) is supported by Chief Engineer (Planning), Chief Engineers of each district, Accountant, Architect and Material Testing Laboratory. Each Chief Engineer is supported by Divisional Engineer who in turn is supported in the districts by Technical Officers.

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20. At the national level, the tender evaluation committee consists of user department representative, sector specialist, accounts department and the members suggested by the user department. Tender opening committee is constituted of two staff officers of procurement division. Procurement committees/ authorities designated for approval have been discussed above.

21. At the provincial level, the composition of tender evaluation committee is experts from Administration side, experts in technical side e.g. relevant consultant and biomedical engineer and experts from the financial side. Tender opening committee consists of head of the institution (Deputy DHS/ regional director of health services), accountant and an external member. Procurement committee / authorities designated for approval have been discussed above. 22. Provincial councils Sabaragamuwa and Central provinces had PIUs along with MOHNIM under Japan International Cooperation Agency (JICA)-funded health project. However, other two provinces, Uva and North Central do not have prior experience for foreign funded Health projects in the recent past World Bank Support had been available as budgetary support for entire Sri Lanka. ADB assisted project has not been undertaken by MOHNIM for the past more than 17 years and at the provincial level, engineering services have been involved in the education sector but not in health sector. At the provincial level, these provincial councils have experienced in implementation of Education Sector Development Project and Local Government Enhancement Projects financed by ADB. 23. The bulk of procurement covered under the project comprises of small civil contracts for renovation/upgradations of PMCUs, divisional hospitals under Central, North Central, Sabaragamuwa and Uva provinces and field health centres. It shall be carried out by the department of engineering services in the provinces. In order to quality/uniformity in the contracts and to ensure effective and efficient implementation, services of civil works design and supervision consultant will be engaged. 24. All consulting services and equipment procurement will be managed centrally at MOHNIM for overall system to ensure quality and to maximize efficiency and achieve economy as the current system is much more organized duly supported by the services of sector specialists. 25. The main issue regarding procurement of equipment relates to the quality assurance, its performance including effective and efficient operation of the equipment. It is desirable to build up a database of information of different medical equipment based on current international/domestic players to help procurement decisions. In order to address quality assurance issue qualification criteria should also include compliance to International Standards Organization (ISO) 13485 and quality certification through Conformite’ Europeene, United States Food and Drugs Administration (USFDA) certificates, compliance to individual product standards of ISO and WHO medical devices regulation. Contract management needs to ensure that the sites are ready for installation and/or commissioning and warranty obligations including maintenance (preventive/breakdown) are ensured so that a minimum of 95% uptime of the equipment is achieved. 26. All medical devices and medical equipment are required to be registered in Sri Lanka under the Cosmetics Devices and Drug Act No.27 of 1980 and its subsequent amendments.5 In case of devices registration, individual products are registered separately after evaluating each product for following parameters i.e. quality, safety, effectiveness and durability and will issues a 'marketing authorization', or licence. For imported medical devices the registration application should be submitted through the local agent representing the manufacturer in Sri Lanka to the

5 Government of Sri Lanka. 2011. Guidelines for Registration of Medical Devices in Sri Lanka. Colombo.

10

Cosmetics, Drugs and Devices Authority (CDDA). The registration process may be expedited to improve participation and availability of latest technology. When importing equipment, CDDA mandates one agent per type of product imported. Therefore, new players who wish to import same equipment as other agents are required to submit a no objection letter from the registered agent of MOHNIM. A major share (95%) of medical devices is met by imports. Local manufacturing is limited to consumables as consumers demand established brand to meet high technology equipment requirements.6 27. Organization and functions of other key institutions related to procurement domain in Sri Lanka at central levels are BMES, building and logistics, MSD and at provincial level Directorate of Health Services and engineering services (i.e. BMED). Brief highlights of their roles except National Medicines Regulatory Authority have been discussed in the preceding/succeeding paras. The National Medicines Regulatory Authority is the institution in which the Ministry of Health has vested the authority to ensure that the pharmaceuticals and medical devices available to the public meet the required standards of quality and are within the existing legislative framework with respect to the production, marketing and dispensing of these items.7 In accordance to the legal requirements of the Cosmetics, Devices and Drugs Act No. 27 of 1980 and cosmetics, devices and drugs regulations– The gazette of the Democratic Socialist Republic of Sri Lanka (Extraordinary) No. 378/3 of 1985, all devices, manufactured, imported, sold and distributed and offered for sale in Sri Lanka should be registered under the provisions of the act. 28. The Department of National Planning as a part of the apex Ministry of National Policies and Economic Affairs committed to policy development, planning and implementation, to accelerate Sri Lanka's economic growth and social progress. This department provides a national perspective to policies, programmes and projects, in contrast to the sectoral or regional perspectives of other institutions. It is in the Ministry of Finance secretariat, which helps maintain close interaction with the treasury and its departments.

29. CIDA is an organization set up under Construction Industry Development Act No. 33 of 2014 by the Government of Sri Lanka to develop and promote the domestic construction Industry, contractors, professionals, work force, etc.8 CIDA has established itself as a recognized and important constituent of the construction industry. ICTAD registration (now known as CIDA registration) is a requirement for obtaining government contracts and there are over 2500 construction contractors registered with CIDA. A database of contractors is maintained. As such the client organizations are requested to call bids for their projects specifying the relevant "financial limits" of the new 'C' scheme (building and civil engineering). 30. CECB was established as a fully owned state enterprise by the Government of Sri Lanka in 1973.9 Presently, it is attached to the Ministry of Mahaweli Development and Environment. The areas of specialization include buildings, roads, bridges hydropower, irrigation, coastal, ports and water supply. They have a fully equipped laboratory for testing engineering materials and a geological investigations unit. Since this is a semi government organization, CECB is not eligible to work for ADB funded projects. 31. Procurement guidelines are substantially harmonized with the procurement guidelines of the World Bank, ADB and JICA. Sri Lankan government has consistently agreed to adopt

6 Embassy of the Kingdom of the Netherlands. 2014. The Health Sector of Sri Lanka. 7 Government of Sri Lanka, National Medicine Regulatory Authority. nmra.gov.lk 8 Government of Sri Lanka, Construction and Industry Development Authority. www.cida.gov.lk 9 Government of Sri Lanka, Central Engineering Consultancy Bureau. www.cecb.lk

11

guidelines of the funders for the procurements in projects that are funded by multilateral agencies such as the ADB and WB and allow real time monitoring. C. Competitiveness and Participation of Private Sector in Public Procurement

32. The private sector needs to be equally efficient, competent, honest and vigilant if public procurement is to function effectively. Relevant extracts from the private sector assessment carried out by ADB as part of country partnership strategy (CPS) 2012–2016 are presented in succeeding paragraphs. ADB support to health sector in Sri Lanka in 50 years until 2016 had been 0.51% of the total amount.10 Post-conflict under North East Community Restoration and Development Project, it was aimed to rapidly improve the living standards and well-being of a substantial number of people in conflict affected areas including developing health infrastructure through construction/reconstruction of health facilities and provisioning of ambulances, trucks and generators.11 33. Critical Constraints to Private Sector Development.

(i) Impact of the prolonged war. Development policy framework (DPF) had

identified poor infrastructure as a major constraint for sustaining rapid economic growth. The goals and objectives of the government’s DPF and ADB’s Strategy 2020 are very similar. The CPS 2012–2016 focus was on three pillars (i) inclusive and sustainable economic growth, (ii) catalyzing private investment and enhancing the effectiveness of public investment, and iii) human resource and knowledge development. The government is also clearer on the gaps in infrastructure, especially in lagging regions. A critical role has been assigned to the private sector and skill development has been assigned high priority. This sharpens the focus of the CPS in addressing the critical development constraints facing the country. Responding to post conflict needs, two cross-cutting themes were identified by the government. These were (i) governance (including innovative capacity development, and (ii) private sector development through improvement in investment climate. Under the first pillar, the strategy sought to improve private sector competitiveness and increase incentives for private sector investment by addressing two major bottlenecks: poor infrastructure, and a volatile macroeconomic environment. Under the second pillar, the strategy aimed to provide expanded access to high quality services in water supply, power and transport and to improve education in the lagging regions. The prolonged war had caused major destruction to the infrastructure. DPF had identified poor infrastructure as a major constraint for sustaining rapid economic growth.

(ii) Lack of access to finance. DPF places the private sector at the centre of the

development thrust. To accelerate the pace of private sector participation, Sri Lanka’s financial sector needs to be developed to offer a wide range of financial products and services. For increasing the effectiveness of public investment and catalyzing private investments ADB will assist by institutionalizing public-private partnerships (PPP) through early and sustained engagement in (i) developing a suitable enabling environment for PPPs, (ii) early identification of PPP candidate projects, concept development, pre-feasibility assessment, and (iii) project

10 ADB. 2017. Asian Development Bank and Sri Lanka: Fact Sheet. Manila. 11 ADB. 2017. Sri Lanka-ADB Partnership, 1966–2016. Manila.

12

structuring by assessing commercial, technical, environmental and financial viability. ADB will explore co-financing opportunities in all projects to channel additional resources and achieve greater leverage. Private investment will be catalysed through co-financing using ADB’s credit enhancement products. These include guarantees for commercial and political risks, and syndication and other private financial entities with ADB taking on the role of lender on record or guarantor on record. ADB will explore providing loans in local currency to eliminate the exchange risk and deepening the domestic capital markets by issuing local currency bonds.

34. Sri Lanka needs significant strengthening of primary healthcare (PHC)—including both primary curative care and preventive health services to tackle the rising costs of health care, as well as to improve basic health services to lagging populations. In the concept paper brought out by ADB for Sri Lanka; Health System Enhancement Project ADB’s assistance is expected to (i) further inform and operationalize government PHC reform initiatives, while improving underserved communities’ access to essential health services, and (ii) address selected gaps in core public health capacities in line with the international health regulations (IHR 2005).12 35. It should be emphasized, however, that Sri Lanka after post conflict period is poised to develop as upper middle-income country because of commitment of Sri Lanka government on good governance, inclusive growth and private sector development backed by high quality labour force supported by good basic education and health systems. 36. Sri Lanka sources a sizable number of healthcare products from other countries. Both public and private sector import drugs, however the import made by private sector is significantly larger than the public sector. Sri Lanka depends on markets India, Switzerland, Pakistan and United Kingdom for its pharmaceutical requirements though about 52% comes from India.13 However 20% of its requirements are met by local manufacturers. The investment in medical equipment and machinery account for 17% of the Government of Sri Lanka total capital investment in curative care in Sri Lanka in 2012. A major share (95%) of medical equipment and devices are met by imports. Local manufacturing is restricted to the consumables for the equipment as the consumers demand established brands to meet high tech medical equipment requirements. A major challenge identified by the importers of medical devices is the rigorous regulatory procedure in registering equipment with CDDA. Importers are required to register the equipment of all types and sizes irrespective of number of times similar and/or identical equipment has been previously registered. When importing the equipment CDDA mandates one agent per type of product imported. Therefore, new players who wish to import the same equipment as other agents are required to submit no objection letter from the registered agent to MOHNIM.14 D. Information Management

37. Both at national and provincial level, Sri Lanka maintains a manual system of information management. All relevant procurement records are kept in a single file. The records are retained for five years as per national archival policy. The contract management records are separately maintained by the concerned division at national level and provincial level. However, Sri Lanka maintains Central Integrated Government System software for accounting all the transactions. 12 ADB. 2017. Project Concept Paper: Proposed Loan and Grant to Sri Lanka for the Health System Enhancement

Project. Manila. 13 Embassy of the Kingdom of the Netherlands. 2014. The Health Sector of Sri Lanka. 14 Embassy of the Kingdom of the Netherlands. 2014. The Health Sector of Sri Lanka.

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E. Procurement Manual and Guidelines

38. Sri Lanka has a comprehensive procurement manual mandated to be used with procurement guidelines 2006, goods and works issued by national procurement agency. procurement manual details the responsibilities of procuring entities, procurement committees, technical evaluation committees as well as the compositions of various committees based on the threshold values (varies so far national level and provincial level procurement are concerned). It also defines the procurement methods, procurement process including invitation to bids, opening of bids, bid evaluation and award of contract. 39. National Procurement Agency has also issued Procurement Guidelines for the Procurement of Pharmaceuticals and Medical Devices 2006. Currently Procurement Commission has taken the role of National Procurement Agency. Procuring entities at national level as well as provincial level follow these guidelines for the procurement of products for use in healthcare facilities under their control.

(i) Procurement Branch, MOHNIM. Procurement Branch is responsible for all types

of procurement including construction, consulting services, pharmaceuticals, surgical consumables, medical equipment and medical devices. Procurement committees are responsible for the approvals at tender stage, bid evaluation stage and at the time of award of contract.

a. Selection of products. BOQ is finalized by the respective Technical

Evaluation Committees (TECs) which operate in the respective divisions of DGHS. The concerned division is responsible for collating/compiling the requirements from the various healthcare facilities under the administrative control of MOHNIM and defining the specifications. BMES provides the BOQ for medical equipment, building and logistics for civil works, MSD for pharmaceuticals, surgical and medical devices and the concerned division of DGHS for consulting services.

b. Demand Forecasting and need assessment. The annual requisition of medical supplies is initially compiled by the respective healthcare facilities. These are collated by the planning division of DGHS. After collation by them, BOQ is finalized by the respective division and sent to procurement unit for initiating procurement action. BMES provides the BOQ for medical equipment; Building and Logistics for Civil Works; MSD for Pharmaceuticals, surgical and medical devices and the concerned division of DGHS for consulting Services.

c. Procurement. Procurement Branch carries out all the processes of

tendering till the award of contract.

d. Contract Management. Contract management including receipt, delivery, inspection, quality control testing, distribution, equipment installation/commissioning, after sales services, warranty obligations and maintenance are maintained and monitored by the respective TECs/ divisions.

e. Payment. The payment is made by finance division of MOHNIM.

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(ii) Procurement Unit, Provincial Council

a. Demand forecasting and need assessment. The annual requisition of medical supplies is initially compiled by the respective districts and major hospitals under the control of DOHS. These are collated by the Planning Division of DOHS. After collation, BOQ is finalized and sent to accounts unit for initiating procurement action for medical supplies and engineering services for civil works. Designing, costing and geotechnical investigation is carried out to prepare preliminary estimate based on historical data by engineering services.

b. Procurement. Account Unit carries out all the procurement of medical

supplies and engineering services is responsible for civil works. c. Contract Management. Contract management for receipt/delivery,

inspection, site preparation, installation/commissioning and ensuring warranty obligations and effective maintenance of medical equipment is carried out by bio medical engineering unit. Engineering services is responsible for carrying out all activities relating to procurement/contract management of civil works.

d. Payment. The payment is made by accounts unit.

(iii) Process flows of procurement unit MOHNIM and provincial council

engineering services a. As per Procurement Guidelines 5.3.1, the procurement entities shall use

SBD approved by National Procurement Agency with minimum changes if there are any, to address contract specific issues. Any such changes shall be introduced through bid or contract data sheets or through special conditions of the contract and not by introducing changes in standard wording of SBDs. The composition of procurement committees based on the threshold values are defined under PGR 2.7 of the procurement manual. PGR 3.1.1 (b) envisages that ICB will be used for foreign funded projects, when the foreign funding agreement requires the procurement entity to resort to ICB procedures. The PCs will be responsible for all aspects of procurement and are independent of the heads of procurement entities.

b. As per the procurement guidelines, in the case of a foreign-funded project, if the foreign funding agency mandates the use of procurement guidelines of such funding agency, such funding agency guidelines shall prevail over these guidelines to the extent applicable. In the event of a conflict between these guidelines and that of the funding agency, the funding agency guidelines shall take precedence over these Guidelines. Procurement manual and SBDs for government financed projects are up to date but do not cover foreign-assisted projects, so would not be used for this project.

c. ADB's Procurement Plan template has the following conditions related to

foreign bidders which would be applicable to the procurement carried out with ADB financial investment. "Foreign suppliers and contractors from

15

ADB member countries shall be allowed to apply for pre-qualification and to bid, without national registration, licensing and other government authorizations, leaving compliance with these requirements until after notice of award and before signing of contract. Where registration is required prior to award of contract, bidders: (i) shall be allowed a reasonable time to complete the registration process; and (ii) shall not be denied registration for reasons unrelated to their capability and resources to successfully perform the contract, which shall be verified through post-qualification".

16

Figure 1: Process Flow of MOHNIM

17

Figure 2: Process Flow of Provincial Engineering Services

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F. Procurement Practices

40. There is no separate procurement cadre or procurement core group in Sri Lanka government. Most staff carrying out procurement functions are from administrative services and accounting/finance wings of MOHNIM or provincial councils and are not trained specifically in procurement. However, developing the BOQ and contract management is carried out by various divisions of MOHNIM under the administrative control of DGHS but in case of provincial council divisions under DOHS and engineering services support these functions. TECs based in the concerned divisions finalize the BOQs and carry out bid evaluation. Therefore, BMES supports procurement unit for medical equipment; buildings and logistics for civil works; MSD for drugs and consumables and the relevant divisions under DGHS for consulting services. 41. In case of medical equipment and medical devices, pre-qualification criteria need to be strengthened to follow WHO medical devices regulations in that compliance to ISO 13485, and quality certification through CE and USFDA certificate can help in satisfying quality, safety, performance, effectiveness and efficacy criteria as enshrined in Sri Lanka national guidelines for procurement of pharmaceuticals and medical devices (refer general principles 1.1). 42. As per PGR 3.2, national competitive bidding in foreign funded projects may be used: (i) with the agreement of the Foreign Funding Agency; ii) by allowing foreign contractors or suppliers to bid on the same terms with domestic contractors or suppliers; iii) by not giving preference to domestic bidders or approved societies and by considering registration in appropriate category under the National Registration System of ICTAD as equivalent experience and qualification criteria described in the bidding document. The table below presents the list of relevant foreign funded health projects.

Table 5: Foreign-Funded Health Projects

Name of the Project Amount of Contracts Procurement Products Funding Agency

Project for Improvement of Basic Social Services Targeting Emerging Regions (JICA, Government of Sri Lanka, IBSSTER, 2012–2017)

Total cost of the project: ¥4,760 million JICA Financing: ¥3,935 million

a. Facility strengthening of SPMC b. Procurement of ambulances b. Enhancement of four Secondary

Hospitals (Construction of Buildings; Installation of Central A/C System, Installation of M and E System and Procurement of Equipment)

JICA, Japan

Second Health Sector Development Project 2014–2019

Total cost of the project: $5,170 million Bank financing: $200 million

To upgrade the standards of performance of the public health system and enable it to better respond to the challenges of malnutrition and non-communicable diseases.

World Bank

43. Discussions by PPTA procurement expert with procurement entities at MOHNIM and sampled provinces central and Uva and Sabaragamuwa are detailed below.

(i) MOHNIM. Discussions were held on 10 January 2018 and subsequently on 29

January 2018 with Procurement Unit Chief, MOHNIM Additional Secretary and his colleagues. PPTA Expert was provided the details of the procurement carried out by the procurement unit. Two Senior Assistant Secretaries have been allocated separate subjects to deal with, one of them dealing with Civil Works and Consulting Services whereas the other has been given the responsibilities of pharmaceuticals

19

and non-pharmaceuticals including medical equipment. Based on the threshold values, cabinet appointed procurement committee (PC) for the procurement costing above SLR 250 million for local funded projects and various ministry appointed procurement committees for goods, works, consulting services for different values (SLR10 million to SLR100 million; 100 million to SLR250 million) are operating and approving the procurement. It was informed that TECs are operating under separate divisions under DGHS. It was apprised that they are following procurement manual and procurement guidelines issued by National Procurement Agency. The Ministry limit for foreign funded projects is up to SLR 600 million.

(ii) Central Province. Discussions were held on 12 January 2018 with Director of

Health Services and her colleagues as well as Chief Accountant, Provincial Director Engineering Services. Procurement of the products other than civil works is being carried out accounts unit of the province and civil works is looked after by the engineering services under Deputy Chief Secretary. PPTA expert was provided the details of the procurement carried out by the Deputy Director of Health Services and Chief Accountant. Procurement Committee led by PDHS has the power to deal with the procurement valuing up to SLR10 million for goods and SLR50 million for works under local funds and Technical Evaluation Committee (TEC) consists of expert from Administration, technical (relevant consultant and biomedical engineer) and finance. Provincial level procurement under the Chief Secretary is up to SLR600 million for foreign funded projects.

(iii) Uva Province. Discussions were held on 01 February 2018 with Director of Health

Services and his colleagues as well as Chief Accountant, Provincial Director Engineering Services. Procurement of the products other than Civil Works is being carried out Accounts Unit of the province and civil works is looked after by the Engineering Services under Deputy Chief Secretary. PPTA Expert was provided the details of the procurement carried out by the Regional Director of Health Services and Accountant. Procurement Committee led by Provincial Director of Health Services has the power to deal with the procurement valuing up to SLR10 million and TEC consists of expert from administration, technical (relevant consultant and biomedical engineer) and finance. Provincial ministry level procurement limit is up to SLR 50 million for foreign-funded projects.

(iv) Sabaragamuwa Province: The procurement procedure is same as the other

provinces, but procurement thresholds of the procurement committees are different than other provinces. The procurement limit under the Chief Secretary level is up to SLR 400 million for the foreign funded projects and up toSLR150 million for the local funded projects.

G. Summary of Procurement Assessment carried out by ADB

Table 6: Portfolio Performance 2011 2012* 2013* 2014* 2015* 2016*

Sri Lanka

%

ADB Ave %

Sri Lanka

%

ADB Ave %

Sri Lanka

%

ADB Ave %

Sri Lanka

%

ADB Ave %

Sri Lanka

%

ADB Ave %

Sri Lanka

%

ADB Ave %

Contract award ratio

26 19 24 29 20 28 24 29 23 26 24

Disbursement Ratio

20 20 24 18 19 18 25 18 21 17 22 18

20

2011 2012* 2013* 2014* 2015* 2016*

Sri Lanka

%

ADB Ave %

Sri Lanka

%

ADB Ave %

Sri Lanka

%

ADB Ave %

Sri Lanka

%

ADB Ave %

Sri Lanka

%

ADB Ave %

Sri Lanka

%

ADB Ave %

Proportion of projectsa

12 31 13 21 19 20 15 24 8 20

a Reporting implementation risks. *ADB Annual Portfolio Performance Reports (2012–2016).

44. Portfolio performance was carried out from 2012–2016. It is seen that Sri Lanka has managed to maintain a relatively good record in portfolio performance, despite some signs of decline in 2016. The contract award ratio has been consistently good for the years 2013–2015, exceeding the respective ADB-wide averages of 20%, 24% and 23% in these years. In contrast, the disbursement ratio has been around 19% to 25%, during the years 2012–2016. Although these rates were better than the overall ADB averages being 17%- 18% between the years 2012–2016. The proportion of projects reporting implementation risks showed marked decline to 8% in 2016. 45. ADB country operations and programs in Sri Lanka were rated successful by both a country assistance performance evaluation conducted in 2010 and the CPS final review validation report in 2013. With the end of the conflict in 2009 and return of political and economic stability, the prospect of rapid economic growth and development improved considerably resulting growth of 8% in gross domestic product in 2010. International Monetary Fund classified Sri Lanka as a middle-income country in 2010. The CPS final review and its validation report both stressed the need for (i) adoption of phased approach and sustained efforts for sensitive reform processes to ensure that the cooperation and support is forthcoming from the stage of project/program design, (ii) support should be continued to improve quality of life for the people emerging from damage, (iii) PPPs should be diversified to cover infrastructure and education sectors, (iv) increased government commitment to capacity development efforts, and (v) in line with ADB 2020 strategy and country development priorities, continuity of assistance in the transport and ICT, energy, finance sectors, etc. is anticipated. A critical review under the current CPS reveals that it may be prudent to include tangible support for education sector and vi) Future interventions should identify risks to sustainability and ensure adequate mechanisms at the design stage for adequate operations and maintenance funds and cost recovery measures. 46. ADB supported Sri Lanka Healthcare Reform Project. ADB supported earlier project in healthcare sector (Tsunami Affected Area Rebuilding Project) was termed as highly successful. North East Community Restoration and Development Project helped in construction, improvement and reconstruction of hospital buildings, Gramodaya health centres, dispensaries, primary care units, peripheral units and health offices to improve the living standards and well-being of a substantial number of people in the conflict affected areas. 47. Public financial management, public procurement, and anticorruption. Sri Lanka Public Financial Management System Assessment Report June 2015 brings out the measures initiated by the government to improve PFM and to decrease corruption.15 The important new reforms initiated by the government include: (i) the reform on procurement regulations and the configuration of National Procurement Commission at the constitutional level, (ii) the National Audit Bill and configuration of an Audit Commission, (iii) the Right to Information Bill, (iv) Code of Conduct for Civil Service, and (v) the reinvigoration of the Commission to investigate Allegations of Bribery or Corruption (CIABAC), Financial Crimes Investigation Department, Special Task Force on Recovery of Assets, and the Commission of Enquiry. Other notable reforms include: (i)

15 USAID. 2015. Sri Lanka Public Financial Management Assessment Report- Assessment Report.

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the budget regulations bill containing financial and procedural issues, and (ii) the implementation of FMIS that will introduce a complete modernization of budget processes and procedures. The report identifies issue of lack of institutional capacity to promote tender competition and retaining the best value for the government with challenges as detailed below.

(i) There is a current Constitutional Act allowing “strategic” projects with unsolicited proposals to skip procurement regulations including competition. In addition, high ranking officials have discretionary power to define strategic projects;

(ii) Lack of proper procurement procedures that has led towards unsolicited proposals promoting inefficiencies and the perception of corruption; and

(iii) Government of Sri Lanka has been bypassing procurement regulations and

exercising discretionary approvals of contracts

48. The fiduciary assessment identified a few drawbacks in the country's procurement system:16

(i) Lack of capacity of some staff to handle procurement;

(ii) Delays in procurement process including preparation of designs and specifications and delays in awarding of contract; and

(iii) Lack of knowledge on packaging contracts

49. The overall procurement risk is rated as Substantial by World Bank in Second Health Sector Development Project.17 The main source of risk is gaps in procurement capacity, which needs to be upgraded for improved procurement performance. Therefore, the system for procurement performance and compliance monitoring needs strengthening. The Second Health Sector Development Project will support the development of a strengthened system for procurement and compliance monitoring, both at central and provincial level. The report suggests that all procurement of goods, works, consulting services and non-consulting services under Component II will be carried out in accordance with World Bank's Guidelines. H. E-Procurement

50. As per PGR 9.2 procurement entities if they wish may carry out following procurement activities electronically with the prior concurrence of Procurement Committees: (i) in addition to the general advertising process, publish Procurement invitations on Website, and (ii) the bidders/consultants will be allowed to inspect pre-qualification (PQ) applications and bidding documents, electronically or otherwise according to their preference; the bidders may be allowed to obtain clarification through electronic media; but electronic submission of Bids will not be allowed. 51. Government of Sri Lanka has introduced Central Integrated Government System which is currently in use both at the central as well as provincial levels.

16 World Bank. 2013. Second Health Sector Development project. Colombo 17 World Bank. 2013. Second Health Sector Development project. Colombo

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I. Effectiveness

52. National Procurement Commission (NPC) has been set up under the 19th Amendment by the Sri Lankan parliament recently. Its responsibilities are to: (i) formulate procurement guidelines, (ii) oversight of public procurement, and (iii) capacity building in procurement.18 It’s vision is to achieve highest professional standards in ensuring best value for money in all government procurement processes and a mission to formulate fair, equitable, transparent competitive and cost effective policies, procedures and processes for the procurement of goods and services, works, consultancy services and information systems performed by the Government institutions in timely manner. It is believed that it shall greatly enhance the effectiveness of public procurement. 53. The procurement rules and regulations, standard bidding documents and related guidelines and manuals are available on the NPC website and are accessible to the public. 54. The National Audit Act promised during the last Presidential and General elections, is to be presented in Parliament shortly for adoption. 19 The adoption of the Act will further strengthen the capacity of Parliament to safeguard public funds and ensure their proper utilization. The Independent Commission is to be headed by the Auditor General. Similar to the setting-up of other commissions, the members to the new one will be nominated by the President on the recommendations of the Constitutional Council. A National Audit Office will also be set up to help the Auditor General to carry out the functions. 55. After review and analysis of audit reports of Audit General for the years 2013–2015 of MOHNIM, it is observed that (i) there had been deviations of the Procurement Guidelines, (ii) Procurement Plans not prepared properly, (iii) delay in the procurement process, (iv) insufficient review and monitoring process, (v) lack of proper contract management, (vi) equipment/medical supplies procured but lying idle and unutilized, and (vii) delays results into emergency procurement, civil works not completed in time or abandoned by the contractors. 56. On review and analysis of audit reports of four provinces (Central, North Central, Uva and Sabaragamuva) for the year 2014 and 2015, it is observed that the provinces have either not prepared procurement plan or not prepared it properly. There had been breaching of the provisions given in procurement guidelines while making procurement. The issues included medical equipment lying idle and unutilized in the stores; essential building repair, purchase and repair of biomedical equipment included in development plan not carried out; effective obligations under warranty not pursued. 57. Sri Lanka is the 95th least corrupt nation out of 175 countries, according to the 2016 Corruption Perceptions Index reported by Transparency International. Corruption Rank in Sri Lanka averaged 82.67 from 2002 until 2016, reaching an all-time high of 97 in 2009 and a record low of 52 in 2002.

J. Accountability Measures

58. The institutional arrangement for anti-corruption and accountability exists in Sri Lanka through Permanent CIABAC, the Auditor General (AGD), Parliamentary Committees of Public

18 National Procurement Commission.

http://nprocom.gov.lk/web/index.php?option=com_contentandview=featuredandItemid=101andlang=en 19 The official government news portal. 2018. National Audit Act to be presented in the parliament. Colombo.

https://www.news.lk/news/business/item/11000-national-audit-act-to-be-presented-in-parliament

23

Enterprises (COPE) and Public Accounts. CIABAC was constituted in 2011, however there is a serious backlog because of paucity/capacity of manpower. The legal framework relating to bribery and corruption is comprehensive but because of variety of reasons including protection of the witness, resources, capacity constraints and political will, implementation is slow. Sri Lanka is also a signatory to United Nations Convention Against Corruption and is a part of the ADB-Organization of Economic Cooperation and Development anticorruption initiative demonstrating globally a commitment to deal with bribery and corruption. 59. Auditor General audits all state entities and the reports are made public after presenting to the parliament. The Oversight Committees of the parliament (COPE and Committee on Public Accounts) after due consideration of the Auditor General reports call the defaulting institutions and officers to answer the anomalies. However, because of opposition members’ crossing over to ruling side and subsequently working in Council of Ministers, the desired deterrent effect of the Oversight Committees is lessened. Otherwise if an audit query not satisfactorily explained results in disciplinary action. The Parliament is considering a National Audit bill to impart configuration an Audit Commission under the Constitution.

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Figure 3: Complaint Handling Process

60. As per PGR 6.1.1, the complaints received from the prospective bidders and suppliers are acknowledged by the Chairman of the Procurement Committee is referred to the procurement entity or the complaint received by the procurement entity is referred to Procurement Committee. The Chairman after consultation with the procurement entity and if required with the members of Procurement Committee/TEC will make a judgement of the validity of the complaint. If the complaint has the merit, the procurement entity in consultation with TEC shall make the corrections and inform the prospective bidders. 61. The complaint received after the evaluation of the bids shall be distributed to all members of Procurement Committee and TEC. It shall be considered comprehensively in the report generated by TEC. Procurement Committee shall ensure that the complaint is sufficiently and satisfactorily addressed in the TEC. 62. Appeal against award of contract shall be disposed of as per PGR 8.3.1. The secretary of the line ministry after being informed by Cabinet Appointed Procurement Committee (CAPC) of the award of the contract, shall inform the unsuccessful bidders in writing within a week to make their representations, if any, against the recommendations of CAPC/intention to award the contract to the successful bidder to the procurement Appeal Board at the Presidential Secretariat. Such representation (i) shall be submitted within a week of the bidder after being informed by the Secretary of the line Ministry of the intention to award the contract to the successful bidder, and (ii) shall be self-contained to enable the Appeal Board to arrive at a conclusion. The Appeal Board upon receipt of the representation from the bidder against the award of the contract shall promptly

25

notify to the Secretary of the line ministry. After investigation into such representations, the Appeal Board shall submit its report independent to the Cabinet of Ministers and a copy to the Secretary of the line ministry and such report shall (i) provide reasons of endorsement of the decision of CAPC, or (ii) for rejecting same together with their independent recommendation of award of contract. 63. In case of award of contract approved by Ministry Procurement Committee, the Secretary Line Ministry after obtaining representations from non-successful bidders shall organize the joint meeting of Ministry Procurement Committee and TEC to consider the representations. The findings/recommendations of the joint committee shall be made available not later than 14 days. The Secretary line ministry after receipt of the recommendation shall issue the award of contract. 64. After exhausting these channels, the aggrieved party can approach Procurement Commission/Court or Allegations of Bribery or Corruption. 65. At the country level, the Allegations of Bribery or Corruption Commission (CIABOC) and Audit Authority have statutory backing and are perceived to be powerful and fair.

(i) Strengths

a. The Procurement Guidelines provide robust provisions of ethical standards, general prohibition of corrupt practices, conflict of interest and acceptance of gifts or inducements. The guidelines also include procedures of blacklisting though there are concerns of process not being followed consistently. Further oversight through external audit by AGD strengthens process control.

b. The Guidelines also contain the provision of Appeal Board for large value contracts established under the President of Sri Lanka in case the unsuccessful bidders want to make an appeal.

c. National Procurement Commission (NPC) has been set up under 19th Amendment by Sri Lanka Parliament recently and has been tasked to i) formulate procurement guidelines; ii) oversight of Public Procurement and iii) capacity building in procurement

d. MOHNIM has implemented a large number of projects financed by development partners including World Bank, JICA and ADB. Hence, they are familiar with national and International procurement procedures

e. Both at central level as well as at provincial levels there are well established procurement committees based on the threshold value, TECs for evaluations of the bids. The Central and a provincial’s PMU and PIU comprise of staff who have extensive experience as employer.

f. Separate well-staffed and well-equipped procurement branch functions independently within procurement branch of MOHNIM and engineering services of provinces. Provincial engineering services have been carrying out World Bank supported civil works projects. They have adequate technical expertise and administrative structure even down at district level.

g. There is a good institutional framework and management capacity. h. Sri Lanka’s procurement process is based on excellent legislative and

regulatory framework. i. For contracts, contract administration and dispute resolution are well

defined and practiced.

26

(ii) Weaknesses

a. Weak procurement planning both at central and provincial level is one of the key weakness.

b. The training and capacity building of government sector staff appears inadequate to meet large and externally financed projects.

c. Lack of transparency and tracking mechanism. d. Inadequate monitoring and review system. e. Provincial departments of health do not have an independent procurement

branch, nor do they have the experience of donor assisted project. f. Difficulties perceived by foreign contractors and consultants to participate

due to barriers to entry (registration, labor, etc.). g. Though Sri Lanka depend for its requirement of medical equipment and

medical supplies largely on the outside markets, but market information is inadequate.

h. Pre-qualification criteria in case of medical equipment needs to be strengthened to ensure the procurement of quality products.

Table 7: Specific Recommendations for Program Implementation

Capacity Constraints Recommended Action Responsibility/Comment

Inadequate procurement Capacity in Procurement Entities

While the executing agency is strong in administration and appropriate guidelines ensure transparency, it is essential that MOHNIM prepare and implement an appropriate capacity building program in MOHNIM, Auditor General’s Department, and in the provinces.

ADB SLRM shall carry out procurement capacity programme for MOHNIM and Provincial Councils as per ADB Procurement Guidelines. For the successful execution of the Project, PMU and PIUs shall facilitate in drafting procurement specifications and contract conditions in the initial set of bid documents (goods, civil works, Consulting services) duly supported through prior review of the initial procurement packages by ADB.

Need to prepare realistic procurement Plans and institutionalize monitoring at various levels

Strengthen current information gathering system and enhance capacity for collecting, analysing and disseminating procurement information.

For the successful execution of the Project, PMU and PIUs shall facilitate it.

Oversight and monitoring of performance of contractors and suppliers is insufficient

Develop a systematic procurement performance and compliance monitoring process.

MOHNIM with PMU shall extend support to develop a systematic procurement performance and compliance monitoring process

Need for bid packaging for improved and efficient contract implementation

Bunching of civil works all healthcare facilities (where civil works is required in a district and if feasible in the province to enhance competition and efficiency and to attract better contractors and for effective contract management.

MOHNIM/PMU/PIU Consultants hired under Design and Supervision Consulting Services shall provide the oversight and effective implementation of contract management

Procurement Controls for increased transparency and effectiveness need strengthening

In order to improve transparency and effectiveness It is desirable to incorporate transparency related activities such as: -all contract information (procurement plans, invitation to bids, names of successful bidders, contract value and implementation period) are posted on the MOHNIM website -all information related to procurement process will also be posted on the MOHNIM websites (bid invitation, bid opening minutes, details of re-bidding,

MOHNIM/PMU

27

Capacity Constraints Recommended Action Responsibility/Comment

bid opening, number of bids received/rejected, complaints received/action taken).

Inefficient document management and retrieval systems at provincial level

Procurement capacity building program for provincial level officials to include a focused module on document management.

So far project documentation is concerned, PMU shall ensure proper maintenance and upkeep of the documentation.

Procurement Guidelines, Manuals and Standard Bidding Documents are outdated

Update the Procurement guidelines, Manuals and SBDs for health sector. Prepare a dedicated manual for health products because of their specific nature and requirements of the products.

NPC/MOF/MOHNIM This is a long-term intervention that covers all public procurement and goes well beyond the scope of the current project. However, implementation support will be provided under HSEP to review the existing Procurement Guidelines, Manuals and SBDs and prepare an updated manual for application under the HSEP such as by consolidating the latest guidelines, for clarity and ease of reference and issuing SBDs for HSEP implementation.

Insufficient market information and status of medical equipment

A database covering the active players and technical specifications of various medical equipment can help in making a proper choice suitable to the intended performance characteristics at the time of procurement. Similarly, an Asset Management System containing the following information shall help in status of the equipment and to make future projections: (i) UMDNS Code (ii) Location (Province, District, Facility,

Department) (iii) Acceptance Details (iv) Service Details (v) Training Received (vi) Maintenance Schedule (Warranty

Period), (vii) Repair History (viii) Financial and Clinical Audit

This is a long-term intervention and goes well beyond the scope of the current project. However, implementation support will be provided under HSEP to review the specification of medical equipment for incorporating prequalification criteria of the manufacturers to quality management system ISO 13485 and compliance of the products to quality certification to CE and USFDA certificates and relevant ISO standards.

IV. PROCUREMENT RISK ASSESSMENT AND MANAGEMENT PLAN

66. The overall risk has been assessed as “Moderate”. The project procurement risks, their assessed impact, likelihood of occurrence and recommended mitigation measures are summarized as follows:

Table 8. Project Procurement Risk Analysis and Management Plan

S.No. Risks Ratings Mitigation Measures

Key Risks

01 Limited experience in handling procurement as per ADB standard guidelines

M There is a requirement to provide structured training to procurement and program management staff of MOHNIM and provinces. In addition, periodic performance including procurement audit needs to be strengthened. ADB will provide training for project staff on ADB procurement policy and regulations, standard bidding documents, ADB review and requirements on bid process. Prior review of the Procurement packages by ADB shall ensure the procurement controls for execution of the ADB project.

28

S.No. Risks Ratings Mitigation Measures

02 Weak Transparency in Procurement Processes

M MOHNIM will establish a Project specific website on which all project related information will be posted regularly. Such information, at the minimum will include details and coverage of the program, implementing agencies, procurement plans, invitation for bids, name of bidders and contract details such as value, dates of start and completion and physical progress. Newspaper paper advertisement for all contracts

03 Proliferation of small scale contracts

M In order to ensure improved efficiency, economy, quality as well as ease of monitoring, it is proposed that multiple contracts with each districts or province be grouped and packaged to gather so that procurement and contract administration can be substantially streamlined. Design and Supervision Consultancy Agency proposed to be hired for the purpose duly supplemented by prior review of the initial packages by ADB shall ensure effective and efficient procurement processes as per latest ADB Procurement Guidelines

V. CONCLUSION

67. Based on the procurement capacity assessment of MOHNIM and provinces and other agencies likely to be involved with the HSEP, the following measures for the improvement of procurement capacity are recommended:

(i) Action plan for building and strengthening the capacity of executing agencies/implementing agencies has been proposed for effective and efficient implementation of the project

(ii) Since there are several small civil works dispersed in different geographical locations, it is recommended to consolidate them in a district/province to ensure quality and economy.

(iii) It is proposed that all consulting services should be handled at central level as the provincial councils have not handled

(iv) In case of medical equipment and vehicles, it is proposed that the procurement may be carried out centrally to ensure quality and economy and because of availability of technical expertise nationally

(v) In order to improve transparency, it is proposed to set up a program specific link on the website of MOHNIM wherein all contract information as well as information relating to procurement process should be uploaded.

(vi) There is an urgent need of market research and prepare a data base of products and their manufacturers/suppliers.

(vii) There is urgent need of revisiting the specifications of the equipment to include qualification requirements and quality assurance on receipt of products so as to ensure performance, quality, safety and efficacy.

68. Overall, it can be stated that the procurement policy framework of Sri Lanka is robust and grounded in sound and fair principles. The project arrangements with appropriate mitigation measures as recommended in the RAMP are satisfactory.

Appendix 1 29

APPENDIX 1: PROCUREMENT CAPACITY ASSESSMENT OF THE MINISTRY OF HEALTH, NUTRITION, AND INDIGENOUS MEDICINE

Risk Ratings High (H) Substantial (S) Moderate (A) Low (L)

I. Specific Assessment and Ratings

Question Response Risk

A. ORGANIZATIONAL AND STAFF CAPACITY

PROCUREMENT DEPARTMENT/UNIT

A.1 Does the agency or Government have a Procurement Committee that is independent from the head of the agency?

Yes, Ministry Procurement Committee or Cabinet appointed Procurement Committee depending on the threshold values

L

A.2 Does the agency have a procurement department/unit, including a permanent office that performs the function of a Secretariat of the Procurement Committee?

Yes

L

A.3 If yes, what type of procurement does it undertake? Yes, all procurement under MOHNIM including support to National Hospitals, Teaching Hospitals, Provincial General Hospitals, Districts General Hospitals, Base Hospitals (Type A and B) and divisional General Hospitals (Types A, B and C). Provincial Medical Care Units proposed to be strengthened under the Project are handled by Provinces

L

A.4 How many years’ experience does the head of the procurement department/unit have in a direct procurement role?

MOHNIM has main one unit handling procurement/supplies headed by Class I Government Administrative Services- Experience of the Senior officers range from 12 years and more. The Procurement Unit is headed by Addl. Secretary (Procurement/MOHNIM) supported by Chief Accountant

A

A.5 How many staff in the procurement department/unit are: i. Full time ii. Part time iii. Seconded

Full Time; 28 officers and 04 Management Trainees

A

A.6 Do the procurement staff have a high level of English language proficiency (verbal and written)?

Yes, most of the officers are proficient in English. However, the working in the offices is in Sinhala.

L

A.7 Are the number and qualifications of the staff sufficient to undertake the additional procurement that will be required under the proposed project?

Yes, there are graduates and procurement diploma holders in the units. Existing staff are capable of handling job however they would need training in ADB procurement processes which will provided by ADB at ministry and provincial level

A

A.8 Does the unit have adequate facilities, such as PCs, internet connection, photocopy facilities, printers etc. to undertake the planned procurement?

Yes L

A.9 Does the agency have, or have ready access to, a procurement training program?

No specific procurement training programs are conducted by the Ministry. However, all training programs are conducted by MOF

H

30 Appendix 1

Question Response Risk

through SLIDA and other semi-government institutions. Procurement Commission has the mandate for capacity building of procurement entities Provisions needs to be made in the project

A.10 At what level does the department/unit report (to the head of agency, deputy etc.)?

To the Additional Secretary Procurement

A

A.11 Do the procurement positions in the agency have job descriptions, which outline specific roles, minimum technical requirements and career routes?

Yes L

A.12 Is there a procurement process manual for goods and works?

Yes L

A.13 If there is a manual, is it up to date and does it cover foreign-assisted projects?

There is a Procurement Manual which is updated from time to time. The Manual however, mandates use of guidelines, manual, and Standard Bidding Document of the donor agency in case of foreign assisted project

A

A.14 Is there a procurement process manual for consulting services?

Yes A

A.15 If there is a Manual, is it up to date and does it cover foreign-assisted projects?

For foreign assisted project, the Manuals of donor agency are adopted

A

A.16 Are there standard documents in use, such as Standard Procurement Documents/Forms, and have they been approved for use on ADB funded projects?

Yes. However, for ADB assisted project, Standard Procurement Documents/Forms as per ADB Procurement Guidelines shall be used

A

A.17 Does the agency follow the national procurement law, procurement processes, guidelines?

Yes L

A.18 Do ToRs for consulting services follow a standard format such as background, tasks, inputs, objectives and outputs?

Yes, TORs factoring background, tasks, inputs, objectives and outputs are drafted by the concerned Divisions under MOHNIM or the Departments under DGHS

A

A.19 Who drafts the procurement specifications? Drafting is carried out by the concerned department such as Biomedical Engineering Division for Medical equipment/Medical Devices; Medical Supplies Division for Drugs/Surgical / Diagnostics and Civil Works by Building and Logistics Division. Finally, the specifications are endorsed by Technical Evaluation Committee. There is a requirement to revisit prequalification criteria and registration issues relating to Medical Equipment and Medical devices with National Medicines Regulatory Authority.

A

A.20 Who approves the procurement specifications? Relevant Procurement Committee A

A.21 Who in the PMU has experience in drafting bidding documents?

Staff in Procurement Unit L

A.22 Who manages the sale of bidding document? Are records of the sale of bidding documents immediately available?

Staff in Procurement Unit, Yes L

A.23 Who identifies the need for consulting services requirements?

Sector Directors (Director of Health) A

Appendix 1 31

Question Response Risk

A.24 Who drafts the Terms of Reference (ToR) Sector Directors with the assistance of external experts

A

A.25 Who prepares the request for proposals (RFPs) Staff in Procurement Unit A

Program Management Unit

A.26 Is there a fully (or almost fully) staffed PMU for this project currently in place?

Being set up as per the recommendations of PPTA/ADB

A

A.27 Are the number and qualifications of the staff sufficient to undertake the additional procurement that will be required under the proposed project?

To handle the procurement under ADB assisted project, the staff is required to be trained and the standard bidding document of ADB Procurement Guidelines shall be used.

A

A.28 Does the unit have adequate facilities, such as PCs, internet connection, photocopy facilities, printers etc. to undertake the planned procurement?

It shall be ensured A

A.29 Are there standard documents in use, such as Standard Procurement Documents/Forms, and have they been approved for use on ADB funded projects?

Standard Bidding Documents and forms are available but have not been used for ADB projects. ADB SBDs will be used.

A

B. Information Management

B.1 Is there a referencing system for procurement files? Yes L

B.2 Are there adequate resources allocated to record keeping infrastructure, which includes the record keeping system, space, equipment and personnel to administer the procurement records management functions within the agency?

Yes. However, there are issues of storage because of space crunch. The records are stored at a place away from the MOHNIM

A

B.3 Does the agency adhere to a document retention policy (i.e. for what period are records kept)?

All records are kept according to the circular issued by the Department of National archives. Currently it is 5 years

L

B.4 Are copies of bids or proposals retained with the evaluation?

Yes L

B.5 Are copies of the original advertisements retained with the pre-contract papers?

Yes L

B.6 Is there a single contract file with a copy of the contract and all subsequent contractual correspondence?

Yes L

B.7 Are copies of invoices included with the contract papers?

Yes, The Procurement Division carries out the procurement till the award of contract. Subsequently, contract management including the payment to the vendors is done by the concerned Division. Under the current system, Invoices are retained by the concerned department who manages the contract management. There needs to be a system where all the documents relating to a particular package including those relating to contract management along with invoices/payment and complaint issues are available in a single file.

A

B.8 Is the agency’s record keeping function supported by IT?

No, Manual System is in use A

C Procurement Practices

Goods and Works

C.1 Has the agency undertaken procurement of goods or works related to foreign assistance recently (last 12 months or last 36 months)? If yes, indicate the names of the development partner/s and project/s.

Yes, JICA (Project for Improvement of Basic Social Services Targeting Emerging Regions) and SHSHP to upgrade the standards of performance of the public health

L

32 Appendix 1

Question Response Risk

system and enable it to better respond to the challenges of malnutrition and non-communicable diseases. The last ADB assisted project in Health Sector was about ten year earlier.

C.2 If the answer is yes, what were the major challenges faced by the agency?

JICA project is operating under Program Management Unit implemented for the purpose

L

C.3 Is there a systematic process to identify procurement requirements (for a period of one year or more)?

Yes, BOQ is provided on annual basis by Building and Logistic Division for Civil Works; Biomedical Engineering Division for Medical Equipment and for Drugs/Pharmaceuticals; and Surgical and Medical devices by Medical Supplies Division

L

C.4 Is there a minimum period for the preparation of bids and if yes, how long?

Yes As per Clause 4.2.2 of the Procurement Guidelines

L

C.5 Are all queries from bidders replied to in writing? Yes L

C.6 Does the bidding document state the date and time of bid opening?

Yes L

C.7 Are bids opened in public? Yes L

C.8 Can late bids be accepted? No L

C.9 Can bids (except late bids) be rejected at bid opening?

No L

C.10 Are minutes of the bid opening taken? Yes L

C.11 Are bidders provided a copy of the minutes? No, Bidders are given the readings, Minutes are not provided

H

C.12 Are the minutes provided free of charge? Minutes are not provided H

C.13 Who undertakes the evaluation of bids (individual(s), permanent committee, ad-hoc committee)?

TECs of the Sector Divisions L

C.14 What are the qualifications of the evaluators with respect to procurement and the goods and/or works under evaluation?

As per Procurement Guidelines; sector specialists, both internal and external and officers are familiar with Procurement Guidelines. However, on technical specifications, capacities vary specifically in regard to Medical equipment

A

C.15 Is the decision of the evaluators final or is the evaluation subject to additional approvals?

No, Evaluators decision is final subject to the final approval by relevant PC and ratified by Secretary, MOHNIM

A

C.16 Using the three ‘worst-case’ examples in the last year, how long from the issuance of the invitation for bids can the contract be awarded?

6 months to 1 year on average. This does not include the time taken by the concerned Division in regard to contract management after award of contract

A

C.17 Are there processes in place for the collection and clearance of cargo through ports of entry?

No, cargo clearance is done by MOHNIM

L

C.18 Are there established goods receiving procedures? Yes, As per Financial Regulations of Sri Lanka

L

C.19 Are all goods that are received recorded as assets or inventory in a register?

Yes, the products are taken on charge as assets or inventory items depending on their nature

L

C.20 Is the agency/procurement department familiar with letters of credit?

No H

C.21 Does the procurement department register and track warranty and latent defects liability periods?

No specific tracking system is established to track warranty/ maintenance obligations and latent defects liability period specifically

H

Appendix 1 33

Question Response Risk

relating to uptime of Medical Equipment but in relevant files such information is available

Consulting Services

C.22 Has the agency undertaken foreign- assisted procurement of consulting services recently (last 12 months, or last 36 months)? (If yes, please indicate the names of the development partner/s and the Project/s.)

No H

C.23 If the above answer is yes, what were the major challenges?

Not applicable

C.24 Are assignments and invitations for expressions of interest (EOIs) advertised?

Yes L

C.25 Is a consultants’ selection committee formed with appropriate individuals, and what is its composition (if any)?

Composition shall include sector specialists, both internal and external, accountants and persons familiar with procurement, technical qualifications and knowledge among committee members

L

C.26 What criteria is used to evaluate EOIs? As defined by TEC L

C.27 Historically, what is the most common method used (QCBS, QBS, etc.) to select consultants?

QCBS and QBS L

C.28 Do firms have to pay for the RFP document? No L

C.29 Does the proposal evaluation criteria follow a pre-determined structure and is it detailed in the RFP?

Yes L

C.30 Are pre-proposal visits and meetings arranged? Yes, if requested L

C.31 Are minutes prepared and circulated after pre-proposal meetings?

Yes L

C.32 To whom are the minutes distributed? To all firms who have been issued RFP

L

C.33 Are all queries from consultants answered/addressed in writing?

Yes L

C.34 Are the technical and financial proposals required to be in separate envelopes and remain sealed until the technical evaluation is completed?

Yes L

C.35 Are proposal securities required? No proposal securities required A

C.36 Are technical proposals opened in public? Yes L

C.37 Are minutes of the technical opening distributed? NO H

C.39 Who determines the final technical ranking and how?

TEC evaluates and recommends ranking and relevant PC approves

L

C.40 Are the technical scores sent to all firms? Yes L

C.41 Are the financial proposal opened in public? Yes L

C.42 Are minutes of the financial opening distributed? NO H

C.43 How is the financial evaluation completed? Following evaluation of Technical and Financial proposals, final ranking is determined after applying a weight as specified in RFP

L

C.44 Are face to face contract negotiations held? Yes L

C.45 How long after financial evaluation is negotiation held with the selected firm?

Generally within 14 days L

C.46 What is the usual basis for negotiation? Fine-tuning of experts’ inputs Technical Proposal, evaluation findings, such as replacement of consultants who are average or below, Availability of personnel etc., Arithmetical corrections, if any in Financial proposal, items exceeding max. budget, logistics, commencement date etc.

L

C.47 Are minutes of negotiation taken and signed? Yes L

34 Appendix 1

Question Response Risk

C.48 How long after negotiation is the contract signed, on average?

Draft contract is signed after negotiation subject to the approval by appropriate authority. Final contract is signed within 21 days

A

C.49 Is there an evaluation system for measuring the outputs of consultants?

yes L

Payments

C.50 Are advance payments made? Yes, if requested L

C.51 What is the standard period for payment included in contracts?

Within 28 days A

C.52 On average, how long is it between receiving a firm’s invoice and making payment?

Within 07 days if all documents are in order, and subject to the availability of funds, however in case of Civil Works, payments are made as per milestones identified by the TEC. After completion of each milestone, the contractor submits the invoice. Though stipulated time is given but in practice it takes significantly longer period.

H

C.53 When late payment is made, are the beneficiaries paid interest?

No H

D. Effectiveness

D.1 Is contractual performance systematically monitored and reported?

There is no systematically monitoring system

H

D.2 Does the agency monitor and track its contractual payment obligations?

No established tracking system is in place

H

D.3 Is a complaints resolution mechanism described in national procurement documents?

Yes. The aggrieved party can move Appeal Board (Constituents are the member of PC+TEC). In case the aggrieved party has an issue, it can move Procurement Commission/Bribery Commission

L

D.4 Is there a formal non-judicial mechanism for dealing with complaints?

Yes L

D.5 Are procurement decisions and disputes supported by written narratives such as minutes of evaluation, minutes of negotiation, notices of default/withheld payment?

Yes L

E. Accountability Measures

E.1 Is there a standard statement of ethics and are those involved in procurement required to formally commit to it?

Yes. L

E.2 Are those involved with procurement required to declare any potential conflict of interest and remove themselves from the procurement process?

Yes L

E.3 Is the commencement of procurement dependent on external approvals (formal or de-facto) that are outside of the budgeting process?

Yes, in the case of external funding the relevant agency approval is required. In ADB assisted procurement, prior-review mode by ADB may be exercised

A

E.4 Who approves procurement transactions, and do they have procurement experience and qualifications?

As per delegation of authority vested with officers in MOHNIM

A

E.5 Which of the following actions require approvals outside the procurement unit or the evaluation committee, as the case may be, and who grants the approval?

a) Bidding document, invitation to pre-qualify or RFP

Relevant PC L

b) Advertisement of an invitation for bids, pre-qualification call for EOIs

Relevant PC L

c) Evaluation reports TEC L

Appendix 1 35

Question Response Risk

d) Notice of award PC/Secretary, MOHNIM L

e) Invitation to Consultants to negotiate Secretary, MOHNIM L

f) Contracts PC L

E.6 Is the same official responsible for: (i) authorizing procurement transactions, procurement invitations, documents, evaluations and contracts; (ii) authorizing payments; (iii) recording procurement transactions and events; and (iv) the custody of assets?

No L

E.7 Is there a written auditable trail of procurement decisions attributable to individuals and committees?

Yes L

II. General Ratings Criterion Risk

A. Organizational and Staff Capacity A

B. Information Management A

C. Procurement Practices A

D. Effectiveness A

E. Accountability Measures L

OVERALL RISK RATING A

36 Appendix 2

APPENDIX 2: PROCUREMENT CAPACITY ASSESSMENT OF THE PROVINCIAL AUTHORITY

(Based on the samples conducted in Central and Uva) Risk Ratings High (H) Substantial (S) Moderate (A) Low (L)

I. Specific Assessment and Ratings

Question Response Risk

A. ORGANIZATIONAL AND STAFF CAPACITY

PROCUREMENT DEPARTMENT/UNIT

A.1 Does the agency or Government have a Procurement Committee that is independent from the head of the agency?

Yes, Provincial Council Procurement Committees or Department Procurement Committees operating under DOHS

L

A.2 Does the agency have a procurement department/unit, including a permanent office that performs the function of a Secretariat of the Procurement Committee?

No, Staff as defined in Procurement Guidelines are assigned procurement activities

H

A.3 If yes, what type of procurement does it undertake? Goods and Works below SLR 5 Million. Procurement of packages to cost above SLR 5 Million is handled by Provincial Council Procurement Committee

A

A.4 How many years’ experience does the head of the procurement department/unit have in a direct procurement role?

Procurement Unit is headed by Accountant/Civil Engineer. Overall it is under the control of Provincial Director of Health or Director of Buildings

A

A.5 How many staff in the procurement department/unit are: i. Full Time ii Part time iii Second time

Differs from Province to Province, generally handled by DOHS and Engineering Services Department. Accounts Unit operating under DOHS carries out procurement of products other than civil works. However, Civils Works is carried out by Engineering Services

A

A.6 Do the procurement staff have a high level of English language proficiency (verbal and written)?

Most of the officers have proficiency in English Language but with varying degree. The working language is Sinhala

A

A.7 Are the number and qualifications of the staff sufficient to undertake the additional procurement that will be required under the proposed project?

Inadequate, Staff does not include procurement officials but rather public officials such as accountant and engineers

H

A.8 Does the unit have adequate facilities, such as PCs, internet connection, photocopy facilities, printers etc. to undertake the planned procurement?

Yes L

A.9 Does the agency have, or have ready access to, a procurement training program?

No specific training programmes are conducted for provincial staff. All training programmes are organized by MOF under SLIDA or other semi-government institutions

H

A.10 At what level does the department/unit report (to the head of agency, deputy etc.)?

To Provincial Director of Health/ director of Buildings. In case of large value contracts to Secretary Health

L

A.11 Do the procurement positions in the agency have job descriptions, which outline specific roles, minimum technical requirements and career routes?

There are no procurement specific positions. However, roles of the concerned staff are defined

A

A.12 Is there a procurement process manual for goods and works?

Yes L

A.13 If there is a manual, is it up to date and does it cover foreign-assisted projects?

There is a National Manual which is updated from time to time. It mandates that in case of foreign assisted projects, the relevant manuals, guidelines and

A

Appendix 2 37

Question Response Risk

standard bidding documents can be used.

A.14 Is there a procurement process manual for consulting services?

Yes A

A.15 If there is a manual, is it up to date and does it cover foreign-assisted projects?

There is a National Manual which is updated from time to time. It mandates that in case of foreign assisted projects, the relevant manuals, guidelines and standard bidding documents can be used.

A.16 Are there Standard Documents in use, such as Standard Procurement Documents/Forms and have been approved for ADB funded projects?

Not in Health Sector. However, in other sectors ADB has approved these with certain amendments mainly on civil works contracts

A

A.17 Does the Agency follow national procurement law, procurement process, guidelines?

Yes L

A.18 Do TORs for consulting services follow standard format such as background, tasks, inputs, objectives and outputs

Yes, but Provincial Councils do not handle Consulting Services

H

A.19 Who drafts procurement specifications? Biomedical Engineering unit under DOHS carries out drafting for medical equipment. However, procurement specification for civil works are drafted by Planning wing of Engineering Services Department

A

A.20 Who approves procurement specifications Relevant Procurement Committee A

A.21 Who in PIU has the experience in drafting bidding document

Staff in procurement entity, Planning and Design Division (Engineering Services) which includes Architect and Engineers drawn from various specialties (Civil, Electrical, Mechanical)

L

A.22 Who manages the sale of bidding document? Are records of the sale of bidding documents immediately

Staff in procurement entity, yes L

A.23 Who identifies the need for consulting services? Provincial Councils have not handled Consultancy Services

H

A.24 Who drafts the TORs? Provincial Councils have not handled Consultancy Services

H

A.25 Who prepares request for proposals? Provincial Councils have not handled Consultancy Services

H

Project Management Unit

A.26 Is there a fully (or almost fully) staffed PMU for this project currently in place?

Being set up as per recommendations of PPTA/ADB

A

A.27 Are the number and qualifications of the staff sufficient to undertake the additional procurement that will be required under the proposed project?

It shall be ensured A

A.28 Does the unit have adequate facilities, such as PCs, internet connection, photocopy facilities, printers etc. to undertake the planned procurement?

It shall be ensured A

A.29 Are there standard documents in use, such as Standard Procurement Documents/Forms, and have they been approved for use on ADB funded projects?

Standard Bidding Documents and forms are available but have not been used for ADB projects. ADB SBDs will be used.

A

B. Information Management

B.1 Is there a referencing system for procurement files? Yes L

B.2 Are there adequate resources allocated to record keeping infrastructure, which includes the record keeping system, space, equipment and personnel to administer the procurement records management functions within the agency?

Yes L

38 Appendix 2

Question Response Risk

B.3 Does the agency adhere to a document retention policy (i.e. for what period are records kept)?

All records are kept according to the circular issued by the Department of National Archives

L

B.4 Are copies of bids or proposals retained with the evaluation?

Yes, after evaluation all bid documents are returned to the relevant procurement unit

L

B.5 Are copies of the original advertisements retained with the pre-contract papers?

Yes L

B.6 Is there a single contract file with a copy of the contract and all subsequent contractual correspondence?

Yes L

B.7 Are copies of invoices included with the contract papers?

Yes L

B.8 Is the agency’s record keeping function supported by IT?

No, manual record keeping, L

C. Procurement Practices

Goods and Works

C.1 Has the agency undertaken procurement of goods or works related to foreign assistance recently (last 12 months or last 36 months)? If yes, indicate the names of the development partner/s and project/s.

The World Bank’s Second Health Sector Development Project support has been available through budgetary support in the entire Sri Lanka. However, JICA support was specifically available for the enhancement of 4 Secondary Hospitals available in four provinces through Provincial/Hospital PIUs. Two provinces, Sabaragamuwa and Central Provinces are part of the proposed ADB Health Sector project. However, both Uva and North Central Provinces do not have prior experience for foreign funded projects other than budgetary support of the World Bank which is otherwise available for all the provinces

M

C.2 If the answer is yes, what were the major challenges faced by the agency?

For DOHS of both the provinces (Uva and North Central), there are challenges for (i) lack of capacity of some staff to handle procurement; (ii) delays in procurement process including preparation of designs and specifications and delays in awarding of contract; and iii) lack of knowledge on packaging contracts However, Engineering Services of all the Provinces have handled civil works for Education Sector supported by ADB

M

C.3 Is there a systematic process to identify procurement requirements (for a period of one year or more)?

Yes L

C.4 Is there a minimum period for the preparation of bids and if yes, how long?

Yes, as per Procurement Guidelines 4.2.2 but usually there are deviations

A

C.5 Are all queries from bidders replied to in writing? Yes L

C.6 Does the bidding document state the date and time of bid opening?

Yes L

C.7 Are bids opened in public? Yes L

C.8 Can late bids be accepted? No L

C.9 Can bids (except late bids) be rejected at bid opening?

No L

C.10 Are minutes of the bid opening taken? Yes L

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Question Response Risk

C.11 Who may have a copy of minutes? Are bidders provided a copy of the minutes?

Procurement Unit, Bidders are also provided copies

L

C.12 Are the minutes provided free of charge? Yes

C.13 Who undertakes the evaluation of bids (individual(s), permanent committee, ad-hoc committee)?

Tender Evaluation Committee appointed by Provincial Council

A

C.14 What are the qualifications of the evaluators with respect to procurement and the goods and/or works under evaluation?

As per Procurement Guidelines, Sector specialists, both internal and external, and officer/s familiar with procurement guidelines, but evaluators are drawn reportedly with varying degrees of technical requirements. TEC consists of evaluators drawn from administration side, technical side and financial side

H

C.15 Is the decision of the evaluators final or is the evaluation subject to additional approvals?

No Final decision rests with the relevant PC which has to be ratified by the Provincial authorities

A

C.16 Using the three ‘worst-case’ examples in the last year, how long from the issuance of the invitation for bids can the contract be awarded?

Normally 6-7 months depending on number of works evaluation period may vary. It takes longer time for obtaining approval of the competent authorities.

A

C.17 Are there processes in place for the collection and clearance of cargo through ports of entry?

No cargo clearance is done by the provinces

L

C.18 Are there established goods receiving procedures? Yes, As per Financial Regulations of Sri Lanka

L

C.19 Are all goods that are received recorded as assets or inventory in a register?

Depending of the nature of the products it is recorded as assets or inventory items

L

C.20 Is the agency/procurement department familiar with letters of credit?

No. Not applicable L

C.21 Does the procurement department register and track warranty and latent defects liability periods?

No specific tracking system has been established to track warranty and latent defects liability period, but such information is recorded in the relevant files

H

Consulting Services

C.22 Has the agency undertaken foreign- assisted procurement of consulting services recently (last 12 months, or last 36 months)? (If yes, please indicate the names of the development partner/s and the Project/s.)

No Consultancy selection handled by the provinces

H

C.23 If the above answer is yes, what were the major challenges?

Not applicable

C.24 Are assignments and invitations for expressions of interest (EOIs) advertised?

Not applicable

C.25 Is a consultants’ selection committee formed with appropriate individuals, and what is its composition (if any)?

Not applicable

C.26 What criteria is used to evaluate EOIs? Not applicable

C.27 Historically, what is the most common method used (QCBS, QBS, etc.) to select consultants?

Not applicable

C.28 Do firms have to pay for the RFP document? Not applicable

C.29 Does the proposal evaluation criteria follow a pre-determined structure and is it detailed in the RFP?

Not applicable

C.30 Are pre-proposal visits and meetings arranged? Not applicable

C.31 Are minutes prepared and circulated after pre-proposal meetings?

Not applicable

C.32 To whom are the minutes distributed? Not applicable

C.33 Are all queries from consultants answered/addressed in writing?

Not applicable

40 Appendix 2

Question Response Risk

C.34 Are the technical and financial proposals required to be in separate envelopes and remain sealed until the technical evaluation is completed?

Not applicable

C.35 Are proposal securities required? Not applicable

C.36 Are technical proposals opened in public? Not applicable

C.37 Are minutes of the technical opening distributed? Not applicable

C.39 Who determines the final technical ranking and how?

Not applicable

C.40 Are the technical scores sent to all firms? Not applicable

C.41 Are the financial proposal opened in public? Not applicable

C.42 Are minutes of the financial opening distributed? Not applicable

C.43 How is the financial evaluation completed? Not applicable

C.44 Are face to face contract negotiations held? Not applicable

C.45 How long after financial evaluation is negotiation held with the selected firm?

Not applicable

C.46 What is the usual basis for negotiation? Not applicable

C.47 Are minutes of negotiation taken and signed? Not applicable

C.48 How long after negotiation is the contract signed, on average?

Not applicable

C.49 Is there an evaluation system for measuring the outputs of consultants?

Not applicable

Payments

C.50 Are advance payments made? Yes, if requested and approved by the concerned authorities

L

C.51 What is the standard period for payment included in contracts?

Within 28 days in case of Goods. However, in case of payment are based on the completion of milestones or work done on ground which is reflected in the contract.

A

C.52 On average, how long is it between receiving a firm’s invoice and making payment?

Within 07 days if all the documents are in order subject to the availability of funds. However, there are several cases where the payment is delayed on account of funds constraints or other reasons including delay in installation/commissioning. During interaction it was informed that in couple of cases it is inordinately delayed even it took a year

H

C.53 When late payment is made, are the beneficiaries paid interest?

No H

D Effectiveness

D.1 Is contractual performance systematically monitored and reported?

There is no systematic monitoring system H

D.2 Does the agency monitor and track its contractual payment obligations?

No H

D.3 Is a complaints resolution mechanism described in national procurement documents?

Yes L

D.4 Is there a formal non-judicial mechanism for dealing with complaints?

Yes L

D.5 Are procurement decisions and disputes supported by written narratives such as minutes of evaluation, minutes of negotiation, notices of default/withheld payment?

Yes L

E. Accountability Measures

E.1 Is there a standard statement of ethics and are those involved in procurement required to formally commit to it?

Yes

L

Appendix 2 41

Question Response Risk

E.2 Are those involved with procurement required to declare any potential conflict of interest and remove themselves from the procurement process?

Yes L

E.3 Is the commencement of procurement dependent on external approvals (formal or de-facto) that are outside of the budgeting process?

Yes, in case of external funding, the relevant agency approval is required

A

E.4 Who approves procurement transactions, and do they have procurement experience and qualifications?

As per delegation of powers to the officers of PCs

A

E.5 Which of the following actions require approvals outside the procurement unit or the evaluation committee, as the case may be, and who grants the approval?

a) Bidding document, invitation to pre-qualify or RFP

Relevant PC L

b) Advertisement of an invitation for bids, prequalification or call for EOIS

Relevant PC L

c) Evaluation Reports TEC L

d) Notice of Award PC L

e) Invitation to Consultants to negotiate Not applicable L

f) Contracts PC L

E.6 Is the same official responsible for: (i) authorizing procurement transactions, procurement invitations, documents, evaluations and contracts; (ii) authorizing payments; (iii) recording procurement transactions and events; and (iv) the custody of assets?

No L

E.7 Is there a written auditable trail of procurement decisions attributable to individuals and committees?

Yes L

II. General Ratings

Criterion Risk

A. Organizational and Staff Capacity H

B. Information Management L

C. Procurement Practices H

D. Effectiveness H

E. Accountability Measures L

OVERALL RISK RATING H

42 Appendix 3

APPENDIX 3: ORGANIZATIONAL STRUCTURE OF PROCUREMENT BRANCH OF MOHNIM

Designation

Full form

SAS - Senior Assistant Secretary AS - Assistant Secretary AO - Administrative Officer SA/CC - Staff Assistant/ Chief Clerk DO - Development Officer DA - Development Assistant PMA - Public Management Assistant GT - Graduate Trainees SKS and KKS - Saukkya karya Sahayaka and Karyala

Karya Sahayaka

Appendix 4 43

APPENDIX 4: ORGANIZATIONAL STRUCTURE OF DOH/ ENGINEERING SERVICES