2. Managing incentives and risks
59 pdg Partnership for Democratic Governance
Case Study 5. Contracting a procurement agent in Southern Sudan
After 22 years of civil war, the entire public service in Southern Sudan had to be rebuilt from scratch. The Government of Southern Sudan had oil revenues but no public procurement system. In 2005, a Joint Assessment Mission comprising donor and national partners recommended that core fiduciary services should be contracted out to international firms until government capacity was built. The Ministry of Finance & Economic Planning agreed with donors to contract a procurement agent to carry out all procurement on behalf of the Government of Southern Sudan. This included Multi-Donor Trust Fund (MDTF) procurement financed jointly by donors and government; and procurement funded directly through the government budget, in turn financed by the government’s substantial oil revenues. A competitive procurement process was launched using World Bank procedures. However, they proved complex for the Ministry of Finance to manage, and the process took over a year to complete. In the meantime, MDTF procurements experienced significant delays, while government line ministries started to procure items themselves, despite lacking procure-
ment capacity. Due to its own capacity constraints and the lack of a viable alternative, the Ministry of Finance was unable to prevent them from doing so. pdg By the time the procurement agent was in place, the Ministry of Finance was unable to reassert a centralised procurement system over line ministries for purchasing items approved in the budget. Line ministries continued to manage these procurements directly despite their limited procurement capacity and with frequent disregard for procurement procedures. They frequently awarded contracts which exceeded the available funds, and the government built up a substantial stock of unfunded contractual obligations. The procurement agent’s role effectively became limited to donor-funded MDTF procurements only.
Partnership for Democratic Governance
Lessons learned: failure to reduce a technical risk (a procurement process which was ill-matched to the urgency of the situation and to government capacity, leading to contracting delays) undermined the political ability of the Ministry of Finance to impose a centralised procurement system on line ministries. This in turn prevented sound public financial management.
Source: Davies, F. (2009), “Contracting out Government Functions and Services in Southern Sudan”, in OECD (2009), Contracting Out Government Functions and Services, OECD, Paris
References OECD (2008), Service Delivery in Fragile Situations: Key Concepts, Findings and Lessons, DAC Fragile States Group, OECD, Paris.
OECD PDG HANDBOOK ON CONTRACTING OUT GOVERNMENT FUNCTIONS AND SERVICES IN POST-CONFLICT AND FRAGILE SITUATIONS © OECD 2010