Tanzania - Country Procurement Assessment Report (Vol. 2 of 3)

26431 Volume 2 TANZANIA COUNTRY PROCUREMENT ASSESSMENT REPORT (CPAR) VOLUME II MAIN REPORT AND ANNEXES April 30, 2003 Operational Quality and Knowledge Services Africa Region   Tanzania CPAR - Volume II -2 - April 30, 2003 TABLE OF CONTENTS CURRENCY EQUIVALENTS .......................................................7 FISCAL YEAR .........................................................7 ABBREVIATIONS AND ACRONYMS .......................................................7 A. INTRODUCTION .........................................................9 Acknowledgements .........................................................9 Purpose of the Report ........................................................ 10 B. BACKGROUND ......................................................... l Country information .........................................................11 Fig. 1: Tanzania at a Glance - 2002 ........................................................ 11 Economic Context ........................................................1 I Bank Portfolio in Country ........................................................ 12 Fig.2: Tanzania: Current Composition of World Bank Loan Portfolio .............. 13 C. MAIN FINDINGS AND ANALYSIS ........................................................ 14 PUBLIC SECTOR ........................................................ 14 C.1. LEGAL AND REGULATORY FRAMEWORK . .......................................... 14 Existing legal and regulatory framework ........................................................ 14 Legal Benchmark - Tanzanian Rules vs. International Standards ..................... 15 Application of procurement rules - entities subject to regulation .....................1 6 Methods of procurement and their conditions for use ...................................... 16 Fig. 3: Procurement thresholds ........................................................1 7 Publicity in procurement ........................................................1 9 Pre-qualification and qualitative criteria ........................................................ 20 Registration Lists ........................................................ 21 Tender Documents - SBDs ........................................................ 22 Filing system ........................................................ 23 Bid submission and opening ........................................................ 23 Time limits ........................................................ 24 Fig. 4: Time limits within the procurement procedure ..................................... 25 Contract award procedure and criteria ........................................................ 25 Domestic and other Preferences ........................................................ 26 Negotiations: pre- and post contract negotiations ............................................. 27 Complaints and administrative review ........................................................ 28 Other Legal Framework Issues ........................................................ 29 Local Government Procurement ........................................................ 29 National Board for Materials Management Act vs. Public Procurement Act .... 30 Defence and security Procurement ........................................................ 30 Legal Framework - conclusion ........................................................ 31 Summary of Legal Framework Recommendations ........................................... 31 C. 2. PROCEDURES AND PRACTICES ........................................................ 32  Tanzania CPAR - Volume II -3 - April 30, 2003 Procurement Planning - Release of Funds ................................................... 32 Procurement Methods ................................................... 33 Publicity and transparency in procurement ................................................... 34 Pre-qualification and qualitative criteria ................................................... 34 Tender Documents - Standard Bidding Documents ......................................... 34 Bid submission and opening ................................................... 35 Contract award procedure and criteria ................................................... 35 Complaints and administrative review ................................................... 35 Summary of Recommendations for Procedures and Practices ........................... 37' Monitoring and Contract Management ................................................... 38 Record-keeping ................................................... 38 Variations and post-contract negotiations ................................................... 38 Enforcement and monitoring compliance ................................................... 39 Consequences of non-compliance ................................................... 39 Dissemination of legal documents ................................................... 40 Recommendations for Monitoring and Contract Management .......................... 40 C.3. ORGANISATION AND RESOURCES ................................................... 41 Current Organisational Set-up ................................................... 41 Role of the Central Tender Board ................................................... 41 Other Tender Boards ................................................... 42 Fig. 5: Thresholds for procuring entities ................................................... 43 Decentralisation ................................................... 43 The Regulatory Authority .................... 44 The Location of the RA .................... 45 Establishment and Strengthening of Procurement Management Units ............. 46 Monitoring ................................................ 47' Securing information flow to the RA ................................................ 47' The monitoring role of the RA vis-a-vis local government .............................. 48 Other Organisational Issues ................................................ 49 The Public Procurement Appeals Authority ................................................ 49 Local government procurement .................... 50 Utilising the advantage of scale .................... 52 Information dissemination regarding the RA and the PPAA ............................ 55 Resources and Capacity ......................................... 55 Establishing a procurement cadre ......................................... 56 Up-grading and certification of procurement professionals .............................. 57 Fig. 7: Number of Supplies Officers in the public service ................................ 57' Public Service Pay and Pay Reform ......................................... 59 Selective Accelerated Salary Enhancement ......................................... 60 Capacity Building Measures ......................................... 61 Fig. 8: Overview of Procurement Training Institutions .................................... 63  Tanzania CPA)R - Volume II -4 - April30, 2003 Nature of the training ..................................................... 64 Summary of Recommendations Regarding Organisation and Resources ........... 65 C. 4. AUDIT AND ANTI-CORRUPTION MEASURES ....................... ............... 67 Corruption in Procurement ..................................................... 67 Auditing ..................................................... 68 Institutional Set-up for Fighting Corruption in Procurement .............. ............... 69 Fig. 9: Mandate and functions of key oversight institutions .............. ............... 70 Legal and Strategic Framework ..................................................... 70 The Prevention of Corruption Act .......................... ........................... 70 The National Anti-Corruption Strategy and Action Plans ................ ................ 71 Review of Anti-Corruption sector strategies .................................................... 72 Ethics and Integrity ..................................................... 73 Training ..................................................... 75 Training of PCB investigators ................. .................................... 75 Monitoring ..................................................... 75 Monitoring public procurement ..................................................... 75 Access to information ..................................................... 76 Building capacity of NGOs ...................... ............................... 76 Involving the media ..................................................... 77 Introducing whistleblowing mechanisms ..................................................... 78 Performance Indicators to Monitor Corruption in Procurement ......................... 79 Summary of Recommendations for Audit and Anti-Corruption Measures ........ 81 C. 5. PUBLIC SECTOR MANAGEMENT PERFORMANCE .............. ............... 82 Performance of the Public Procurement System ............................................... 82 Value of procurement ..................................................... 82 Public Sector Reform Programmes ..................................................... 82 Status of Public Financial Management ..................................................... 84 C.6. E-PROCUREMENT ..................................................... 86 Fig. 10: E-procurement issues ..................................................... 87 Fig. 11: Features and complexity of e-procurement systems .............. .............. 87 Recommendations ..................................................... 88 C. 7. PERFORMANCE ON BANK-ASSISTED PROJECTS ................................ 90 Choice of procurement method and advertisement .............................. ............ 90 Tender Openings ..................................................... 91 Bid- and performance security ..................................................... 91 Pre-Qualification Documents: .................. ................................... 91 Tender documents ..................................................... 91 Evaluation Reports ..................................................... 92 Keeping records ..................................................... 92 Timeliness ..................................................... 92 Recommended Supervision Plan ..................... ................................ 93  Tanzania CPAR - Volume II - 5 - April 30, 2003 C.8. GENERAL RISK ASSESSMENT . ...................................................... 95 PRIVATE SECTOR .......... .............................................. 97 C.9. TRADE PRACTICES AND CUSTOMS ...................................................... 97 Trade Policies and Conditions in General .................................... 97 Custom Practices and Authorities in General . ................................................... 98 Import Procedures and Practices ........................................... 99 Fig. 12: Annual TRA Customs Dept. Revenue Collection . ...................... 100 Fig. 13: TRA Customs Department Annual Revenues . ......................... 101 C.10. COMMERCIAL PRACTICES AND PROCUREMENT ... 102 Fig. 14: Gross domestic product by sector (mainland) . . 102 Fig. 15: Tanzania: External Trade ......................................... 103 Regulation of Competition and Conditions of Doing Business in Tanzania ...... 103 Fig. 16: Commercial Banks Lending rates for year 2002 . ....................... 104 Private Sector Procurement .......................................... 105 C.1 1. PRIVATE SECTOR PERFORMANCE . . ........................ 106 D. ZANZIBAR ............................................ 107 Brief Background ........................................... 107 Legal Framework ........................................... 108 Procedures and Practices ........................................... 109 Organisation and Resources ..1......................................... 1 Anti-corruption .......................................... 11:3 The Private Sector in Zanzibar .......................................... 114 Fig. 17: Gross domestic product by sector (Zanzibar) ...................................... 115 Import and Export Procedures and Practices . ......................................... 115 Summary of Recommendations for Zanzibar . ................................ 116 E. RECOMMENDED ACTION PLAN ........................................ 117 Measures to be the Taken by the Government .......................................... 117 Measures to be Taken by the Bank and Other Financiers . ....... ................ 117 Technical Assistance .......................................... 117 Timetable ........................................... 118 Funding Procurement Reform ................... ....................... 118 Monitoring and Follow-up Plan .......................................... 118 CPAR ACTION PLAN .......................................... . 120 F. ANNEXES .......................................... 126  Tanzania CPAR - Volume II - 6 - April 30, 2003 LIST OF ANNEXES Annex I List of People Met Annex 1I List of Documents Consulted Annex III List of Task Force Members/Government Procurement Task Force Annex IV Detailed Breakdown of Supplies Officers in Public Service Annex V Anti-Corruption Initiatives Annex VI NACSAP Action Plan for Public Procurement Annex VII Checklist Comparing National Competitive Bidding Procedures And World Bank Policy FIGURES Figure 1. Tanzania at a Glance - 2002 Figure 2. Tanzania: Current Composition of World Bank Loan Portfolio (as of June 30, 2002, amounts in USD Million) Figure 3. Procurement thresholds Figure 4. Time limits within the procurement procedure Figure 5. Thresholds for procuring entities Figure 7. Number of Supplies Officers in the public service Figure 8. Overview of Procurement Training Institutions Figure 9. Mandate and functions of key oversight institutions Figure 10. E-procurement issues Figure 11. Features and complexity of e-procurement systems Figure 12. Annual TRA Customs Dept. Revenue Collection - Budget Vs Actual 1997 to 2000 Figure 13. TRA Customs Department Annual Revenues Figure 14. Gross domestic product by sector (mainland) Figure 15. Tanzania: External trade Figure 16. Commercial Banks Lending rates for year 2002 Figure 17. Gross domestic product by sector (Zanzibar)  Tanzania CPAR - Volume II - 7 - April 30, 2003 CURRENCY EQUIVALENTS (Exchange Rate on April 15, 2002) Currency Unit = Tanzanian Shilling (Tshs) USD I = 1,050.00 Tshs FISCAL YEAR July 1 - June 30 ABBREVIATIONS AND ACRONYMS AfDB African Development Bank ATIP Accountability, Transparency and Integrity Program BoT Bank of Tanzania CAS Country Assistance Strategy CED Chief Executive Director CFAA Country Financial Accountability Assessment CSD Civil Service Department GS Govemment Stores CSD Civil Service Department CTB Central Tender Board CTBA Central Tender Board Act DI Destination Inspection DIS District Administrative Secretary EOI Expression of Interest EU European Union EUD EU Procurement Directives FY Financial Year GDP Gross Domestic Product GGCU Good Govemance Coordination Unit IBRD Intemational Bank for Reconstruction and Development ICB Intemational Competitive Bidding ICS Integrated Controller System of the World Bank IDA Intemational Development association IFMAP Integrated Financial Management Accountability project IMS Information Management System IMWG Inter-Ministeral Working Group IPR Independent Procurement Review JICA Japanese Intemational Cooperation Agency LCC Local cost compensation LGRP Local Govemment Reform Programme  Tanzania CPAR - Volume II - 8 - April 30, 2003 MBA Master of Business Administration MDA Ministries, Departments, and Agencies MSD Medical Stores Department MoF Ministry of Finance MSA Medical Stores Department Act NACSAP National Anti-Corruption Strategy and Action Plan NAO National Audit Office NBMM National Board for Materials Management NBMMA National Board for Materials Management Act NCB National Competitive Bidding NCC National Construction Council NGO Non-Governmental Organisation OPP Office for Public Procurement OWl Oversight and Watchdog Institutions PCB Prevention of Corruption PEA Post Entry Audit PER Public Expenditure Review PFMRP Public Financial Management Reform Programme PIF Performance Improvement Fund PMUs Procurement Management Units PPA Public Procurement Act PPAA Public Procurement Appeals Authority PPB Procurement Professionals Body PPTS Public Procurement Training Strategy PQ Pre-Qualification PRS Poverty Reduction Strategy PRSC Poverty Reduction Support Credit PS Permanent Secretary PSI Pre-shipment Inspection PSRP Public Service Reform Programme QCBS Quality and Cost Based Selection RAS Regional Administrative Secretary RA The Regulatory Authority RFQ Request for Quotation SASE Selective Accelerated Salary Enhancement SME Small and Medium Sized Enterprises SBDs Standard Bidding Document TAP Tax Administration Project TB Tender Board TI Transparency Intemational TNA Training needs assessment ToT Training of Trainers TRA Tanzania Revenue Authority UML United Nations Model Law for procurement/ UNCITRAL UNCITRAL United Nations Commission for Intemational Trade Law VAT Value Added Tax WB World Bank WBG World Bank Guideline WTO World Trade Organisation   Tanzania CPAR - Volume II - 9 - April30, 2003 A. INTRODUCTION 1. This report, which updates the CPAR of September 1996, presents the findings and recommendations of two World Bank missions: a preliminary mission from July 8-12 and August 5-9, 2002; and a main mission' from November 19 to December 6, 2002. 2. Concurrently with the CPAR, an Independent Procurement Review (IPR) was being carried out by Global Procurement Consultants Limited (GPCL)2 of India as a sub-contractor to PLS RAMBOLL Management A/S. The IPR provided direct input to the CPAR. 3. To assist and guide the CPAR, the Government of Tanzania established a Task Force comprising several ministries, local government representatives, parastatals, the private sector, as well as a representative from the Government of Zanzibar. The taskforce is chaired by the Secretary of the Central Tender Board (CTB) Mr. Nkinga.3 4. A draft report was discussed at a workshop organised by the Government of Tanzania in Dar es Salaam on 27-28 January 2003. During this workshop, members of the Task Force, representatives from regional and local government authorities, and a number of development partners discussed and agreed this report, including its key findings and recommendations. To benefit from the momentum of the workshop it was decided to streamline the Task Force enabling it to carry forward the reform of the public procurement system. It was further decided that new terms of reference for the Task Force shall be developed focussing on the implementation of the recommendations coming out of the workshop. Acknowledgements 5. The mission is grateful for the cooperation it received from the Governments of Tanzania and Zanzibar and all organisations visited. In particular, the mission would like to thank the members of the Government Task Force for their full and proactive commitment to the CPAR mission, participation in key meetings and, in particular, for the comprehensive dialogue, which ' The mission was led by Mr. Rogati Kayani (Lead Procurement Specialist), and included representatives from the Government of Tanzania, Mr. Pascal Tegwa (Senior Procurement Specialist) from the World Bank Tanzania Country Office as well as a consultant team from PLS RAMBOLL Management A/S of Denmark lead by Mrs. Mette S. Lassesen (Procurement organisation, procurement capacity, and anti-corruption) and consisting of Mr. Soren Staugaard Nielsen (Legal framework, procedures and practices) and Mr. Claus Thomsen (Trade and private sector). In addition a group of local consultants were engaged: Dr. Laurent Shirima (Legal framework, procedures and practices), Mr. Oltesh Thobias (Trade and private sector), and Professor Awadhi Mawenya (Anti-corruption). 2 Headed by Mr. R. Rajappa and including Mr. A. K. Kolsur and Dr.Masaburi (local consultant). 3 Please refer to Annex III for a full overview of the Task Force members  Tanzania CPAR - Volume H - 10- April 30, 2003 they entered into with the mission, to discuss the issues identified by the assessment and to develop the recommendations presented in this report. 6. In addition, the mission would like to thank the Danish Government Trust Fund for financing parts of the mission and the AfDB, DANIDA, DFID, JICA, SDC, SIDA, USAID and the EU for providing valuable contributions in discussion during the various stages of the CPAR process. Purpose of the Report 7. The World Bank undertakes assessments of the procurement environment, covering both public and private sectors in borrowing member countries on a systematic basis. The objective of the assessment is to determine the compatibility of national procurement law and practices with the principles of economy and efficiency and with international procurement practices. The findings and recommendations of this work not only helps the Bank ensure that sound procurement practices are followed in the projects that the Bank finances, but also enables it to provide valuable feedback to member countries regarding the strengths and weaknesses of their public procurement systems. This enables member countries to improve the transparency of the procurement process and enhance the efficiency of public spending.  Tanzania CPAR - Volume II - I - April 30, 2003 B. BACKGROUND Country information 8. The United Republic of Tanzania is a union of two countries, mainland Tanganyika and Zanzibar (consisting of the islands of Zanzibar and Pemba). The country covers a land area of 945,000 sq. km. and its population at the end of 2001 was estimated at 34.5 million. A summary is captured in Table 1 below. Fig. 1: Tanzania at a Glance - 2002 Population 34.45 million Surface area 945 thousand sq km Population growth 3% (annually) Life expectancy (years) 44 Population below national poverty line 35% GNI per Capita 270 US$ GDP 9.1 billion US$ Source: World Development Indicators Database 9. Tanzania has two governments, the Union Government and the Zanzibar Government. The mainland is wholly govemed by the Union Government, while Zanzibar is mainly govemed by the Zanzibar Government with the Union Government taking care of some government affairs including security and foreign affairs. Procurement in the mainland is governed by the 2001 Procurement Act and Regulations while Zanzibar is governed by its own Rules and Regulations. The CPAR will review the two systems separately. Economic Context 10. Tanzania, with a per capita income of USD 270, is one of the poorest countries of the world. The economy is heavily dependent on agriculture (primarily, coffee, cotton, tea, cashew nuts, sisal, maize, rice, wheat, cassava, and tobacco), which accounts for about 50 percent of GDP, provides 85 percent of exports, and is by far the largest employer. Topography and climatic conditions, however, limit cultivated crops to only a small fraction of the land area. Industry accounts for some 15 percent of GDP and is mainly limited to processing agricultural products and light consumer goods. Tanzania's macroeconomic performance has continued to improve during 2000 and 2001 (Annexes I to 3). The annual growth rate increased to 4.9 percent in 2000 and rose to 5.6 percent in 2001, despite the negative effects on commodity prices and tourism of the slowdown in the world economy. The rise in growth during 2001 was led by relatively strong performnance in agriculture, mining, and wholesale and retail trade. Good rainfall and improved  Tanzania CPAR - Volume H - 12 - April 30, 2003 markets, particularly for food crops in the neighbouring countries have combined to raise agriculture growth to an estimated 54.5 percent 2001. The mining sector growth remained strong at 12.3 percent raising its overall contribution to GDP to 2.5 percent from negligible levels five years ago. Wholesale and retail trade (including tourism) grew at 7 percent. Industry (manufacturing, utilities, construction, transport and communication) grew at an average of nearly 6 percent posting improvements in all sub-sectors over 1999 and 2000 except for construction, which had peaked earlier during the height of investment in gold mining. The overall growth rate for 2002 is projected to rise further to 5.9. 11. The Country Assistance Strategy (CAS) for Tanzania focuses on higher economic growth, poverty reduction and institutional reforms to improve governance. It conforms with Government's main strategic directions - adherence to macro stability, increased private sector participation in the economy, a renewed emphasis on rural development and improved delivery of social services. It also supports the Government's desire to enter into new relationships with partners, based on the phased switching from projects to programs for a more effective and efficient use of aid resources. In supporting these objectives, the CAS suggests a lending program which will be increasingly geared towards operations with a direct bearing on poverty and strengthening of social sector programs, in a shift from the earlier emphasis on infrastructure development. Pursuant to this shift from projects to prograrns, a Poverty Reduction Support Credit (PRSC) is being prepared to support the Government's poverty reduction strategy (PRS). In shifting from projects to programs, the Bank's focus in ensuring fiduciary compliance is also shifting from dealing with specific projects to dealing with reforms of nationwide procurement systems. The work on the CPAR will be closely linked to the work already done on Country Financial Accountability Assessment (CFAA) and ongoing Public Expenditure Review (PER). 12. Governance: Tanzania has initiated comprehensive reforms to improve economic governance. Reforms in the area of public financial management include the implementation of an integrated financial management system, the adoption of an inclusive Public Expenditure Review/Medium Term Expenditure Framework process, and the revision of the public finance management and the public procurement systems. Following up on the recommendations of the Warioba report which documented deeply entrenched corruption in the public sector, a national action plan for the control of corruption as well as sector specific anti-corruption plans are being implemented. The impact of these anti-corruption measures has already been seen as demonstrated by an improvement in the relative position of Tanzania on the Transparency International's Corruption perception index for 2001. Bank Portfolio in Country 13. The Bank disbursed about USD 1,644 million of Intemational Development Association (IDA) resources to Tanzania through projects and operations that exited the portfolio between 1991 and 2002. It has greatly expanded its support - both financial and knowledge sharing - to the country. New commitments in the last fiscal year, Financial Year (FY) 2002 amounted to  Tanzania CPAR - Volume II - 13 - April 30, 2003 USD 396 million. The Bank's net commitment to Tanzania at the beginning of FY03 was USD 1,233.0 million (second highest, after Ethiopia, in the Africa Region of the Bank). One of the challenges for both the Government of Tanzania (GoT) and the Bank is to ensure that this momentum is maintained, followed through on project implementation, on disbursements, and on dialogue with all stakeholders. Fig.2: Tanzania: Current Composition of World Bank Loan Portfolio (as of June 30,2002, amounts in USD Million) Approval Closing Age Net commit- Total Project date date (year) ment disbursed ESSD Lake Victoria Environment Project 07/30/1996 06/30/2004 5.92 15.1 8.8 National Agric. Extension Project 11 07/11/1996 12/31/2002 5.97 31.1 23.5 River Basin Management Project 07/11/1996 12/31/2003 5.97 26.3 17.1 Tanzania Agric. Research Project 11 01/29/1998 06/30/2003 4.42 21.8 11.7 Forest Conservation Management Project 02/26/2002 12/31/2007 0.34 31.1 0.0 Lower Kihansi Management Project 07/03/2001 12/31/2006 0.99 6.3 0.4 Infrastructure Railways Restructuring Project 06/13/1991 12/31/2002 11.05 64.7 64.3 Second Integrated Roads Project 04/07/1994 06/30/2004 8.24 106.7 53.5 Urban Sector Rehabilitation Project 05/23/1996 06/30/2004 6.11 105.0 72.6 Songo Songo Gas Dev. & Power Gen. 10/09/2001 03/31/2006 0.72 183.0 7.8 Rural Water Supply Project 03/20/2002 06/30/2006 0.26 26.0 0.0 Finance and PSD Financial Institutions Dev. Project 11 08/31/1999 12/31/2003 2.83 27.5 9.1 Privatization and PSD Project 12/14/1999 09/30/2004 2.55 45.9 9.0 Public Service Reform Project 12/02/1999 12/31/2004 2.58 41.2 7.6 Rural and Micro-finance Services 08/26/1999 12/31/2003 2.85 2.0 0.4 Tax Administration Project 03/30/1999 12/31/2004 3.25 40.0 10.0 Regional Trade Facilitation 04/03/2001 06/30/2011 1.24 24.8 3.8 HDN Health Sector Development Program 06/15/2000 12/31/2003 2.04 22.0 6.5 Human Resource Development Program 10/07/1997 12/31/2005 4.73 20.9 17.2 Primary Education Dev. Program 10/09/2001 10/31/2004 0.72 150.0 50.0 Tanzania Social Action Fund 08/22/2000 06/30/2005 1.85 60.0 13.9 PREM PSAC I 06/15/2000 06/30/2003 2.04 191.4 67.8 Source: Tanzania, Draft Country Portfolio Performance Review, February 2003, by the Government of Tanzania and the World Bank   Tanzania CPAR - Volume II - 14 - April 30,2003 C. MAIN FINDINGS AND ANALYSIS PUBLIC SECTOR C.1. LEGAL AND REGULATORY FRAMEWORK Existing legal and regulatory framework 14. The United Republic of Tanzania is a union of two countries, mainland Tanganyika and Zanzibar (consisting of the islands of Zanzibar and Pemba). Tanzania has two governments, the Union Government and the Zanzibar Government. The mainland is wholly governed by the Union Government, while Zanzibar is mainly governed by the Zanzibar Government with the Union Government taking care of some government affairs including security and foreign affairs. Procurement in the mainland is governed by the 2001 Procurement Act and Regulations while Zanzibar is governed by its own Rules and Regulations. The CPAR will review the two systems separately. 15. Local Government authority (district, town, municipal, and city councils) are placed outside the line ministries under the control of the Local Government Authority under The President's Office. The line ministries simultaneously maintain their own representation at local level. The Public Finance Act (2001) forms the legal basis for public expenditure. The following main legal instruments govern public procurement in Tanzania. 16. Public Procurement Act (PPA) and Regulations: The PPA was enacted in July 2001 replacing all previous procurement legislation, which was at that time spread out in several different acts and other legal instruments.4 Subsequently in 2001, the Regulations were issued in two parts: 1) Procurement of Goods and Works Regulations,5 and 2) Public Procurement (Selection and Employment of Consultants).6 In mid-November 2002, the Central Tender Board (CTB) issued a set of standard documents and guidelines. The PPA covers procurement carried out by both central government and local authorities, though for the latter case, specific Local Government Regulations are to be issued under the Local Government Finances Act. 17. Anti-Corruption Legislation: The Prevention of Corruption Act (1971) with subsequent changes and amendments serves together with the Organized Crime Control Act (1984) as the basis for the establishment of the Prevention of Corruption Bureau (PCB) in 1990 with authority for monitoring and prosecuting malpractice in public procurement. 4 Some of the most important pieces of legislation that have now in part been replaced by the PPA are the Financial Memorandum (on local government authority procurement), the Medical Stores Department Act, and the National Board of Materials Management Act. s Government notice No. 138 published 13/07/01. Where nothing else is stated in this report the term Regulations refer to these.  Tanzania CPAR - Volume II - 15 - April 30, 2003 18. Public Service Act: The Public Service Act (2002) with subsequent amendments and the supporting Employment Ordinance and Security of Employment Act establish the Public Service Commission responsible for human resource management in the public sector. Legal Benchmark - Tanzanian Rules vs. International Standards 19. With the introduction in 2001 of PPA, Tanzania has taken a very profound step of reforming the entire legal framework of public procurement. The PPA was created on basis of the UNCITRAL model law on procurement, with considerable technical assistance from donors with an aim to upgrade the legal framework to international standards. 20. The following benchmark seeks to compare the present legal framework for procurement in Tanzania with selected internationally recognized procurement regimes. The benchmark is focused on a number of key issues recognized as important for a sound procurement system. The key issues are described in general terms to determine whether the internationally accepted principles are present and adequately implemented in the legislation. As the practical issues may vary between the different sectors when procuring goods, works and services, the benchmark will focus on the common application of these principles. For the sake of comparison, three different procurement regimes have been selected. They each pose a different approach to regulating public procurement, but all share the same basic values of transparency and accountabilily leading the way to more value for money in public procurement: * The World Bank Guidelines (WBG) for procurement under International Bank for Reconstruction and Development (IBRD) loans and IDA credits7 * The United Nations UNCITRAL Model Law on public procurement (UML)8 * The EU procurement directives (EUD)9. 6 Government notice No. 137 published 13/07/01 7 The World Bank Guidelines for procurement under IBRD loans and IDA credits (WBG) are an example of procurement regulations enforced by a large global donor organisation. These guidelines are designed for use as a prerequisite to loan agreements in which the World Bank is part. The purpose of the guidelines are to "... ensure that the proceeds of any loan are used only for the purposes for which to loan was granted, with due attention to considerations of economy and efficiency and without regard to political or other non-economic influences or considerations". Besides being internal guidelines regulating procurement undertaken with the use of funds made available by the World Bank, the guidelines are also an attempt to codify the essence of best practice regarding procurement and thus obtaining the goals mentioned above. It is therefore the policy of the World fBank to apply the principles of the guidelines not only to procurement financed wholly or in part by World Bank loans but also to seek a general compliance within the receiving country of these principles. 8 The United Nations UNCITRAL Model Law on procurement of goods, construction and services (UML) was adopted by the United Nations Commission for International Trade in 1994. The Model Law is by UNCITRAL described as an answer to "...inefficiency and ineffectiveness in the procurement process, patterns of abuse, and the failure of the public purchaser to obtain adequate value in return for the expenditure of public funds". It is the explicit purpose of the Model Law to promote transparency, objectivity and efficiency thereby curbing conruption and abuse in the procurement of public goods. In contrary to other intemational regulations the Model Law is purpose built to suit the needs of development countries whose economies are in transition, such as Tanzania.  Tanzania CPAR - Volume II - 16 - April 30, 2003 Application of procurement rules - entities subject to regulation 21. The PPA in Article 2 aims to cover all procuring entities, defined as "ministry, government department, agency, parastatal organisation, a regional or a local authority", with some important exceptions. Parastatals are covered by the PPA only if mentioned by name in the regulations and if they receive government subsidy. A parastatal organised as a private company, but with the government as a majority shareholder, would thus fall outside this category. This leaves open the possibility of a part of the public administration, or a public utility, being branched out and thus outside the coverage of the PPA, even though the public, through government ownership of shares, still remains in control of the activity. This is an issue that especially affects a country such as Tanzania, which historically has had a very large public sector, but now are deregulating and developing the private sector as a key player in society. The present situation where the PPA covers a parastatal, only while it receives public subsidy, also appears very difficult to enforce. The aim of the Regulation is to solve this issue by including in the first schedule a list of all the public entities that are subject to the PPA. Strangely a number of parastatals, which do not receive government subsidy, are in fact included on the list.10 - EUD: The EU directives on this issue has taken the view that the legal firamework must be applicable if the activity in question is under public control, whether that control is through ownership of shares or by any other means. The underlying principle being that all activities carried out in the public interest should abide by the same rules. - UML: The UNCITRAL Model Law is basically identical to the PPA in this respect. Recommendation: The rules regarding application of the PPA on parastatals should be clarified | by amending the PPA to cover all parastatals. Methods of procurement and their conditions for use 22. The PPA operates with competitive tendering as the main method for procurement of goods, works and services. Guided by the thresholds published as part of the Regulations, the procuring entity can use International Competitive Bidding (ICB), National Competitive Bidding (NCB), Restricted Tendering, Competitive Quotations, Single Source Procurement, and Minor 9 The European Union directives on procurement (EUD) have for over a decade now been the national regulations regarding the public procurement of goods, services and public works in the member states of the European Union. The four main directives are on a number of points supplemented by other regulations issued by the European Commission, the organisation trusted with the enforcement of the directives. As a directive only under certain circumstances can be applied directly by courts in the member states, all member states have by law enacted the directives in their respective legal frameworks. The European Union has for political reasons divided the rules goveming procurement in to four different sets of regulations addressing the procurement of goods, services, public works and public supply. For a large part, the directives contain parallel sets of rules for each sector, with some major exemptions. The European Commission has in 2001 put forward a proposal for a new unified procurement directive, scheduled for implementation in 2004 at the earliest. '