- The Washington Times - Wednesday, March 12, 2008

The Bush administration, together with U.S. and foreign business organizations, challenged a World Bank proposal that would allow developing countries to use their own contracting rules for bank-funded projects.

A revised version of a proposal introduced last year would organize a pilot program to use country procurement systems in bank-supported operations.

The proposal would cover infrastructure, rural development and similar sorts of projects in Third World countries.

Businesses that work with the bank previously objected, fearing it would increase corruption in such countries as Nigeria, Zimbabwe and Azerbaijan.

The U.S. government entered the fray earlier this month when Commerce Secretary Carlos Gutierrez and a variety of business groups expressed misgivings in March 3 letters to World Bank President Robert B. Zoellick.

Jeffrey Gutman, the bank’s vice president for operations policy and country service, yesterday stressed that the bank consulted widely on the proposal and that its development is continuing in an open process.

We are continuing to consult, and we are also continuing to refine the proposal to take into account all the comments we’re receiving, he said, so we’re not in a final phase as of yet.

Mr. Gutierrez’s letter was reportedly written before the latest version of the plan, which has not been publicly released.

Industry sources who have seen the latest version, however, continue to criticize it.

The proposal envisions a pilot program for using countries’ systems in nations with procurement standards that are equivalent to those in bank guidelines.

It would identify a group of at least eight to 10 countries and a set of projects in those countries where national procurement systems could be used for a pilot program.

The proposal is set to be reviewed by two bank committees today and by bank executive directors April 1.

An industry paper Mr. Gutierrez attached to his letter expresses concern that the proposal is weak in its capacity to ensure that procurement would meet World Bank standards and international practices.

The attachment says the proposal would lead to the increased potential for corruption and a locking in of weak national standards, rather than building the type of strong procurement capacity that we all seek.

In a separate letter, the National Association of Manufacturers and several European business groups warned that the success model should not be jeopardized by … implementation of the current World Bank plans to apply country systems in procurement.

The letter was signed by Italian, Dutch, British, German, Danish and French business groups.

An international procurement adviser said over the weekend the revisions made to the newest version of the proposal do not address key U.S. and European business concerns.

The revision, the adviser said, lacks real and meaningful adherence to the bank’s years developing international best practice and standard bidding documents.

This is the third, wholly inadequate proposal on the subject in as many years. It is time for the bank to step back and rethink its approach, according to this specialist.

National Foreign Trade Council President William A. Reinsch noted that business has been critical of both the substance and process of the proposal.

Once again, the bank has made a major new proposal with significant changes from the previous one and then wants to move it through without adequate time for review and comment, he said.

At the very least, the proposal should be posted on the bank”s Web site, and ample time for public comment should be provided.

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