Innovative Procurement and Contract management solutions for Challenging and Fragile Environments
Challenges addressed by the Grant and Service Contract Management Unit (GCMU) were both prior and post establishment. In 2003 the newly formed Afghan Government and foreign donors faced numerous challenges in rebuilding the country, grappled with providing health care services to its people where the Public Health Care system was almost non-existent/in dismal condition. Foreign donors support to the Government of Afghanistan’s (GoA) endeavour in Public Health Care System was difficult for want of a credible/reliable/satisfactory government mechanism, This situation led to the establishment of the GCMU by GoA in 2003, with the mandate (i) to develop an institutional capacity for procurement and contract management within the Ministry of Public Health (MoPH); (ii) to handle large scale health funding and; , (iii) to develop a performance based partnership agreement with the civil societies to develop and sustain health services in Afghanistan. The newly formed GCMU, faced with multiple challenges in (1) Institution Development, (2) to acquire stakeholders acceptance, (3) to gain credibility and respect, required to develop a competent management system along with a robust procurement management in consultancy services with qualified procurement management staff. The GCMU was able to create a credible institution by providing relevant training to its staff to increase capacity, adopting new innovative systems such as performance based payments/new monitoring techniques and in handling large procurement successfully. Difficulties at the beginning were overcame gradually and, the ability to successfully manage contracts led under the performance based partnership agreement has steadily grown since 2003 when only 9 contracts (value USD 30 million) were contracted, to 49 contracts (value USD 129 million) as on 2016. This progress has led to approvals and support being given steadily by stakeholders in health procurement. For example, Global Alliance for Vaccine and Immunizations (GAVI) released funds for GCMU procurement in 2008, USAID released USD 200 million for GCMU through the Ministry of Finance in 2009. The GCMU is now an authorized procurement entity certified by the Policy and Procurement Unit of the Ministry of Finance (MOF), and the National Procurement Authority (NPA) to conduct consultancy services procurement. In addition to GoA approval, GCMU has been successfully certified by the USAID, World Bank, EU and GAVI as a capable and transparent entity to conduct procurement and management of health services financed under the ordinary and development budgets. GCMU is also approved to be a procurement and management entity with interface between International Development Partners and the Ministry of Public Health Afghanistan in receiving and managing public health funds, especially related to country wide provision of Basic Public Health Services (BPHS) and Essential Package of Hospital Services (EPHS), in coordination with other MoPH departments and stakeholders. Institutional respect is something that cannot be earned without competent staff and in its infancy GCMU suffered from a shortage of trained procurement staff. GCMU has successfully met its pre and post formation challenges by being professional, innovative and producing impressive procurement/contract management results. It is now a highly respected institution in GoA.
The GCMU since its formation had a significant impact through its health procurement for consultancy services. Some of these positive impacts have been institutional strengthening, improved health outcomes, ability to manage contracts with civil society organisations, inbuilt technical capacity due to its constant interaction with health issues and general capacity improvement/development in Afghanistan government procurement. A positive impact with the creation of GCMU has been an institution specialised in procuring health consulting services. Before its formation the MoPH did not have the capacity and such procurement was done in an ad-hoc manner. With the formation of this institution, GoA was able to create an infrastructure thus enabling the procurement of health consulting services worth hundreds of million dollars and provide government health services delivery to all provinces in Afghanistan The ability of GCMU to procure large value service contracts that offered good quality health services- particularly through the BPHS (Basic Public Health Services) and EPHS (Essential Public Health Services) programs - which has enabled GoA to improve health outcomes, e.g. from maternal mortality rate (MMR) of 1600 per 100,000 live births in 2002, to 327 in 2010; the under 5 mortality rate (MR) in 2000 was 257 per 1000 live births while in 2010 it came down to 97. Due to its good procurement/contract management system in health services, the GCMU has developed considerable influence over stakeholders on health and has been able to use this influence to act as a catalyst and coordinator in bringing together various organisations to discuss public health issues. An example of this is that, the BPHS/EPHS coordination meetings where GCMU brings together NGOs and MoPH technical departments every three months to discuss issues is opened by His Excellency Minister or the Deputy Health Minister. Through its constant interaction with health issues in procurement/contract management, the GCMU has developed considerable expertise within its staff in health matters. Accordingly assistance has often been requested from GCMU by MoPH departments in technical matters related to policy and planning, child health and immunization, nutrition, communicable disease and reproductive health sectors. There is no doubt that GCMU has contributed significantly to the improvement of government procurement in Afghanistan, particularly in the health sector. It is an institution well respected both within the government and externally (including international bodies). It has provided MoPH the capacity to undertake large scale health service delivery at a standard satisfactory to international funding organisations such as the World Bank, USAID, EU, UNICEF and the WHO. Its success has been noted by other organisations within GOA and is being used as a role model for developing their own procurement capability. The GCMU impacts through its health procurement and contract management activities can be studied by any organisation involved in health procurement or government procurement needing improved results.
There were many lessons learnt during establishing the GCMU. Among these were procurement cost reductions, institutional structure, necessity for monitoring and the role of medical doctors in health procurement. The GCMU system of open and transparent competitive procurement has considerably lowered costs. Although the GCMU was created with an objective to create a system of open and transparent procurement system, there was no assurance that procurement costs would be lowered and even if they were, such cost reductions would be significant. Now that GCMU procurement has been operating for fourteen years there is ample evidence that, considerable cost savings can be made if any organisation invests in a specialised unit in procurement An analysis of GCMU costs showed that the cost of procurement to the value of consultancy services/services procurement is 2%. This contrasts with an accepted international norm of 10%. Initially when the GCMU commenced operating, the future impact was not clear. Today the model has been seen to provide cost savings, transparency and efficient streamlined procurement processing. It now can be said with confidence that an institutional organisational structure such as the GCMU specializing in procurement is recommended as a structure when an organisation such as a government ministry is conducting large scale procurement. This has been a lesson learnt from the GCMU operation. It has been identified from early operations of GCMU that effective and regular monitoring is necessary to assure that health services are delivered successfully throughout the 34 provinces of Afghanistan. Many of these provinces are in remote and security sensitive locations hence health service delivery is difficult and knowing whether the contractor was delivering satisfactory services was a major issue. It became very apparent that monitoring was necessary but how to do this became a question. Discussion within GCMU led to the third party monitoring system and this has been coupled with a regular field monitoring program by the GCMU itself. Initially in the early GCMU operations, medical practitioners did not view any potential career role in procurement. Their role in procurement was seen by both management and medical practitioners’ themselves as transitory with the thinking that following a relatively short period they would move to positions in the medical mainstream. This thinking however, gradually changed as it became apparent that medical expertise was a very necessary resource in both the GCMU and health procurement. Contract management involved the managing /monitoring of district health public resources and considerable health knowledge is required to do this properly. One of the lesson learnt by the GCMU was that better outcomes are obtained by having medical doctors as permanent staff for all health procurement but particularly in contract management. All the above lessons were learnt while providing improved procurement and contract management for delivering health services in a fragile and geographically challenged country as Afghanistan.
The GCMU has displayed considerable innovation including the introduction of a third party monitoring to verity contractor’s performance and introducing payment to contractors based on results. The introduction of the third party monitoring came about when the GCMU was experiencing difficulty in delivering health services throughout Afghanistan through its Basic Public Health Service (BPHS) and Essential Public Health Service (EPHS) contracts. There were difficulties in knowing whether the services were delivered by the contracted health providers in a satisfactory manner when many locations are in security sensitive areas, not normally accessible to government. To solve this issue, The GCMU devised an innovative approach by placing a further contract to a qualified third party having access to such localities. In these contracts the third party contractor using performance criteria (23 indicators) developed by the GCMU /Ministry of Public Health assesses the health provider and then provides this data back to the GCMU for review and action. The third party -which at present is an international firm -monitors 25% of health facilities in the 34 provinces of Afghanistan every 6 months. Since the system has been introduced in 2015, results show a steady improvement in in performance by the health providers which is documented through “The Balanced Scorecard Report”, for example in 2016, 18 BPHS indices shown improvement in standard to 2015, while only 5 showed a decrease in standard. The innovation of third party monitoring is sustainable as the GCMU will have funds to continue the initiative in future GCMU budgets which are a part of the GoA’s normal budget. In order to improve performance by the contractors delivering the health services (normally a NGO), the GCMU moved away from payment of a basic fee to an incentive system where payment was based on performance. In the new system, there is 10% payment of the contracted amount made to performance against verification of parameters set in the MoPH’s Health Management Information System (HMIS) , 10% payment against health systems functionality as attested by a third party monitor contracted by the GCMU and finally 80% of payment against submission of a quarterly technical report. All these three actions involve a specific level of performance before payment is made. The GCMU has displayed notable innovation. The third party monitoring system has allowed improved monitoring of contractors delivering health services particularly in remote areas. The concept is innovative and while adding an extra cost, this is more outweighed by the benefits in ensuring proper health delivery to provinces. By introducing a performance based system for payments it is providing more value for money in its procurement. These innovative ideas are measures that can be studied by other countries when looking at ways to achieve better outcomes in their health procurement particularly, when they are operating in difficult and fragile environments and performance requires measurement and improvement.
The GCMU success in creating a strong internal government organisation with good capability in management of procurement has been noted by other organisations and replication of its structure and operating methodology is now been evidenced in Afghanistan government institutions. GCMU as an organisation has adequate staffing and procedures that are designed to assure successful sustainable procurement. The staffing structure has clear lines of decision making and contains all positions needed for successful procurement, not only procurement specialists but other disciplines such as legal, finance, information technology and health experts. This organisational structure is constantly reviewed and is always subject to approval by the Ministry of Public Health (MoPH). Procurement processes are documented with operational procurement procedures available in either soft or hard copy. Procurement decisions are subject to review by the World Bank and GoA Public Procurement Board thus ensuring good transparency. All procurement is subject to audit by the government and fund donors. GCMU management meet regularly to discuss issues. All these features make the GCMU an organisation to admire and learn from in the context of Afghanistan government procurement. Three organisations that are using GCMU as a model for improving their own procurement capacity are the Afghanistan Ministries of Labour, Agriculture and Education. Officials from these ministries regularly visit the GCMU to study and learn the systems being applied as well as GCMU representatives are invited to observe the ministries existing procedure, and provide expertise to modify and enhance these ministries existing system. All the interested ministries have mentioned that they were impressed with the organised systematic manner the GCMU conducts procurement including adequate staffing establishment, proper accounting/procurement systems, well trained competent people and the ability to manage large scale procurement with possible replication which would lead to reduction in direct costs, expedite procurement in a transparent manner through public advertising and bidder meetings etc, as well as delivering non-monetary benefit by delivering greater stakeholder satisfaction.
In 2003, the ministry of public health of Afghanistan in collaboration with the donors had introduced the Basic Packages of Health Service (BPHS) for rural setting defining and targeting primary curative and preventive interventions as integrated packages. The BPHS was later on revised in 2010 to address other major burden of diseases such as mental health by providing an integrated health package of cost effective services. At the same time, the Essential Package of health services (EPHS) was developed in 2005 to provide further specialized curative healthcare and referral service to the needy people of the Afghanistan. Under strong international community support, the required institutional capacity within the Ministry was built to fulfill its stewardship role and to proceed with contracting out mechanism through a competitive procurement process. Therefore, the MOPH through support of its donors established a consultancy service procurement unit/department called Grants and Service Contract Management Unit (GCMU) within the structure of procurement directorate to proceed service procurement and manage the grants financed for the health sector particularly the BPHS and EPHS packages. The Grants and service Contract Management Unit (GCMU) is an authorized procurement entity certified by the Policy and Procurement Unit of the Ministry of Finance (MOF), and the National Procurement Authority (NPA) to conduct procurement of the consultancy services without limit on the threshold set in the procurement law. In addition to that, GCMU has been successfully certified by the USAID, World Bank, EU and GAVI as capable and transparent entity to conduct procurement and management health service financed under the ordinary and development budget. GCMU is also proved to be a procurement and management entity with transparent interface between International Development Partners and the Ministry of Public Health Afghanistan in capturing and managing the public health funds, especially related to the country wide provision of the BPHS and EPHS, in coordination with other MoPH departments, and stakeholders. The main goal of GCMU is to contribute to the reduction of high levels of maternal and child mortality and morbidity by ensuring efficient and effective use of available resources to provide equitable and quality health services. The scope of work of the GCMU mainly involves service procurement, contract management, and coordination of the external and internal assistance provided by international donors such as ARTF, World Bank, EU, USAID, GAVI, Global Fund, other donors and the fund provided by the Ministry of Finance.
GCMU-Certified by NPA.pdf