2008/SOM3/GPEG/007

SEMINAR ON THE IMPLEMENTATION OF THE VALUE FOR MONEY NBP IN GP

Brief on Findings and Recommendations

Dear GPEG Members,

I have pleasure in informing you about some aspects about the fulfillment of the “Seminar on the Implementation of the Value for Money NBP in Government Procurement”, carried out in Lima – Peru, on August 13 – 14, 2008, during the Third SOM.

Regarding its antecedents, the Seminar was promoted by the Peru countingwith the cosponsorship of Canada, New Zealand and the United States.

The Seminar took one and a half day, including the presentations of nine speakers, from APEC Economy members like Australia, Canada, Chile, Korea, New Zealand, the United States, Vietnam and Peru, as well as a representative from the Inter American Development Bank(IADB). The presentations’ headings were:

  1. Developing tangible measures of government procurement Systems across APEC(Ed Lekawski, Procurement Branch, Department of Finance, Australia).
  1. Multilateral Development Banks´ point of view on Value for Money(Veljko Sikirica, Senior Procurement Specialist of the Interamerican Development Bank).
  1. How can procurement in developing countries seek a fine balance between local, small and medium enterprises (SMEs) and international contractors in competition? (Nguyen Dang Truong, Department for Management of Public Procurement, Ministry of Planning and Investment, Vietnam).
  1. Sustainability aspects of Value for Money(Karen English, Senior Policy Analyst, Government Procurement Development Group, Ministry of Economic Development, New Zealand).
  1. Procurement Review: How it represents Value for Money(Randy Heggart, Research Director, Procurement Review Division, Canadian International Trade Tribunal, Canada).
  1. Purchases by catalogue Framework Agreement(Lorena Caro, Commercial Department of Framework Agreement, National Direction of Purchases and Government Procurement, Chile).
  1. Korea´s Multiple Award Schedule: A scheme to enhance Value for Money in a highly Centralized Procurement System (Seunghyun Kang, Director at Headquarters for International Goods Public Procurement Service, Korea, Chairman of the GPEG/APEC).
  1. Implementation of Value for Money in the United States(Sarah Loss, Attorney Advisor, Office of the Chief Counsel for International Commerce, U.S. Department of Commerce, United States).
  1. The Value for Money in Peru: Implementing Appropriate Procurement Methods (Mario Arteaga, International Affairs Official, Superior Council of Government Procurement - CONSUCODE, Peru).

Each presentation was followed by a stage of questions and answers.

In regard to the findings and recommendations of the Seminar, we can summarize them in the following paragraphs:

  • Among other points, it has been statedthat it is very important to foster the use of open, just and transparent procurement policies and practices. This necessarily includes the permanent application of the VFM NB Principle, which extends beyond criteria such as price, required quality, reduction of risks and performance requirements.
  • The speakers presented their experiences and practices derived from different economic models, explaining to the audience the importance of transparency, competitive practices, efficiency and sustainability. This should be measured through performance indicators aimed to maximize the VFM NB Principle.
  • This means that the VFM NB Principle requires an integral or holistic evaluation of rules, proceedings, capabilities and other factors, with special reference to price, quality, sustainability and efficiency. The total cost of the product should be considered including the whole process that ranges from the primary goods to the final product, service or work.
  • Some experiences had been discussed during the Seminar. Such is the case of the procurement system of Korea, where a centralized system of procurement coexists with a multiple program of acquisitions and with an electronic procurement system. The experience of the procurement System of the United States and Australia, concerning the VFM NB Principle had been presented too. This was also the case of Peru, Chile and Vietnam. Canada explained how the administrative tribunals of commerce decided in cases concerning procurement.
  • New Zealand and the Inter American Development Bank emphasized the importance of sustainable development. Concerning the present global problems such as global warming, high prices of energy and food, it is relevant to design and put forward the corresponding policies that should warranty the good use of public resources, extending this to the need to obtain the sustainability of public investment and the reduction of the impact of public procurement in the environment.
  • The new point of view that has been offered during the Seminar consists in maximizing the VFM, changing the old paradigm that considered only the procurement realized in the search of the “lowest prices”. This has to be changed considering the need to recognize the “total value or cost of the product”. Because of this new paradigm, it is necessary to consider many aspects. Such is the case of the cycle of use and utility of the products, the environmental rationality in procurement activities, the impact in life quality of the population, and to take care of natural resources.
  • From this point of view it is necessary to develop new socioeconomic policies for procurement activities, considering the need to obtain sustainable development and the best result from the VFM Principle.

Without prejudice of the results of the evaluation that participants will make on the Seminar, it is possible to say that the objectives pursued by this project have been achieved. Promptly we will send to the APEC Secretariat and GPEG Members, as well as the participants, the corresponding Evaluation Report, including the conclusions in a wider manner.

It is necessary to mention that participants have been provided with materials of each presentation contained in both printed matter and one compact disc.

Finally, Peru would like to thank all stakeholders’ support without which this project could not be done/achieved.