Professionalizing ProcurementIn a Changing World

Presented by Margaret Rose

Caribbean Procurement Institute

BUSINESS ETHICS AND INTEGRITYIN PUBLIC PROCUREMENT

NATIONAL PROCUREMENTFORUM

ABUJA, NIGERIA,29th -30th June 2009

Margaret Rose, LLB (Hons) UWI, L.E.C. Executive Director, Caribbean Procurement Institute

(CPI), is an attorney at law, qualified to practice throughout the Commonwealth Caribbean for

the past fourteen (14) years with extensive litigation and jury trial experience. She is Principal

of the Lodewijk Meijer Group of Companies (LMG) and serves as the Chief Executive and

Senior Partner in the group’s law firm, LMG ROSE & Partners. The LMG philosophy is based

on providing Best of Breed Solutions in a Changing World and the work of the Group is

targeted toward the sustainable development and growth of emerging markets. LMG Rose & Partners

particular areas of practice include anti-corruption and procurement law, corporate commercial and

taxation law, construction and infrastructure project finance and management.

CPI is a private sector organization affiliated to the Lodewijk Meijer Group of Companies and

established to serve policy makers and practitioners in the field of procurement dedicated to the

promotion of excellent standards in procurement for both public and private sector organizations in the

interests of the public good. It has established itself as the premier resource for specialist and world

class procurement education , research and expertise in the Caribbean region. As Executive Director of

CPI, Ms. Rose has spearheaded the development of the Procurement Intensive Seminar Series ™ which is

series of two day intensive training programs designed to give the participant an in-depth and

comprehensive coverage of the legal and practical complexities arising in specialized areas in the field of

procurement. 

Ms. Rose advises Government Ministers and both public and private sector bodies and has served on

several state and private sector boards and chaired Procurement Advisory Committees and Tenders

Committees.

Ms. Rose is presently a Director on the Board of Trinidad and Tobago Transparency Institute

(TTTI) and serves on the Procurement Reform Committee of TTTI, and the board of the

Caribbean Association of Procurement Professionals (CAPP).  In 2008 Ms. Rose was

appointed to serve on the Advisory Board of the International Public Procurement Conference

(IPPC) body and in April 2009 she was appointed to the Anti Corruption Committee of the

World Federation of Engineering Organizations (WFEO).

.

Presentation Summary

The Changing World Procurement in the Changing World Nigeria – New Frontier Market Possibilities Professionalizing Procurement

(i) Tenets of an Efficient Procurement System

(ii) Building Procurement Capacity – Procurement and Certification

Best of Breed Solution for a Changing World The Commonwealth Procurement Institute - Certified Procurement Professionals

To understand our role in the world,we must first understand the world.

The Changing World

Isaac Asimov

It is change, continuing change, inevitable change, that is the dominant factor in society today.

The Changing World

Global(General)

•Trade Liberalization

•Rise of Multi National Corporations

•Rapid Technological Advances

•Deteriorating Environment

The Changing World

Global (Political)

•Penetration of Democratic Philosophy of

Governance

•Strengthened Civil Society Organisations

•Transparent and Accountable Government

• International pressure – behind the border issues

The Changing World

Global(Economic)

•Credit Crisis & Broadening arm of the state in the financial sector

•Globalization

•Irony of Capitalism

•Rapid growth of emerging economies

The Old World OrderA Two Block Economic World Order – Market Value basedEquities and Bonds (combined) as of Sep 30, 2008

Source:

LMG Compendeon GTAA

North America = 37.4%

Europe/Dev Asia =56.4%

Em Markets=6.2%

Easy to understand,US-led world order

The New World OrderA Three Block Economic World Order – GDP Based

Situation as of Sep 30, 2008

Source:

LMG Compendeon GTAA

North America = 27.6%

Europe/Dev Asia =37.7%

Em Markets=34.7%

Exp Growth 2009-11 = 1.3%

Exp Growth 2009-11 = 2.0%

Exp Growth 2009-11 = 7.0%

Global ExchangesUS? EU? BRIC?Where should I invest?

Global – Globalization of Financial MarketsGlobalization of Financial Markets resulted in an

increase in market correlations:

– Gradually so in Developed Markets, that were already reasonably integrated in the world economy

– Spectacularly so in Emerging Markets, due to:• A) Trade Liberalization Programs• B) Increase in Foreign Direct Investment activities• C) Spectacular Growth in Portfolio Investments in

Em Markets by Institutional Investors both from Developed Nations and from Em Markets (SWFs)

Gradually Increasing Correlations in Developed Markets

0

0.2

0.4

0.6

0.8

1

1.2

1972

12

1974

01

1975

02

1976

03

1977

04

1978

05

1979

06

1980

07

1981

08

1982

09

1983

10

1984

11

1985

12

1987

01

1988

02

1989

03

1990

04

1991

05

1992

06

1993

07

1994

08

1995

09

1996

10

1997

11

1998

12

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

CORR36USA CORR36UK CORR36JAP CORR36GER

CORR36FRA CORR36SWI CORR36AVG DEV Linear (CORR36AVG DEV)

Gradual Increase

In Correlation

Spectacular Increase in Correlations in Emerging Markets

-0.2

0

0.2

0.4

0.6

0.8

1

1990

12

1991

06

1991

12

1992

06

1992

12

1993

06

1993

12

1994

06

1994

12

1995

06

1995

12

1996

06

1996

12

1997

06

1997

12

1998

06

1998

12

1999

06

1999

12

2000

06

2000

12

2001

06

2001

12

2002

06

2002

12

2003

06

2003

12

2004

06

2004

12

2005

06

2005

12

2006

06

2006

12

2007

06

2007

12

2008

06

CORR36AVG DEV CORR36BRA CORR36CHIN CORR36RUS

CORR36IND CORR36AVG EM Linear (CORR36AVG DEV) Linear (CORR36AVG EM)

Dev Markets

Spectacular Increase in

Correlation in EMs

Globalization

Procurement In A Changing World

The function of procurement is becoming increasingly recognized as the most strategic function for a government in the present global environment

and inextricably tied to economic growth.

Procurement – The Value Exchange

Goods

Works

Services

Infrastructure

What’s Different?

1. Procurement viewed as a more strategic function

Development tool for the achievement of social industrial and environmental objectives

Transactional vs Whole life cycle approach

More complex and sophisticated procurement methodologies

eProcurement,

More Strategic Procurement

Administrative Function

Regulated Function

Strategic Function

Transactional Approach

Rules Based Approach

Value Based Approach

Gains to be realized through Good Procurement

Direct Effect

=

Lower

Costs

Indirect Effect

=Lower RiskPremium

Combined Effect

=Huge Increase inProject Values;

Especially those with long duration

Better returns on old capital, increases potential for new capital

What’s Different?

2. Changed legal risk environment

International regimes (UNCITRAL, WTO-GPA, Donors)

Regional Initiatives (EU Public Procurement Directives, EPAs)

Significant Developments in the Common Law of Competitive Bidding

Interaction with a multiplicity of legal texts (Anti-Corruption Statutes, Access to Information Statutes, Whistleblower legislation etc. )

Internationalization of Procurement StandardsSignificant international initiatives occurred post

1990 for the harmonization of public procurement regimes

UNCITRAL Model Law on Procurement of

Goods, Construction and Services adopted at the 27th Session 1994

WTO – GPA 1994

EU Public Procurement Directives and EPA

UNCITRAL

Established by the UN General Assembly with the mandate to further the progressive harmonization and unification of international trade law

Sixty Member States elected by the General Assembly – Six Working Groups – Observer States and Bodies

Full Text Downloadable at www.uncitral.org

UN Model Procurement LawUNCITRAL

Provides a Model regulatory framework for Public Procurement which states can elect to adopt

Covers scope (Articles 1-3), qualifications (Articles 6-8), specifications (Article 16), procurement methods and their operation (Articles 18-51), and review (Articles 52-57)

UN Model Procurement LawUNCITRAL Does not deal with planning, feasibility and

budgeting phase OR post award phase, contract administration or implementation

Does not expressly provide for electronic reverse auctions, supplier lists, framework agreements, competitive dialogue

Countries with UNCITRAL based Procurement Law Central and Eastern European Countries :

Poland, Albania, the Slovak Republic, Kosovo

Former Soviet Union countries: Russia, Estonia, Georgia, Azerbaijan, Latvia, Kazakhstan, the Kyrgyz Republic

African States : Uganda, Kenya, Tanzania, NIGERIA, Ghana, Malawi, Ethiopia

Caribbean : Guyana, Draft CARICOMProcurement Protocol

NOTE: NO DEVELOPED COUNTRIES – UNCITRAL BASED

Only developing and transition economies have undertaken legislative reform on the basis of the UNCITRAL Model Law!

WTO – Government Procurement Agreement

The WTO Agreement on Government Procurement (WTO-GPA) came into force at the conclusion of the Uruguay Round of multilateral trade negotiations in 1994 and seeks to provide an international legal framework for the liberalization and governance of public procurement markets.

Full Text Available for Download at www.wto.org

WTO – GPA : Main Elements Guarantees of national treatment and non-discrimination

for the suppliers of Parties to the Agreement with respect to procurement of covered goods, services and construction services as set out in each Party’s schedules and subject to various exceptions and exclusions noted therein;

Detailed requirements regarding transparency and procedural aspects of the procurement process, in general, designed to ensure that covered procurement under the Agreement is carried out in a transparent and competitive manner that does not discriminate against the goods, services or suppliers of other Parties;

Additional requirements regarding transparency of procurement-related information;

Provisions regarding modifications and rectifications of Parties’ coverage commitments;

WTO – GPA : Main Elements Requirements regarding the availability and nature of

domestic review procedures for supplier challenges which must be put in place by all Parties to the Agreement;

Provisions regarding the application of the WTO Dispute Settlement Understanding in this area

Provisions regarding accession to the Agreement and the availability of Special and Differential Treatment for Developing and Least Developed Countries; and

A “built-in-agenda” for improvement of the Agreement, extension of coverage and elimination of remaining discriminatory measures through further negotiations

WTO-GPA Signatories Currently forty (40) WTO Members are covered by the WTO

Agreement on Government Procurement. These comprise Canada, the European Community (27 member states), Hong Kong, China, Iceland, Israel, Japan, Korea Liechtenstein, the Netherlands including Aruba, Norway, Singapore, Switzerland and the United States.

Twenty (20) other WTO Members have observer status under the Agreement: Albania, Argentina, Australia, Cameroon, Chile, China, Columbia, Croatia, Georgia, Jordon, the Kyrgyz Republic, Moldova, Mongolia, Oman, Panama, Saudi Arabia, Sri Lanka, Chinese Taipei and Turkey.

WTO-GPA Signatories

Four (4) intergovernmental organisations also have GPA observer status: the International Monetary Fund (IMF), the Organization for Economic Co-operation and Development (OECD), the United Nations Conference on Trade and Development (UNCTAD) and the International Trade Centre (ITC).

At present, there are eight (8) WTO Members which are in the process of acceding to the GPA: Albania, Georgia, Jordon, the Kyrgyz Republic, Moldova, Oman, Panama and Chinese Taipei.

Note Limited execution by ACP Developing

States

Donor Regimes

World Bank, IDB, ADB and other regional banks have established procedures and processes for procurements undertaken with donor funds

World Bank Procurement Rules & Guidelines http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/PROCUREMENT/0,,pagePK:84271~theSitePK:84266,00.html

IDB Procurement Guidelines http://www.iadb.org/exr/english/BUSINESS_OPP/bus_opp_procurem_procedurs.htm

ADB Procurement Guidelines http://www.afdb.org/en/documents/project-related-procurement/policies-and-procedures/

Challenges with Donor Regimes The Multiplicity of regimes in states with

immature procurement systems causes confusion among professionals interacting with and implementing the function of procurement.

There is a lack of domestic ownership of the procedures which stymies long term capacity development.

Donor funded procurement reform projects tend to produce systems heavily influenced by the donor.

EU Public Procurement Directives Directive coordinating the procurement proced

ures of entities operating in the water, energy, transport and postal services sectors, 2004/17/EC

Directive on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, 2004/18/EC

- transparent - open procedures - fair conditions of competition for suppliers

The New ERA – EPAs Despite the pressures of the developed countries on developing

states to accede to the WTO – GPA which will mandate transparent public procurement processes and non-discrimination between suppliers – the developing countries have resisted.

EPAs are trade and economic partnerships between regional groups of African Caribbean and Pacific (ACP) countries and the EU. They replace the trade arrangements of the EU-ACP Cotonou Partnership Agreement which expired at the end of 2007. The ACP countries decided themselves on the regional groupings for EPA negotiations. There are four negotiating regions in Africa, one in the Pacific and one in the Caribbean. The Caribbean group is made up of the 15 CARIFORUM countries.

Now with the negotiation of EPAs between the EC and ACP territories, traditional “behind the border” issues such as public procurement, competition and investment policy, domestic space is threatened

CARIFORUM – EC EPA

Arguably the most significant development in regional procurement policy

CARIFORUM comprises CARICOM Member States and Dominican Republic and Cuba.

In 2001 CARICOM and Dominican Republic signed an FTAA agreeing to harmonize procurement policy

CARIFORUM is the agreed organization with responsibility for negotiating trade arrangements with Third States

CARIFORUM – EC EPA

On 16th December 2007 the CARIFORUM Member States (except Cuba) and the EC initialed an EPA

Latest page in ACP-EU relations . On 2nd September 2008 EPA was to be formally signed. Rumblings among member states postponed the finalization.

EPA signed by all CARICOM Member States 15th October 2008.

CARIFORUM-EC EPA contains provisions relating to public procurement – made history on the world stage as the first of it’s kind between developed and developing states!

CARIFORUM – EC EPA

Two modalities for procurement policy in international agreements

(a) Transparency (b) Non-discrimination / national

treatment

WTO-GPA – deals with both. (Note limited execution by ACP developing countries)

CRNM asserts that the CARIFORUM – EC EPA – deals ONLY with transparency provisions

CARIFORUM EC EPA

However see Article 167.1.2 which obliges parties not to discriminate against foreign companies that have a commercial presence in a CARIFORUM State and as such qualify as a domestic company for public procurement bids.

CARIFORUM- EC EPA

MERITS DEMERITSDeals with only Transparency (Protects domestic industry)

Deals with only Transparency (No efficiencies from increased competition)

National Treatment for Foreign subsidiaries (encourages foreign investment)

National Treatment for Foreign subsidiaries (compromises stance on limiting foreign competition)

Covers only Central Government Authorities (allows more flexibility at sub-central level to pursue socio-economic and industrial objectives)

Covers only Central Government Authorities (limits accountability)

High Thresholds (allows more flexibility at sub-central level to pursue socio-economic and industrial objectives)

High Thresholds (limits accountability)

Each territory signatory (no country will bear the brunt of another country’s non compliance)

Each territory signatory (fosters asymmetrical development –counter productive to CSME objectives)

Supra National Governance Mechanism (Makes agreement more effective)

Supra National Governance Mechanism (Highlights governance flaws in CSME Treaty)

CARIFORUM EC EPA

COMPARING REGIMES UNCITRAL/WTO-GPA/DONOR/ EPA

REGIME UNCITRAL WTO-GPA DONOR EPA

Nature Prescriptive Detailed Rules

Framework rules governing Transparency and Non dis-crimination

Prescriptive Detailed Rules

Framework rules governing Transparency

Review Yes Yes Yes Yes

Supplier Lists

No Yes No Yes

Framework Agreements

No Yes No Yes

eProcurement

Adapting Yes Adapting Yes

ECOWAS EC EPA

• NIGERIA must now continue to deal with the on going ECOWAS EC EPA negotiations.

• Government procurement and trade and investment experts can learn from the CARIFORUM experience.

• NIGERIA has the potential to be the leader in

the ECOWAS negotiations – opting to serve as the anchor for the smaller, poorer West African states.

• Côte d’Ivoire’s has signed.• Ghana soon to follow.

Will Nigeria be able to lead?

Significant Developments in the Common Law of Competitive Bidding

• Implied Tender Contract Doctrine – Ron Engineering 1981 (Canada)

• BlackPool Case 1990 (UK)

• Pratt Contractors Privy Council Decision 2004 (New Zealand)

• NH v UDECOTT Cv. App. 95 of 2005 – judgment

delivered 17th March 2006 (Trinidad and Tobago)

The Ten Stages of the Procurement Cycle

1. Identifying

Needs

9. Contract

Performance and

Management

8. Contract

Execution

7. Selection of Supplier

6. Evaluation of Tenders

5. Submission of Tenders

4. Issuing

Tender Call

3. Tender Call

Drafting

2. Determining Procurement

Method

10. Assessing

Performance

Diagram, Paul EmmanueliCPI Faculty Director

The Formation of Contract A and Contract B

Purchaser Issues Tender Call

Purchaser Selects Bidder’s Tender

Bidder Submits Compliant Tender

Purchaser’s Offer to Enter Into Contract A

Purchaser’s Invitation to Treat on Contract B

Bidder’s Acceptance of Contract A OfferContract A Formed

Bidder’s Binding Offer to Enter Contract B

Purchaser Accepts Bidder’s Contract B Offer

Bidder Must Honour its Tender to Comply With Contract A

Diagram, Paul EmmanueliCPI Faculty Director

Procurement in the Changing World - Summary Procurement shift from administrative to more

strategic function

Procurement no longer viewed as a transaction but occurring over the whole life cycle. Efficiency in procurement function must necessitate proper systems and capacity at each stage of the cycle.

Domestic Sovereignty over Procurement Systems slowly being eroded. Trade Agreements, International trade bodies and Donor Regimes demanding more OPEN procurement.

Courts more aggressive to protect rights of bidders

Procurement in the Changing World – Summary Strengthened Anti-Corruption and Access to

Information Regimes both domestically and internationally – Multiplicity of legal Texts.

More sophisticated procurement methodologies, new P3 structures and Private Finance Initiatives,

DBFM, DBFOM, BOLT, BOOT, BOT, Framework Agreements, Supplier Lists, Negotiated Formats eg. Competitive Dialogue under EU Directives and eProcurement, eAuctions

Green Procurement initiatives

NIGERIANew Frontier Market Possibilities

Winston Churchill

There is nothing wrong with change, if it is in the right direction.

Part of Next – 11Goldman Sachs 2005• One of the New Frontier Champions?

Nigeria as one of the Frontier Champions?

Leader in ECOWAS Substantial Oil Reserves Sovereign Wealth Fund (Excess Currency

Account) TI Corruption Perception Index/Democratic

Initiative Significant Legislative Reforms Ex – South Africa – Largest Stock Exchange in

Sub Saharan Africa Enormous labour capacity (young population)

Nigeria; The Short TermReal Economy and Politics

NEGATIVE FACTORS

Instability Niger Delta (MEND)

Oil production at 1.8 mn barrel per day versus 2.3 mn budgeted

Relatively poor GDP growth of 2.1% over 2009 (Renaissance Capital)

Sources: Renaissance Capital and LMG Compendeon

Nigeria; The Short TermReal Economy and Politics

POSITIVE FACTORS

Little substantial in the short term.

Sources: Renaissance Capital and LMG Compendeon

Nigeria; The Short TermMonetary Economy and Stock Market

NEGATIVE FACTORS

Stock Market liquidity is an issue with TURN/MV ≈ 3-4% (almost like Private Equity!)

Naira weakness not totally gone yet, notwithstanding actions by CBN and ECA

Budget deficit calculations ’09 (3-4%) could be optimistic

Sources: Renaissance Capital and LMG Compendeon

Nigeria; The Short TermMonetary Economy and Stock Market

POSITIVE FACTORS

Recent oil price strength (US$ 70+) helps the budget (US$ 45)

Stock Market bottoming out after dramatic 70% drop (P/E 2009 ≈ 5)

Most local investors are piling up cash with interest rate and inflation trends working against them

High inflation levels (14-15%) will drop due to Global Crisis

Low Foreign and Public Debt; Room for Leverage if NecessarySources: Renaissance Capital and

LMG Compendeon

Nigeria; The Long TermReal Economy and PoliticsNEGATIVE FACTORS

The political situation will continue to be uncertain, albeit that LMG Compendeon and Renaissance Capital believe that things can be solved

However, LMG Compendeon analysts believe that government is aware of this risk (see speeches and actions of Min. of Finance Muhtar)

Sources: Renaissance Capital and LMG Compendeon

Nigeria; The Long TermReal Economy and PoliticsPOSITIVE EFFECTS

Low Foreign and Public Debt

LMG Compendeon: Expected growth GDP 2009-2012 5.5% and that is including the poor 2.1% for ’09

Oil resources and demand recovery will prove an enormous asset that will remain responsible for the bulk of foreign reserve inflow

The domestic and regional markets in other industries will grow in importance

Enormous pool of cheap and relatively young labor (compare the major theme in Goldman Sachs’s Next-11)Sources: Renaissance Capital and

LMG Compendeon

Nigeria; The Long TermMonetary Economy and Stock Market

NEGATIVE FACTORS

High volatility and systematic market risk will remain. This leads to a relatively high country risk premium

Lack of transparency of the banking system and ECA might hinder growth (However note positive)

Sources: Renaissance Capital and LMG Compendeon

Nigeria; The Long Term

Monetary Economy Stock Market POSITIVE EFFECTS

Stock Market with huge Potential. One of Goldman’s Next-11

Role as regional financial center highly likely

ECA is a strong asset. SWFs can be transformed into catalyst for growth

Diversification effect of an economy less dependent on oil can mitigate high country risk premium

Sources: Renaissance Capital and LMG Compendeon

Nigeria; Combining the Short and Long Term

In Summary:

Real economic outlook doesn’t look good yet in the short-

term. No real improvement before the end of the year.

But as so often: monetary factors and the stock market

might be ‘leading indicators’. Signs of improvement and

opportunities already visible.

We understand that the government will be ‘busy’ mitigating

the effects of the Global Crisis and fighting the upheaval in

the Niger Delta.

Sources: Renaissance Capital and LMG Compendeon

Nigeria; Combining the Short and Long Term

But this provides a chance to focus on

‘structural’ policies to ensure that the long-term

potential of the country (one of the flagships in

Goldman Sachs’ Next-11) will be realized:

Attract Foreign Investors (both FDI and Portfolio)

Improve Transparency of the Banking System and

ECA

Enhancing procurement capacity and efficiency

Diversify the Economy (compare Trinidad’s Vision

2020)

Improve Education through increased investments

Improve Health through increased investments

(Infant Mortality ↓; Life Expectancy ↑)Sources: Renaissance Capital and

LMG Compendeon

YES NIGERIA CAN!

TI Corruption Perception Index

According to the Transparency International Corruption Perception Index. In 2001, 2002 and 2003, Nigeria was ranked the second most corrupt country out of the surveyed countries. From 2005 to 2007, Nigeria ranked the eighth, twenty second, and thirty second most corrupt among the surveyed countries. In 2008 one hundred and twentieth!

Charting a Procurement Strategy

How will Nigeria

Respond?

International and Domestic

Regulatory Environment

Systems & Processes for Democratic Governance

Sustainable Development & Growth; Frontier

Possibilities

Professionalizing

Procurement

Margaret Mead

Never doubt that a small group of thoughtful, committed citizens can change the world.

Indeed, it is the only thing that ever has.

Procurement as a Development Tool

Provision of Infrastructure

, Works, Goods & Services

Economic Growth and

Development

AccountableGovernment

SoundProcurement

Processes

Direct Investment

Tenets of a Sound Procurement System

Overarching Public Procurement Policy

Strong Systems and Institutions to monitor and enforce policy

Sophisticated Cadre of Professionals skilled in the art &

science of procurement

Nigeria Public Procurement System

Public Procurement Act 2007

Public Procurement Bureau

Procurement Professionals???

Procurement Professionalism requires more

than an understanding of

the rules

The Ten Stages of the Procurement Cycle

1. Identifying

Needs

9. Contract

Performance and

Management

8. Contract

Execution

7. Selection of Supplier

6. Evaluation of Tenders

5. Submission of Tenders

4. Issuing

Tender Call

3. Tender Call

Drafting

2. Determining Procurement

Method

10. Assessing

Performance

Diagram, Paul EmmanueliCPI Faculty Director

What functions will these professionals perform? Strategic Procurement Planning including inter alia tender

call formats and sourcing strategies, Spend Analyses and Procurement Risk Management

Drafting and Preparation of Tender Documents including Instructions to Bidders and Terms and Conditions of Contract

Managing Disclosure duties throughout the procurement cycle.

Advising on compliance and interpretation of Tender Rules, Bid Evaluation and Award on high risk projects

Handling Bid protests/ Complaints

What functions will these professionals perform? Specific RFP Management in high risk projects including

risk mitigation in the RFP process, understanding most effective strategies for specific projects, implementation of International best practice in the RFP process

Business Integrity Management and Ethical decision making

Negotiation of Public Private Partnerships (PPP's) and Private Finance Initiatives (PFI's)

EProcurement, including advice on transnational issues in eTendering, eAuctions, Procurement cards, Digital Certificates etc.,

What functions will these professionals perform? Alternative Dispute Resolution and litigation services for

the management of procurement disputes

Evaluation and revision of existing procurement rules, processes and procedures to conform to international best practice.

Performance of Procurement Risk assessments.

Performance of Procurement Fraud Audits

Efficient Management of Freedom of Information Requests under the new Access to Information Regime being implemented globally.

What functions will these professionals perform? Review, audit and report on the effectiveness and

efficiency of the procurement function

Contract Negotiation and Administration

  Strategic Supply Chain Management

Value Engineering

Whole Life Cycle Costing, Financing Models for P3 structures

Two salient points….

What is clear is that the procurement function in the present global environment is a cross disciplinary function requiring the interaction of several disciplines in order to attain optimum efficiency.

The need for a common, transferable body of

knowledge is critical.

How has procurement education responded to

the changing role of procurement in the world

today?

Guy Callender and Darin Matthews The Role of Immanence in the

future of Public Procurement (International Public Procurement

Conference Proceedings, Vol 3

“In the case of procurement and supply chain management,

the speed with which outside influences are changing procurement knowledge and practice result in the core body of knowledge within procurement being summarized as the capacity to manage procurement practice using a constantly variable mix of knowledge drawn from other disciplines to achieve the results of practitioners in the field….. Procurement professionals need to be able to evaluate procurement influences across a range of discipline areas at a professional standard of knowledge rather than just demonstrating a working appreciation of these content areas”

(See also Giunipero, 2000; Humphreys, 2001; Wynstra, van Wheele, &

Weggerman,

2001).

How it operates now..

Strategic

Tactical

Operational

Policy & Decision makers

Lawyers, Project Managers,

Accountants, Auditors, CFOs, Sector Specific

Disciplines

Purchasing, Supply & Logistics Officers

Limited

Focus

FullFocus

Growing Focus

Purchasing Certifications – Pre 1990World divided into two main blocks

Chartered Institute of Purchasing and Supply

(CIPS) (UK and worldwide)

• Established in 1932• Leading organisation serving the needs of purchasing and supply professionals

• 54 000 members worldwide

National Institute of Government Purchasing

(US and Canada)

• Established in 1944• Serving the needs of government purchasing and supply professionals

• 15 500 members (US and Canada)

Notice the Focus on

Operational layer

Purchasing Certifications Post 1990As the strategic nature of the function of

procurement and the need to enhance the profile of the procurement practitioner became recognized – more and more training and “professional” associations have developed. Too numerous to mention all!

CIPS UK NIGP (US, CANADA) Council of Supply Chain Management (SCM) Universal Public Purchasing Council (UPPC) Most national procurement regulatory bodieshave training programmes for their staff

Common feature – focus on

purchasing and supply

chain practitioners

CIPS (UK)

International Qualification in Purchasing and Supply

The International Certificate and Advanced Certificate in Purchasing and Supply is an appropriate starting point for non UK-based learners.

International Certificate in Purchasing and Supply• C1 Understanding purchasing principles• C2 Selecting the right supplier• C3 Effective negotiation in purchasing and supply• C4 Managing inventory• C5 The business environment for purchasing and supply

International Advanced Certificate in Purchasing and Supply

• A6 Analysing the supply market• A7 An introduction to purchasing strategy• A8 Preparing and managing contracts• A9 International logistics• A10 Measuring performance in purchasing and supply

[Excerpt www.cips.org]

CIPS (UK)

Level 2 Introductory Certificate in Purchasing and Supply

The Level 2 Introductory Certificate in Purchasing and Supply qualification is a stand-alone qualification, taking a minimum of 20 guided learning hours.  It has been developed in order to cover the basic principles of purchasing and supply. It is one unit, consisting of four elements:

• The role and scope of purchasing• Systems and procedures in purchasing• Working with suppliers• The importance of purchasing contracts

The Level 2 Introductory Certificate will be assessed using a one hour online test.

CIPS (UK)

Level 3 Certificate in Purchasing and SupplyThis award is the ideal entry point for anyone new to the profession as

no prior qualifications or experience is required. It comprises five units:

• L3-01 Understanding the purchasing environment• L3-02 Purchasing operations• L3-03 Client and supplier relationships• L3-04 Securing supply• L3-05 Purchasing in action -  Integrative unit

Level 4 Foundation Diploma in Purchasing and Supply

Many members who have previous business experience or qualifications commence their CIPS studies with Level 4. Together with Level 5 and 6

it is the most common route to reach full Membership and obtain the designatory letters MCIPS.• L4-01 Effective negotiation in purchasing and supply• L4-02 Developing contracts in purchasing and supply• L4-03 Measuring purchasing performance• L4-04 Managing purchasing and supply relationships• L4-05 Purchasing contexts

CIPS (UK)Level 5 Advanced Diploma in Purchasing and Supply The Advanced Diploma has five units but this award introduces

optional units to learners. There are three core units and a choice of six optional units, from which candidates must complete two.

Core units:• L5-01 Management in the Purchasing Function• L5-02 Risk Management and Supply Chain Vulnerability• L5-03 Improving Supply Chain PerformanceOptional Units:• L5-10 Marketing for Purchasers• L5-11 Storage and Distribution• L5-12 Operations Management in the Supply Chain• L5-13 The Machinery of Government• L5-14 Contracting in the Public Sector  • L5-15 Sustainable Procurement

CIPS (UK)

Level 6 Graduate Diploma in Purchasing and Supply

The Graduate Diploma has five units, there are three compulsory core units and two optional units must be chosen from a choice of five. When the Graduate Diploma has been successfully completed, members can apply to become a full Member of CIPS which entitles them to use the designation, MCIPS after their name.

Core units:• L6-01 Leading and influencing in purchasing• L6-02 Strategic supply chain management• L6-03 Supply chain management in practice -  Integrative unitOptional units:• L6-10 Legal aspects in purchasing and supply• L6-11 Advanced project management• L6-12 Finance for purchasers• L6-13 Strategic Public Sector Programme Management• L6-14 Public Sector Stakeholders and Governance

CIPS (UK)

Level 7 Executive Diploma in Purchasing and Supply Management

This qualification is an opportunity for members who have already achieved MCIPS to undertake further personal and professional development.

The Executive Diploma uses a self-managed learning approach and has four elements:

• a strategic learning contract• a literature review• a business project• a self-review and evaluation.

SCM Associations and Certification ProgramsThe following is a list of trade and professional associations, and links to any of

their certification programs specifically in the supply chain management area involved in some aspect of supply chain management.

• AME - The Association for Manufacturing Excellence3115 No. Wilke Rd., Suite GArlington Heights IL 60004+1 224.232.5980

•APICS – The Educational Society for Resource Management Certification Programs5301 Shawnee Road Alexandria, VA 22312+1 800.444.2742

•AST&L - The American Society of Transportation & LogisticsCetification Programs 1700 N. Moore Street, Suite 1900Arlington, VA 22209+1 703.524.5011

SCM Associations and Certification Programs • ATA - American Trucking Association

2200 Mill RoadAlexandria, VA 22314+1 703.838.1700

•ISM - Institute for Supply ManagementCertification ProgramsP.O. Box 22160 Tempe, AZ 85285+1 480.752.6276

•IWLA - International Warehouse Logistics Association 2800 S. River Road, Suite 260 Des Plaines, IL 60018 +1 847.813.4699

•MHIA - Material Handling Industry of America8720 Red Oak Blvd., Suite 201Charlotte, NC 28217-3992 +1 704.676.1190

SCM Associations and Certification Programs• NITL - National Industrial Transportation League

1700 North Moore Street, Suite 1900Arlington, VA 22209 +1 703.524.5011

•SmartWay Transport Partnership2000 TraverwoodAnn Arbor, MI 48105+1 734.214.4767

•SOLE – The International Society of LogisticsCertification Programs810 Professional Place, Suite 111Hyattsville, Maryland 20785+1 301.459.8446

SCM Associations and Certification Programs• SCC - Supply-Chain Council

1400 Eye St., NW Ste. 1050Washington, D.C. USA 20005+1 202.962.0440

•VICS - Voluntary Interindustry Commerce Solutions AssociationCertification Program1009 Lenox Drive, Suite 202Lawrenceville, NJ 08648+1 609.620.4590

•WERC - Warehouse Education & Research Council1100 Jorie Boulevard, Suite 170Oak Brook, IL 60523+1 630.990.0001

But For whom?

Policy &

Decision makers

Lawyers, Project Managers, Accountants, Auditors, CFOs, Sector Specific Disciplines

Purchasing, Supply & Logistics Officers

Responsive to the needs of Strategic Procurement

Universities and Institutes…

Universities have very recently, begun to respond to the need for more strategic and specialised procurement education.

University of Nottingham – Public Procurement Research Group; Public Procurement Law Review, Phd Program and now LLM in Public Procurement Law from September 2009!

University of Rome Tor Vergata – Master in Procurement Management September 2009!

International Law Institute

International Federation of Purchasing and Supply Management (IFPSM)

Unique organization, worthy of mention

A Federation of Associations serving the needs of purchasing and supply management professionals.

A union of 43 National and Regional Purchasing Associations worldwide. Within this circle, about 200,000 Purchasing Professionals can be reached.

IFPSM facilitates the development and distribution of knowledge to elevate and advance the procurement profession, thus favorably impacting the standard of living of citizens worldwide through improved business practices.

The term procurement is taken to embrace purchasing, materials management, logistics, supply chain management and strategic sourcing.

IFPSM is a non-political, independent and non-profit oriented International Organization, registered in Aarau, Switzerland.

How it should operate

Strategic

Tactical

Operational

Policy & Decision makers

Lawyers, Project Managers,

Accountants, Auditors, CFOs, Sector Specific

Disciplines

Purchasing, Supply & Logistics Officers

FullFocus

Best of Breed Solution for a Changing World

THE CARIBBEAN PROCUREMENT INSTITUTE (“CPI”) is a private sector organization established in December 2006 to serve policy makers and practitioners in the field of procurement. We are dedicated to the promotion of excellent standards in procurement for both public and private sector organizations in the interests of the public good.

Best of Breed Solution for a Changing World

Several professionals from the disciplines of law, finance, development studies, construction, IT and Oil and Gas got together to begin to develop a common transferable body of knowledge in the field of public procurement.

During 2007, CPI liaised with world experts, practitioners and academics to develop a defining philosophy for the entity.

Best of Breed Solution for a Changing World

HOW ARE WE DIFFERENT?

Four reasons… Promotion of a broad appreciation of the concept of “value” not

focusing only on the economic indicators as a measure of value.

Eschewing the transactional approach to the function of procurement and promoting an appreciation of the function of procurement within the context of the entire procurement cycle and as it relates to financial management, legal accountability and risk management paradigms

The programmes are specifically designed to serve the needs of ALL stakeholders involved in the various stages of the procurement cycle including decision makers (leaders, policy makers, CEOs, Directors), professionals interacting with the procurement (lawyers, accountants, Auditors, Quantity Surveyors, Engineers, Architects, Project Managers) procurement managers, purchasing, logistics and supply officers and private sector participants in procurement (suppliers, contractors and consultants)

Commitment to the creation of region specific and relevant programmes developed jointly by international and regional academic and

practitioner experts

The Integrated approach…

• Sector Specific Expertise

• IT - eCommerce, eSourcing, eAuctions, eLit, business application software

•Policy and Decision Makers

•Public Administration – Management of GT contracts, P3 structures - Project Management

Legal & Audit – Contract Drafting,

Interpretation, Negotiation, Dispute

Resolution,Fraud and Compliance

Auditing

Finance & Economics – Whole life cycle

costing, Procurement Multipliers / Cost

Savings, Risk Management

Procurement – Purchasing, Supply Chain Management,

Logistics

A&E – Design of Works or Product

What we have done so far….

• Establishment of a faculty of International academics and practitioner experts to assist in the development of courses for ALL professionals interacting with the function of procurement.

What we have done so far

• First Caribbean Public Procurement Conference (CPPC) March 2008, over 170 leading world and regional academics, public officials and professionals.

What we have done so far… CAPPs establishment is being jointly facilitated by CPI and the

International Federation for Purchasing and Supply Management (IFPSM).

Partnered with International bodies to further develop the common

transferable body of knowledge in procurement. Developed the Procurement Intensive Seminar Series™ and

trained close to 200 professionals during 2008.

Developed and trademarked the NEW professional designation of Procurement Professional

PP – Procurement Professional LPP - Legal Procurement Professional

CPP – Construction Procurement Professional FPP – Finance Procurement Professional PMPP – Project Management Procurement

Professional

What we have done so far..CPI has sponsored the establishment of a voluntary association of

procurement professionals the Caribbean Association of Procurement Professionals (CAPP) 2008. With 216 registrants this new association has established its vision as “A Caribbean with world class procurement”. Some of the objectives of CAPP are

To promote high standards of professionalism, ethics and integrity among all those engaged in procurement

To increase the appreciation of the value of procurement good practice by raising the profile of procurement professionals in the region.

To encourage learning, knowledge sharing and consensus building in the region.

To establish and implement training and certification standards and requirements for the procurement profession

To work with its members to establish and mentor national chapter associations.

To promote reform in procurement regimes consistent with established best practice

What we are doing….

In 2008 CPI partnered with The Procurement Office, Ontario, Canada – to establish the non-profit Commonwealth Procurement Institute.

The Commonwealth Procurement Institute,

Headquartered in Ontario, Canada will license institutes and associations of professionals desirous of working toward the new professional designations.

The Objectives of The Commonwealth Procurement Institute

1. To spread and improve appreciation of the value of procurement good practice by raising the profile of procurement at the leadership level in both the public and private sectors and acting as a catalyst for learning, knowledge sharing, and consensus building throughout the Commonwealth and worldwide.

2. To educate leaders and develop professional skills among practitioners in the art and science of procurement towards achieving excellent standards and maximising value in public and private sector organizations.

3. For the benefit of the public good, to promote high standards of professional skill, ethics and integrity among all those engaged in procurement.

4. To promote the development and utilization of a common transferable body of knowledge in the field of procurement.

The Objectives of The Commonwealth Procurement Institute

5. To support, encourage and promote institutions and associations established to serve the needs of procurement professionals and all professionals interacting with the function of procurement for the public good.

6. To promote and encourage continuous research and development in the field of procurement

7. To educate persons engaged in the practice of procurement and by means of examination and other methods of assessment to certify the skills and knowledge of such persons.

8. To provide specialist expertise to Governments, tertiary institutions, associations, leaders and organisations engaged in

the function of procurement.

What we are doing…

In 2008 Caribbean Procurement Research Group (CPRG) established. First Working Paper Series exploring the positive incentives for anti-corruption mechanisms and policies ‘The Value of Virtue’ October 2009

Masters in Procurement Management with University of Rome Tor Vergata – September 2009. Graduates will receive (Msc). Procurement Management and

(PP) Certified Procurement Professional designation

Charles Holden, Director General of IFPSM

"The International Federation of Purchasing and Supply

Management is proud to be working closely with CPI to

assist in the investment in higher levels of procurement

professionalism within the Caribbean, particularly the

formation of the professional association CAPP.

Accordingly, it is recognized as a highly beneficial advance for

such professionalism that CPI is able to introduce in

partnership with the University of Rome, a Master

Programme in Procurement Management.  Such a

programme adds significantly

to the recognition of Caribbean practitioners

in the International marketplace"

THANK YOU

BE THE CHANGE YOU WISH TO SEE IN THE WORLD

Mahatma Gandhi

Acknowledgements

Dr. Erik L. van Dijk, CPI Faculty

Director ESG Finance & Investments

Caribbean Procurement Institute

120 Abercromby Street, Port of Spain, Trinidad,

www.caribbeanprocurementinstitute.com

CEO/CIOLMG Compendeon

120 Abercromby Street, Port of Spain, Trinidad

www.lmgcompendeon.com

Renaissance Capital5th Floor

Professional Centre Plot 1B, Bank PHB Crescent

Victoria Island, Lagos Nigeria

www.rencap.com Goldman Sachs

32 Old SlipNew York, NY 10005

United Stateswww2.goldmansachs.com/gsam