Coverage

CG.

Time period

Last completed fiscal year.

Measurement guidance

Significant public spending takes place through the public procurement system. A well-functioning procurement system ensures that money is used effectively in acquiring inputs for, and achieving value for money in, the delivery of programs and services by a government. The principles of a well-functioning system need to be stated in a well-defined and transparent legal framework that clearly establishes appropriate policy, procedures, accountability, and controls. The description of the legal framework for PFM is included in the PEFA report narrative in section 2.3. Key procurement principles include the use of transparency and competition as means to obtain fair and reasonable prices and overall value for money.

The scope of the indicator covers every procurement of goods, services, civil works, and major equipment investments, whether classified as recurrent or capital investment expenditure. It does not include the defense sector, for which information is typically classified and confidential by law.

In decentralized procurement systems this indicator can be assessed using the five CG units with the highest value of procurement commenced in the last completed fiscal year. If data to identify the CG units with the highest value of procurement is not easily identifiable by the assessor, then the assessor should choose the CG units with the largest annual gross expenditure which perform a substantial value of procurements. The assessor may be guided by the government in identifying the most relevant CG units, but the assessor will make the final decision on which CG units to include in the assessment. The basis of choosing the CG units included in the assessment should be noted in the narrative discussion for this indicator.

Dimension 24.1 assesses the extent to which prudent monitoring and reporting systems are in place within government for ensuring value for money and for promoting fiduciary integrity. Completeness refers to information on contracts awarded. The accuracy and completeness of information can be assessed by reference to audit reports.

Dimension 24.2 analyzes the percentage of the total value of contracts awarded with and without competition. A good procurement system ensures that procurement uses competitive methods, except low-value procurement under an established and appropriate threshold. This includes situations in which other methods are effectively restricted by regulations or where the provisions to apply other methods are used sparingly.