Attachment_2_-_TEAM_Background_Information.pdf

SOL-167-16-000021

Transparent, Effective and Accountable Municipalities (TEAM) activity in Kosovo

Attachment 2 – TEAM Background Information

I. BACKGROUND AND PROBLEM STATEMENT

The program aims to tackle corruption in Kosovo by increasing transparency in public procurement processes, including implementation of e-procurement at the local government level. In Kosovo, government procurement is often the main source of misdirected public funds used to reward political cronies and politically connected private businesses; misconduct of this sort occurs from the local level to the central. The Auditor General states that most “red flags” in municipal audits are related to procurement. According to the Anti-Corruption Agency’s report, procurement officers cancel about 35 percent of procurements for a variety of reasons.1 Some degree of transparency in government procurement exists, but it is not sufficient. A lack of enforcement allows many irregularities to go unchecked and for officials at various levels to operate without being held accountable. As a result, corruption reduces public resources and undermines public confidence in government.

TEAM will address the problem through the development of integrity plans for municipalities, strengthening capacities of procurement bodies at the local and central levels, and engaging civil society in monitoring and exposing corruption and its links to the public procurement process. The development hypothesis is that with higher levels of transparency introduced through e-procurement systems, the opportunity for rent-seeking behavior will decrease and competitiveness and efficiency will increase, leading to the improvement of local governance and service delivery and a corresponding increase in public trust.2 Currently corruption both at the municipal and national level threatens the trust of the public in government institutions and further perpetuates and sanctions lawless behavior. A November 2015 UNDP report, shows that 29 percent of the public believe that large-scale corruption is prevalent in municipal governments; 78 percent do not believe that their local government is working according to the priorities of its citizens.3 Although the reason for this perception is due to several factors, three main areas are notable: inadequate human capital, deficient systems and procedures, and a lack of enforcement.

Human Capital

Many issues diminishing the total transparency of procurement are linked to the lack of human capacity at the local level, which is created in part by both the pervasiveness of nepotism and dearth of skills building. According to a public poll4, 85 percent of Kosovo’s citizens believe that family connections, bribes, party alliances, and other non-merit based factors are most important in garnering employment in the public sector; only 15 percent consider that education, professional experience, and vocational training help in attaining a job in the public sector.5During key informant interviews in October 2015, one mayor stated that this situation is confusing for their youth, who do not know whether to interact with city officials as professional “Western European” civil servants, or in a more clientelistic fashion predicated on personal relationships.6 Frequently noted by internal audit units (IAUs) is the practice of placing unqualified staff that collude with or are otherwise under the influence of municipal executives.7 The

1 Anti-corruption Agency Annual Report, (2014).

2Neupane, A., Soar, J., Vaidya, K., & Yong, J. (2012). Role of public e-procurement technology to reduce corruption in government procurement. Proceedings of the 5th International Public Procurement Conference

(IPPC5), 304-334.

3 USAID/UNDP. (2015). Public Pulse Report, no. 10.

4 Ibid.

5Ibid.

6 Key informant interviews with municipal officials, USAID, October 2015.

7Ibid.

lack of merit-based hiring practices has contributed to a public workforce comprised of individuals without sufficient skills to manage public procurement effectively.

Specifically, bids for municipal tenders can be manipulated based on “technical” issues (e.g. not supplying a full tender dossier to meet minimum requirements) allowing contracts to be made to vendors that did not offer the best value. Procurement officials often lack information on what reasonable prices are for various goods and services. Municipal staff at times are unaware of the public procurement rules and do not have the capacity for adherence. They are also susceptible to enter into agreements that are not advantageous for municipalities, and may even be fraudulent. For example, municipal officials often lack the skills needed to inspect construction projects in order to determine if specifications are being met and if/when progress payments should be made. Sixteen years of international programs designed to enhance the skills of civil servants have been skewed by the inability and/or lack of desire of mayors to staff civil servant positions with qualified personnel.

Systems and Procedures

Compounding this issue of human capital deficits are weak local government structures and procurement procedures. Although the Ministry of Local Government Administration (MLGA) has made tremendous improvements to the legal framework for the conduct and composition of municipal assemblies to guarantee uniformity of laws across the country, municipal assemblies remain unable to organize themselves.8 As a result, they remain unable to counter balance sufficiently the executive office or oversee procurement properly. Some municipalities, particularly in the North, do not have procurement plans. Citizen participation in, and oversight of, municipal governance is insufficient. All 38 municipal assemblies are required to have audit committees, but the Auditor General found that only 21 do-with six of these non-operational. In some municipalities where the municipal assemblies are in opposition to the mayor, they actively block his/her initiatives. Perhaps as a result, citizens sparsely attend public municipal meetings and public sessions of municipal assemblies.

As a result of inefficacious institutions and insufficient systems, municipalities often sign contracts with vendors absent a procurement plan or without adhering to the proper procurement procedures. To avoid scrutiny, often larger public procurements are split into smaller ones to avoid reaching the 10,000 Euro threshold after which the Public Procurement Regulatory Commission reviews the process. Often payments are made for unexecuted works and there are unclear progress payments. Municipalities make grants without any follow-up on results or impact.

Lack of Enforcement

The lack of follow-through with investigation, prosecution and sanction of non-adherents compounds the challenges facing public procurement in Kosovo. Information gathered by the Auditor General and corruption cases served by the Anti-Corruption Agency to the prosecutor are not acted upon to punish poor performance or intentional bad behavior. The reasons for this unwillingness to take action appear to be twofold. First, prosecutors reportedly lack sufficient expertise in pursuing complex cases such as procurements gone awry. Second, corruption within the judiciary itself may explain why cases are not prosecuted more actively. Cases are reportedly left to languish until deadlines have expired and they have to be dismissed.9 The Auditor General (AG) produces what many consider a reputable annual report in

8European Commission. (2014). Kosovo Progress Report.

9The USG has several programs in place that focus on strengthening the rule of law in Kosovo, which are described below in the section of this document entitled “Links to Other USAID Programs.”

which findings are detailed for each municipality (as well as other parts of the GOK).10 Completion of parts of the AG’s report are contracted out to large, international auditing firms. However, AG staff stated that while they can often see that something did not go right with a procurement, they cannot always explain why.11 Creating this audit trail is key to ensuring full transparency in the procurement process.12

While there is already some degree of transparency in Kosovo regarding government integrity, more monitoring and oversight is needed. Several highly experienced Kosovar CSOs routinely investigate and report on corruption including the areas of procurement and the privatization of state-owned enterprises.

CSOs devise and monitor transparency scores and competiveness indices for municipalities. The media is also able to freely report on corruption without fear of retaliation by the GOK. The population is well aware of the problem, and even schoolchildren are taught about corruption. However, larger CSOs that can focus on the issue of corruption are based mainly in the capital and more remote areas do not enjoy the same civic oversight by interested organizations (i.e., in rural areas CSOs are centered more on service delivery than an advocacy/watchdog role to shore up needs in the safety net).

Government of Kosovo Efforts to Tackle Corruption

The Government of Kosovo (GOK) has pledged to reduce corruption at all levels of the government, as the subject has become a high priority issue with many international organizations. Unlike many other countries in which USAID operates, the GOK may have an additional incentive to address corruption, as anti-corruption measures are part of the wider reform effort that is a prerequisite for EU integration.

Ramping up the urgency to address the matter, the International Monetary Fund (IMF) has included conditionality in its Stand-by Agreement that is linked to the implementation of e-procurement.

The GOK is taking steps to ensure that more transparent systems are in place in order to mitigate fraud, waste and abuse. One example of this is the Resources Information Management System (RIMS), which was rolled out to the Ministry of Internal Affairs, which includes the Kosovo Academy for Public Safety, the Kosovo Agency for Forensics, Kosovo Police Inspectorate, the Emergency Management Agency, and the Civil Registration Agency. In 2009-2011, the GOK adopted legislation to fight corruption.13The GOK also adopted an Anti-Corruption Strategy (2013–2017)14 which requires all public institutions to develop and implement an Integrity Management System. Currently only two municipalities have such plans in place.15 In addition, the Public Procurement Law was amended in December 2015 and in February 2016 to comply with European Standards, and the Office of the Auditor General has significantly stepped up public audits of municipal budgets. However, implementation of these anti-corruption efforts is at a nascent phase and corruption remains a significant issue.

The GOK’s Declaration of Medium-Term Policy Priorities (2014-2016), approved in April 2013, and the GOK’s Anti-Corruption Strategy, approved by the Assembly in February 2013, set out the Good Governance priorities to include: 1) Public Administration;16 2) Local Administration; 3) Anti-corruption;

4) Human Rights; and 5) Management of Strategic and Public Financial Planning. Good governance is a

10http://www.oag-rks.org/repository/docs/RVA-Eng_319961.pdf 11Key informant interviews with municipal officials, USAID, October 2015.

12Gupta, S, Jha, B & Gupta, H (2009), 'E-Procurement: A Developing Country Perspective: A Study on New Trends Concerned with Developing Countries', AIUB Journal of Business and Economics, 122 (1): 161-75.

13 e.g. First Anti-Corruption Strategy; Law on Anti-Corruption Agency.

14 This Strategy follows-on to the 2009-2011 Anti-Corruption Strategy.

15United Nations Development Program helped Prishtinë/Priština and Gjakova/Dakovica municipalities to develop plans under the Support to Anti-corruption Efforts in Kosovo (SAEK) program.

16The European Commission has the lead in public administration reform in Kosovo. USAID is not working in this area.

http://www.oag-rks.org/repository/docs/RVA-Eng_319961.pdf key priority and will be addressed through various means, including improving public procurement, financial planning and management. A special emphasis is placed on the organization and functioning of municipal governments and direct participation of citizens in decision-making processes.

A few municipalities stand out as promoting more integrity, notably Prishtinë/Priština, Gjakova/Dakovica17 as well as some others, as they were the first municipalities to adopt comprehensive integrity plans. These municipalities have developed their own internal controls systems to make hiring more public and to track internal expenses better.18They are also further along in implementing integrity plans than other municipalities. These better performing municipalities may create pressure on other municipalities to improve their performance.

E-Procurement

Part of the GoK reform packages described above includes an e-procurement system. The use of e-procurement by municipalities could help to address some of the problems related to corruption described above.19 This new e-procurement system will be used by over 170 of the GOK’s budgetary units, including all 38 municipalities (the only GOK entities exempted are the ones using RIMS, described above). The World Bank is currently implementing the Public Sector Modernization Project, which centers on the e-procurement system. The e-procurement portion of the Public Sector Modernization Project provided a grant to the GOK for purchasing both hardware and software that has already been installed and is located at the Public Procurement Regulatory Commission (PPRC), the body that is responsible for overseeing implementation of e-procurement. E-procurement is a centralized system/platform and, except the need for the training of the procurement officers in usage of the system, there are no additional cost envisaged for the Kosovo budgetary units - including municipalities, to be able to start using the system.

The e-procurement system installed consists of 12 Modules as follows: General Registration of Economic Operators, Contracting Authorities, Central Procurement Agency (CPA), Procurement Review Body (PRB), PPRC; Electronic Tendering; Framework Agreements; Electronic Auctioning; Mutual Electronic Auctions; Contract Management; Function of the CPA; Complaints Handling Procedures of the PRB; e- PMIS; Billing; Payments; and Online Help. The recent amendment of the Law on Procurement (December 2015) provides the legal basis for the start of e-procurement use by all Kosovo budgetary units, from January 1, 2016. The GoK has decided to pilot e-Procurement in seven selected budgetary units: the Ministry of Finance; Ministry of Local Government Administration; Ministry of Infrastructure;

Ministry of Public Administration; Ministry of Trade and Industry; Ministry of Spatial Planning; and the Kosovo Electro Corporation (KEK). The piloting phase will last for the first six months of 2016, with the aim of identifying any issues or problems with e-Procurement hardware and software installed as well as testing the Kosovo market on how useful and applicable this platform (e-procurement) is. After piloting and testing the system and solving any issues/problems identified, the GoK is planning to expand usage of e-Procurement to all budgetary Units in Kosovo during the second half of the year.

The World Bank (WB) project ends in May 2016. By that time, the project will have prepared the Manuals/training material for use of the e-procurement system. In addition, the WB project has planned to

17 According to the FOL Movement Corruption Scan Survey, 2015, Gjakova/Dakovica is perceived as having the lowest levels of corruption. It is also the only municipality with a woman mayor.

18UNDP jointly with Kosovo Anti-Corruption Agency (KAA), developed Integrity Management Systems for Pristina, Gjakova, and (most recently) Gjilan.

19Lee, J, Oh, K-T, and Kwon, HY (2008). Striving for transparency and efficiency in e-government: procurement reform through e-procurement, ACM, Cairo, Egypt. And Joongi, K. (2006). National Integrity Systems:

Transparency International Country Study Report: Republic of Korea. Transparency International Secretariat.

train a number of trainers which is supposed to result in the training of at least one person from each of the GOK’s 171 budgetary units. How much training can be delivered before the project ends and training needs of municipal procurement officials at that point is not known, thus necessitating a training gap needs assessment.

The Bank welcomes additional support from USAID in training GOK officials on how to use the e-procurement system. The Bank acknowledges that the level of USAID support in this area should have better definition in the future, as the Bank itself cannot even anticipate how much it will be able to accomplish by the time its project ends. The Bank also does not know if their new five-year strategy, currently in draft, will contain any provisions for further support in the area of e-procurement. The GOK has also requested USAID assistance in providing training in e-procurement.

II. LINKS TO MISSION STRATEGY

USG foreign policy priorities include open governance and transparency. To meet this priority, the Bureau of European and Eurasian Affairs (EUR) recently unveiled an anti-corruption initiative aimed at stemming rent-seeking and systems of patronage that stymie responsive democratic governance and limit economic prosperity, while threatening political stability in Kosovo. This will be achieved by promoting the integrity and professionalism of selected government entities, reinforcing transparency of the work of local government and encouraging participation and the oversight by the citizenry. Similarly, the US Embassy in Kosovo developed an inter-agency Anti-Corruption Plan in 2014 (updated in 2015) that tasks USAID “to promote integrity and professionalism of local officials, reinforce transparency in their work, encourage civil society participation, and ensure accountability for anti-corruption measures at the local level”.

TEAM will contribute to these USG goals, along with those of other donors, Kosovo partners and stakeholders. TEAM will directly support the overarching goal of USAID/Kosovo’s Country Development Cooperation Strategy 2014-2018 (CDCS): Kosovo becomes an increasingly prosperous country, progressively integrating into the Euro-Atlantic community, with more effective and accountable governance.

Activities implemented through TEAM will contribute to realizing the CDCS’s Development Objective 1 (DO1): Improved Rule of Law and Governance that Meet Citizens’ Needs. TEAM will directly add to two Intermediate Results (IR) under this DO:

IR1.2: Strengthened Effectiveness and Accountability of Assemblies, Administrations, and Election Processes – TEAM will improve the accountability of municipal administrations and assemblies through creating greater transparency and accountability.

IR1.4: Civil Society Strengthened to Increasingly Engage Constructively with Government – TEAM will work with civil society in monitoring municipal procurement and prosecutorial actions and engage the public to ensure people are aware of municipal activities.

All of the IRs addressed under TEAM focus on making progress on Development Objective One and link logically to the overall Strategic Goal of prosperity that can only be achieved through the realization of transparency and accountability as well as principles of good governance. Activities will also directly support the Agency’s 2012 Strategy on Democracy, Human Rights, and Governance and the USG’s Integrated Country Strategy (ICS) for Kosovo20 and fit into the draft National Development Strategy of Republic of Kosovo (2016-2020).

20 In addition to the last ICS, the soon-to-be adopted ICS will also include links to the IRs.

Additionally, TEAM will indirectly contribute to DO 2, “Increased Investment and Private Sector Employment, IR 2.2: “Increased Competitiveness and Market Linkages in Targeted Private Sector Areas”. Competiveness should improve with the effective implementation of e-procurement and the training of procurement officials and Kosovar businesses, resulting in an increasing the number of businesses that can and will compete for municipal and other GOK procurements.

III. Possible Activities and Interventions

Component One - Develop, refine and roll out models for transparent and accountable municipalities

Possible Activities and Interventions in five focus municipalities:

• Increase capacity of the municipal Procurement Managers on the Procurement Cycle - Based on the Training Needs Gap Analysis, the Contractor will work with relevant GOK and other Kosovo partners in training municipal procurement managers on: project planning, project design and documentation, planning solicitations, tendering, evaluating bids, contract award, accounting and auditing, construction and contract management, and all other parts of the procurement cycle so that the anti-corruption safeguard mechanisms within the procurement processes are put in place. In addition to the this training, focus municipalities will receive more intensive training and “on-the-job” coaching. These will be delivered as the systems and processes that prevent corruption within procurement (including e-information, e-sourcing, and e-tendering) are being set up.

• Train municipal (and other Kosovo Budgetary Units if needed) officials on the use of E- Procurement - Based on the Gap Analysis for the focus municipalities, the Contractor may need to provide basic and/or refresher training so that more municipal officials have a greater understanding of e-procurement. If needed, training will be expanded to officials of other Kosovo Budgetary Units as well. The Contractor will use Training Manuals prepared by World Bank project for conducting the trainings and may replicate them and other primary or secondary training material for wide distribution if necessary to provide requisite training to meet the program objectives. In addition to the basic training subjects, the Contractor will provide in more depth and “on-the-job” training for the five focus municipalities. To the extent possible and in close coordination with the Public Procurement Regulatory Commission (agency responsible for implementation of e-procurement in Kosovo), the Contractor will institutionalize e-procurement training within the relevant parts of the GOK responsible for providing such training to other governmental actors (see section V.b. (2)).

• Increase the capacity of Municipal Internal Audit Units (IAUs) in the areas of fraud detection, investigative and forensic auditing - Train focus municipalities’ IAUs so they are better able to investigate cases of municipal procurement fraud and other malfeasance to a degree leading to sufficient evidence that can be referred to the prosecutor's office for further investigation. The Contractor will create a process that IAUs can use to refer cases to the prosecutor’s office if fraud is detected. The Contractor will also identify various mechanisms that will empower IAUs and protect them from the interference and influence of the Mayor (as their direct supervisor) in fulfilling their role and responsibilities. The Contractor will provide training and technical assistance to IAUs to better able to understand and act upon the findings of the Internal Audit Units and the Auditor General.

• Increase the transparency of municipal procurement - In the focus municipalities, the Contractor will help officials use government systems for making public all non-confidential details of procurements on websites and otherwise in formats that can be readily used by civil society, media and the public for analysis. If possible, this work will link with national-level systems, such as the e-procurement platform, to make such data available for all municipalities.

• Provide technical assistance to municipalities in preparing and/or implementing Integrity Plans - Per Kosovo’s Anti-Corruption Strategy, all municipalities must have Integrity Plans in place. TEAM will, as necessary, work with the focus municipalities so that they are in compliance with the Anti-Corruption Strategy as it pertains to Integrity Planning.

• Train Municipal Finance Departments –The Contractor will provide training to Municipal Finance Departments in the focus municipalities so that they are better able to prepare budgets in accordance with Kosovo law. This includes performance-based budgeting, so that budgets are based on the relationship between program funding and expected results.

• Transfer Municipal Best Practices – Municipal best practices, used in other countries in improving procurement processes, using e-procurement, and preventing corruption, should be made available to the municipalities. In addition, some Kosovo municipalities have themselves developed systems to improve the transparency of their procurement and human resource processes. The Contractor will create a platform with Association of Kosovo Municipalities (AKM) or directly from municipality-to-municipality, so that practices that increase transparency and reduce corruption can be replicated.

• Capacitate Municipal Assembly Audit Committees –Audit Committees must have the capacity to understand and act upon the findings of the Internal Audit Units and the Auditor General. This training will be provided in more depth in the focus municipalities.

• Train businesses on how to use e-procurement and business ethics - In order to increase competition for municipal procurements, the Contractor will train businesses that wish to respond to solicitations and require training on how to use e-procurement and business ethics. This training will be provided more intensively for businesses using e-procurement in the focus municipalities. It will also be provided to relevant Kosovar organizations such as the Chamber of Commerce and the Kosovo Center for Business Support. Cluster trainings will be provided in regional areas (e.g. the Contractor may want to divide the country into “regions” outside of targeted municipalities over the life of the program to work in so that business can come to these regional centers and receive information and training) for interested businesses, tailored for their size and business type. USAID/Kosovo is already implementing economic growth activities centered on diversifying the economy and increasing the private sector’s contributions to economic growth. TEAM will coordinate with the Mission’s economic growth activities in the delivery of more sustainable training on procurement and e-procurement.

• Increase the capacity of municipalities to counter corruption through enforcing ethics and eliminating conflicts of interest, that would introduce the concept of corruption and nepotism and how to reduce or eliminate it within the recruitment process through increased awareness of laws and guidelines as well as the costs of corruption.21The intervention will be informed by the baseline on training and implemented in only focus municipalities.

Possible Activities and Interventions in all municipalities:

• Increase capacity of the municipal Procurement Managers on the Procurement Cycle – The basic training subjects for municipal procurement managers on planning solicitations, to evaluating bids, to construction and contract management, and all other parts of the procurement cycle so that the anti-corruption safeguard mechanisms within the procurement processes are put in place, will made available to all requesting municipalities.

• Train municipal (and other Kosovo Budgetary Units if needed) officials on the use of E- Procurement - The implementer will provide basic and or supplemental/refresher training on

21The European Union is taking the leads on public administration reform efforts in Kosovo.

basic so that more municipal officials have a greater understanding of e-procurement (particularly on the World Bank system). This activity will be provided for all municipalities and other Kosovo budgetary units based on gap analysis and secondary data analysis.

• Increase the capacity of Municipal Internal Audit Units (IAUs) in the areas of fraud detection, investigative and forensic auditing – Provide basic training to all municipalities so that they are better able to investigate cases of municipal procurement fraud and other malfeasance to a level that it results in sufficient evidence that can be referred to the prosecutor's office for further investigation.

• Transfer Municipal Best Practices – Municipal best practices, used in other countries in improving procurement processes and preventing corruption, should be made available to all municipalities via the municipal platform.

• Capacitate Municipal Assembly Audit Committees – Audit Committees must have the capacity to understand and act upon the findings of the Internal Audit Units and the Auditor General. This training will be available to all municipalities.

• Train businesses on how to use e-procurement and business ethics - In order to increase competition for municipal procurements, train businesses that wish to respond to solicitations and require training on how to use e-procurement and business ethics. Training will be provided based on business size and type in focus municipalities so that they can easily access e-procurement system and training provided in regions—by one or more CSOs-- on a periodic basis to specific businesses based on size and type to improve access to e-procurement, e-informing, e-sourcing, and e-tendering.

Illustrative Results

• All municipal procurement officers from all 38 municipalities are trained in basic e-procurement subjects and ethics,

• All 38 municipal internal audit units receive training and are better able to detect procurement fraud and other malfeasance,

• Internal Audit Units in five focus municipalities are more independent and empowered to identify and report fraud.

• Municipal procurement in all 38 municipalities becomes more transparent22, and more information is made available in formats that are more conducive to analysis by CSOs and the public.

• The focus municipalities are implementing integrity plans that are in compliance with the GOK’s Anti-Corruption Strategy.

• Municipal finance departments in focus municipalities are better able to prepare performance-based budgets in accordance with Kosovar law.

• Municipalities are making more use of systems to improve transparency developed in other municipalities.

• At least the five first focus municipalities are addressing more findings of the Internal Audit Units and the Auditor General.

• Municipal assembly audit committees in at least the focus municipalities are better able to understand and act upon the findings of the Internal Audit Units and the Auditor General.

• An increasing number of businesses are able to use e-procurement and participate in municipal procurements.

• Kosovar organizations are closer to becoming sustainable in providing e-procurement training to businesses.

22Based on secondary data sources.

Component Two- Engage the Central Level in Addressing Municipal Corruption within the procurement process.

Possible Activities and Interventions:

• Increase the capacity of the Auditor General (AG) in the areas of fraud detection at the Local Government level - Increase the ability of the AG’s Regularity Audit of Local Government Division and the Department of Value for Money within the Performance Audit Division, to conduct municipal Value for Money audits and production of the comparative studies on the costs of the selected municipal procurements. This will enable AG to detect systemic weaknesses of the procurement process and increase ability to detect fraud to a level that it results in sufficient evidence that can be used in a court of law.

• Increase the ability of the Ministry of Finance's Central Harmonization Unit (CHU) to oversee and direct municipal Internal Audit Units (IAUs) - Increase the involvement of the CHU in coordinating with the IAUs in order to make them more objective and less likely to be influenced by municipal officials.

• Increase the capacity of the Public Procurement Regulatory Commission team to ensure proper operation of the E-Procurement System – Increase the capacities of the IT Team within the Public Procurement Regulatory Commission responsible for overseeing operation of the e-procurement system. The lack of capacity to oversee operation of the e-procurement system (hard and software installed) could jeopardize implementation of the e-procurement in all Kosovo Budgetary Units.

• Develop guidelines for training Prosecutors and Judges – Develop training guidelines to be used for training prosecutors and judges to understand procurement process in order to collect and better understand evidence presented to them for further prosecution and conviction of corrupt government officials. This activity component should be closely coordinated with the Office of Overseas Prosecutorial Development Assistance and Training (OPDAT), USAID Kosovo/Justice System Strengthening Program (USAID/JSSP) and the Bureau of International Narcotics and Law Enforcement (INL). It is expected that the USAID/JSSP and OPDAT will use the guidelines for bench book creation.

• Create a Contractor Past Performance Records - Similar to the USG’s “Past Performance Information Retrieval System” (PPIRS), a system is needed so that municipalities are able to determine how contractors performed in past procurements. Such a system would need to be housed with, for example, the PPRC and have information fed into it by municipalities. The contractor should first explore the possibility that this system is inserted/included into the existing e-procurement system (existing hardware funded by the World Bank and located at the PPRC).

Otherwise, the development of the standalone system/platform (within PPRC) should be considered, with the approximate cost of $350,000.

• The Auditor General is better able to detect systemic weaknesses in the municipal procurement system and detect fraud.

• The Ministry of Finance’s Central Harmonization Unit has increased ability to oversee and coordinate with municipal IAUs.

• Municipal Internal Audit Units are more independent and less likely to be pressured by municipal executives.

• The Public Procurement Regulatory Commission has technical capacities to be able to ensure proper operation of the e-procurement system.

• Prosecutors and judges are better able to understand the procurement process.

• A system is in place that will allow municipalities (and possibly other parts of the GOK) to determine contractor past performance.

Component Three - Enable Civil Society to Track and Expose Corruption

Possible Activities and Interventions:

• Enhance national-level CSOs ability to monitor municipal procurement – Support national-level think tanks and CSOs to analyze municipal procurements, as well as other spending and recruitment actions; support the development and use of tools and information bases, such as municipal scorecards, reports, databases, and other material, that would help these organizations to increase exposure of corrupt practices.

• Enhance national-level CSOs ability to monitor enforcement related to the litigation of corrupt municipal practices – For example, enable CSOs to track and widely publicize indictments, convictions and paroles of municipal officials and other persons and businesses linked to corrupt municipal practices. Where possible, this information should be included in national indices and publications on corruption.

• Enable national-level CSOs to train local-level CSOs in monitoring municipal procurements –For example, fund national-level CSOs to produce training material and train municipal-level CSOs on how to monitor and expose municipal-level malfeasance.

• Enable CSOs to use Media to expose corrupt municipal practices – For example, enable and fund CSOs and citizen groups to use media to allow Kosovans to create, share and exchange information, ideas, and photographs/videos in virtual communities and networks, as they pertain to corrupt municipal practices.

• National-level think tanks and/or NGOs are analyzing municipal procurements, other spending, and recruitment on a regular basis.

• Kosovan CSOs are increasingly capable of tracking and widely publicizing indictments, convictions and paroles of municipal officials and other persons and businesses linked to corrupt municipal practices.

• National-level CSOs have increased capacity to train municipal-level CSOs on how to monitor and expose municipal-level malfeasance.

• CSOs are better able to use social media and other communication vehicles to expose corrupt municipal practices.

IV. INDICATORS

A rigorous Activity Management Plan will be required to track the expected and actual implementation and results of the TEAM activity. The AMP is expected to be used as an effective information management tool that will provide the Contractor, USAID, and local stakeholders with rigorous and timely data that can be used to make informed decisions and report meaningful progress. In addition to custom indicators developed by TEAM, there are many sources of standard indicators that can be used in this performance management system.

(A) Standard F Indicators Below are standard indicators developed by the Office of U.S. Foreign Assistance Resources (F).

Complete information on F indicators can be found on the State Department website http://www.state.gov/f/indicators/index.htm. In addition to the F indicators, it is expected that the https://en.wikipedia.org/wiki/Virtual_community http://www.state.gov/f/indicators/index.htm program will include indicators that will measure the impact of the program as a whole as well as the effect of specific program activities for each component.

2.2 Good Governance

2.2-2 - Government Effectiveness Index Score

2.2.3 Local Government and Decentralization

2.2.3-5 - Number of sub-national entities receiving USG assistance that improve their performance

2.2.4 Anti-Corruption Reforms

2.2.4-2 - Number of government officials receiving USG-supported anti-corruption training 2.2.4-4 - Number of mechanisms for external oversight of public resource use supported by USG assistance 2.2.4-5 - Number of people affiliated with non-governmental organizations receiving USG supported anti-corruption training 2.2.4-7 - Number of USG-Supported Anti-Corruption Measures Implemented 2.2.4-8 - Corruption Perception Index Score

Cross-Cutting Indicators

CBLD-1 - Number of awards made directly to local organizations CBLD-5 - Local Organizational Capacity Assessment Score

(B) “Standard Governance Indicators from USAID’s “Handbook of Democracy and Governance Program Indicators”i

(C) Custom Project Indicators could include:

• The number of audit findings addressed by the partner municipalities, under supervision of the Internal Audit Units, as measured by the Auditor General

• The percentage of municipal procurements that are canceled decreases, as measured by the Auditor General, the Central Harmonization Unit and/or NGOs.

• The number of businesses that compete for municipal procurement increases, as measured by the Auditor General, the Central Harmonization Unit and/or NGOs.

• The number of cases of municipal corruption presented to the prosecutor increases, as measured by the Auditor General and/or NGOs

• The number of municipal officials trained in procurement and e-procurement increases;

• The number of cases of municipal malfeasance reported by Kosovo CSOs increased, as measured by the TEAM implementer.

• Percentage of funds invested by GOK into curriculum and staffing of KPA for procurement training.

• Number of municipalities “graduated” from TEAM program based on schedule of achievements.

• Increased capacity of municipal procurement officers to manage procurement cycle.

• Increased number of procurement officers able to implement procurement plans.

• Increased number of businesses using e-procurement system to obtain municipal contracts.

• The Kosovo Municipal Competitiveness Index

Other Possible Indicators

• The World Bank's Worldwide Governance Indicators23

• Bertelsmann Transformation Index (BTI)24

• Sustainable Governance Indicators (SGI)25

• Institutional Profiles Database (IPD) (expert assessments of civil service training, remuneration, capacity)26

• Global Integrity (financial disclosure, conflict of interest, human resources management for civil service)27

• Indicators of the Strength of Public Management Systems (ISPMS)28

• Opinion surveys governance, institutions, service delivery nationally/sub-national)29

V. LINKS TO OTHER ASSISTANCE PROGRAMS

USAID Programs

TEAM will build upon USAID’s past programming focused on improving municipal governance, such as the Local Government Initiative (LGI), the Effective Municipalities Initiative (EMI), and the Democratic Effective Municipalities Initiative (DEMI).

TEAM will also cooperate with and complement current programs, including:

• Advancing Kosovo Together (AKT), which seeks to improve the efficiency and capacity of targeted municipal administrations to respond to the needs of all their citizens and in improving economic opportunities;

• Partnership for Development (P4D), which provides assistance in enhancing public financial management and improving the transparency of public expenditure at the central and local levels.

Coordination is especially important in the areas of municipal public financial management and support to municipal internal audit units;

• Property Rights Program (PRP), especially as it relates to its objective to enable municipalities to make available and accessible information on land parcels, since the Municipal Cadastral Offices (MCOs) are perceived as being vulnerable to corruption;

• Justice System Strengthening Program (JSSP) especially in regards to training judges on the procurement process.

USG Rule of Law Programs

The TEAM implementer should be aware of the various programs that promote the rule of law that are implemented by other USG agencies. The U.S. Department of State’s Bureau for International Narcotics and Law Enforcement Affairs (INL) provides funding for several justice sector programs, with a focus on the criminal justice sector. INL partners with the U.S. Department of Justice (DOJ) to implement these programs. Specifically, INL provides funding to the DOJ’s Office of Overseas Prosecutorial Development

23http://info.worldbank.org/governance/wgi/index.aspx#home 24http://www.agidata.org/Site/SourceProfile.aspx?id=17 25http://www.agidata.org/Site/SourceProfile.aspx?id=21 26http://www.agidata.org/Site/SourceProfile.aspx?id=21 27http://www.agidata.org/Site/SourceProfile.aspx?id=3 28http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPUBLICSECTORANDGOVERNANCE/0,,conten tMDK:23304376~pagePK:148956~piPK:216618~theSitePK:286305,00.html 29http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPUBLICSECTORANDGOVERNANCE/0,,conten tMDK:23304376~pagePK:148956~piPK:216618~theSitePK:286305,00.html http://info.worldbank.org/governance/wgi/index.aspx#home http://www.agidata.org/Site/SourceProfile.aspx?id=17 http://www.agidata.org/Site/SourceProfile.aspx?id=21 http://www.agidata.org/Site/SourceProfile.aspx?id=21 http://www.agidata.org/Site/SourceProfile.aspx?id=3 http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPUBLICSECTORANDGOVERNANCE/0,,contentMDK:23304376%7EpagePK:148956%7EpiPK:216618%7EtheSitePK:286305,00.html http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPUBLICSECTORANDGOVERNANCE/0,,contentMDK:23304376%7EpagePK:148956%7EpiPK:216618%7EtheSitePK:286305,00.html http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPUBLICSECTORANDGOVERNANCE/0,,contentMDK:23304376%7EpagePK:148956%7EpiPK:216618%7EtheSitePK:286305,00.html http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPUBLICSECTORANDGOVERNANCE/0,,contentMDK:23304376%7EpagePK:148956%7EpiPK:216618%7EtheSitePK:286305,00.html

Assistance and Training (OPDAT) as well as the International Criminal Investigative Training Assistance Program (ICITAP). Through OPDAT, assistance is provided to prosecutors and victims’ advocates as well as to the newly created Forum for Women Judges and Prosecutors. The ICITAP program works with law enforcement entities and provides a range of training and advisory support to police officers. In addition to OPDAT and ICITAP, INL provides funding to the Public International Law & Policy Group (PILPG) to work with civil society organizations in Kosovo to increase access to, demand for, and respect for justice. Finally, INL supports American legal professionals who serve as judges, prosecutors and police officers for EULEX.

Other Relevant Donors, Programs and Local Actors

Association of Kosovo Municipalities (AKM) The AKM is the primary association that represents the interests of municipalities to the GOK. It has initiated changes in the legal framework and lobbies against legislation seen as unfavorable for municipalities. The AKM has been and continues to be the recipient of donor largess.

Auditor General (AG) The AG performs audits of all of Kosovo’s budgetary entities, including all 38 municipalities. The AG requested USAID to provide specialized training in the areas of forensic and investigative auditing.

Balkan Procurement Institute (BPI) The BPI was involved in the World Banks’s e-procurement project. The Institute may continue to be involved in e-procurement training or other procurement related training or technical assistance.

European Union’s Anti-Corruption Unit (EU ACU) The EU’s Anti-Corruption Unit will work with the GOK’s Anti-Corruption Agency, the Prosecutor’s Office, the judiciary and the Public Procurement Regulatory Commission (PPRC) in a three-year project.

Importantly, the EU does not believe that it is going to work with the Auditor General or the Central Harmonization Unit, the two bodies that we propose working with through TEAM. Nonetheless, the TEAM implementer will coordinate with the EU ACU as needed.

German Federal Ministry for Economic Cooperation and Development (GIZ) GIZ implements the “Modernization of Municipal Services” (MMS) project, which has an overall objective of addressing the legal framework so that it complies with EU standards. This activity also focuses on citizen engagement in municipal governance in Prishtinë/Priština, Pejë/Peć, Mitrovicë/a (south), Gjilan/Gnjilane and Gllogovc/Glogovac. This activity may be extended to the municipalities of:

Istog/Istok, Klinë/a, Skenderaj/Srbica, Vushtri/Vučitrn, Gračanica/Graçanicë, Fushë Kosovë/Kosovo Polje, Lipjan/Lipljane and Obiliq/Obilič. This activity is implemented through the Ministry of Local Government Administration. Given that MMS may overlap with some of the municipalities in which TEAM works, close coordination will be needed.

Kosovo Democratic Institute (KDI) KDI is a well-established NGO in Kosovo and is affiliated with Transparency International (TI). KDI is already monitoring government integrity and has in the past also monitored municipalities. KDI also uses a TI methodology for integrity planning, which the GOK’s Anti-Corruption Strategy requires all budgetary entities, including municipalities, to develop (although it does not have to be TI’s integrity planning methodology). KDI operates TI’s “Advocacy and Legal Advice Centers” which is mechanism that anybody can use to anonymously report corruption.

Kosovo Foundation for Open Society (KFOS)

KFOS is a Kosovar CSO that monitors and reports on government integrity, in particular in regards to the privatization of state-owned enterprises. It is affiliated with the Open Society Foundations.

Kosovo Institute for Public Administration (KIPA) KIPA is the only GOK-approved entity that may train and certify municipal procurement officers (as well as other GOK officials). All acknowledge that KIPA, even after over a decade of donor assistance, remains weak. At the same time, all also recognize that KIPA cannot be sidelined. TEAM will most likely have to work with KIPA to improve their ability to provide training on procurement and e-procurement to a greater or lesser extent depending on the outcome of the Training Needs Gap Assessment.

Ministry of Finance The Ministry of Finance has repeatedly asked for USAID assistance in providing training in e-procurement for all 171 GOK budgetary units (which includes the 38 municipalities). TEAM will likely engage with the Ministry regarding e-procurement training. The level of engagement will be determined to some extent by the outcome of the Training Needs Gap Analysis.

Central Harmonization Unit The CHU is part of the Ministry of Finance. The CHU is supposed to coordinate with municipal internal audit units, but reportedly, this coordination is not very strong. Increasing coordination of the CHU with municipal audit units could help to make the latter more independent of municipal executives.

Ministry of Local Government Administration (MLGA) The TEAM implementer will coordinate with the MLGA as needed as it pertains to the objectives of this activity.

Organization for Security and Cooperation in Europe (OSCE) The OSCE supports municipalities in Kosovo with activities to increase citizen participation in decision-making regarding local governance. Given that TEAM will also be working in some of the same municipalities as the OSCE, coordination will be required.

Public Procurement Regulatory Commission (PPRC) The PPRC is the body of the GOK tasked with creating training material and organizing e-procurement training. The PPRC also specifically requested USAID assistance in providing e-procurement training both at the central level and at the municipal level. The extent to which TEAM engages with the PPRC will depend in large part on the outcome of the Training Gap Needs Assessment.

Swiss Agency for Development and Cooperation (SDC) TEAM will necessarily need to cooperate with SDC.