Craig Brewin continues his series on Procurement issues arising from last year’s hurricane season, as covered at the CDB special conference. The others in the series can be found here, here, and here.
One of the issues that the Caribbean Development Bank (CDB) and World Bank was addressing at its Procurement in Emergency Situations workshop in June, was the need to have the procurement arrangements for dealing with disaster and recovery organised as far as possible in advance.
Framework agreements in particular were seen as being important tools and examples of their effective use were presented from different circumstances in different parts of the world. Amy O’Reilly from the Humanitarian & Stabilisation Operations Team of the UK’s Department for International Development (DFID) explained how the use of frameworks is an integral part of their approach. In an emergency the first movement of supplies is from DFID stockpiles with supplies issued on a “no regrets” basis. This means stockpiles are created and replenished through the framework, often using reverse auctions. There are a limited number of items distributed in an emergency, and market analysis and logistical planning is based around two stock items per category with a focus on manufacturers, traders and suppliers, along with possible bottleneck issues. DFID sources over 90% of supplies through the Frameworks. This facilitates humanitarian response in non-crisis conditions.
Frameworks can also be used during an emergency and the World Bank’s Paul Schapper outlined the lessons from his procurement experience in Kyrgyzstan. In an emergency, frameworks are a means of truncating the procurement process, widening the supplier base, pre-vetting suppliers, ensuring suppliers are aware of requirements, mitigating against degraded products and substitution, and preparing for repeat orders. Most importantly it is a means of managing risk, particularly the risk of price gouging and logistical failure. They are not used to centralise procurement, but a framework is a centralised instrument that allows local flexibility with central control.
How you call off from a Framework in an emergency would not necessarily be the same as it would be to replenish stockpiles. Competition is not an end in its own right and is not always a reliable form of purchasing. “There is no point in having a competitive process if the is no competition in the market.” Although reverse auctions may work well for DFID stockpiles they can also encourage high-balling and can be a gift for those who are predatory pricing.
Joao N. Veiga Malta, Practice Manager at the World Bank advised that pre-planning doesn’t just make purchasing less crisis driven in the emergency, and organisations working alone can undermine the efforts in other parts of the region, or even the world. Those with rolling contracts for N1H1 vaccine, for example, were making it harder for others to cope should a pandemic have struck.
CDB do seem to be determined to make things happen here, and the workshop was peppered with questions. Are local stockpiles viable and who would host them? Is relying on transport routes from Miami too high-risk or unavoidable? Is a Caribbean framework for emergency supplies viable or is the market too regionalised? How do we ensure that local business and individuals are getting work from the rebuilding process? CDB also made a broad commitment to provide practical support to any initiative taken by the various cross-national bodies in the region, or individual states. In their view regional stockpiles and frameworks are inevitable. It is just a matter of where, when and who leads.