Christopher Yukins / GW Law: Hello, and welcome to this second session in our webinar series on New Directions in International Development and Procurement. We're very glad you could join us. We had a very successful first session on Monday, and we're going to have another session on Friday in anti-corruption, as we'll be talking about in a minute. Today's session is on contract administration, and we're going to be looking at contract administration primarily at the World Bank, using it really as a case study.
Christopher Yukins / GW Law: from several different angles, from a policy perspective, in terms of the current policy and practice structure for the World Bank, and we'll be looking at it from the perspective of
Christopher Yukins / GW Law: practical issues that have arisen in World Bank, Multilateral Development Bank Procurement, over the last, over the last decades. That's… and then the third part of our session with, with Matteo, Amerigo de Laurentis is going to be talking about specific policy issues that are now presenting in World Bank Procurement. We're very glad, again, that you could, could join us.
Christopher Yukins / GW Law: Just a little bit of background. I'm Chris Yukins. I'm a… the Lynn David Research Professor of Government Procurement Law at George Washington University Law School. I've been a professor there since 2002, and have been very glad to watch the advancement of the
Christopher Yukins / GW Law: the Procurement community internationally, really, we… historically, the program, our students had not
Christopher Yukins / GW Law: Worked extensively in international development, and you can see that the… since the turn of the century, we really have
Christopher Yukins / GW Law: Our students have a much broader involvement, as you'll see in just a few minutes, because two of our graduates are presenting today.
Christopher Yukins / GW Law: The recording from this program will be available probably in the next few hours. It's published on Public Procurement International on the program page, and it'll also appear on the GW Law Government Procurement Law Program YouTube page.
Christopher Yukins / GW Law: The chat from today's session will be, the chat will be published along with the materials.
Christopher Yukins / GW Law: If you could, and I see we have a… we have a hand up. If you have a question along the way, if you could put it in the chat, I'd be very grateful. We also have a Q&A function, but usually it's more efficient if you ask questions in the chat, and we oftentimes ask our panelists, we have a number here.
Christopher Yukins / GW Law: We ask our panelists then to respond to your questions directly in the chat, if at all possible. We have a number of speakers who have official roles. Today, they're appearing in their personal capacities.
Christopher Yukins / GW Law: So we've… for this webinar series, we have, over 450 registrants from 85 countries and 6 continents around the world.
Christopher Yukins / GW Law: Really an extraordinary opportunity to speak to the public procurement community around the world, and we're very, very glad that you can join us.
Christopher Yukins / GW Law: We're… today's session, as I mentioned, is based… is focused on contract administration, and literally hundreds of folks who've signed up for our series, spend day-to-day… they work day-to-day in contract administration. I think for those of you working in… in every country, you'll begin to see common patterns in the issues that arise in contract administration. I think you're going to find this a very interesting program.
Christopher Yukins / GW Law: Today are, the three speakers that we're gonna have today are Vinay Sharma, Jean-Jacques Verdeaux, and Matteo Amerigo de Laurentis.
Christopher Yukins / GW Law: I'm just going to quickly go through their bios again.
Christopher Yukins / GW Law: Vinay is recognized as a distinguished authority on international public procurement, governance, and institutional reform with over 35 years of global experience spanning multilateral development banks, public infrastructure enterprises, and high-level advisory roles.
Christopher Yukins / GW Law: linking fiduciary integrity with development effectiveness, market creation, and institutional trust. He began his career in India's public sector infrastructure enterprises.
Christopher Yukins / GW Law: Working on large rail and urban transport projects, he subsequently transitioned to international development finance, serving in senior leadership roles at the African Development Bank and the World Bank.
Christopher Yukins / GW Law: In those capacities, he led major policy reforms, contributed to the modernization of procurement frameworks, strengthened fiduciary oversight systems, and supported operations across
Christopher Yukins / GW Law: Africa, Asia, Europe, and fragile and transition countries. He holds a bachelor's and bachelor's and master's degrees in civil structural engineering from the Indian Institute of Technology in India, in Roki, India, where he was awarded gold medals.
Christopher Yukins / GW Law: I also have Jean-Jacques Ferdeaux, who's currently the Procurement Practice Manager for the Latin American and Caribbean region of the World Bank. He's a U.S.-French-educated lawyer who first joined the bank in 2002 as a Senior Procurement Specialist in the Africa region, and has held, since then various positions, including Senior Counsel in the Legal Procurement Group
Christopher Yukins / GW Law: Procurement Coordinator for the Indian Countries, and Lead Procurement Specialist for the Middle East.
Christopher Yukins / GW Law: and Northern Africa. Before his current assignment, he worked at the European Investment Bank in Luxembourg, where he was the Senior Procurement Advisor for the Energy Department. In his current position as Manager for Latin America and the Caribbean, he leads a team of more than 35 World Bank Procurement Specialists who supervise operations in 32 countries.
Christopher Yukins / GW Law: He graduated from George Washington University Law School, got an LLM in federal government contracts in 2002, and the University of Laurenti from the faculty at the Droix de Nancei in 1988. He's admitted to the Paris Bar. He's fluent in both Spanish and English, and lived for years in the United States and Latin America. He's currently based in Panama.
Christopher Yukins / GW Law: There's a note that Jean-Jacques was
Christopher Yukins / GW Law: He, as I noted, he graduated in 2002 from our program at GW. In 2003, he published our… the first real breakthrough comparative piece in our journal, the Public Contract Law Journal.
Christopher Yukins / GW Law: Jean-jacques is very much in his career, he's an example of tremendous success.
Christopher Yukins / GW Law: as a graduate, he's… and his writing and the work that he's done, he really has helped, bring GW and the Washington, D.C. procurement community into a much broader international orbit. We're very, very grateful for that.
Christopher Yukins / GW Law: Matteo is a recent graduate of our program. He is… he graduated with high honors from GW Law School.
Christopher Yukins / GW Law: We're very, very proud of him. He's going… he's going to shortly be joining private practice in a Washington, D.C. law firm. He's right now, as American lawyers know, he's sweating out the bar right now. He's preparing for the bar exam.
Christopher Yukins / GW Law: So we're very grateful that he was able to give us the time that he has. He's going to be talking about a note he published in the Public Contract Law Journal. So he's the next generation behind Jean-Jacques, and he's going to be… that note focuses on issues
Christopher Yukins / GW Law: of ensuring that we can bring in… that the World Bank can bring in, top-level contractors to compete for its… its contracts. Co-moderating with me today is Benedetta Audia. She's the Principal of International Development LLC, a firm advising private sector companies in international development and business matters.
Christopher Yukins / GW Law: and providing counsel to multilateral organizations, non-governmental organizations, and government entities. Benedetta, would you like to say hello?
Benedetta Audia: Good morning, good afternoon, everyone. Thank you for being here today. I've given a bit of an overview of what international development is and what its primary goals are. So today, I will just, you know.
Benedetta Audia: sit and watch, and, and contribute as, as questions are, are posed. Thanks again, Chris, for the invite.
Christopher Yukins / GW Law: Thank you very much.
Christopher Yukins / GW Law: We have a resolute time today, so I thought I would just turn it right over to Jean-Jacques, and Jean-Jacques, if you don't mind, I can advance the slides for you.
Jean-Jacques Verdeaux: Yeah, thank you very much, and thank you, Chris, for your kind words. I have to say that maybe I would not have had that career, international procurement without having first been in GW in the program, like, 20, now, 6 years ago, 25 years ago. So, thank you for the invitation, so…
Jean-Jacques Verdeaux: So, I am at the World Bank, and I am covering Latin America and the Caribbean, so hello to everybody who is in that part of the world, and to, you know, everybody else in other parts of the world, too. I'm going to go try to be concise, and to go to the, you know.
Jean-Jacques Verdeaux: to the heart of it. And really, first of all, I always start with that, because not all, you know, the people know exactly what the World Bank is doing, or have an idea, more or less, but just dig into the… what is the World Bank. Now we are talking about the World Bank Group. Actually, we have five institutions.
Jean-Jacques Verdeaux: To make it, you know, simple.
Jean-Jacques Verdeaux: We have actually, I would say, two main big institutions, if you wish.
Jean-Jacques Verdeaux: Which, I mean, the first group, or the first, institution is what we call, usually, IBRD IDA. IBRD has been,
Jean-Jacques Verdeaux: created, you know, after the World War II, either a little bit later, at the time of decolonization. But these two institutions within the World Bank are essentially the institution that is doing sovereign lending. Sovereign lending, or sometimes what we call consensual financing, so it's not only, you know, lending, sometimes it's, you know, zero-interest lending, or even, you know, grants.
Jean-Jacques Verdeaux: to the least developed countries. So this is the first, I would say, big part of the World Bank, and when we
Jean-Jacques Verdeaux: mention World Bank, usually we mention these two institutions, which actually are forming only one. Then we have another, I would say, significant institution called IFC. They are the one actually financing the private sector for the same objective of the World Bank, which is, you know, development and fighting poverty. So they are the ones actually investing in the private sector or lending to the private sector.
Jean-Jacques Verdeaux: sometimes they have to do procurement as the other institutions that I just mentioned, Aditya, and then two others.
Jean-Jacques Verdeaux: for the lawyers, maybe XSIDE is the most,
Jean-Jacques Verdeaux: relevant one, XSIDE is really the arbitration institution of the World Bank, and you could see XSIDE, you know, in arbitral decision all over the world, especially when you have a foreign direct investment in a country. And we have MIGA, that is very important these days, because they are providing, essentially, a guarantee, the last one being to Argentina. We did a guarantee of $2 billion.
Jean-Jacques Verdeaux: to Argentina to help them, you know, with the…
Jean-Jacques Verdeaux: with their financial, situation. So, if I could go to the, to the next slide. So, when we are talking, again, about, about the World Bank, we are talking, again, essentially about IBRDAS, or Soaring Loan.
Jean-Jacques Verdeaux: But, and why? Because that's actually where, you know, we are lending to… to countries through mostly investment projects. So, not all the financing that the World Bank is doing are investment projects, but most of it are investment projects. And investment projects are also translated into
Jean-Jacques Verdeaux: contract, and two government contracts that are actually procured by our, what we call sometimes our clients, we should not say clients, but by our borrowers, which are sovereign entities.
Jean-Jacques Verdeaux: It represents, today, so these government contracts represent.
Jean-Jacques Verdeaux: a big chunk of the overall World Bank portfolio. In the last, I think last year, in 2024, it was close to $150 billion. We have a number of projects, and projects could be in a lot of different sectors, and there are new priorities when it comes to sectors, but a lot in infrastructure, obviously, and at other, you know, in human
Jean-Jacques Verdeaux: human development, education, health, but also digital, and even, you know, digital network and these kind of things. We have almost 150 beneficiary countries. The World Bank has more members, but in all these members, they are the ones that are considered a kind of donor, and the other ones are a recipient. So we have close to, I think, 190,
Jean-Jacques Verdeaux: I mean, these days, or a little bit maybe less than that.
Jean-Jacques Verdeaux: member countries in the World Bank. The World Bank has difference with the UN, because I know that you talked about the UN. In the World Bank, it's not one country, one vote, and the World Bank is really representing, you know, shareholding, so the U.S. has most
Jean-Jacques Verdeaux: all the shareholding after, comes, Japan, if I'm not mistaken, then China, actually, and our third one, and then you have Germany, France, the UK, and others.
Jean-Jacques Verdeaux: That part of the World Bank. So…
Jean-Jacques Verdeaux: We have, in, in, so in the world, we have a number… we are covering all the regions.
Jean-Jacques Verdeaux: We are now divided into 8 regions. In my region, which is the Latin America and Caribbean region, we are, close to, 20, $20 billion in terms of portfolio out of the 248 billion currently. So what are the priorities?
Jean-Jacques Verdeaux: a lot has to do with infrastructure. There is new priorities, supposedly, but actually, it's always a little bit the same, especially infrastructure. And why infrastructure? Because we say that, I mean, we say there is no development without infrastructure. I mean, there was a time at the bank that, I think more than 25 years ago, where we, I mean, the banks were thinking that, you know.
Jean-Jacques Verdeaux: economy was driving everything, even development, but, I mean, we are a little bit back to the basics. I would say the saying that infrastructure is a big part of development, and you'd ever… I mean, it's evident to a lot of people that it's, you know, again, now a big priority of the bank. Infrastructure. We have other
Jean-Jacques Verdeaux: priorities, health, tourism, what we call agro-industry, and value manufacturing. I have to say that, you may not see education there, but education is considered some kind of soft infrastructure, so education is still a very big priority of the World Bank.
Jean-Jacques Verdeaux: So, we implement projects, we implement projects to mainly the procurement of government contracts.
Jean-Jacques Verdeaux: by our borrower countries. And then we may go to the next slide, and our borrowers could not do whatever they want when it comes to procurement. They have to follow a kind of legal framework. I'm saying legal framework because it's important to know that when the World Bank is financing, actually.
Jean-Jacques Verdeaux: through a loan agreement, the loan agreement is considered a treaty. So, whatever is in the loan agreement actually supersedes, you know, national, the national law. So we have what we call a procurement regulation. Before, it was called Procurement guidelines, it were not guidelines. Actually, it's maybe a better word to say Procurement regulation, that is going to govern how procurement could be… could be carried out.
Jean-Jacques Verdeaux: And essentially, a very, very much detailed in what we call international procurement, which are, you know, procurement that are, you know, above a certain threshold, and that are going to attract, usually, international competition. So, that comes also for these international processes with another set of documents, which are standard bidding documents. I mean, you could find that in the website of the World Bank, and that's really the whole
Jean-Jacques Verdeaux: legal framework that, I have to say, we, in one way or other, you know, is really imposed on the borrowers. I mean, we always say that the borrowers are responsible for the procurement and administration
Jean-Jacques Verdeaux: of the contract that is true. What is not true is that they could not receive financing with the World Bank if they do not follow
Jean-Jacques Verdeaux: This regulation and, and, and standard billing documents for the
Jean-Jacques Verdeaux: high-value contract, and most of my work and work of my staff, and Vinay was in charge of all Procurement all over the bank, was to make sure that these, you know, these regulations were actually followed by our borrowers, and we have a lot of issues
Jean-Jacques Verdeaux: to deal with, in particular when it comes to national law versus bank procurement, I would say, policy.
Jean-Jacques Verdeaux: So, we may go to the… to the next slide and…
Christopher Yukins / GW Law: So, can I interrupt you with just two quick questions? The first one's for a member of the audience. How does the World Bank intersect with charities in the borrower nations?
Jean-Jacques Verdeaux: So, charities are not recipients. Charities are not recipients of the World Bank financing, but charities and a lot of NGO are service providers or, I would say, contractor of World Bank financing.
Jean-Jacques Verdeaux: That means that we have a number of NGOs, actually, I think one of the UN agency… for instance, I'm not NGO, but the UN agency is one of the top suppliers of World Bank Finance contracts. So the contracts, again, are the contracts of the board. They contract with a lot of private firms, but we have also NGOs that are part of it.
Jean-Jacques Verdeaux: So we… they do not receive financing, which is very different from other, you know, development agencies, and even, I think, USAID, was going through charity, foundation, things of that sort. In our case, they are not the direct recipient of the financing, but indirect, I would say, if they are contracting with the board.
Christopher Yukins / GW Law: So, the second question has to do with this intersection between the procurement regulation and the borrower nation's laws. The borrower nations are rapidly developing their own laws.
Christopher Yukins / GW Law: And they also are… they're… they are oftentimes formed… I was lecturing on Friday in a country where, by law, they're required to publish their government estimates, because as a result of local corruption.
Christopher Yukins / GW Law: they… that information's leaking out, so they publish the estimates in order to forestall the corruption. So, the local law is rapidly evolving, it's rapidly maturing.
Christopher Yukins / GW Law: And it oftentimes is nuanced, because it's dealing with the local situation, and that may not align with the World Bank's procurement regulations. How do you kind of… how do you balance those two?
Jean-Jacques Verdeaux: Well, I mean, we… I mean, part of our job, I mean, on top of, you know, I would say enforcing somehow our bank policy is really, you know, procurement reform. We have been engaged in that for a long, long time, you know, across the different countries.
Jean-Jacques Verdeaux: I have to say that it was a huge priority for a number of years. It's still a priority, but maybe less these days than it was
Jean-Jacques Verdeaux: It was, before, because really we're intended to
Jean-Jacques Verdeaux: to change a system. But changing a system is a long way. I mean, it's… it looks, you know, easy, you know, on the outskirt, I mean, from outside, but when you have to
Jean-Jacques Verdeaux: actually, you know, pushed for reform, it took a long time, I have to say that, you know, a political system, even a procurement system, comes from, you know, culture, history, you know, sometimes geography and things of that sort, and it's very, very difficult to change. And Vinay and I know very well that, you know, things that may have been started 20 years ago have not been implemented yet when, you know, it was pushed by the World Bank.
Jean-Jacques Verdeaux: When it comes to national law versus,
Jean-Jacques Verdeaux: international… what they have in their national law, usually I have… actually, I had a request, that we are… actually, we are going to have an amendment on one of our clients. In their national law, they have…
Jean-Jacques Verdeaux: an exclusion for whatever comes as international financing. So, they usually recognize international law or regulation that whether it's financing for the World Bank or IBRD or any other international financing, their national law code does not apply.
Jean-Jacques Verdeaux: So that's really what it is, I mean. And that's a recognition of the special, you know, regime, you know, comes with this international finance.
Jean-Jacques Verdeaux: So, yes?
Benedetta Audia: I wanted to ask a follow-up question here. Can you talk a little bit about the cooperation between the World Bank and the UN? Because that also addresses the point about the support that is given by the World Bank to, you know, charity, projects in an indirect manner.
Jean-Jacques Verdeaux: Yeah, so, I mean, yeah, it's a very good question. So, the UN actually, I mean, we are actually a kind of sister organization of the UN. I mean, we are a little bit the same region when it comes to, you know, when we're in the US, we have the same passport and things like that. But the UN actually, they have, I would say.
Jean-Jacques Verdeaux: two very much different roles. And when I say UN, I mean UN agency, obviously, and different UN agency. So, again, they could be a supplier, a contractor, a service provider.
Jean-Jacques Verdeaux: In the contract that we are financing. So their counterpart is the country, the borrower country. So that's one kind of role. And there is also
Jean-Jacques Verdeaux: in some circumstances, usually circumstances where you have a very, you know, difficult situation, post-conflict type of situation, where it is true that, not an NGO, but they are the recipient
Jean-Jacques Verdeaux: of, you know, the, the financing, and they could implement. That's usually very, very specific, very specific,
Jean-Jacques Verdeaux: situation. Sometimes it's a kind of, what we call, you know, implementing agency. They are, so they are the one implementing, they're the one actually contracting on behalf of the government that does not have at all the capacity.
Jean-Jacques Verdeaux: And really, we have seen, I mean, I've seen, for instance, when I was working in Africa, that they were the ones that were really the counterpart in some way, but still, the financing was to the borrower. They were more an implementing agency than the recipients of the funds, if you wish.
Jean-Jacques Verdeaux: So that's a little bit the two roles. So, obviously, Johannes is a very special, you know, institution for us.
Jean-Jacques Verdeaux: I would say more, not traditional, but it could be contractor service provider, and even, you know, sometimes Procurement.
Jean-Jacques Verdeaux: playing as a procurement agent, but sometimes they are really an implementing agency, so it goes further. They are really the one who are going to implement the project, and not only on procurement, but on all the aspects of a project implementation, and that has to do, again, a lot with a post-conflict situation, and when you have a government that is
Jean-Jacques Verdeaux: Either not functioning or not, you know, not there yet.
Benedetta Audia: Thank you, and if I can just add to this, this was made possible through the modifications that were introduced to the World Bank Procurement framework, particularly in relation to alternative procurement arrangements.
Benedetta Audia: So there was an assessment that was made ex ante on the procurement regulations of several UN system organizations.
Benedetta Audia: And it was through that
Benedetta Audia: that direct implementation was possible, because it was happening beforehand, but when certain UN organizations were implementing World Bank-funded projects, they were doing so following the World Bank rules, while after the modifications that were introduced
Benedetta Audia: with respect to the alternative procurement arrangements, it was possible for UN organizations to follow their own rules with respect to implementation. And again, echoing your comment in relation to the need to support countries that have
Benedetta Audia: that basically, operate in a fragile context, either conflict and post-conflict.
Benedetta Audia: A few examples have been in Yemem, for instance, or Afghanistan, or a number of projects called Back on Track.
Benedetta Audia: Where, basically, UN organizations were helping governments speed up implementation with respect to programs that were, stalled or taking a bit longer because of the lack of capacity or other challenges that we're facing.
Jean-Jacques Verdeaux: Yeah, you're completely right. So, it's a kind of delegation of procurement to other institutions. I have to say that
Jean-Jacques Verdeaux: I mean, the most common one is with other banks, and we've seen, like we are doing with Inter-American Bank these days, actually, that was made. I mean, we have a framework agreement also with other banks, and with also Asian Development Bank, and now with Europe Investment Bank, so we delegate to other banks, or they could delegate to us, but we could also delegate under APA to an agency within the country. Well, I think the first one was
Jean-Jacques Verdeaux: Might have been in India, I think Vinay should, I mean, may know more than me on that, but I think it was Power Grid, one of the major, you know, energy agency entities in India. So it could be UN agency, could be other banks, and sometimes it's not that often, but to, you know, an agency within the country.
Jean-Jacques Verdeaux: So let's talk a little bit of, and, I'm glad that,
Jean-Jacques Verdeaux: Chris said that I was talking on my personal, you know, capacity, not the representative of the World Bank, but let's talk about what's not going on, and what's maybe not, you know, so… so great these days with our bank finance contract. Matteo is maybe, you know, complement that. But I would just to say that within the last 10 years or 20 years, we had several issues when it comes to our World Bank finance contract and procurement.
Jean-Jacques Verdeaux: We have seen,
Jean-Jacques Verdeaux: One of the issues that is really a problem that was obviously emphasized by the president recently, two or three years ago, is the fact that we have a lot of companies that are not bidding in our bank finance contract. And very high-level, qualified international companies are not bidding.
Jean-Jacques Verdeaux: For a different reason, one of the reasons, and they feel that they are not operative in a competitive environment.
Jean-Jacques Verdeaux: Obviously, they have to compete with a lot of Chinese contractors these days, and you know that beyond Procurement is sometimes a geopolitical issue. I am living in Panama, and I may have followed that, what happened in Panama with the ports, you know, along the canal. So, but beyond that, they are concerned about, you know, that, and especially that sometimes we may have also not always the best qualified firms.
Jean-Jacques Verdeaux: to build for our contracts. And that's a trend that is going on, and that has been really something that the president and the bank wanted to address. So we came with a procurement change program. Actually, we implemented a little bit ahead of time, because we're in Latin America, and we felt
Jean-Jacques Verdeaux: the need in Latin America to implement that beforehand. So, I'm going to go very, very quickly, but that's very important. So, they were deciding in early 2025 to implement rated criteria, which is actually to give the premium of quality over price. And maybe Matteo is going to go over that. I'm sorry, Matteo, if I, you know…
Jean-Jacques Verdeaux: but, the… it is really having a minimum weighting for.
Jean-Jacques Verdeaux: technical criteria, minimum 50% going to 60% quality over price. It has been the regulation, or what we call the Procurement framework for a while, I mean, 10 years now, but it was not used, and for different reasons for our borrowers. Now it's mandatory, and not that it's mandatory, since September 2023, but the minimum weighting of technical over cost.
Jean-Jacques Verdeaux: is now part of the policy. We have, what we say, early market engagement. We want
Jean-Jacques Verdeaux: the borrowers to engage with the private sector is very difficult in a number of countries. Not, I mean, early market engagement, early in the procurement, but we are talking about contract administration also during contract administration, and that's what we have, and you could see that, what we call direct payment. In some instances, and the borrower has to agree to that, the bank
Jean-Jacques Verdeaux: could, as a financier, could pay directly to contractor. And that's really to address one of the main issues we have, and really, you know, sometimes that the firms have to deal with is really the fact of lack of payment or delayed payment.
Jean-Jacques Verdeaux: And that's really a big, big issue for the contractors. We have imposed also now what we call local labor, so local labor, minimum of 30% in civil works, only civil works.
Jean-Jacques Verdeaux: Contracts, international civil rights contract, 30% local labor, and that's to do a lot also with the request for some borrowers, and the fact that, we wanted also, you know, to comply with our mandate of development.
Jean-Jacques Verdeaux: We have a complaint system that has been around for a long time, but now everything is centralized to be able to follow, you know, complaints.
Jean-Jacques Verdeaux: Which are a very, very important tool that, personally, I would like to be extended beyond what is right now, like they have in EIB and EBRT, the two European,
Jean-Jacques Verdeaux: outside development banks, that I think works very well. I work in EIB, and I could see what a complete, you know, complaint system to the institution like the World Bank could change in terms of consistency, in terms of responsiveness, and addressing, really, the issue that
Jean-Jacques Verdeaux: Bidress could face.
Jean-Jacques Verdeaux: Collaboration is that, a little bit what Benedetta was mentioning is, you know, this delegation, and obviously, we try to aggregate Procurement. We have a lot of contracts for relatively, you know, medium value, and we try to aggregate Procurement, because in terms of transaction, in terms of, you know, oversight is much better for us. So, in a nutshell, it's a bit of a change program. We're implementing that. We have some results, and like we have a very
Jean-Jacques Verdeaux: good result in terms of, for instance, a better… we increased by 21%.
Jean-Jacques Verdeaux: bidder participation in our contracts in our region, so it's a bit more challenging in other regions. But in our region, we are very, very pleased to have, on top of that, a very diverse set of suppliers coming from all over the world, and we are very, very proud of that, because it's a little bit more challenging for the
Jean-Jacques Verdeaux: folders, and so I'm going to stop with my last, my last slide.
Benedetta Audia: Good luck.
Jean-Jacques Verdeaux: Yes.
Benedetta Audia: Before, sorry, before you go to your… your last slide, if you go… if you go back.
Benedetta Audia: Maybe one point, and if you could say a few words about it, it would be great. Under collaboration, when you refer to mutual reliance agreements, I think what is… what may be interesting for the audience to know is that the very basis to have these agreements in place was
Benedetta Audia: an assessment
Benedetta Audia: of, basically, similarities in frameworks, an ex-ante assessment that was concluded that could enable the conclusion of these agreements. So, while in the past.
Benedetta Audia: something, you know, these exercises were conducted on a case-by-case basis, on a project-by-project basis. The advantage of having these mutual reliance agreements and, framework agreements is that there is a,
Benedetta Audia: an exercise that is conducted to make sure that there aren't that many, differences between the frameworks of the organizations that the bank is cooperating with. And so this… this contributes to harmonization, which also helps contractors that want to work with multiple international development entities.
Jean-Jacques Verdeaux: Yeah, yeah, that's correct. So, and just on material rights agreement, I mean, it's sometimes a question of terminology. Now it goes beyond procurement, so we just, I mean, we signed with the Asian Development Bank, some time ago. We are signing, we are supposed to sign, one with the Inter-American Bank, so it goes really beyond,
Jean-Jacques Verdeaux: it goes really beyond. So, I have a question about…
Jean-Jacques Verdeaux: research and development services, I could not see the, the whole question. But so, when we say the World Bank, we are saying it's the government who is contracting, so some, some, project actually requires some research and, and, and development. I mean, every project is different in its, in itself. Obviously, we have very, you know, very,
Jean-Jacques Verdeaux: common, you know, we'd say financing and contracts, but we could see, when you look at the procurement plan, each project have a Procurement plan, when you look at Procurement plan of one project, you would see, sometimes research and development, especially, you know, in IT, or when they are doing some, you know, some exploration, things of that sort.
Jean-Jacques Verdeaux: So, just my last slide, and just to go over very, very quickly what is not…
Jean-Jacques Verdeaux: still challenging for the World Bank, and I touched upon that, is really one of the main issues is competition. Still, we have issue of not that many, much competition from different countries. When I call competition, I mean the international procurement. I mean, a lot in Africa, we have a lot of, obviously, our shareholders, and the main shareholders who are
Jean-Jacques Verdeaux: Complaining about that, and again, if you talk about major, major, you know, provider 15 years ago, what number of contracts they have compared to now, it's a big, big difference, so they do not bid as much as they used to bid.
Jean-Jacques Verdeaux: So, we have some issue regarding consistency across region, because now we are quite decentralized between regions, which changed a little bit again. I think maybe it was a little bit better when Vinay was there, because we had a unified, I would say, procurement, operational procurement unit, or I would say department, or direct, yeah, department. It's not the case anymore. We try to correct that these days, but we have a little bit of consistency issues sometimes.
Jean-Jacques Verdeaux: between regions. Still a problem of capacity with the borders. We have just launched
Jean-Jacques Verdeaux: what we call the prophesization of the Procurement function in lack, for those who are in lack, who are interested in being certified in international procurement. That's a call for candidates, it's on the website, and you could look at that, and we are going to certify 240, people in the Latin American region, Spanish-speaking.
Jean-Jacques Verdeaux: Complaints, we could go a little bit beyond… I mean, we could go… we could do more certainty of complaints, we are looking at that. And obviously, we have to be a little bit more, aware of how to manage risk, and that's sometimes something that we will try to address.
Jean-Jacques Verdeaux: I think partly with AI. I'm not sure that AI will, you know, lower the risk as much as we would like, but that's one of the issues. So, I'm stopping that, and again, I saw that there were several questions, I'm happy to respond, yeah.
Benedetta Audia: Yeah, I was about to say, there are a few questions here, and the last one is about, repayment, right? So, the question is, given that World Bank loans and the procurement they finance are ultimately repaid by borrowers, how do you ensure that rated criteria remain economically sound from the borrower's perspective? Specifically, how do you avoid a situation where the borrower bears the additional cost of a
Benedetta Audia: More sustainable technology that the bank has requested through those criteria.
Jean-Jacques Verdeaux: That's a very, very good question, and what's, you know, one of the arguments we hear again and again when it comes to rating criteria, and sometimes, you know, supposedly higher cost. I mean, we… I mean, we have seen that when you look at the life.
Jean-Jacques Verdeaux: Life of a project. That lowest costs do not provide neither quality nor actually saving for the country in the long run.
Jean-Jacques Verdeaux: Well, I mean, I see that again and again, and we all know that, you know, a low-cost
Jean-Jacques Verdeaux: bid that comes and chosen based on the cost. At the end, you have always either amendment when the cost does not represent, actually, we know the challenge and what is supposed to be accomplished through the contract. So, when you look at it.
Jean-Jacques Verdeaux: a best solution that could be costly, you know, on the front, I mean, on the cost front, at the end, is not costly anymore, especially when we're talking about, you know, innovative solutions. We are seeing that
Jean-Jacques Verdeaux: over and over in our contract. Even, you know, when you are doing… when you are doing, you know, civil… basic selling basic… civil works, I mean, civil works like roads and things like that, so…
Jean-Jacques Verdeaux: We could see that, any quality and any innovative product that now are sometimes not accessible to our borrowers, have actually
Jean-Jacques Verdeaux: comes with savings. And we have seen, again, that in some example where the countries may not have followed, you know, a national… their national law or the lowest cost.
Jean-Jacques Verdeaux: And I could tell you that we have ample example, a lot of examples of that. So, again, it's something we hear again and again, but that's true, that when you have the best solution and the most innovative product at the end of the day, I mean, you are much better off.
Jean-Jacques Verdeaux: In terms of development and results. So when it comes to results, there is no question that having, you know, that part of tech, I mean, better quality product or service gives a much more better results in terms of development.
Christopher Yukins / GW Law: Thank you very much, Jean-Jacques. We're going to turn over, Vinay, and just for the audience, as we transition to Vinay's presentation. So, Jean-Jacques ended up focusing on risk management. Vinay is a central part of Vinay's presentation, and more and more important part of procurement in general.
Christopher Yukins / GW Law: I'll turn it over to you, Vinay. Thank you again.
Vinay Sharma: Thank you. Thank you very much, Chris, and good morning, good afternoon, and good evening to everyone joining from different parts of the world.
Vinay Sharma: Over the past 4 decades, I have had the privilege of working in public procurement.
Vinay Sharma: and contract management. As an engineer, as a procurement specialist.
Vinay Sharma: And later as a manager in both the World Bank and the African Development Bank.
Vinay Sharma: During that time, I participated in thousands of procurement decisions and reviewed hundreds of major contracts across virtually every sector, transport, energy, health, education, water, urban development.
Vinay Sharma: But one conclusion became increasingly clear to me.
Vinay Sharma: We devote enormous attention to procurement, to selecting the contractor.
Vinay Sharma: And we devote far less attention to ensuring that the contractor actually delivers the intended development results.
Vinay Sharma: Yet, that second phase is where success or failure is ultimately determined.
Vinay Sharma: Everything I said today is really centered around one single proposition.
Vinay Sharma: Procurement determines who will deliver a project. Contract management determines whether the project delivers development. Can I have the next slide, please?
Vinay Sharma: So, we often think of procurement as the end of a process. In reality, it's the beginning of another, and arguably the more important and the more difficult phase.
Vinay Sharma: Winning a tender does not produce a road. It does not produce electricity. Awarding a consulting contract does not strengthen institutions.
Vinay Sharma: The contract merely creates the opportunity to achieve these outcomes.
Vinay Sharma: Everything that citizens care about happens afterwards.
Vinay Sharma: Will the contractor mobilize quickly, for example?
Vinay Sharma: Will decisions be taken on time? Will disputes be resolved constructively? Will unforeseen risks be managed sensibly?
Vinay Sharma: Will environmental and social commitments actually be implemented?
Vinay Sharma: Those are contract management questions.
Vinay Sharma: Citizens never celebrate a successful procurement process. They celebrate functioning hospitals, reliable electricity, safe roads, clean drinking water.
Vinay Sharma: In other words, Citizens experience implementation, they don't, experience procurement.
Vinay Sharma: That distinction is becoming increasingly important as development institutions move from measuring inputs
Vinay Sharma: Towards measuring not outputs, but outcomes, results, and impact.
Vinay Sharma: Can we go to the next slide, please, Chris?
Vinay Sharma: People often ask why projects fail.
Vinay Sharma: The instinctive answer is almost always poor contractors.
Vinay Sharma: I think the experience has been rather different.
Vinay Sharma: In most cases, the seeds of failure are planted long before construction even begins. Poor preparation.
Vinay Sharma: Incomplete investigations, weak designs, unrealistic schedules, Optimistic cost estimates.
Vinay Sharma: Poorly allocated risks, Weak institutional capacity, slow governance, arrangements.
Vinay Sharma: All of these are embedded inside the contract before anyone arrives on site.
Vinay Sharma: Now.
Vinay Sharma: We had done recently, a few months ago, an analysis of more than 2,600 World Bank finance contracts, admittedly only in the Africa region.
Vinay Sharma: And those contracts were worth almost $60 billion.
Vinay Sharma: I was struck by a very interesting observation.
Vinay Sharma: Most contracts did not require major amendments. Only one-fifth of the work contracts require positive amendments.
Vinay Sharma: That tells us something encouraging.
Vinay Sharma: Major implementation problems are not inevitable. Good preparation works.
Vinay Sharma: But when preparation is weak, contract managers spend years dealing with consequences that could often have been prevented.
Vinay Sharma: In many respects, contract management begins during project preparation, not after contract signature.
Vinay Sharma: Next one, please.
Vinay Sharma: So, the next one is actually…
Vinay Sharma: you know, a real case, and I'm sure all of you would have seen many cases like this.
Vinay Sharma: But this is one of the… one of my favorite examples, because it illustrates how seemingly minor drafting issues can have enormous consequences.
Vinay Sharma: The tender required suppliers to deliver educational material to final beneficiaries, but they didn't define what the final beneficiaries were.
Vinay Sharma: Were they government warehouses? Were there district offices? Were there thousands of individual schools?
Vinay Sharma: Different bidders made different assumptions.
Vinay Sharma: And each assumption was perfectly reasonable.
Vinay Sharma: The bids were therefore incomparable, the procurement had to be canceled, the students lost a year of,
Vinay Sharma: you know, of textbooks and so on. It was not only an administrative inconvenience, it had major human impact.
Vinay Sharma: Whenever we draft procurement documents, we do tend to think only about legal decision.
Vinay Sharma: We should also think about operational position.
Vinay Sharma: Every ambiguity eventually becomes someone's problem during implementation. Poor contract management often begins with poor drafting.
Vinay Sharma: Can I have the next slide, please?
Vinay Sharma: Many organizations still view contract management as a back office administrative activity.
Vinay Sharma: You know, the contract managers process invoices, they approve extensions, they issue certificates, they maintain files. These activities are important, they're not trivial.
Vinay Sharma: But they… but they are not why contract management exists.
Vinay Sharma: I would suggest that the real purpose of contact management is managing uncertainty. Technical uncertainty.
Vinay Sharma: Commercial uncertainty, political uncertainty, environmental uncertainty, social uncertainty.
Vinay Sharma: In effect, contact managers continuously reconcile what was expected With what actually happens.
Vinay Sharma: This requires engineering judgment, commercial judgment, legal judgment, and perhaps most importantly, professional judgment.
Vinay Sharma: The contract manager is not simply administering a contract.
Vinay Sharma: He's protecting development outcomes.
Vinay Sharma: This is a fundamentally different way of thinking about the profession.
Vinay Sharma: So, the next one, The next one is… basically.
Vinay Sharma: How risk allocation determines project success.
Vinay Sharma: As we had just mentioned, every contract is essentially a mechanism for allocating uncertainty.
Vinay Sharma: The temptation among all public procurement officials, among most public procurement officers, is to transfer as much of risk as possible to the contractor. On paper, that appears attractive.
Vinay Sharma: In reality, contractors simply either price those lists or refuse to bid altogether.
Vinay Sharma: One observation from the analysis that I was talking about particularly interested me. The contracts with the fewest amendments were not the largest projects.
Vinay Sharma: In fact, amendment rates followed something close to a U-shaped pattern.
Vinay Sharma: Small projects experience relatively high amendment rates.
Vinay Sharma: Very large projects also experienced high amendment rates. Medium-sized projects performed best… performed best. Why?
Vinay Sharma: Probably because small projects often receive insufficient preparation and management attention, and large projects are inherently complex.
Vinay Sharma: The lesson is that risk is not simply a function of the project size.
Vinay Sharma: It is a function of preparation, governance, and institutional capacity.
Vinay Sharma: Good contracts allocate each risk to the party, best available to… best able to manage it.
Vinay Sharma: Not necessarily the contractor. And as you see.
Vinay Sharma: the employer would be the best party to manage, for example, ground conditions, utilities, permits, etc. And the contractor should
Vinay Sharma: Essentially be managing only contract lists.
Vinay Sharma: The next one, please.
Vinay Sharma: So… Commercial reality does not wait for administrative processes.
Vinay Sharma: Once a contractor has won a contract, equipment is ordered.
Vinay Sharma: Personnel are recruited, banks arrange financing, Subcontractors engaged.
Vinay Sharma: If contract effectiveness is delayed unexpectedly, costs continue to accumulate. And I'm sure all of us have seen this. After signature, it takes months, sometimes years, for the contract to become effective.
Vinay Sharma: But these costs appear as claims. This example reminds us that implementation actually begins before many employers believe it has begun.
Vinay Sharma: Good contract managers understand the commercial dynamics between the, behind the paperwork.
Vinay Sharma: They appreciate that every administrative delay has commercial consequences.
Vinay Sharma: So, what does… how do employer delays impact the contract? That is in the next slide.
Vinay Sharma: The… the contractors certainly contribute to… to… contractors certainly contribute to delays, but employers often underestimate their own contribution.
Vinay Sharma: Late approvals.
Vinay Sharma: Late access to sites, late payments, delayed responses, Slow design reviews, Each delay appears relatively minor.
Vinay Sharma: Collectively, however, they become extremely expensive.
Vinay Sharma: One of the more interesting findings from our recent analysis concerned when amendments occurred.
Vinay Sharma: The First Amendment typically appeared around 18 months after the contract signature.
Vinay Sharma: But after that, something changed.
Vinay Sharma: Subsequent amendments occurred progressively closer together. So the first one took 18 months, the second one took a little lesser, and then the subsequent ones even, even lower.
Vinay Sharma: The contact effectively entered a cycle of repeated adjustments. In other words, implementation problems compound.
Vinay Sharma: They, they rarely remain isolated.
Vinay Sharma: That suggests an important management lesson.
Vinay Sharma: The First Amendment should not simply be processed administratively.
Vinay Sharma: It should become a management signal. It should trigger closer oversight.
Vinay Sharma: The first amendment should prompt senior managers to ask, what is happening on this contract?
Vinay Sharma: what underlying problems are we trying to solve? Because if those questions are asked early, many later disputes can often be avoided.
Vinay Sharma: Can we have the next slide, please?
Vinay Sharma: So, disputes almost never, arise suddenly. They accumulate.
Vinay Sharma: Because of what? Weak supervision, for example? Poor documentation?
Vinay Sharma: Delayed decisions.
Vinay Sharma: uncontrolled variations, Each seems manageable. Together, when they all combine, it becomes litigation.
Vinay Sharma: One contract we recently examined accumulated 32 amendments over less than 2 years.
Vinay Sharma: The interesting question is not whether those amendments were justified. The interesting question is why management allowed 32 amendments to become necessary.
Vinay Sharma: Good governance intervenes long before that point, and when disputes do arise.
Vinay Sharma: Documentation becomes decisive. In arbitration, memory has very little value.
Vinay Sharma: Contemporaneous records have enormous value.
Vinay Sharma: Documentation protects not only the employer, it also protects honest contractors and honest project managers. And I'm sure many of us realize that poor documentation has been the bane of government record keeping.
Vinay Sharma: Can we have the next slide, please?
Vinay Sharma: So, every major infrastructure project changes, we know that. I mean, it's impossible… I haven't seen a single large infrastructure project not having changes. This is perfectly normal.
Vinay Sharma: The issue is not whether variation or orders occur. The issue is whether they are well governed.
Vinay Sharma: Whenever a variation is reviewed, I think four simple questions need to be asked.
Vinay Sharma: Why is this change necessary?
Vinay Sharma: Who benefits?
Vinay Sharma: Could it reasonably have been foreseen?
Vinay Sharma: Does the project still represent value for money?
Vinay Sharma: And perhaps a fifth one, could this variation have been avoided?
Vinay Sharma: Too often, We celebrate processing variation orders efficiently.
Vinay Sharma: Perhaps we should instead measure how many unnecessary variation orders were prevented through better preparation.
Vinay Sharma: This is a much better indicator of institution maturity.
Vinay Sharma: The next one, please.
Vinay Sharma: So, I… would expose myself, and I would be bold as to say that contracting is actually governance.
Vinay Sharma: For me, this is really the heart of the presentation.
Vinay Sharma: When I began my career, we spoke mainly about compliance.
Vinay Sharma: Today, we rightly speak much more about value for money.
Vinay Sharma: I believe the next evolution is to recognize that contract management is fundamentally about a governance.
Vinay Sharma: Every delayed payment influences future competition.
Vinay Sharma: Every poorly justified variation affects public confidence.
Vinay Sharma: Every unresolved dispute ultimately increases future bit prices.
Vinay Sharma: Every implementation failure weakens trust in public institutions. Contract managers, therefore, influence far more than individual contracts. They influence markets, they influence institutions. Ultimately, they influence citizens' confidence that governments can deliver. Governance is not exercised only through legislation.
Vinay Sharma: It is exercised every day through thousands of operational decisions taken during project implementation. That is why I increasingly describe contract managers, not as administrators, but as governance professionals. The next one, please.
Vinay Sharma: So, technology is changing implementation rapidly. Ten years ago, site supervision depended almost entirely on physical inspections.
Vinay Sharma: Today, we increasingly use drones, satellite imagery, artificial intelligence, digital payment verification, predictive analysis.
Vinay Sharma: These technologies allow us to detect implementation problems much earlier than before.
Vinay Sharma: But one principle remains unchanged.
Vinay Sharma: Technology supports judgment. It cannot replace judgment.
Vinay Sharma: Artificial intelligence may identify an anomaly, but only experience can determine whether that anomaly reflects fraud, poor planning, justified adaptation, or simply changing project circumstances.
Vinay Sharma: So, what are the lessons? And that is in the next slide.
Vinay Sharma: So, if I had to summarize.
Vinay Sharma: you know, the four decades of experience into the… into a few observations, I think these would… these would be my lessons.
Vinay Sharma: Most disputes begin long before disputes become visible.
Vinay Sharma: Preparation matters more than procedure.
Vinay Sharma: Documentation, matters more than memory.
Vinay Sharma: early intervention, Is almost always cheaper than former dispute resolution.
Vinay Sharma: And perhaps my biggest personal lesson is this.
Vinay Sharma: Early in Macari, I believed that successful procurement produced successful projects. Today, I believe something different. Successful procurement merely creates the opportunity for successful delivery.
Vinay Sharma: The real work begins after contract signature.
Vinay Sharma: The next one, please. So what is… can we look at contracts a little differently?
Vinay Sharma: Perhaps we need to stop thinking of contracts merely as legal documents. A contract is a governance instrument, a delivery framework, a risk allocation mechanism.
Vinay Sharma: A partnership between the employer and the contractor. And an accountability system linking public expenditure to public value.
Vinay Sharma: If Procurement selects the right partner, contract management determines whether that partnership is succeeding or not.
Vinay Sharma: So, the last slide is about how
Vinay Sharma: I think this needs to be concluded.
Vinay Sharma: So let me conclude with one final thought. International development… has invested enormous intellectual effort in improving procurement systems.
Vinay Sharma: That investment has been worthwhile. But I believe that the next frontier is implementation, because citizens never experience procurement, they experience roads, schools, hospitals, electricity, water, institutions, etc.
Vinay Sharma: In other words, they experienced the results of contact management, so let me return to where I began.
Vinay Sharma: Procurement determines who delivers the project. Contract management determines whether the project delivers public value or not.
Vinay Sharma: If we truly wish to improve development outcomes, we must devote as much attention to managing contracts as we do to awarding them.
Vinay Sharma: Thank you very much.
Vinay Sharma: And I look forward to any questions in the chat. Thank you.
Christopher Yukins / GW Law: Thank you very much. And just,
Christopher Yukins / GW Law: For those interested in the forthcoming book by, Vinay and Prabhat, who will be, speaking on Friday, this is… it's available in advance in, through Amazon, and also there… there'll be a discount available, and you should reach out to the authors if you… if you're interested in that. It's an excellent book, by the way.
Christopher Yukins / GW Law: If… Benedetta, you have a, you have a point?
Benedetta Audia: Yes, I just wanted to quickly address, because unfortunately I have to log off on the hour, I wanted to address Carol's question in relation to intellectual property rights. Hello, Carol. Thank you for attending today's session. I just want to focus on the UN's approach with respect to intellectual property rights, especially with respect
Benedetta Audia: Respect to private contractors.
Benedetta Audia: The, general terms and conditions are quite clear, in the sense that IIP rights belong to the UN, with the exception of pre-existing materials.
Benedetta Audia: And Carol, I, I couldn't agree more, in relation to your comment with respect to addressing the issue of long-term sustainability, local ownership.
Benedetta Audia: But the issue of ownership is important because it is linked to the privileges and immunities that the UN enjoys, and
Benedetta Audia: for instance, joint ownership would be a problem if the other party is a private sector entity or even a government, but what I've seen is that at the end of the project, there is a possibility
Benedetta Audia: for a transfer to take place, and usually when the project outputs are transferred to the government, IP rights are included in the… in the handover… in the handover agreement. Just wanted to offer my views on… on this point. Thanks again for the question.
Christopher Yukins / GW Law: Thank you very much. We'll turn it over to Matteo, who is quite literally the next generation of… because as we were joking around before the program, Matteo actually played football, or as we call in America, soccer, against Jean-Jacques Sun. So, welcome to the next generation, Matteo, the floor is yours.
Matteo Amerigo de Laurentiis: Thank you very much, Professor Yukins. I'm extremely excited to be here to discuss my paper, especially with such an esteemed panel of practitioners in the field.
Matteo Amerigo de Laurentiis: So, my paper observes contractor incentives and their related effect on bidder diversity in World Bank Civil Works contracts, really looking at how we can encourage top contractors to participate in these contracts.
Matteo Amerigo de Laurentiis: And this is particularly important in the realm of civil works and infrastructure, as they, constitute, almost 60% of the World Bank's portfolio in terms of contract dollars.
Matteo Amerigo de Laurentiis: And unfortunately, there's a challenge here where many suppliers still perceive MDB procurements as favoring lowest price in evaluation, which can discourage competition and participation by high-quality international firms.
Matteo Amerigo de Laurentiis: So my, my note really has two solutions that I propose, the first of which is increasing the proportion of requests for proposals, which are performance-based rather than conformance-based specifications.
Matteo Amerigo de Laurentiis: Which can help increase the scope for innovation while providing also greater scope for consideration of quality and evaluation.
Matteo Amerigo de Laurentiis: And also adoption of collaborative contract models, which have a more balanced risk allocation for contractors, place contractors and borrowers on a more equal plane in terms of contract administration and performance, and also provide opportunities for early contractor involvement.
Matteo Amerigo de Laurentiis: So… As we've discussed a little bit, there are,
Matteo Amerigo de Laurentiis: significant challenges, in terms of political, economic, and geopolitical developments in recent terms that have, times that have created a more difficult international
Matteo Amerigo de Laurentiis: development environment. And within this context, it's really important to maximize the World Bank's ability to attract a wide range of high-quality international contractors.
Matteo Amerigo de Laurentiis: So, looking at my first solution that I propose, which is the third bullet point here, so more sophisticated procurement methods can improve outcomes and attract a broader range of
Matteo Amerigo de Laurentiis: quality suppliers. During my research, I recognized that requests for bids remain dominant, even in civil works procurement within the World Bank ecosystem.
Matteo Amerigo de Laurentiis: And the solution I propose is to increase the share of requests for proposals, which could increase participation by international contractors through international tools, through procurement tools, such as initial selection and competitive dialogue.
Matteo Amerigo de Laurentiis: Looking at initial selection.
Matteo Amerigo de Laurentiis: It's a method that encourages innovation and ensures technical quality is meaningfully evaluated before price is considered. And just to give a quick rundown of it.
Matteo Amerigo de Laurentiis: It's, applicants are assessed against two broad technical categories.
Matteo Amerigo de Laurentiis: qualification criteria and rated criteria. Only applicants meeting the qualification criteria then advance to investment against rated criteria. An evaluation panel will assign the, each proposal a application.
Matteo Amerigo de Laurentiis: a technical score, and then applicants will then be ranked according to their technical score, and the borrower will initially select applicants up to a certain predetermined number of applicants. Only those initially selected applicants will then be invited to submit proposals.
Matteo Amerigo de Laurentiis: And just to give an illustration of, how this could lead to greater participation by top-ranked international contractors.
Matteo Amerigo de Laurentiis: For example, in Europe, suppliers' health and safety or ESG compliance requirements may be mandated by the European Union or domestic law, and these suppliers will,
Matteo Amerigo de Laurentiis: have worldwide implementation of these Hyde standards, including in their overseas subsidiaries, which can lead to higher direct and overhead costs, and thus the comparatively higher prices vis-a-vis suppliers from countries that do not have these same domestic legal requirements.
Matteo Amerigo de Laurentiis: So these requirements, in term, may price European suppliers out of the market when price outweighs quality in evaluation. Initial selection, through the process that I discussed.
Matteo Amerigo de Laurentiis: Offers a powerful tool to counteract these forces by acting as a quality filter and ensuring that contractors' quality is considered when they are invited to submit bids or proposals.
Matteo Amerigo de Laurentiis: Next, slide, please.
Matteo Amerigo de Laurentiis: So the second proposal or solution that I propose is to adopt collaborative contract models which optimize contractor risk and promote collaboration.
Matteo Amerigo de Laurentiis: So, as we see, compared to traditional contract models, collaborative contract models such as the NEC, the new engineering contract, offer a more balanced risk profile for contractors and an emphasis on cooperation and early contractor involvement.
Matteo Amerigo de Laurentiis: They have clearer organization, which can reduce administrative burdens and losses and disputes due to procedural errors. They also have inclusion of objective tests for measuring delay events, as well as positive profit incentives for contractors that help orient the borrower-contractor relationship
Matteo Amerigo de Laurentiis: towards a more cooperative and less adversarial posture, and may positively impact contractors' risk perceptions of World Bank projects, and therefore, their willingness to submit
Matteo Amerigo de Laurentiis: bids or proposals.
Matteo Amerigo de Laurentiis: just one thing that I wanted to touch on that's really important in these collaborative contract models is the potential for having early contractor involvement.
Matteo Amerigo de Laurentiis: In early contractor involvement, the contractor is involved from the earliest stage of the procurement and the design.
Matteo Amerigo de Laurentiis: Which can lead to early identification of risks. The contractor who has technical expertise is able to identify risks and designs, and provide value engineering before these risks manifest during performance, which can lead to lower costs and delays.
Matteo Amerigo de Laurentiis: in performance and higher client satisfaction. We also see, signals from the market that high-quality suppliers really want to be involved.
Matteo Amerigo de Laurentiis: As early on in the process. And so adopting these sort of collaborative contract models would be an effective method of responding to that signal from the market.
Matteo Amerigo de Laurentiis: I know Jean-Jacques talked about this a little bit as well, but one of the key themes that came out during the course of my, of my research was that MDBs are increasingly,
Matteo Amerigo de Laurentiis: recognizing that procurement starts before the tender is issued, and that collaborative contract models have built-in early contractor involvement mechanisms, which respond to the need for early contractor engagement.
Matteo Amerigo de Laurentiis: the last point that I wanted to touch on is that, you know, capacity building really remains essential. The proposed solutions in my paper respond to a lot of
Matteo Amerigo de Laurentiis: market, signals, however, they also, increase the requisite capacity to, implement and manage contracts. So,
Matteo Amerigo de Laurentiis: as we see here on the slide, you know, borrower capacity to design procurements, evaluate quality, and manage contracts is a key determinant of successful outcomes, and investment in procurement professionalization through increased support to borrowers is really essential to realizing the benefits of our FPs and collaborative contract models.
Matteo Amerigo de Laurentiis: And, we do see that
Matteo Amerigo de Laurentiis: World Bank, support for capacity building really brings significant added value, and, one of the,
Matteo Amerigo de Laurentiis: little points of data that I found while conducting my research is that while only 8% of projects in the World Bank ecosystem receive expanded implementation support.
Matteo Amerigo de Laurentiis: these projects exhibit faster procurement times and greater use of innovative procurement team techniques. And this is really despite the fact that, HICE, as it's called, is,
Matteo Amerigo de Laurentiis: Limited to projects that are occurring in significantly, difficult contexts, whether through, limited
Matteo Amerigo de Laurentiis: borrower capacity or, difficult project context in terms of economic, political, environments. So…
Matteo Amerigo de Laurentiis: really the, as I said at the beginning of my presentation, the crux of the, of the challenge is to
Matteo Amerigo de Laurentiis: increase bidder diversity, especially for civil works, in the face of, a very difficult
Matteo Amerigo de Laurentiis: political, economic, and geopolitical environment. And, the two solutions that I have identified in my note, sort of increasing the share of requests for proposals and adopting collaborative contracting models, responds to a lot of the market
Matteo Amerigo de Laurentiis: Demands that we are seeing… seeing from, from…
Matteo Amerigo de Laurentiis: private… from the private sector. So, thank you, and happy to answer any questions if there… if there are any.
Christopher Yukins / GW Law: Thank you very much. We're gonna have to… unfortunately, we have to wrap up, because we've gone a little bit over time, but I want to say, well, the best thing about being an oral professor is being able to be so proud of our students, and I'm very, very proud of both you and Jean-Jacques. You really… you make our… the work that we do very worthwhile. Thank you.
Christopher Yukins / GW Law: On Friday, we're going to be talking about anti-corruption and international development. Prabhat and Shopee Williams, our newest colleague at GW, she's joining us from Stellenbeisch University, are going to be talking about anti-corruption issues, and I very much hope that those of you in the audience can join us. Again, the recording from today's program will be available on the program page later today in Public Procurement International, and also on the GW Law
Christopher Yukins / GW Law: You too, Paige. Thank you all for joining us, and I hope to see you on Friday at the same time.
Christopher Yukins / GW Law: Thank you again. Take care. Bye-bye.