The World Bank provides financial and technical assistance to reduce poverty and build shared prosperity in developing countries. Commitment to sustainability and the environment is a cornerstone of all the Bank’s work. DesignIntelligence recently sat down with Enzo de Laurentiis, Chief Procurement Officer for World Bank, to talk about how sustainability underpins the Bank’s new procurement strategy.
DesignIntelligence (DI): How is the procurement policy at the Bank different now than in the past?
Enzo de Laurentiis (DL): We now have a significantly modernized procurement policy. The new framework, which became effective July 1, 2016, was developed through a three-year process that involved extensive global consultations, including several engagements with our Board of Executive Directors. In a nutshell, we moved from a one-size-fits-all to a fit-for-purpose approach, which allows us to adapt our procurement strategy to the unique characteristics of operating environments. Some of these characteristics include the country, capacity, and local environment, the market dynamics, and, of course, the specific development objectives that we want to achieve with our projects.
This new framework is much more flexible and modern. It supports and helps to implement broader sets of policies, rather than one narrow objective. That way, it becomes a strategic tool to achieve economic, technological, social and environmental goals.
Rather than the old approach, where contracts were awarded to the lowest evaluated tender, we have moved to awarding the most advantageous proposal, which insures that value for money is the key driver, and the balance between quality and cost is right. So, we are looking at all aspects of life-cycle costs, quality, and sustainability considerations. We are now linking procurement directly to the development objectives. This also results in a much more proactive engagement with the market.
DI: It seems there are a lot of benefits to this new procurement framework. What were the reasons for the change? What made you dissatisfied with the way things were done before?
DL: The World Bank’s previous procurement policy served us very well for a long time. In fact, it has been long considered the standard in the development community. But as public procurement matured into a strategic policy tool in an environment of globalization and rapid information exchange, there was a real need to modernize our policy.
The evolution of procurement at the World Bank mirrors new government and market realities, and the current framework is intended as a catalyst for further change, driving new ways of thinking and working to deliver improved development outcomes in our projects and supporting the sustainable development goals.
DI: In what ways does the new procurement approach help accomplish the mission of the bank?
DL: Effective procurement is key to successful development outcomes. The new procurement approach is designed in a way to help countries achieve high quality, sustainable and innovative development results. For example, our fit-for-purpose approach is the driving principle that allows us to tailor our strategies. We do in-depth analyses of all risks and opportunities in a country’s own environment. A key objective is to attract in the relevant market the right bidders with the right incentive and the right strategy, therefore getting better value for countries.
In lower-capacity or fragile countries, we can support these countries better and help them attract bidders. For example, we launched a three-year pilot whereby the Bank mandates direct payment to bidders, as part of a broader effort to foster competition in particularly difficult environments. We also work with countries to provide hands-on support. In addition, we manage risks more proactively and comprehensively, because the risks in those countries are different.
Likewise, for countries with more sophisticated systems, this framework allows us to adapt to their needs and environment, too. It helps us to align with the modern practices and provide more cutting-edge solutions.
DI: Sustainability is a strategic objective for the World Bank. How is sustainability addressed by the Bank’s new procurement approach?
DL: First, sustainability underpins all of our work at the World Bank. There are many different aspects of it—too many to list here. We have a very broad agenda that supports sustainable development goals. As you know, several of those deal directly with sustainability from climate action, to improved natural resources management, to broader coverage of social aspects, just to mention a few.
We will soon launch a new Environmental and Social Framework, a major reform of our environmental and social safeguard policies. The ESF contains standards that will help us support environmental and social sustainability, including as it pertains to addressing climate change mitigation and adaptation. The ESF will also help us support the sustainable development goals of all countries.
When we developed the procurement framework, we wanted to make sure that we were supporting the broader sustainability agenda that touches everything that we are doing from the ground up. Sustainability is intrinsically related to value for money because it is critical to deliver the right results while also protecting the environment and the communities we serve.
DI: Are there any particular examples or success stories that you can point to?
DL: Right now, we are in the second year of the new policy, and the projects using it are just now beginning to procure. It’s still a little early to give data and assessments of those projects, but we are seeing new methods and new approaches being used. We’re seeing discussions on resource efficiency and on using different options to ensure that sustainability is being taken into account. And we’re also seeing a very good response from the market.
That said, the Bank is doing projects in every region of the world that support greener development. One example is a solar project in Morocco, which will become one of the largest solar power plants in the world. This project underlines the country’s determination to reduce dependency on fossil fuels. Procurement strategies support the delivery of these objectives with value for money and integrity. But we certainly have a rich portfolio of projects that support these objectives. In fact, as I said, almost everything we do from ground-up focuses on supporting the sustainable development goals.
DI: You’ve referred to both environmental and social aspects of sustainability. From the procurement perspective, what are some specifics within these aspects that you’re looking to change?
DL: One very concrete example of how sustainability is incorporated in procurement processes is the way we now manage risks in all aspects of environmental, social, health, and safety requirements. For example, we proactively manage risk related to gender-based violence and sexual exploitation in projects with a physical work site. All our works-related bidding documents have been significantly enhanced. We use these procedures in a way that helps protect the environment and the communities that we serve. We are also in the process of revising other standard bidding documents to further reflect sustainability requirements, as appropriate, and update procurement guidance to ensure seamless coordination with relevant aspects of the Environmental and Social Framework.
In terms of the environment, it means to first discuss with our clients the objectives of the project and develop a procurement strategy that directly supports them. It can mean, for example, including some type of eco-labeling and specifications that ensure a certain sustainability, and the possibility of using rated criteria in evaluation, as described in the Request for Proposals for a specific procurement. These, and other options in the Framework, allow us to review and compare the proposals also from a qualitative point of view, and some of the criteria can address sustainability aspects.
Another example is energy efficiency throughout the life-cycle costs. We also use value engineering, which is the ability to improve certain aspects of the methodology and performance, using different materials, or reducing cost while maintaining basic function.
There are many ways throughout the whole procurement process, from planning through contract implementation, where we can help achieve desired objectives specific to the project.
DI: The World Bank works in so many diverse environments. What are some challenges you face in different regions or countries relating to the new procurement framework and supporting sustainability within that?
DL: The main challenge is the different level of capacity of our clients. The lower the capacity, the more support we need to provide. As I mentioned, we focus even more attention and resources on projects in riskier environments. When appropriate, we help clients and do hands-on parts of procurement. We sometimes add more technical assistance and more direct support. In some cases, the fragility is very serious. There are conflicts in some areas and additional complexities come with that. We have a lot of guidance for countries and staff on how to deal with these specific aspects.
DI: What positive effect do you think the new procurement approach will have on the places where you’re working?
DL: First, creating an enabling environment for business. That means more competition; more and better bidders. These higher-quality bidders are interested in participating, because they feel that there is a leveled playing field, that their added value is taken into account, and, of course, that transparency and integrity are enhanced. It makes for a much better environment for business.
Second, complemented by technical assistance and policy dialogue, the procurement framework can build and develop the capacity of our clients with a footprint that is much larger than our projects.
A third positive is better value, ultimately, for the people of the world. The new procurement framework ties directly to our ultimate objectives of reducing poverty and increasing shared prosperity.
DI: In choosing different projects to work on, are there certain strategic priorities that the Bank follows?
DL: The Bank supports projects in almost every sector of the economy. Every country has its own development strategy.
The Bank partners with countries to help develop and implement these strategies. (We call them country partnership frameworks.) They are renegotiated with every political cycle to agree on the right match between the policy objectives and the development priorities. A lot of studies and analytics provide the basis for these documents and determine the right projects. For example, water is very, very important. Energy is also very important, and so is infrastructure, education, and health, among various other sectors. Each country considers the right balance and agrees with the Bank on strategy that forms the basis of projects.
DI: What should we take away from this discussion about procurement?
DL: To me, the most important thing is that the Bank’s new procurement framework is a paradigm change from the past. The new approach focuses on value for money, which means it results in the most advantageous proposal: the balance, the quality, the cost and sustainability. Procurement can support sustainability because of this critical fit-for-purpose aspect. We are able to support all our clients and income segments, with a special focus on those countries that are the most fragile and have capacity challenges.
This also places a premium on partnerships and collaboration, including with the private sector. We engage with the private sector very early during project preparation and carry out market assessments and analysis that helps us develop the right strategy to target the right bidders from the relevant market. All of this is done not only to deliver results on the project but also to build capacity beyond our projects. We work closely with multilateral banks and other development partners as well.
Again, procurement is a key tool in supporting social and environmental objectives and protecting communities and the environment. There are many important benefits of this new framework to support these goals and our projects’ specific development objectives.
About the World Bank
Established in 1944, the World Bank Group is headquartered in Washington, D.C. The World Bank is a vital source of financial and technical assistance to developing countries around the world. The Bank provides low-interest loans, zero to low-interest credits, and grants to developing countries. These support a wide array of investments in such areas as education, health, public administration, infrastructure, financial and private sector development, agriculture, and environmental and natural resource management.
Enzo de Laurentiis is the World Bank’s Chief Procurement Officer, in the Operations Policy and Country Services Vice-Presidency.
This article is excerpted from DesignIntelligence Quarterly 3Q 2018 edition, our issue about sustainable and regenerative design.