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2008 Assessment

Cambodia: Integrity Indicators Scorecard

Cambodia : Integrity Scorecard Report > Sub-Category: Procurement
Indicators		Score
51	Is the public procurement process effective?	50
52	Can citizens access the public procurement process?	38

Indicator and sub-Indicator Details

Is the public procurement process effective?

51a: In law, there are regulations addressing conflicts of interest for public procurement officials.

Score:

YES

Comments: There is currently no law on public procurement. The existing framework consists of decrees and guidelines, especially the Sub-Decree on Public Procurement, dated October 2006. While this sub-decree has been a huge improvement over the 1995 sub-decree on procurement, it still does not have an explicit conflict-of-interest provision. The sub-decree does require public procurement officials to sign the Code of Conduct, which has conflict-of-interest provisions, but this code does not stipulate sanctions for non-compliance.

It has been said, however, that the government plans to pass a public-procurement law. In fact, the enhancement of the legal framework on procurement (including preparation of a law and implementation of the regulations on procurement decentralization, for instance) is one of the core provisions of the Public Financial Management Reform Program (PFMRP).

Moreover, a Manual on Standard Operating Procedures (SOP) and the concomitant Procurement Manual for Externally Financed Projects/Programs in Cambodia, promulgated by a Prakas, are currently being used to specifically guide procurement for projects and programs funded by donors. Note that most public procurement in Cambodia is externally financed. The Procurement Manual has explicit conflict-of-interest provisions that essentially state that it is the duty of public-procurement officials and staff to declare potential conflicts of interest that arise when the individual has direct or indirect relationships with bidders, consultants, contractors or suppliers or anything else that affect or might be deemed to affect the individuals impartiality. Bidders and consultants with potential conflicts of interest will also be considered ineligible to bid. As will be elaborated later, the procurement regime in Cambodia has been said to have greatly improved following the procurement scandal involving the Cambodian government back in 2006. Oversight has strengthened as a result of such unfortunate developments. In addition, the PFMRP also targeted procurement as one of the areas in public-financial management that needed improving.

References: Manual on Standard Operating Procedures. [ LINK ]" target="_blank">[ LINK ].

Procurement Manual for Externally Financed Projects/Programs in Cambodia. http://www.mef.gov.kh/.

Sub-decree on Public Procurement, October 28,2006.

51b: In law, there is mandatory professional training for public procurement officials.

Score:

YES

Comments: Procurement officials in Cambodia have been said to lack training partly due to lack of resources. Between 2008 and 2010, the PFMRP aims to develop the capacity of procurement officials, both at the national and local levels. Some training opportunities have already been made available under donor-assistance projects. For instance, the World Bank has provided technical support to the government to reinforce its ability to identify and remedy fraud and corruption in procurement. It has also provided technical assistance to train MoNASRI staff on investigative techniques.

References: As mentioned, there is no law yet on public procurement. Under the related sub-decree, there is also no mention of mandatory professional training for procurement officials.

Royal Government of Cambodia, Public Financial Management Reform Program Stage Two (Building on Improved Budget Credibility Toward Achieving Better Financial Accountability), Revised Draft, May 20, 2008.

World Bank, (International Development Association), Country Assistance Strategy Progress Report, April 27, 2008. [ LINK ].

51c: In practice, the conflicts of interest regulations for public procurement officials are enforced.

Score:

100

Comments: As mentioned, most public procurement in Cambodia is externally financed. Ever since government procurement problems for seven World Bank-funded projects were discovered in 2006, resulting in bank suspension of disbursements on three active projects, the procurement regime for externally-financed projects in the country has greatly improved.

In the case of the World Bank, specifically, it and the Cambodian government have established a number of preventive and oversight measures to mitigate fiduciary risks to World bank-financed projects, one of which is the adoption of anti-corruption action plans called Good Governance Framework (GGF). The GGF includes measures to strengthen procurement procedures, which have been voluntarily adopted by the government. Early implementation reviews indicate there has been an increasing level of implementation of the GGF and that compliance with the procurement, financial management and disclosure elements was generally high across all projects. Another oversight measure adopted to prevent procurement problems was the use of an International Procurement Agent (PA). While the World Bank required that procurement in only the three formerly suspended projects be handled by the PA, it has been said that the government decided to require the PA for all ongoing and future World Bank-financed projects. This action has been taken by the bank as evidence of the governments commitment to ensure the integrity of the procurement process and to break established collusive cartel arrangements.

Note, however, that as a result of the 2006 procurement problems, oversight has become so strong and the bureaucracy so strict that it is said to have unfortunately made it difficult to push procurement activities forward. There are also reservations as to the sustainability of the reforms.

Note further that for procurements outside externally-financed projects, it has been said that connections and influence are important to getting procurement contracts, which may imply contraventions of the conflict-of-interest provisions.

References: World Bank, (International Development Association), Country Assistance Strategy Progress Report, April 27, 2008. [ LINK ].

Economics Today, Cambodia Economic Watch (Special Issue), "Public Financial Management Reform: Government Improves Budgeting but More Work is Needed," July 2008.

Interview, Mr. Peter Murphy, Senior Public Sector Management Specialist, World Bank, August 26, 2006, 9:00 a.m., World Bank Office.

Interview, Anonymous executive, August 31, 2008, 10:00 a.m., residence.

51d: In law, there is a mechanism that monitors the assets, incomes and spending habits of public procurement officials.

Score:

YES

Comments:

References: By law, or in the related sub-decree or the manuals mentioned before, there is no such mechanism provided.

51e: In law, major procurements require competitive bidding.

Score:

YES

Comments: The Procurement Manual for Externally Financed Projects/Programs also explicitly states that International Competitive Bidding (ICB) is the most appropriate and preferred method of procurement because it will provide users a wide range of choices from competing suppliers and provide the suppliers (or potential suppliers) adequate, fair and equal opportunities for the goods and works being procured. Its use is mandatory for all contracts with estimated value above US$100,000. Again, note that the majority of the major public procurements in Cambodia are externally financed. There continues to be the requirement of registration, however, with a committee headed by the Department of Public Procurement, registration complicates and undermines the competitive tender process. This requirement is essentially provided under Article 29 of the Sub-Decree on Public Procurement. Aspiring bidders have to register first to be able to participate in public projects. Those with so-called connections and influence have been said to certainly have an advantage over the others, especially in relation to procurements outside the externally-financed projects where oversight is not high. For procurements not externally financed, connections and influence have been said to be a major consideration throughout the procurement process.

Addressing the registration issue, the Procurement Manual for Externally Financed Projects/Programs states that there is no registration requirement on the part of the donor agencies (other than for the purpose of legal incorporation in the firms country of origin), but in the event that the executing agency insists on the registration, it must form part of the contract-awarding procedure and must not be used as criterion for eligibility, evaluation or post qualification.

Aside from the issue on registration, another problem besetting the competitive bidding process in Cambodia is the weak information system.

References: As mentioned, there is no law on public procurement as yet.

However, the Sub-Decree on Public Procurement, in particular Article 8 thereof, states that international competitive bidding shall be selected for more expensive projects and domestic competitive bidding shall be implemented when there is sufficient domestic production or sufficient construction capacity and/or when the planned expenses are not big enough to draw the attention of foreign suppliers or contractors.

Procurement Manual for Externally Financed Projects/Programs in Cambodia. [ LINK ].

Sub-decree on Public Procurement, October 28 2006.

Business Anti-Corruption Portal, Cambodia Country Profile 2008. [ LINK ].

Interview, Anonymous executive, August 31, 2008, 10:00 a.m., residence.

51f: In law, strict formal requirements limit the extent of sole sourcing.

Score:

YES

Comments:

References: The Sub-Decree on Public Procurement, in particular Article 6 thereof, states that direct contracting can only be done in the following cases: the material is available only from one source; the goods or services are necessary to respond to natural calamities and within a short period of time; or for study or development purposes.

Further, the Procurement Manual on Externally Financed Projects/Programs explicitly states that direct contracting shall be used as little as possible because it does not provide for either transparency or competition. It always requires no objection by both the donor agency and the Ministry of Economy and Finance (MoEF) and can only be used under the following circumstances: standardization of equipment is available from only a single proprietary source; exceptional cases, such as a response to a natural disaster; and when the goods, works or services represent the natural continuation of an ongoing or recently completed contract and it can be demonstrated that lower prices will not be obtained through further bidding.

51g: In law, unsuccessful bidders can instigate an official review of procurement decisions.

Score:

YES

Comments: The Sub-Decree on Public Procurement, specifically Articles 38 to 40 thereof, states that bidders or consultants have the right to file written complaints at all stages of the procurement process. The complaints shall be submitted to the procurement-executing agencies and can be raised again with the Ministry of Economy and Finance (MoEF) in case of dissatisfaction with the decision of the procuring entities. As a last resort, the decision of the MoEF may be appealed in the courts. Under the Procurement Manual for Externally Financed Projects/Programs, this explicit complaint mechanism is also set out and required to be built into all bidding documents. The stated mechanism allows bidders, suppliers, contractors and consultants to lodge a complaint about the procurement process from time to time, with and without justification. The complaint shall be submitted to the procuring entity and can be appealed at the Department of Public Procurement (DPP) in the MoEF. The findings of the DPP with regard to the complaint shall be final, but without prejudice to any other recourse or remedies available under the laws of Cambodia, including going to the court for resolution.

For procurements outside the externally-financed projects, it has been said that losing companies can perhaps also approach the Government Private Sector Forum or the Chamber of Commerce, but these bodies have been said to not be entirely open. Connections are important.

References: Procurement Manual for Externally Financed Projects/Programs in Cambodia. [ LINK ].

Sub-decree on Public Procurement, October 28 2006.

Interview, Anonymous executive, August 31, 2008, 10:00 a.m., residence.

51h: In law, unsuccessful bidders can challenge procurement decisions in a court of law.

Score:

YES

Comments:

References: As mentioned, the Sub-Decree on Public Procurement, specifically Article 40, and the Procurement Manual for Externally Financed Projects/Programs will not be used as prejudice against other recourse or remedies available under the laws of Cambodia, including going to the courts for resolution.

51i: In law, companies guilty of major violations of procurement regulations (i.e. bribery) are prohibited from participating in future procurement bids.

Score:

YES

Comments: The Sub-Decree on Public Procurement, specifically Article 45 thereof, states that when bidders, receivers, suppliers, consulting companies or individual consultants are found to be involved in any corruption, fraud, compellation or collusion, the Minister of the Ministry of Economy and Finance MAY fully prohibit those companies or individuals from participating in supplying commodities, construction activities, services, permanently or for not less than a three-year period. The prohibition is thus not automatic.

However, the Procurement Manual for Externally Financed Projects/Programs provides that if it is determined that a bidder or consultant has engaged in corrupt, fraudulent, coercive or collusive practices in competing for or executing a donor agency-financed contract, such bidder or consultant will be declared ineligible, either indefinitely or for a stated period of time.

Note that for procurements outside the externally-financed projects, it has been said that it depends on one's connections whether one gets sanctioned for any discovered violation.

References: Sub-decree on Public Procurement, October 28 2006.

Procurement Manual for Externally Financed Projects/Programs in Cambodia. [ LINK ].

Interview, Anonymous executive, August 31, 2008, 10:00 a.m., residence

51j: In practice, companies guilty of major violations of procurement regulations (i.e. bribery) are prohibited from participating in future procurement bids.

Score:

100

Comments: For procurements funded by donors, no major violation of procurement regulations has been known to be reported since the procurement scandal in 2006. As mentioned before, it has been noted that the government's compliance with the procurement elements of the Good Governance Framework (GGF) has been high, at least across all World Bank-financed projects.

For procurements outside the externally-financed projects, it has been expressed that whether one gets sanctioned for a violation depends on one's connection.

References: World Bank, Country Assistance Strategy Progress Report, April 17, 2008. [ LINK ].

Interview, Mr. Peter Murphy, Senior Public Sector Management Specialist, World Bank, August 26, 2006, 9:00 a.m., World Bank Office.

Interview, Anonymous executive, August 31, 2008, 10:00 a.m., residence.

Can citizens access the public procurement process?

52a: In law, citizens can access public procurement regulations.

Score:

YES

Comments: The absence of statutory provisions ensuring citizen access to procurement regulations is reflective, of course, of the overall problem of lack of freedom of information in Cambodia. As mentioned, the legal infrastructure governing public procurement in the country is governed by a set of decrees and guidelines that make it even more difficult for ordinary citizens to access and, therefore, be informed.

The strong donor interest in procurement, however, has, thankfully, enabled the advancement of transparency in procurement management. The Manual on Standard Operating Procedures for Externally-Financed Projects/Programs has identified disclosure to civil society as one of the key guiding principles of procurement for donor-funded initiatives. In line with this, the Procurement Manual on Externally-Financed Projects/Programs has referred to transparency as a benefit of following procurement procedures that are consistent with the best practices. According to it, transparency in the procurement process is essential to ensure that the correct procedures are being employed, to encourage firms in competing for contracts and to provide an invaluable check against corrupt and collusive practices. Note that the above-mentioned manuals are posted on the website of the Ministry of Economy and Finance, although not necessarily downloadable. The old Sub-Decree on Public Procurement is posted on the website of the Council of Jurists, but not the new sub-decree and other relevant guidelines.

Note further that under the Draft Anti-Corruption Law, June 16, 2005, version, specifically Article 15 thereof, it is provided that the state shall take necessary measures to manage public procurement on the basis of transparency, competitiveness and clearly stated procedures as well as discretion in all procurement processes

References: By law, or specifically under the Sub-Decree on Public Procurement, there is no such provision ensuring citizen access to public-procurement regulations.

Manual on Standard Operating Procedures (SOP) for Externally-Financed Projects/Programs in Cambodia. [ LINK ]" target="_blank">[ LINK ].

Procurement Manual for Externally-Financed Projects/Programs in Cambodia. http://www.mef.gov.kh/.

1995 Sub-Decree on Public Procurement. [ LINK ]. Draft Law on Anti-Corruption, June 16, 2005 version.

52b: In law, the government is required to publicly announce the results of procurement decisions.

Score:

YES

Comments:

References: The Sub-Decree on Public Procurement, specifically Article 36 thereof, states that the summary of the results of the assessment of contract awarding shall be posted on the notice board or uploaded on the webpage, if any, of the procurement-executing agencies for the public to see.

Under the Procurement Manual on Externally-Financed Projects/Programs, there are more specific disclosure requirements provided in compliance with the principle of transparency. The requirements include: local advertisement of all awards of contracts funded by the World Bank and ADB as well as eventual posting of the Summary of Evaluation at the project and/or the executing agency's website; compilation of the reports, Summary of Evaluation and Contracts Register by the Project Management Units; compilation of a Register of Contracts and its posting at the project and/or executing agency's website; and issuance of a notice to the general public through a Khmer-language newspaper of national circulation, inviting interested parties to review and inspect all Summaries of Evaluation.

Note again that under the June 16, 2005, Draft Anti-Corruption Law, specifically Article 15 thereof, it is provided that the state shall take necessary measures to manage public procurement on the basis of transparency, competitiveness and clearly stated procedures and discretion in all the procurement processes.

52c: In practice, citizens can access public procurement regulations within a reasonable time period.

Score:

100

Comments: Again, by law, there is no such requirement ensuring citizen access to public procurement regulations. The manuals are posted on the website of the Ministry of Economy and Finance (although not necessarily downloadable) and the old Sub-Decree on Public Procurement is posted on the website of the Council of Jurists. However, the new sub-decree and other newly executed guidelines are not available online as far is known. More importantly, there are very few Cambodians with access to the Internet so most users need to go to the cyber cafes. Indeed, as with any other document or information from the government, relatively new laws and regulations in Cambodia are difficult to access, especially for the ordinary citizen. Connections are needed and, as been expressed, unofficial payments are made at times.

References: Interview, Mr. Tieng Sophorn, Advocacy Action Program Manager, Star Kampuchea, August 17, 2008, 8:45 a.m., Star Kampuchea's office.

Interview, Mr. Pok Leaksmy, Senior Program Officer, Mainstreaming Anti-Corruption for Equity Program, Pact Cambodia, August 19, 2008, 9:00 a.m., Pact Cambodia's office.

Interview, Ms. Thou Heng, Program Coordinator, Advocacy and Policy Institute (API), August 20, 2008, 3:00 p.m., API's office.

Interview, Mr. Moeun Chhean Nariddh, Director, Cambodia Institute for Media Studies, August 22, 2008, 2:30 p.m., Internews Office.

Interview, Mr. Phann Ana, Assistant Journalism Advisor, Internews, August 22, 2008, 2:30 p.m., Internews Office.

Interview, Anonymous, Media, August 22, 2008, 8:00 a.m., Phnom Penh Center.

Interview, Anonymous, Media, August 22, 2008, 10:00 a.m., Institutions office.

Interview, Ms. Mu Sochua, Deputy Secretary General and Former National Assembly (NA) member, Sam Rainsy Party (SRP), August 27, 2008, 9:00 a.m., SRP Headquarters in Phnom Penh.

Interview, Anonymous, executive, August 31, 2008, 10:00 a.m., residence.

52d: In practice, citizens can access public procurement regulations at a reasonable cost.

Score:

100

Comments: Again, by law, there is no such requirement ensuring citizen access to public procurement regulations. However, the manuals are posted on the website of the Ministry of Economy and Finance (although not necessarily downloadable). The old Sub-Decree on Public Procurement is also posted on the website of the Council of Jurists, but the new one and other newly executed guidelines are not. As in any other document or information from the government, relatively new laws and regulations in Cambodia are difficult to access, especially for the ordinary citizen. Connections are needed and, as been expressed, unofficial payments are made at times.