The complexity, scale, timespan and risks in infrastructure projects call for specialised delivery and procurement strategies that enable decision makers to maximise the value generated for society throughout the assets’ life cycle. An important consideration is selecting contractors based on criteria that combine financial and qualitative elements (e.g. sustainability criteria such as environmental impact). To this end, when procuring new infrastructure, it is essential that governments have mechanisms in place to ensure the procurement process is open to as wide a range of bidders as possible, thereby ensuring competitive costs and high quality.
Among SEA countries, Indonesia, Singapore, and Thailand employ a combination of financial and qualitative criteria to select proposals (Table 4.4). They also assess proposals using a life cycle perspective. While the Philippines does not employ either of these approaches, it does have mechanisms to manage abnormally high and low tenders. The application of these procurement criteria is also common in OECD Member countries in the Asia-Pacific region. Across OECD countries as a whole, 30 countries (100%) use a mix of financial and qualitative criteria to select proposals, and 21 of these 30 countries have mechanisms in place to manage abnormally high and low tenders. However, only 13 of 30 countries assess from a life cycle perspective.
During procurement of infrastructure, open, neutral and transparent processes can increase inclusiveness and boost competitiveness. The four SEA countries for which data are available provide tools to support the design of tender documents and specifications (Table 4.5). This can help to avoid risks that tenders are restrictive or tailored. All four SEA countries also publish future procurement opportunities and allow firms from other countries or other regions within their own countries to participate. This can help to deter bid-rigging. Indonesia, the Philippines, and Thailand have e-procurement systems that span the entire procurement cycle. This increases transparency and competition by providing information about tender opportunities. However, the integrity of procurement officials could be further promoted. Due to the large sums involved, the multiple stakeholders, and the complexity of transactions, infrastructure procurement has a high risk of integrity failures. Except for Singapore, no SEA country provides adequate incentives for procurement officials to prevent and detect bid-rigging, such as explicitly including the prevention and detection of bid-rigging among their duties and training and rewarding the successful detection of anti-competitive practices in performance evaluations of procurement officials. Singapore provides detailed guidance, including a checklist, to assist procurement officials in better detection and prevention of bid-rigging. Similarly, only Singapore provides platforms for regular dialogues with suppliers and business associations on upcoming tender opportunities.
Mechanisms to enable smaller companies to participate in public contracts can help to improve value. All four SEA countries have one or more mechanisms to facilitate the participation of smaller firms in procurement (
Table 4.6). Indonesia, the Philippines, and Singapore have simplified administrative procedures to reduce the burdens of participating. Indonesia also favours subcontracting and joint bidding, and allows smaller firms to participate, even if they cannot bid for the entire contract. Singapore and Thailand have eased bond requirements to facilitate access to smaller companies that may face difficulties in obtaining financial guarantees. However, there is scope for most SEA countries and OECD countries to expand the range of mechanisms they use to facilitate the participation of smaller firms.