INFORME DEL BANCO MUNDIAL

REGIÓN AMÉRICA LATINA Y EL CARIBE DEPARTAMENTO DEL CARIBE – LCC3C

REPÚBLICA DOMINICANA

INFORME DE EVALUACIÓN DEL SISTEMA DE ADQUISICIÓNES

June 30, 1999

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EQUIVALENCIAS MONETARIAS

Unidad Monetaria = Pesos Dominicanos 1US$ = 15.0 Dominican Pesos

ABREVIACIONES Y ACRÓNIMOS

ADIC Asociación Dominicana de Ingenieros y Contratistas CAS Papel Estratégico de Asistencia al País CDE Corporación Dominicana de Electricidad CTI Comisión Técnical Institucional CUTA Coordinador de la Unidad Técnica de Apoyo CGDR Contralor General de la República CDC Cámara de Cuentas CODIA Colegio de Ingenieros, Arquitectos y Agrimensores Dominicanos CORDE Corporación Dominicana de Empresas Estatales DDPC Departamento de Prevención de la Corrupción DGAG Dirección General de Abastecimientos del Gobierno DGDA Dirección General de Aduana EU Unión Europea GATT Acuerdo General de Tarifas y Comercio GDR Gobierno de la República Dominicana IADB Banco Interamericano de Desarrollo INAPA Instituto Nacional de Agua Potable y Alcantarillado INDRHI Instituto Nacional de Recursos Hidráulicos MCCA Mercado Común Centro Americano ONAP Oficina Nacional de Personal OCSRP Unidad Central de Adquisiciones del Banco SBD Documentos de Licitación Estándard SEE Secretaría de Estado Educación SEF Secretaría de Estado de Finanzas SEOPC Secretaría de Estado de Obras Públicas y Comunicaciones SESP Secretaría de Estado de Salud Pública STP Secretariado Técnico de la Presidencia UNCITRAL Comisión de Leyes Internacionales de Comercio de las Naciones

Unidas UNDP Programa de Desarrollo de las Naciones Unidas USAID Agencia para Desarrollo Internacional de Estados Unidos

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REPUBLICA DOMINICANA Informe de Evaluación de los Procedimientos de Adquisiciones

Volumen I – Conclusiones y Recomendaciones

Prefacio Fecha y bases para informe. Agradecimientos: Organizaciones gubernamentales participantes. Otros copatrocinadores/ colaboradores. Equipo del Banco Mundial. A – Resumen de las conclusiones: Ventajas e inconvenientes del actual sistema de

adquisiciones. Sector Público 1. Marco jurídico y normativo. 2. Procedimientos y prácticas. 3. Organización y Recursos. 4. Auditoría y medidas contra la corrupción. 5. Resultados de la gestión del sector público. 6. Resultados de Gestión en los proyectos financiados por el Banco. 7. Evaluación general del riesgo. Sector Privado 1. Reglamentos comerciales. 2. Prácticas comerciales.

B – Plan de acción recomendado

1. Enfoque estratégico. 2. Medidas que deberán ser adoptadas por el Gobierno/ sector privado. 3. Medidas que deberán ser adoptadas por el Banco. 4. Calendario 5. Asistencia técnica. 6. Método de supervisión recomendado para el Banco.

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REPÚBLICA DOMINICANA

INFORME DE EVALUACION DE LOS PROCEDIMIENTOS DE ADQUISICIONES

PREFACIO

1. El informó se concluyó el 30 de junio de 1999. Base para el Informe 2. En fecha 9 de noviembre de 1998, el Banco y Gobierno de la República Dominicana acordaron que, en consonancia con las iniciativas tomadas por el Gobierno para mejorar la capacidad general de gestión financiera del Estado, era necesario mejorar con urgencia el marco jurídico y normativo del sistema de adquisiciones y contrataciones por parte del sector público, la capacidad gubernamental en la adquisición y contratación de bienes, obras y servicios, y los mecanismos utilizados por el gobierno central y las instituciones públicas en el desempeño de esas funciones. Se acordó también que, con la finalidad de tomar pleno conocimiento de los problemas y restricciones que presentaba el sistema de adquisiciones y contrataciones en la República Dominicana, era necesario realizar una evaluación detallada de dicho sistema, evaluación que el Banco Mundial estaba dispuesto a realizar. El objetivo principal de una evaluación de este tipo sería la de promover un diálogo abierto y sincero con el Gobierno acerca de las reformas necesarias para establecer un sistema de contratación más eficiente y transparente y más en consonancia con las prácticas y normas internacionales. El gobierno concedió su autorización para realizar dicha evaluación, y nombró a la Secretaría de Estado de Finanzas como contraparte para la labor del Banco. Este informe puede considerarse como un esfuerzo conjunto del Gobierno y del Banco. 3. El informe se elaboró en base a las nuevas instrucciones y procedimientos emitidas el 1 de junio de 1999 por la Unidad Central de Adquisiciones del Banco (OCSPR). El Anexo 1 muestra una lista de los funcionarios públicos y de las personas con las que el Banco sostuvo conversaciones; y el Anexo 2 muestra la lista de documentos recopilados por el Banco y utilizados en la preparación del informe. 4. En fecha 20 de julio de 1999, el Ing. Juan Temístocles Montás, Secretario Técnico de la Presidencia de la República, sostuvo una reunión con el Sr. Armando Araujo, asesor del Banco en adquisiciones para América Latina y el Caribe, para discutir en forma preliminar un informe resumen de las conclusiones presentadas en el presente informe y muy particularmente para analizar la estrategia de implementación de las recomendaciones del Banco. El Ing. Montás expreso su preferencia para que en el corto plazo se propongan acciones, para fortalecer las disposiciones legales vigentes, que puedan formalizarse por la vía de Decretos Presidenciales en lugar de Leyes que requieren la aprobación del Congreso de la República. El Plan de Acción adjunto al presente informe se elaboro teniendo en cuenta esta recomendación.

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Agradecimientos 5. El presente informe ha sido preparado por el Ing. Vladimir T. Jadrijevic (jefe de proyecto) sobre la base de las conclusiones de una misión preliminar del Banco que tuvo lugar el 3 de febrero de 1999, y de otras dos misiones a la República Dominicana entre los días 12 y 23 de abril de 1999 y entre el 7 y el 11 de junio de 1999, y se completó bajo la dirección general Armando Araujo (asesor regional en adquisiciones para América Latina y el Caribe). Marisela Montoliu y Max Pulgar-Vidal tuvieron a su cargo la coordinación de las actividades con el Departamento de Operaciones del Caribe. La labor del Banco contó con el respaldo del Banco Interamericano de Desarrollo (BID), que facilitó un ejemplar del informe preparado por sus consultores sobre la evaluación de la capacidad de gestión de las contrataciones en el sector público, y del Dr. Angel Ramos Brusiloff, consultor contratado por el Banco para preparar la información relacionada con los aspectos jurídicos, comerciales, financieros y adquisiciones del sector privado. El Banco contó con la valiosa ayuda e información proporcionada por varias secretarías de Estado, organismos autónomos, compañías privadas y asociaciones profesionales. 6. El Banco desea agradecer por la cooperación recibida de los funcionarios y personal de varias instituciones gubernamentales y no gubernamentales así como del sector privado. Merecen especial agradecimiento la Secretaría de Estado de Finanzas, a través de la Oficina de Coordinación del Programa de Reforma y Modernización de la Administración Financiera del Estado; la Cámara de Cuentas, a través de su Presidente; la Secretaría de Estado de Obras Publicas y Comunicaciones, a través de la unidad ejecutora del proyecto nacional de carreteras; la Secretaría de Estado de Educación, a través del departamento de adquisición de bienes; la Contraloría General de la República, a través su contralor general; la Dirección General de Aprovisionamiento (DGA) del Gobierno, mediante su Director General; el Instituto Nacional de Recursos Hidráulicos (INDRHI), mediante su Director Ejecutivo; la Corporación Dominicana de Electricidad, mediante su Administrador General; la Secretaria de Estado de Salud Publica y Asistencia Social, mediante su director financiero y administrativo; el Instituto Nacional de Aguas Potables y Alcantarillado (INAPA); la Dirección General de Aduanas; la Asociación Dominicana de Ingenieros y el Colegio Dominicano de Ingenieros, Arquitectos y Agrimensores. 7. El Banco desea agradecer muy particularmente por la ayuda y colaboración recibida del Lic. Damián Santos, Coordinador nacional del Programa de Reforma y Modernización de la Administración Financiera del Estado; el Dr. Hugo Arias Fabián, Presidente de la Cámara de Cuentas; el Dr. Pedro Justo Castellanos, Jefe del Departamento de Prevención de la Corrupción; el Ing. Pablo Cabrera Acosta, Jefe del Departamento de Licitaciónes del INDRHI; el Lic. Héctor Winter, Jefe de la Unidad de Adquisiciones de la CDE; el Ing. Daniel Gómez, Asesor del Secretario de Estado de Obras Públicas; la Lic. Dania Marcano, Jefe del Departamento de Adquisición de bienes de la Secretaría de Estado de Educación y Cultura; la Lic. Soraya Suárez, Directora Adjunta, Departamento de Auditoría Interna de la Secretaría de Estado de Salud Pública; el Ing. Marcos Rodríguez y Lic. Luis José Placeres, Director Ejecutivo Adjunto de Planificación y Director Administrativo Adjunto de INAPA respectivamente; el Ing. Gregorio Lora Arias, Director Adjunto de Operaciones de Aduanas; los Ings. Juan Espaillat e Hilario Peña, Presidente y miembro de la Asociación Dominicana de Ingenieros y Contratistas; y el Arq. Alejandro Montás e Ing. Héctor Navarro, Presidente y

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Secretario General respectivamente del Colegio Dominicano de Ingenieros, Arquitectos y Agrimensores. 8. El informe incluye los comentarios y sugerencias de los siguientes funcionarios del Banco: Orsalia Kalantzopoulos, Maria Donoso Clarke, Marisela Montoliu, José María Alonso Biarge, Max Pulgar-Vidal, John Panzer, Jamil Salmi, Eugene MacCarthy, Philippe Durand, Marcos Scuriatti, Alfonso Sanchez, Pamela Bigart, Robert Hunja, Armando Araujo, Efraim Jimenez y Jaime Roman.

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Anexo 1

República Dominicana List de las Autoridades de Gobierno y Personas Entrevistadas por la Misión

Secretariado Técnico de la Presidencia de la República Lic. Cesar Diaz, Jefe de Departamento de Proyectos. Tel. 221-5140, X-338

Lic. Rolando Guzmán, Economista Principal. Tel. 221-5140, X-384

Secretaría de Estado de Finanzas Lic. Daniel Toribio, Secretario de Finanzas. Tel. 689-2480

Lic. Juan Rivera, Sub-Secretario de Finanzas. Tels. 689-2480, 687-5131 X-226-228

Lic. Damián Santos, Coordinador – Programa de Reforma Y Modernización de la Administración Financiera del Esatdo (PRMAFE) – Tel. 687-5131 X-328

Dra. Mary Swett, Asesor Legal – PRMAFE – Tel. 687-5131 X-328

Contraloría General de la República Lic. Caridad de los Santos D., Sub-Contralor General. Tels.:682-2585/7386

Lic. Ingrid Soñé Alfonseca, Directora Administrativa. Tels. 682-1677, X-247-279

Lic. Cynthia V. Camejo V., Asesor Legal. Tel. 682-1677, X-232/233 Lic. Dilcia Ortega Cárdenas, Jefe – Oficina de Reclamos de Corrupción. Tel. 682-1677

Lic. Placido Mercedes, Gerente de Operaciones. Tel. 682-1677, X-260-273

Cámara de Cuentas Dr. Hugo F. Arias Fabián, Presidente. Tel. 682-3290, 682-9942

Dr. Alcides Benjamin Decena Lugo, Vice-Presidente. Tel. 682-9942, 685-7496

Dr. Juán Tolentino, Asistente del Presidente. Tel. 682-9942 Dirección General de Aprovisionamiento del Estado Lic. Jacinta Dominguez, Directora General. Tel. 221-5588, 682-7407

Procuraduría General de la República Lic. Justo Pedro Castellanos, Director - Departmento de Prevención de la Corruption.

Tels. 534-6709 Lic. Ana Rojas, Asistente del Director Administrativo. 221-8476/8016

Institute Nacional de Recursos Hidráulicos (INDRHI) Ing. Francisco J. Rodriguez, Director Ejecutivo. Tels. 533-0455, 508-2741

Ing. Pablo Cabrera Acosta, Jefe – Departmento de Licitaciones. Tel. 532-3271 X-3364

Ing. Valentín Cordero L., Coordinador Nacional Proyecto PROMATREC . Tel. 532-3271 X-3364

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Ing. Rafael R. Ruiz, Asistente del Jefe del Departamento de Licitaciones. Tel. 532-3271 X-3236, 3237

Sra. Delta Soza, Jefe de la División de Compras. Tel. 532-3271 X-3498

Corporación Dominicana de Electricidad (CDE) Ing. Radamés Segura, Administrador General. Tel. 533-3807

Ing. Carmen Chalas de Camaño, Directora de Ingeniería. Tel. 532-3516

Lic. Roxana Montilla, Gerente Financiero. Tel. 533-3707

Lic. José Antonio Rodriguez, Gerente Administrativo – Unidad Corporativa. Tel. 537-8643

Ing. Román Rodriguez, Gerente de Adquisiciones – Unidad Transmisión. Tel. 543-2232

Lic. Hector Winter, Jefe de Adquisiciones – Unidad Corporativa. Tel. 537-1255

Secretaría de Obras Públicas y Comunicaciones Ing. Daniel Gomez Martinez, Asesor del Secretario – Tel. 547-1580, 567-5470

Lic. Kennia Mendoza de Hernandez, Jefe de la Unidad de Adquisiciones – Tel. 565-2811, X-5068/5069

Secretaría de Educación Lic. Dania Marcano, Jefe del Departamento de Adquisición de Bienes. Tel. 688-9700 X-401

Arq. Julio Peña, Director General – Construcción de Obras. Tel. 688-9700 X-384/373

Secretaría de Obras Públicas Dr. Luis Tomás Oviedo, Director Administrativo. 541-3121 X-538, 539, 540

Lic. Soraya Suarez, Sub-Director – Departamento de Auditoría Interna. Tel. 541-3821

Lic. Bolivar Fabián, Director General – Cómputos. Tel. 541-3121 X-346

Mr. Juan Vargas, Jefe Unidad de Adquisiciones y Suministros. Tel. 683-0314

Instituto Nacional de Aguas Potables y Alcantarillado (INAPA) Lic. Luis Jose Placeres, Sub-Director Administrativo. Tel. 567-1241/49 X-205, 271

Mr. Marcos Rodriguez, Sub-Director Ejecutivo de Planificació. Tel. 566-0939 X-208

Gobierno Municipal del Distrito Nacional (Sto. Domingo) Mr. Frank Guerrero, Director del Programa de Reforma Municipal. Tel. 412-0538

Mr. Ivan Rodriguez, Sub-Director del Programa de Reforma Municipal. Tel. 412-0538 Customs General Directorate Ing. Gregorio Lora Arias, Sub-Director de Operaciones. Tel. 685-4015, 688-1961 Mr. Juan Carlos Garcia, Jefe de Adquisiciones. Tel. 688-6070 X-295 Asociación Dominicana de Ingenieros y Contratistas Ing Juan Espaillat – Presidente – Tels. 596-1266, 414-4757, (cel.) 1-301-9867

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Ing. Hilario Peña – Miembro de la Asociación – Tels. 569-5949, 567-0358

Colegio Dominicano de Ingenieros, Arquitectos y Agrimensores (CODIA) Arq. Alejandro Montás, Presidente. Tels. 687-8198, Cel 1-383-2238

Ing. Hector A. Navarro – Secretario General – Tels. 667-8275/8168/8198

Banco Inter-Americano de Desarrollo (BID) Sr. Jorge .Claro de la Maza, Jefe del Departamento de Adquisiciones, Tel. 623-2612

Ing. Augusto Ruiz-Eldredge, Especialista en Operaciones Sr. Misión Residente. Tel. 562-6400

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VOLUMEN I – CONCLUSIONES Y RECOMENDACIONES

A – RESUMEN DE LAS CONCLUSIONES VENTAJAS E INCONVENIENTES DEL ACTUAL SISTEMA DE ADQUISICIÓN

SECTOR PÚBLICO

MARCO JURÍDICO Y NORMATIVO

Tema No. 1 – Política de adquisiciones: Durante muchos años la adquisición y contratación de bienes, obras y servicios en la República Dominicana ha estado reglamentada y regulada por un conjunto de normas antiguo y obsoleto (véase el tema No. 2, más abajo). En el marco de la Reforma de la Gestión Financiera, el Presidente Fernández se ha comprometido a mejorar la eficiencia con la que se gastan los recursos públicos y a mejorar la transparencia y eficiencia del sistema de adquisiciones. Un ejemplo de ese compromiso ha sido i) el nombramiento, en marzo de 1998, de un Comité Presidencial encargado de preparar un nuevo proyecto de ley para la contratación de obras y servicios; y ii) la aprobación de un Decreto Presidencial (No. 262-98 de 10 de julio de 1998) para regular la adquisición de bienes por parte de los organismos públicos. Debido a discrepancia de opiniones entre los partidos políticos por una parte y la falta de adopción de las medidas necesarias por otra parte, el proyecto de ley preparado por dicho Comité no ha sido examinado aún por el Parlamento, y el Decreto Presidencial no se ha puesto en práctica debido a los retrasos en la adopción de medidas administrativas para reestructurar la Dirección General de Aprovisionamiento y, sobre todo, por la falta de recursos para llevar a la práctica las medidas especificadas en el decreto. En la práctica, no hay correspondencia entre los planes y objetivos gubernamentales y los resultados obtenidos a la fecha. Este hecho no solamente posterga las esperanzas de mejora en la eficiencia del manejo de los recursos del estado y por tanto de los ahorros que ello implicaría, sino también que crea un ambiente de incredulidad entre la población civil sobre la capacidad de dialogo entre las autoridades de Gobierno y otras esferas políticas. Por tanto, es necesario que exista un acuerdo entre los partidos políticos, sobre las acciones de corto y mediano plazo necesarias para mejorar el sistema legal y regulatorio de adquisiciones, así como también una estrategia y un plan de como llevar a cabo dichas acciones. Recomendación: Se recomienda, por una parte, que el Gobierno negocie con los principales partidos políticos en el Parlamento, una política de adquisiciones y prepare una estrategia para ejecutar las medidas necesarias para alcanzar los objetivos de dicha política. Por otra parte, se recomienda que el Gobierno tome medidas inmediatas para la implementación del Decreto 262-98 (ver tema 4 abajo). Debido a que por mucho tiempo se han realizado contratación de bienes y servicios utilizando normas obsoletas y prácticas ineficientes, la transición hacia un nuevo marco jurídico y normativo de las adquisición en la República Dominicana será una tarea muy difícil. La estrategia de aplicación deberá ser realista y tener en cuenta la realidad política y social dominicana y contener medidas que puedan aplicarse a corto plazo, en algunos casos, y a mediano plazo en otros. Dichas medidas son las recomendaciones que se proponen para abordar

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cada uno de los grandes problemas de contratación identificados en el informe y que se enumeran a continuación (ver párrafo 35 – Plan de Acción Recomendado). Tema No. 2 Ley y reglamentos de contratación: La contratación de obras y servicios conexos por parte del sector público en la República Dominicana está regulada por un conjunto de normas y reglamentos antiguos (1965) y obsoletos. El marco jurídico de las actividades de contratación es deficiente y anticuado, y los reglamentos no contienen los componentes esenciales de un sistema transparente y eficiente de contratación. Además, hay demasiados reglamentos y leyes inconexos, que en algunos casos presentan incoherencias y contradicciones. En resumen, los reglamentos y procedimientos de adquisiciones no ayudan a promover economía y eficiencia, no obliga a que los funcionarios públicos asuman plena responsabilidad por las decisiones tomadas, y no promueve la creación de un entorno equitativo para todas las partes involucradas en el proceso. Por otra parte, la legislación ofrece al poder ejecutivo una enorme discrecionalidad para la adquisición de bienes y servicios por la vía de la contratación directa. En la práctica, durante los últimos años el Gobierno de la República Dominicana ha adjudicado la mayor parte de los contratos de construcción de obras públicas mediante contratación directa. El Comité nombrado por el Gobierno (véase el tema No. 1, más arriba) ha elaborado un proyecto de legislación para la adquisición de obras y servicios, sobre cuya base el Presidente de la República sometió en julio de 1998 para la consideración del Parlamento una propuesta de ley. Debido los desacuerdos con el partido de la oposición, sobre todo en relación con el porcentaje que deberá reservarse para la contratación directa (en la propuesta del Presidente se recomienda el 30%, mientras que la oposición recomienda que el 100% se adjudique mediante licitación pública), no se ha tomado aún ninguna decisión. Dada que la relación existente entre el gobierno y el partido de la oposición es poco fluida, la mayor parte de las personas entrevistadas por el Banco consideran que la propuesta del Presidente Fernández no será aprobada por el Parlamento. El Banco ha examinado el proyecto de legislación propuesto y considera que se trata de un documento bastante completo, que podría mejorar substancialmente la legislación existente. Recomendación: Tomando en cuenta el entorno político en que vive el Pais y el hecho de que por mucho tiempo el sector público ha estado contratando el suministro de bienes y servicios sobre la base de leyes y reglamentos antiguos y obsoletos, la transición a un nuevo sistema será difícil. Por ello, se recomienda un planteamiento gradual y la adopción de las siguientes medidas: a) En el corto plazo, llevar a cabo llevar las siguientes recomendaciones:

i) Ejecutar la recomendación del Tema No.3 indicado mas abajo, la cuál se puede formalizar por la vía de un Decreto Presidencial. ii) El Gobierno debería establecer una Comisión de alto nivel encargada de

examinar a fondo todo el conjunto del entorno jurídico y normativo de las adquisiciones, con el fin de unificar y concentrar en un número muy reducido de instrumentos jurídicos la contratación de bienes, obras y servicios. Esa Comisión debería contar con ayuda de un

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grupo de consultores locales e internacionales experimentados en las actividades de adquisición y en los aspectos jurídicos. b) En el mediano plazo, llevar a cabo las siguientes recomendaciones:

i) El Gobierno someterá a la aprobación del Parlamento el proyecto de ley preparado por el Comité nombrado por el Presidente Fernández. Aunque esta opción no es la mejor solución posible (ya que mantendría un 30% de contratación directa), mejoraría sin duda la legislación actual, y debería considerarse como una medida transitoria.

ii) La Comisión debería completar su trabajo y presentar recomendaciones al Presidente de la República. Tomando en cuenta éstas recomendaciones, así como también el modelo UNCITRAL de Naciones Unidas para la preparación de leyes de adquisiciones, la ley mencionada en el párrafo i) arriba sería revisada, reduciendo más el porcentaje de adjudicación por la vía del grado a grado. Tema No. 3 - Vacío jurídico en la contratación de obras: El 23 de junio de 1981 se promulgó la ley 5557, en la que es establecen las normas y reglamentos básicos para la adquisición y la adjudicación de contratos para la construcción de obras públicas. La reglamentación detallada para la aplicación de dicha ley se aprobó por la vía del Reglamento No. 395 del 26 de septiembre de 1986. Dicha ley y sus reglamentos contenían normas de adquisición razonables y, en particular, establecían la llamada "Comisión de licitación" como organismo normativo responsable por velar el cumplimiento de la ley y sus reglamentos, así como de asegurar el cumplimiento de los procesos de adquisiciones establecidos en los reglamentos de la ley. Dicha Comisión de Licitaciones nunca llegó a iniciar sus actividades, ya que el 16 de marzo de 1997 se promulgó una nueva ley (ley 105) para la contratación de obras públicas, derogando la ley 5507 y su reglamento correspondiente (el 395). Desde entonces no se ha aprobado ningún nuevo reglamento para la ley 105 y la Comisión de licitación, en la práctica, dejó de existir, y la contratación de obras se ha venido regulando por la ley 105 sin ningún reglamento. Debido a éste vacío normativo, todas las entidades públicas han establecido sus propios reglamentos internos de adquisiciones sin la supervisión de organismo regulatorio independiente alguno. Recomendación: Se recomienda que, al menos con carácter transitorio y mientras no se promulgue una nueva ley sobre la contratación de obras, se restablezca formalmente el reglamento 395, en el que se incluya la Comisión de Licitación, o que se apruebe un nuevo reglamento para la aplicación de la ley 105. En cualquier caso, es absolutamente imprescindible establecer una Comisión de Licitación, la cuál podría ser semejante a aquella descrita en el proyecto de ley propuesto por el poder ejecutivo al Congreso - la Comisión Nacional de Licitaciones y Sorteos. Las actividades diarias de la Comisión estarían a cargo de un brazo operativo de la misma que podría llamarse la Secretaría de la Comisión, la cuál deberá contar con personal experimentado contratado a tiempo completo. Dicha Comisión tendría como responsabilidades, entre otras, las siguientes: (i) difundir el contenido de la nueva ley y sus reglamentos; ii) velar por el cumplimiento de la ley y sus reglamentos por parte de todos los organismos públicos; iii) preparar los documentos estándar de licitación y demás documentación relacionada; iv) preparar

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programas de capacitación de acuerdo con las necesidades de los organismos públicos; v) establecer y mantener un registro actualizado de proveedores y contratistas, y vi) ofrecer a las instituciones públicas asistencia técnica en todo lo relacionado a cuestiones de adquisiciones de bienes, obras y servicios de consultoría. Tema No. 4 - Retrasos en la aplicación de la nueva reglamentación: El Reglamento 262-98 (aprobado en julio de 1998) es el reglamento para la adquisición de bienes más reciente aprobado desde 1983 ?? o 1966 . Si llegara a aplicarse, podría mejorar en forma substancial la reglamentación actual. Los principios básicos de este decreto presidencial son la descentralización de las funciones operacionales de la adquisiciones a las entidades públicas encargadas de la ejecución de proyectos y la centralización de las funciones normativas de la adquisiciones (ver Anexo A – Preguntas 8 y 11). Para que este instrumento normativo pueda aplicarse se requiere de una nueva estructura para la Dirección General de Aprovisionamiento, así como del personal, presupuesto y servicios necesarios para que dicha Dirección pueda desempeñar las funciones especificadas en el nuevo reglamento. Para que la DGA pueda desempeñar sus nuevas funciones, es necesario que el Secretario de Estado de Finanzas, que es el Presidente de la Comisión, apruebe la nueva reglamentación orgánica y funcional, y se proceda con el nombramiento del personal necesario para su funcionamiento. La misión desconoce las razones por las cuales dicha aprobación sigue pendiente desde noviembre del año pasado. La falta de esta reglamentación orgánica y funcional ha imposibilitado a la DGA cumplir con sus funciones y particularmente con el mandato del Reglamento 262-98. Hasta el momento, no se ha llevado a cabo ninguna de las acciones exigidas por este reglamento, debido a la falta de estructura, personal y presupuesto. Un préstamo del BID, cuya aprobación está pendiente de ratificación desde el año pasado en el Congreso Nacional, ayudaría en parte a financiar la asistencia técnica así como los equipos y materiales para ayudar a la DGA en la aplicación de citado Reglamento. Recomendación: Se recomienda que el Poder Ejecutivo apruebe lo antes posible el nuevo reglamento orgánico y funcional necesario para que la Dirección General de Aprovisionamiento pueda funcionar según lo dispuesto en el nuevo Reglamento de adquisiciones. Simultáneamente, la Dirección debería preparar un plan de acción detallado, en el que se especifiquen, entre otras cosas, los recursos humanos, físicos y financieros necesarios para la ejecución de las medidas previstas en el artículo 9 del Reglamento. Si el Parlamento continúa retrasando la ratificación del préstamo del BID, se recomienda que el Ejecutivo apruebe el presupuesto necesario para comenzar a la brevedad posible con la ejecución de dicho plan. Tema No. 5 - Ejecución de obras públicas: Como se ha indicado anteriormente , la Ley 105 es la única ley, sin reglamentos, actualmente vigente en la que se exige que todas las obras públicas por un valor superior a 10.000 pesos dominicanos (unos US$670) se adjudiquen mediante un proceso de licitación pública. El artículo 2 de la Ley 105 autoriza al Presidente de la República, en circunstancias excepcionales, a adjudicar contratos para la construcción de obras de interés público en forma directa, y la Ley no establece limite de montos para dichos contratos. Al amparo de esta disposición excepcional de la Ley y la disponibilidad de fondos discrecionales (mediante el fondo 14.01) para la Oficina del

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Presidente de la República, los organismos ejecutivos del gobierno (la oficina de coordinación y la de supervisión) han ejecutado un gran número de contratos, los cuales han sido adjudicados en forma directa sin ningún tipo de competencia. Esta práctica ha favorecido la ineficiencia y la falta de transparencia en la administración de los recursos del estado. Las oficinas de coordinación y supervisión fueron creadas por Decreto Presidencial el 15 de junio de 1986, para la ejecución de obras autorizadas por el Ejecutivo, a quién estas oficinas reportan directamente. De conformidad con disposiciones y mecanismos jurídicos, durante los últimos veinte años la mayoría de los contratos de obras públicas financiados con fondos locales han sido ejecutados por contratistas seleccionados mediante contratación directa. Algunos funcionarios públicos mantienen que estas obras son únicamente las que no están incluidas en el presupuesto nacional y que aquellas incluidas en él son ejecutadas por la Secretaría de Estado de Obras Públicas y Comunicaciones (el Banco fue informado que en algunos casos también mediante contratación directa). El Banco no dispone de información sobre cuál es la proporción de las obras ejecutadas por el Ministerio de Obras Públicas y Comunicaciones que se hayan contratado en forma directa. El sector de la construcción, en particular, y la sociedad civil, en general, reclaman la falta de competencia y transparencia en la adjudicación de dichos contratos y consideran que los mismos se están ejecutando a un costo muy alto para el país. Muchos profesionales del sector sostienen que en la adjudicación sólo se tiene en cuenta a un reducido grupo de contratistas privilegiados, y que un gran porcentaje de las empresas de construcción están despidiendo personal por falta de trabajo. Es importante señalar que en los presupuestos nacionales correspondientes a los años 1996, 1997 y 1998, la cuenta de la Presidencia correspondiente a obras públicas mostraba cifras muy reducidas. En la práctica, los informes anuales de auditoria revelan que el Ejecutivo ha desembolsado grandes sumas por concepto de obras públicas no consideradas en el presupuesto del Ejecutivo. Recomendación: Se recomienda que el Gobierno (Poder Ejecutivo y Secretaría de Estado de Obras Públicas) demuestre con hechos concretos su voluntad de aumentar la transparencia en los procesos de adjudicación de obras públicas, reduciendo más aún el porcentaje de adjudicación de contratos por la vía del grado a grado, independientemente de la aprobación de la Ley indicada en la recomendación del Tema 2. PROCEDIMIENTOS Y PRÁCTICAS

Tema No. 6 - Control del presupuesto y disponibilidad de fondos: Varios funcionarios públicos entrevistados por el Banco señalaron que la disponibilidad de fondos para la ejecución de proyectos ha sido y continúa siendo un problema. Incluso en los casos en que el proyecto ha sido aprobado por el gobierno central y el costo del proyecto se ha incluido en el presupuesto general de la nación, en el momento en que un organismo solicita la liberación de fondos, muchas veces el Gobierno comunica al organismo de ejecución que no hay fondos o que el presupuesto es insuficiente para cubrir el costo total. Dichos funcionarios indicaron que, debido a ello, en muchas circunstancias los

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organismos públicos solo recurren a los proveedores que tienen la capacidad económica de aceptar retrasos en los pagos de hasta 1 año, lo que aumenta el costo de los bienes y servicios de manera significativa. Recomendación: Se recomienda que el Gobierno preste especial atención a este tema en el contexto de la reforma de la gestión financiera del sector público, y aplique la legislación vigente en materia de presupuesto. Los objetivos de esta reforma son, entre otros, el desarrollo de las capacidades de los organismos públicos para adquirir, administrar y asignar fondos públicos. Este tema será tratado en detalle en el informe de análisis de gerencia financiera que esta elaborando el Banco Mundial, informe que estará disponible al Gobierno en Septiembre de este año. Tema No. 7 - Documentos estándar de licitación: En el país existe un gran número de unidades ejecutoras de proyectos a nivel central y regional, incluyendo las corporaciones, los organismos autónomos y los municipios. Cada una de esas unidades utiliza documentos de licitación diferentes. En los proyectos financiados por organizaciones internacionales dichas unidades normalmente utilizan los documentos standard de dichas organizaciones. En los proyectos financiados con fondos locales y ejecutados por organismos ministeriales y otros organismos públicos, las unidades ejecutoras utilizan documentos de licitación preparados internamente (en algunos casos basados en documentos estándar de organizaciones internacionales, como el BID, el Banco Mundial y la FIDIC), los cuales difieren de un organismo a otro. En algunos casos (INAPA, INDRHI, CDE), estos documentos son de calidad aceptable. En muchos otros los mismos no cumplen con los requerimientos de normas internacionales, no ofrecen una visión equilibrada de los derechos y obligaciones de las partes involucradas, y en general no describen adecuadamente los criterios y la metodología a utilizarse en la evaluación de las ofertas. Esta amplia gama de documentos de licitación dificulta la labor del personal involucrado en los procesos de licitaciones y representa una gran pérdida de tiempo, además de crear un ambiente confuso entre los contratistas y proveedores locales e internacionales. Recomendación: Se recomienda la utilización de documentos estándar de licitación (disposición que podría respaldarse por Decreto Presidencial) para todas las licitaciones de bienes, obras y servicios de consultoría por parte del sector público, independientemente de la fuente de financiamiento. Dichos documentos se podrían preparar sobre la base de los documentos standard del Banco Mundial o de BID. Para el caso de adquisiciones financiadas por otros organismos financieros o por otras fuentes locales, dichos documentos podrán adaptarse para cumplir con los requisitos del ente financiero y ajustarse, cuando se trate de financiamiento local, tomando en cuenta el volumen y complejidad de los proyectos. Hasta tanto se establezca la Comisión de Licitación, se recomienda que la responsabilidad por la preparación de los documentos estándar de licitación para el suministro de bienes la asuma la Dirección General de Aprovisionamiento. Para el caso de los documentos de licitación para la contratación de obras de construcción y servicios de consultoría, se recomienda que esta responsabilidad la asuma la Secretaría de Obras Públicas. La obligatoriedad del uso de los documentos estándar de licitación deberá constar en los reglamentos de la Ley 105 (véase la recomendación del tema No. 4, más arriba). Posteriormente, cuando se apruebe la nueva

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ley y se establezca una Comisión Nacional de Licitación, será ésta quien se hará cargo de éstas responsabilidades. Tema No. 8 - Procedimientos de adquisición previstos en la ley: Los procedimientos de adquisición establecidos en la ley para la contratación de obras así como los incluidos en el reglamento para el suministro de bienes son muy limitados y no contienen los elementos básicos para promover la competencia, la economía y la eficiencia en la contratación de bienes y obras. No hay ningún reglamento para la contratación de los servicios de consultoría. En los proyectos con financiamiento externo, en general no hay ningún problema mayor porque los organismos encargados de las adquisiciones se guían por las normas y directrices del organismo financiero. A continuación se presenta una lista de las requisitos básicos que no aparecen ni en la ley ni en los reglamentos, y se propone que se toman en cuenta que en la preparación de la nueva legislación sobre adquisición y contratación de bienes, obras y servicios. • Disposiciones detalladas para el establecimiento de la Comisión Nacional de

Licitación y su brazo operativo. Composición, funciones y responsabilidades, y duración de las funciones.

• Documentos estándar de licitación para la adquisición y contratación de bienes, obras y servicios de consultoría, de acuerdo con las prácticas internacionales aceptables.

• Métodos de adquisición para hacer posible que la entidad contratante pueda hacer frente a condiciones cambiantes, incluyendo aquellas para situaciones de emergencia.

• Calificación de los proveedores y contratistas y procedimientos de pre-calificación .

• Disposiciones relativas a la revisión periódica de los niveles de aprobación para los diferentes métodos de adquisiciones.

• Convocatoria pública (publicidad) para presentar licitaciones.. Deberían ampliarse los requisitos actuales.

• Mantenimiento de los registros de los procesos de adquisición, especificando los requisitos mínimos.

• Obligación de los licitantes de proveer una garantía de seriedad de la propuesta y de cumplimiento de contrato.

• Disposiciones relativas al pago de intereses a los contratistas en el caso de pagos atrasados.

• Disposiciones sobre la forma de comunicaciones (correspondencia) entre la entidad licitante y los proveedores y contratistas.

• Disposiciones sobre la apertura de propuestas. Los requisitos actuales deberán ampliarse para conseguir una mayor transparencia y confianza en el proceso de adquisiciones.

• Disposiciones sobre el examen, evaluación y comparación de propuestas y adjudicación de contratos. En la actualidad ni la ley ni los reglamentos especifican los criterios ni la ponderación relativa asignada.

• Disposiciones detalladas para establecimiento de comités de evaluación. Composición, nombramiento y responsabilidades.

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• Prohibición de negociaciones con proveedores o contratistas antes de la firma del contrato.

• Disposiciones sobre la inclusión en los contratos de cláusulas relativas a la solución de disputas.

• Disposiciones sobre notificaciones públicas relacionadas con las adjudicaciones de contratos.

• Disposiciones sobre el mantenimiento de registros e información pública. • Disposiciones sobre la auditoría, por parte del Auditor General de la Nación, de

cuestiones relacionadas con adquisiciones. • Disposiciones sobre la resolución de reclamos de proveedores, contratistas y

consultores Recomendación: Se recomienda que en la nueva ley y reglamentos de adquisición se incluyan, como mínimo, las disposiciones antes mencionadas así como los requisitos para el establecimiento de la Comisión de Licitación y su brazo operativo .

ORGANIZACIÓN Y RECURSOS Tema No. 9 - Auditoría independiente de los procesos de adquisición: El país adolece de un ningún organismo independiente responsable de examinar/auditar los procesos de adquisiciones de las instituciones públicas. La Contraloría General de la República, institución que depende directamente del Presidente de la República, se encarga únicamente de la auditoría de cuestiones relacionadas con el presupuesto y las cuentas financieras. La Cámara de Cuentas, organismo semiindependiente que rinde informes al Parlamento (véase el Anexo A – Pregunta 14), tiene a su cargo la auditoría de las instituciones públicas y, aunque está autorizada a examinar los procesos en general, en la práctica, por problemas de estructura, dotación de personal y presupuesto, no desempeña en forma apropiada y eficiente todas las funciones y responsabilidades que le asigna la ley. Otra entidad, aunque no totalmente independiente, que podría proveer servicios de control en relación a estos temas, es la Comisión de Licitación (véase el tema No. 4, más arriba), pero en la práctica esta Comisión fue abolida cuando se promulgó la ley 105. Recomendación: Se recomienda que se establezca un proceso de auditoría periódico de los procedimientos de adquisiciones de todas las empresas publicas. Dicha responsabilidad podrá recaer en la Cámara de Cuentas, para lo cual deberá fortalecerse institucionalmente dicho organismo, o podrá adoptarse otro mecanismo que asegure la independencia de sus funciones. El ente auditor deberá realizar un examen a fondo de los registros y documentos para comprobar que i) las adjudicaciones de contratos se efectúan de acuerdo con los reglamentos establecidos por la ley; ii) las adjudicaciones se atienen estrictamente a las disposiciones establecidas en los documentos de licitación; iii) los bienes o servicios suministrados corresponden a las categorías especificadas en los documentos de licitación y en los contratos; iv) los pagos están debidamente autorizados y cuentan con el necesario respaldo, y v) los estados de cuentas financieros y las notas correspondientes reflejan en la forma debida la transacción comercial efectuada. Dicho

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examen deberá reflejarse en un informe a presentarse al Parlamento y a publicarse en la Gaceta nacional Para que la CDC pueda desempeñar adecuadamente las citadas responsabilidades, ésta deberá reestructurarse e incluir en su nueva estructura a una unidad especial, dotada del personal y equipos necesarios. Para esto el Gobierno debería asignar el presupuesto necesario para asegurar el funcionamiento adecuado de dicha unidad. Se recomienda también que el Gobierno prepare un proyecto detallado y un plan de ejecución para la llevar adelante esta tarea. En ese plan se deberá especificar la nueva estructura, el personal, equipo y materiales necesarios, las actividades de capacitación, la asignación presupuestaria y la fuente de financiamiento. Las posibilidades de financiamiento de un programa de asistencia técnica, de capacitación y suministros de equipos, a través del préstamo del BID para la ejecución del Programa Integrado de Gestión Financiera, deberán ser investigadas. Tema No. 10 - La profesión de especialista en adquisiciones: La profesión de especialista en adquisiciones no existe en la República Dominicana. Aunque hay una Oficina Nacional de Administración y Personal (ONAP), encargada de describir las funciones y responsabilidades de todas las funciones/puestos públicos en la República Dominicana, incluyendo la formación y experiencia necesarias para cada puesto, incluyendo aquel personal en funciones relacionadas con adquisiciones, los funcionarios públicos normalmente no siguen las recomendaciones de la ONAP. Los ministros y otros altos funcionarios prefieren nombrar al personal encargado de las adquisiciones tomando en cuenta aspectos de confianza personal y conocimiento de la persona a ser contratada, más que su experiencia específica en adquisiciones. Algunas de las Secretarías de Estado y organismos públicos contratan personal con antecedentes académicos y experiencia en comercialización. Los salarios pagados al personal que desempeña funciones en adquisiciones, con algunas excepciones, en general son bajos comparados con los que se pagan a profesionales en otros campos con el mismo número de años de experiencia. Como consecuencia de ello, en algunas Unidades Ejecutoras de Proyectos establecidas para la ejecución de proyectos que cuentan con financiamiento de organismos internacionales, el personal de adquisiciones percibe salarios por encima de los se pagan en la administración pública. Recomendación: Se recomienda que el GDR imponga través de la ONAP la aplicación de la Ley (No. 14-91 del 30.05.91) de Servicio Civil y Carrera Administrativa, asegurándose que la contratación del personal de adquisiciones por parte de los organismos públicos se lleve a cabo teniendo en cuenta los antecedentes y experiencia requeridos para el puesto en cuestión. Tema No. 11 – Capacitación y fortalecimiento institucional en materia de adquisiciones: La capacitación y entrenamiento en adquisiciones, en general, es muy escasa y se ha venido ofreciendo de una manera muy fragmentada y especialmente por parte de aquellas instituciones que están ejecutando proyectos financiados por organizaciones internacionales. Aunque el BID ha organizado algunos seminarios sobre adquisiciones en el contexto de los proyectos financiados por este organismo, el acceso de los funcionarios públicos a este tipo de entrenamiento es limitado representa un grave problema. En los últimos años, el Banco Mundial ha hecho muy poco en este sentido, y

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los funcionarios públicos entrevistados han manifestado su preocupación al respecto. La capacitación en adquisiciones es necesaria no sólo en la unidad encargada de la ejecución de los proyectos financiados por organizaciones internacionales sino también en las que se dedican a la ejecución de proyectos con financiamiento local. Es preciso centralizar la planificación y ejecución de las actividades de capacitación, de manera que redunden en beneficio de todas las instituciones públicas, incluyendo las empresas de consultoría y construcciones del sector privado. Por otro lado, en algunos proyectos en ejecución financiados por el Banco Mundial, el tema de adquisiciones ha sido identificado como una de las principales razones de las demoras en la ejecución de los mismos. En otros casos, como en el proyecto de Reforma Regulatoria del Sector Telecomunicaciones recientemente aprobado por el Banco, el Gobierno ha aceptado contratar a un experto en adquisiciones para que lo ayude en la preparación de un manual operativo de adquisiciones, el cual incluiría los siguientes temas: preparación de reglamentos y procedimientos internos de adquisiciones, invitación a presentación de propuestas, documentos de licitación y otras actividades necesarias para completar el ciclo hasta su conclusión con la adjudicación y firma de los contratos. Parte de estas actividades serían, eventualmente, competencia de la Comisión de licitación (véase el tema No. 4, más arriba). Recomendaciones: Se recomienda aumentar de forma considerable e institucionalizar a nivel nacional las actividades de capacitación en el tema de. La responsabilidad de preparar los programas de capacitación de acuerdo con las necesidades de los organismos públicos encargados de la ejecución y de velar por su aplicación recaerá sobre la Comisión de licitaciones restablecida (véase el tema No. 4, más arriba). Mientras no se establezca esa Comisión o algún otro organismo semejante, se recomienda que la Secretaría Técnica de la Presidencia se haga cargo del diseño y la ejecución de un plan de capacitación, con la asistencia de consultores. Eventualmente, esta actividad podría ser financiada por el préstamo de cooperación técnica del BID para el programa de gestión financiera integrada. Para fortalecer más aún la capacidad de las unidades ejecutoras de proyectos en el campo de adquisiciones, se recomienda ampliar el alcance de los servicios del consultor que se contratará para el proyecto de reforma regulatoria del sector de telecomunicaciones de manera que se incluya bajo el mismo contrato u otro separado, además de la actividad relacionada con este proyecto, la asistencia técnica que requieran otras unidades ejecutoras de proyectos, incluyendo la preparación de los manuales operativos de adquisiciones, todo ello bajo la coordinación de la Secretaría Técnica de la Presidencia. Los términos de referencia del consultor deberán redactarse cuidadosamente de forma tal que posteriormente la Comisión de licitaciones pueda continuar con la labor iniciada por la STP. Eventualmente estos servicios podrían financiarse con los fondos del préstamo del BID antes mencionado. Tema No. 12 - Registro nacional: Los registros de proveedores, constructores y servicios de consultoría son realizados por algunas instituciones de manera muy aislada, y su utilización se limita a la institución que ha efectuado el registro. Muy pocos de los registros se actualizan periódicamente y en la mayor parte de las ocasiones ello se realiza de forma manual. Muchos organismos públicos no tienen registro alguno y encuentran

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dificultades para establecer uno nuevo. En virtud del reglamento 262-98, la Dirección General de Aprovisionamiento debe crear y mantener un sistema de bases de datos, para el suministro de bienes, con información sobre los precios de mercado de los bienes, así como los plazos de entrega, las condiciones de pago y otros detalles de interés. Este sistema debe ser accesible a todas las entidades públicas del país. Esta es una de las actividades que la Dirección General de Aprovisionamiento no ha conseguido realizar todavía. Recomendación: Se recomienda el establecimiento de un registro nacional de proveedores de bienes y servicios, servicios de consultoría y contratistas, que se pondrá disposición de todas las entidades públicas. Esta es una de las responsabilidades de la Comisión de licitación (véase el tema No. 4, más arriba). Para realizar esta labor se recomienda el nombramiento de consultores especializados para la realización de un estudio. El consultor deberá prestar los siguientes servicios: i) identificación de las necesidades del país; ii) diseño del sistema de información necesario; iii) especificaciones del programa y equipo de procesamiento de datos necesarios para establecer sistema; iv) estimaciones de los costos de ejecución del proyecto; v) capacitación del personal para el funcionamiento y mantenimiento del sistema, y vi) plan detallado de ejecución del proyecto. Tema No. 13 - Información sobre las adquisiciones públicas: No existe un sistema de información público que provea información relacionado con adquisiciones públicas, en particular sobre el estado de situación de las distintas etapas del proceso de adquisiciones y sus resultados, incluyendo información sobre el nombre del contratista y/o proveedor, montos del contrato, etc. La ausencia de este mecanismo de información aumenta la percepción pública sobre el tema de la corrupción. Recomendación: Se recomienda el establecimiento de un banco de datos electrónico con un sistema de información pública sobre las actividades de adquisición realizadas por el sector público. Este sistema podría proveer información sobre la situación de las licitaciones públicas, los detalles de las licitaciones en particular, la adjudicación de contratos (nombres , montos de contrato, etc.), las futuras licitaciones (a corto y mediano plazo), los datos históricos sobre los contratos adjudicados, los requerimientos legales para la presentación de ofertas, datos estadísticos, nombres de proveedores, etc. El sistema "Compranet" establecido por el gobierno de México es un ejemplo de este tipo de mecanismos. Esta tarea, junto con el establecimiento del registro nacional, podría ser una de las responsabilidades de la Comisión de Licitación.

AUDITORÍA Y MEDIDAS CONTRA LA CORRUPCIÓN

13. La corrupción es un problema muy delicado y grave en la República Dominicana. De las discusiones sostenidas por la misión del Banco con los altos funcionarios del sector público y privado, se pudo percibir la opinión generalizada de que el sistema de adquisiciones y contrataciones de bienes, obras y servicios no está bien administrado y de que la corrupción afecta de una ú otra manera a los procesos de adquisiciones en el país. Bajo el actual marco jurídico e institucional, los procesos de adquisiciones en las instituciones públicas no son eficientes ni transparentes y la responsabilidad por los

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mismos es casi inexistente. La percepción de que existe corrupción se agudiza mas aún por la falta de medios de comunicación para informar a las partes interesadas sobre el estado de situación y resultados de los procesos de adquisiciones en cada fase y cuando son informados, a los contratistas y proveedores no se les la oportunidad de pedir aclaraciones ni tampoco de presentar quejas formales, pues no existe un mecanismo fiable para el manejo de los reclamos. Los contratistas temen presentar quejas porque muchas veces lo que se consigue con ello es prolongar el proceso indefinidamente y en, algunos casos, temen que el organismo ejecutor del proyecto adopte actitudes hostiles y negativa con ellos en futuras licitaciones y evaluaciones de propuestas, incluyendo el poner a una empresa en la lista negra. 14. El Gobierno ha demostrado gran interés en enfrentar el problema de la corrupción. En julio de 1997 (decreto 32-97) el Gobierno creó el Departamento de Prevención de la Corrupción (DPC), una unidad muy importante dentro de la Oficina del Procurador General de la República. Bajo su liderazgo, el DPC propuso un Plan estratégico nacional de prevención de la corrupción (PENPC) , que fue aprobado en una conferencia nacional celebrada en Santo Domingo entre el 28 y el 30 de noviembre de 1997. Dicho Plan se puso en marcha a comienzos de 1997 y prevé tres fases en la campaña en contra de la corrupción: promover el reconocimiento de la corrupción como un problema para la sociedad, aplicar medidas específicas para combatir la corrupción y mantener el proceso de cambio. Como se indica con más detalle en el Anexo A – Pregunta No. 4 en la sección sobre base de rendición de cuentas de los funcionarios públicos responsables de adquisiciones, el Plan enfatiza temas clásicos, como la definición de las atribuciones gubernamentales, una mayor supervisión y consulta por parte de la ciudadanía, y el establecimiento de sistemas menos vulnerables a la corrupción. Está subdividido en cuatro grandes áreas: jurídica, educativa, social e institucional. En lo referente al área jurídico, el tema de la reforma de las leyes y los reglamentos de adquisiciones y contrataciones está expresamente considerado como uno de los principales elementos para reducir la corrupción. 15. El DPC está actuando con mucha decisión en la aplicación el PENPC. En el informe de avance de los trabajos del primer año de operaciones del DPC, se observa una enorme actividad realizada por este departamento en las cuatro áreas mencionadas anteriormente de conformidad con el mandato establecido en el PENPC. En el campo educativo, social e institucional, el DPC ha conseguido notables progresos, incluidos algunos acuerdos con la Cámara de Cuentas y la Contraloría General de la República para intensificar los esfuerzos el DPC por combatir la corrupción. En el campo jurídico y otros semejantes relacionados con la adquisiciones, es importante señalar que el jefe del DPC ha participado activamente en la Comisión nombrada por el Presidente de la República para la preparación de una nueva ley (pendiente de aprobación por parte del Congreso desde julio de 1998) sobre la contratación de obras por las instituciones públicas (ver Tema No. 2 más arriba. El DPC ha sometido también a la aprobación del Congreso varios proyectos de ley, que si se aprobaran, podrían mejorar significativamente los mecanismos de lucha contra la corrupción. En ellos se contemplan los siguientes temas: i) declaración jurada del patrimonio de los funcionarios públicos y de enriquecimiento ilícito; ii) nuevo código de ética para los funcionarios públicos; iii) examen del código penal para aumentar las sanciones impuestas por corrupción a los funcionarios públicos culpables, y iv) reglamentos sobre soborno internacional. Hasta el 15 de junio de 1999 el Congreso

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no había probado todavía ninguno de dichos proyectos de ley. Este es otro ejemplo más de que los esfuerzos del presidente Fernández por mejorar la transparencia y eficacia de la administración pública se ven frenados por la difícil relación existente entre el Gobierno y el partido de la oposición. 16. A pesar de tantos retrasos y frustraciones, el Gobierno del Presidente Fernández está embarcado en un ambicioso plan para mejorar los mecanismos institucionales y evitar la corrupción, y ha promovido, de forma íntegra y transparente, la organización de la sociedad civil para combatir la corrupción, por un lado, y la organización de su propio Gobierno contra la corrupción administrativa y las prácticas corruptas, por el otro. Para que todos estos esfuerzos den resultados, deben ir acompañados, entre otras cosas, de mejores prácticas de gestión administrativa, de cambios en la actual ley presupuestaria que autoriza a la Presidencia a utilizar fondos públicos y excedentes presupuestarios de forma discrecional (ver tema No. 5, más arriba) y de modificaciones en las leyes y reglamentos para aumentar la transparencia y eficiencia en las adquisiciones del sector público (ver tema No. 2, más arriba). Todo ello forma parte de uno de los cuatro pilares de la estrategia nacional del Banco Mundial para reducir la pobreza en la República Dominicana, que a su vez está apoyado en parte por los esfuerzos del BID para mejorar los sistemas de gestión financiera del sector público. Parecería que las condiciones están dadas para que el Banco Mundial discuta con el Gobierno de la República Dominicana el cumplimiento del "compromiso contra el soborno" especificado en las directrices del Banco ("Normas: Adquisiciones con préstamos del BIRF y créditos de la AIF") de enero de 1997, revisadas en septiembre del mismo año.

RESULTADOS DE LOS PROYECTOS FINANCIADOS POR EL BANCO

17. Hasta junio de 1999 el Banco ha aprobado más de 38 préstamos/créditos para la República Dominicana, y los proyectos correspondientes han sido ejecutados, con un total desembolsado de US$567 millones. La actual cartera del Banco Mundial en la República Dominicana está integrada por 6 proyectos, con un compromiso neto de US$284 millones. A la misma fecha indicada anteriormente, el monto no desembolsado ascendía a US$151 millones, mientras que el coeficiente entre el total de préstamos desembolsados durante el ejercicio de 1999 y los saldos no desembolsados de todos los préstamos al final del ejercicio de 1998 era del 11%. Los proyectos en ejecución son: proyecto de emergencia del huracán Georges, proyecto de política de medio ambiente, proyecto de servicio provincial de salud, proyecto de carreteras nacionales, prot=yecto de educación básica, y proyecto de riego y cuencas hidrográficas. 18. De los 6 proyectos, solamente el de educación básica es un proyecto con problemas, y en términos de avance en la ejecución del proyecto, éste ha sido calificado como no satisfactorio desde marzo de 1999.

EVALUACIÓN GENERAL DEL RIESGO

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19. Hoy en día en la República Dominicana, el más grave problema es la extrema debilidad del marco jurídico y normativo de actividades de adquisiciones y contrataciones. La legislación correspondiente a la contratación de obras está basada en una ley (No. 105) obsoleta, de enero de 1967, sin la correspondiente reglamentación (ver tema No. 4, más arriba y pregunta No. 8 en el Anexo sobre Experiencia General. Esta situación ha creado un vacío jurídico que ha durado más de 30 años y ha obligado y/o permitido a todas las organizaciones públicas a establecer sus propias reglamentaciónes sin control de ninguna entidad regulatoria independiente y creíble. Los esfuerzos del gobierno por promulgar una nueva ley de adquisiciones (ver tema No.2, más arriba) se han visto obstaculizados por los desacuerdos existentes entre el Ejecutivo y los partidos de oposición, particularmente en lo referente al nivel de contratación directa que debe autorizar la ley. Antes de la promulgación de la ley 105, que derogó la antigua ley 5557 y su Reglamento 395, las funciones de control y supervisión de las adquisiciones eran competencia de la Comisión de Licitaciones establecida por el Reglamento 395, también derogado. Además de este problema, el artículo 2 de la ley 105 se autoriza al poder ejecutivo, sin ningún límite en cuanto a los costos o tipos de obras, a adjudicar contratos para la construcción de obras utilizando procedimientos de contratación directa, cuando en opinión del ejecutivo estas obras son de interés público. Al amparo de éste artículo, durante los últimos 30 años muchas obras públicas financiadas con fondos locales han sido adjudicadas por la vía de la contratación directa. Por el hecho de que la oficina del Presidente, como consecuencia de la actual ley presupuestaria, está autorizada a utilizar los excedentes presupuestarios de manera discrecional y a gravar a los organismos y ministerios sectoriales, transfiriendo parte de sus presupuestos a la Presidencia. Tradicionalmente, casi el 50% de todos los gastos públicos se concentraron en la Oficina del presidente, y gran parte de esa cifra se destinó a la ejecución de obras públicas adjudicadas mediante contratación directa. Si bien este porcentaje se ha reducido a aproximadamente el 22%, ofrece a la Oficina del Presidente una gran capacidad de discreción. Aunque la sociedad civil y los constructores son conscientes de la necesidad de introducir cambios radicales en los reglamentos de la adquisición pública, así como otros cambios en la gestión financiera, la asignación presupuestaria y las actividades de auditoría, existe también una fuerte oposición al cambio por parte de quienes se benefician de la situación actual. 20. En lo que respecta a la adquisición de bienes, el único instrumento jurídico es el reglamento 262-98 aprobado mediante decreto presidencial el 10 de julio de 1998. Dicho reglamento derogó el 295, de junio de 1996, que de aplicarse en su totalidad, podría mejorar substancialmente la legislación actual para la adquisición de bienes. Como se ha indicado anteriormente (ver tema No. 3, más arriba), aunque los organismos públicos han comenzado a aplicar este reglamento (en lo referente a los nuevos limites para licitaciones públicas, para compras por la vía de cotizaciones y para las compras directas) este reglamento no está siendo cumplido en su totalidad. Esto se debe a que la Comisión de Aprovisionamiento no ha aprobado aún la nueva estructura y reglamentos internos para el funcionamiento de la Dirección General de Aprovisionamiento y, por consiguiente, no hay ninguna asignación presupuestaria para dotar a la Dirección del personal y equipo necesarios para ejecutar las acciones y desempeñar las funciones previstas en el reglamento (véase el Anexo Experiencia General – Pregunta No. 8).

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21. Los párrafos anteriores muestran que el Gobierno ha tomado la iniciativa para introducir cambios importantes en los reglamentos de adquisiciones y contratación de bienes y obras, como parte de los esfuerzos del estado para mejorar la eficiencia en la forma en que los recursos públicos son utilizados. Lamentablemente, ya sea por la difícil relación entre el Gobierno y los partidos de oposición en el Congreso o por la falta demora en la aplicación en su integridad del nuevo reglamento, los beneficios esperados no se han materializado aún. Dada esta situación y la incertidumbre de la agenda política en torno al desarrollo de largo plazo por parte de administraciones futuras, es posible que ésta situación continúe y no se produzca ningún hasta que el nuevo Gobierno sea nombrado en el año 2000. El Banco Mundial deberá intensificar sus esfuerzos, en coordinación con el BID, para ayudar al Gobierno a lograr los objetivos de corto plazo, teniendo en cuenta aquellos definidos para el largo plazo.

SECTOR PRIVADO

Estrategia gubernamental 22. El país se encuentra en el proceso de reformar el marco jurídico y económico para dar cumplimiento a las directrices formuladas en la Ronda de Uruguay y en las negociaciones del GATT, lo que necesariamente conllevará a la liberalización de la economía Dominicana. En consecuencia, el GDR está preocupado por modificar el marco jurídico que regula la actuación de las empresas extranjeras y nacionales, además de reformar algunos sectores importantes de la economía y dar acceso a los inversionistas extranjeros. En 1995 se promulgó una nueva ley de inversiones extranjeras, la ley No. 16-95, se prevé un trato igualitario tanto a inversionistas extranjeros como a nacionales, se elimina la mayor parte de las restricciones de la ley anterior, se simplifican las obligaciones en materia de registro de las inversiones y se amplía la posibilidad de repatriar, en moneda de libre convertibilidad, los beneficios obtenidos de la inversión en la República Dominicana. En 1997 se adoptaron nuevas medidas, por la vía de decretos presidenciales, para promover la inversión extranjera en el país. Entre ellas figuran la adopción de dos reglamentos relacionados con la aplicación de la nueva Ley de inversión extranjera y la creación de un Consejo para la promoción de la inversión extranjera. 23. El 24 de junio 1997 se aprobó la Ley (No. 141-97) general para la reforma de las empresas públicas. Esta legislación pretende mejorar la calidad y eficiencia y reducir los costos de los servicios públicos, y abre la participación a la inversión privada estableciendo los objetivos y directrices para la privatización así como la modalidad y los para una licitación abierta a libre competencia. Las directrices para la privatización prevén el establecimiento de normas operativas para asegurar que: i) el programa de privatización se lleve a cabo de manera abierta y transparente; ii) las invitaciones de ventas de los activos del estado reciban amplia publicidad, incluyendo el proceso y los criterios para la calificación previa de los licitantes; iii) la evaluación y el dictamen jurídico se efectúe con la antelación suficiente, y que los resultados de la auditoría se publiquen en periódicos de amplia circulación nacional. La reforma de las empresas podrá hacerse utilizando distintos métodos como ser la capitalización, contratos de concesión, y la transferencia de acciones y/o de activos. En la Ley 141-97 se indica que

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las empresas que se someterán a este proceso de reforma son las siguientes: i) CORDE (ver Anexo A – Pregunta No. 3), que es la casa matriz (holding) de una serie empresas dedicadas a actividades comerciales, minería, electricidad, fabricación de vidrio y aviación; ii) la CDE; iii) los hoteles pertenecientes a la Corporación para la promoción de la industria, y iv) el Consejo Estatal del Azúcar (CEA), que controla una gran parte de la producción azucarera de la República Dominicana. 24. Siguiendo las directrices antes mencionadas,, en 1998 se puso en marcha un proceso de capitalización de la CDE. Aunque la misión del Banco no puedo tener acceso a los documentos de licitación durante su visita, el personal del Banco que trabaja para la República Dominicana informó que en el proceso de licitación contempló los siguientes requisitos: i) publicidad y notificación suficiente acerca del proceso; ii ) tiempo suficiente entre la publicación y la fecha de la licitación; iii) distribución de prospectos informativos sobre la venta entre todas las partes interesadas; iv) oportunidades para la inspección de los activos sujetos al proceso de venta; v) confidencialidad de los sobres de propuestas cerrados; vi) fianzas y otros requisitos de precalificación para garantizar el cumplimiento del licitante; vi) evaluación transparente y equitativa de las licitaciones y notificación de los resultados de la adjudicación, y vii) derecho del gobierno a rechazar cualquiera o la totalidad de las ofertas recibidas. El proceso de capitalización culminó exitosamente en abril de 1999, con la capitalización de la parte del sistema de generación y distribución, reteniendo el componente de la transmisión del sistema en manos del estado, cuya operación estará a de la CDE. Este proceso, que fue manejado por la Corporación Dominicana de Empresas Estatales (CORDE), recibió amplía publicidad en los periódicos de circulación nacional, en los que se elogió la transparencia del proceso. 25. Antes de promulgar la Ley 141-97, desde el año 1990 e1 Gobierno abrió las puertas a los a los inversionistas privados nacionales y extranjeros en el sector de la electricidad. En el pasado, la CDE ha ejecutado varios contratos con el sector privado para el suministro de electricidad, en condiciones de emergencia, bajo el sistema de construcción-operación-transferencia (BOT), y de operación y mantenimiento. El personal entrevistado por el Banco manifestó que la experiencia con esos contratos no había sido del todo satisfactoria y que los mayores beneficiarios resultaron los inversionistas privados, a expensas de los consumidores, que tuvieron que pagar precios muy altos por la electricidad. Recientemente, la CDE ha firmado un contrato de suministro de electricidad con una compañía extranjera, Smith/Enron, que está operando una central térmica de ciclo combinado que produce aproximadamente el 20% de toda la capacidad de producción de la CDE. 26. De conformidad con el mandato de la ley 141-97, actualmente, se están privatizando también los Molinos Dominicanos y otras empresas pertenecientes a la CORDE. Regulaciones Comerciales 27. Las transacciones comerciales que involucran la compra y venta de bienes y servicios están reguladas en general por el Código de Comercio, que tiene ya más de cien años y ha sufrido muy pequeños cambios en todo este tiempo. La mayor parte de las normas no son restrictivas, y las disposiciones obligatorias son la excepción, lo que ofrece un amplio margen para la creatividad contractual.

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28. El comercio exterior desempeña un papel importante en la República Dominicana, y los componentes importados constituyen aproximadamente el 60% del valor de los productos consumidos en el mercado interno. Por otro lado, la República Dominicana exporta una variedad de productos acabados y semiacabados, y la industria manufacturera de productos para la exportación, especialmente prendas de vestir, ha crecido significativamente debido al aumento de las zonas francas. En septiembre de 1990 se aprobaron los Decretos Presidenciales 339-90 y 340-90, con la finalidad de armonizar los impuestos de aduana, reduciendo el número y variedad de impuestos de importación, reduciendo los gravámenes que tienen efectos equivalentes, así como las exenciones y otras metidas semejantes, aumentando de esta forma la eficiencia y la base impositiva por concepto de importaciones. De conformidad con esos objetivos, se adoptó el Sistema Armonizado de Designación y Codificación de Mercancías. En septiembre de 1990, el decreto presidencial 366-91 redujo más aún el impuesto sobre el valor agregado aplicable a algunos productos alimenticios, medicamentos y materias primas. Todas estas reformas se integraron más tarde en la ley 14-93. 29. El sistema arancelario actual consta de los siguientes componentes: 1) los derechos de importación, que consisten de: i) un impuesto básico de importación, que va del 5% al 35%; ii) un impuesto indirecto sobre el consumo, que oscila entre el 5% y el 80% en el caso de algunas importaciones de lujo, calculadas sobre la base del precio c.i.f. más el monto de los impuestos y derechos pagados con anterioridad, con excepción del IVA; iii) un IVA del 8% aplicable a los productos industriales importados; y iv) una comisión del 2% que se paga a los importadores; 2) las exenciones de los impuestos de importación correspondientes a: i) productos importados en el marco del régimen de admisión temporal establecido por la Ley 69, y ii) las importaciones de materias primas para la fabricación de bienes en las zonas francas; 3) los derechos e incentivos a las exportaciónes: i) los productos no tradicionales no gozan de ninguna exención ni privilegio, ii) algunos productos agrícolas y ganaderos, como los plaguicidas, insecticidas y herbicidas, están exentos de los impuestos de importación. Los exportadores de algunos productos, como el azúcar, el café y el cacao, están sujetos a un recargo sobre los ingresos derivados de sus operaciones, iii) los exportadores de la República Dominicana a los Estados Unidos gozan de condiciones preferenciales para muchas de sus mercancías en el marco del Sistema Generalizado de Preferencias, aprobado por el Congreso de los Estados Unidos en 1974, y la Iniciativa de la Cuenca del Caribe (ingreso a los Estados Unidos libre de impuestos, siempre que el 35% del costo del producto sea el valor agregado por el país perteneciente a dicha Iniciativa), así como las mercancías exportadas a la Unión Europea en el marco del Convenio de Lomé IV. Prácticas comerciales 30. En la República Dominicana no hay prácticas comerciales establecidas para el sector privado, como las que normalmente existen en un mercado competitivo. La mayor parte de las empresas/industrias privadas y establecimientos comerciales en la República Dominicana utilizan procedimientos comerciales convencionales, predominando la contratación directa y la comparación limitada de precios (nacionales e internacionales). Las cotizaciones se solicitan por teléfono, fax o correo electrónico a los proveedores conocidos, a quienes luego se hacen los pedidos directamente. El uso de un

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procedimiento de competencia abierto por parte del sector privado para la adquisición de bienes, no es práctica común en la República Dominicana. La contratación directa es un método común para la contratación de obras pequeñas, y muchas industrias suelen pedir presupuestos a dos o tres empresas locales pequeñas y luego negocian el precio del contrato. 31. En actualidad, existe un sector industrial muy desarrollado y dinámico, en el que están incluidas las empresas de exportaciones establecidas en las zonas francas de exportación, el sector minero, el de la construcción y agricultura, un amplio sector comercial y de pequeñas empresas, así como un importante sector turístico.. Muchas de éstas empresas tienen un excelente sistema de organización y planificación y utilizan las encuestas de mercado, otros instrumentos administrativos y tecnologías de punta, pero hay también otras empresas privadas pequeñas que operan sobre la base de la intuición y el olfato comercial, sin recurrir a herramientas comerciales sofisticadas. Los procedimientos de adquisición de las grandes compañías están de conformidad con los principios de eficiencia y economía. 32. Las compañías grandes, como REFIDOMSA, FERQUIDO o Cemento Nacional, tienen acceso a información mundial sobre abastecedores, calidad, precios y disponibilidad de bienes. Algunas de estas empresas utilizan empresas de consultoría y auditoría internacional, que incluyen en sus servicios la revisión de los procedimientos de adquisiciones. Dichas empresas mantienen un buen registro de posibles proveedores con buenas referencias, en lo referente a precios y calidad y, dependiendo del tipo del bien o servicio a adquirir, preparan una lista corta y las invitan a presentar propuestas. Las empresas grandes adquieren las materias primas por intermedio de un agente o empresa de servicios de adquisiciones, sujetándose estrictamente a las condiciones del mercado y dado el volumen de las operaciones se negocian precios muy favorables. Las pequeñas empresas no tienen acceso al mismo tipo de información y utilizan un mecanismo mucho más elemental, que consiste en enviar directamente los pedidos de compra a los abastecedores que conocen, sin ningún procedimiento de comparación de precios entre varios abastecedores. Es probable que estas compañías estén comprando sus productos de manera eficiente y económica. 33. La República Dominicana fue uno de los signatarios del Acuerdo General sobre Aranceles Aduaneros y Comercio (GATT) en la conferencia de Annecy (Francia) en 1949. El país es también signatario del acta final de la Ronda de negociaciones firmada en Uruguay en abril de 1994. Como resultado de ello está la creación de la Organización Mundial de Comercio y la aprobación del Acuerdo General sobre el Comercio de Servicios (GATS) y del acuerdo sobre los Derechos de Propiedad Intelectual, relacionados con el Comercio. Como miembro del GATT, el país aplica prácticas comerciales que promueven la libre circulación de bienes y servicios entre la República Dominicana y otros países. Actualmente se está procediendo a la reforma del marco jurídico y económico con el fin de atenerse a las directrices establecidas en la Ronda Uruguay de negociaciones del GATT. 34. La República Dominicana es también parte del Convenio de Lomé entre la Unión Europea y los Estados miembros, junto con el grupo de países del África, el Caribe y el Pacífico (ACP). En general, los bienes procedentes de países ACP están exentos del

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pago de derechos de aduana cuando ingresan en la Unión Europea. El gobierno Dominicano está examinando la posibilidad de adherirse a agrupaciones comerciales regionales con países de América Central, como el Mercado Común Centroamericano (MCCA) y la CARICOM. La República Dominicana solicitó también la adhesión a la CARICOM en 1990, pero en 1992 se negó el acceso a todos los nuevos candidatos. No obstante, el país mantiene activos intercambios comerciales con el grupo regional.

B - PLAN DE ACCIÓN RECOMENDADO

Enfoque Estratégico 35. El programa de reforma del Presidente Fernández, en contraste con aquellos de gobiernos anteriores, incluye un ambicioso programa de liberalización del comercio, de privatización de las empresas públicas, de mejora de los servicios sociales y de modernización de la capacidad de gestión financiera del sector público, esto último en parte para mejorar la eficiencia y la transparencia en el manejo y administración de los recursos del estado. No obstante, el gobierno no ha podido implementar dicho programa de reforma en el plazo inicialmente previsto. Sin embargo, la actual administración ha iniciado un proceso para modernizar e integrar el sistema de administración financiera. El BID ha aprobado un préstamo (que no ha entrado en vigencia aún) para ayudar al gobierno en este esfuerzo, y en particular, para reforzar los sistemas de presupuesto, inversión pública, crédito público, contabilidad, control interno y adquisiciones públicas. En el contexto de la reforma de la gestión financiera, se han adoptado varias iniciativas para mejorar la transparencia, la eficiencia y la responsabilidad en las prácticas gubernamentales para llevar a cabo la adquisición de bienes y contratación de obras. En particular, cabe señalar la aprobación del nuevo reglamento para la adquisición de bienes (ver Tema No. 3, más arriba), el establecimiento de una Comisión para la preparación de un nuevo proyecto de ley de contratación de obras (ver Tema No. 4, más arriba), y la presentación al Congreso de un proyecto de ley sobre obras, basado en las recomendaciones de dicha Comisión. 36. Dado el actual ambiente político y la débil relación entre el gobierno y los partidos de oposición en el Congreso, es muy poco probable que durante el mandato del Presidente Fernández, se aprueben las leyes y reglamentos necesarios para reformar a fondo el marco jurídico y normativo sobre las adquisiciones. Tomando en cuenta ésta situación, el plan de acción propuesto que se describe más adelante, incluye algunas acciones que lo mas probable, se implementarán a corto plazo y otras, de mayor repercusión, que se implementarán en el mediano plazo.

Plan de Acción

37. El plan de acción propuesto es un resumen de la recomendaciones presentadas en relación con los temas examinados y descritos detalladamente en la parte A del presente informe. Debido a la situación política actual, a que por mucho tiempo las adquisiciones

29

del sector público se han llevado a cabo sobre la base de leyes y reglamentos antiguos y obsoletos, y a la tradicional discrecionalidad del Ejecutivo en la asignación de recursos públicos para la contratación de obras públicas en forma directa, la transición del actual sistema de adquisiciones a otro nuevo será un proceso muy difícil y lento. Por ello, se recomienda la introducción de cambios de una manera progresiva a ser implementados en el corto plazo, para luego promover acciones de mediano plazo para una modernización más profunda del sistema de adquisiciones. Las medidas y recomendaciones propuestas se muestran en el Anexo 1, adjunta a esta sección del informe.

Asistencia Técnica

38. A solicitud del Gobierno Dominicano, el Banco estaría dispuesto a someter a la aprobación de su administración una donación, por un monto que no excedería de los US$ 500.000, para ayudar al Gobierno en el financiamiento parcial del Plan de Acción propuesto en este informe, cuyo costo total estimado preliminar es de US$700.000. Dicha donación complementaría los recursos disponibles del BID dentro del préstamo para el Programa Integrado de Administración Financiera. Este programa incluye acciones que están directamente relacionadas con las acciones propuestas en el Plan de Acción.

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REPUBLICA DOMINICANA DIAGNÓSTICO DE LOS PROCEDIMIENTOS DE ADQUISICIONES

Plan de Acción para mejorar el Marco Legal y Regulatorio de las Adquisiciones en la República Dominicana

Tema Específico

Acción Recomendada

Fecha de Inicio y

Terminación

Agencia Responsable

Comentarios

Tema 1 Falta de una política realista y ejecutable, para enfrentar los temas de adquisiciones del sector publico.

Acción de Corto Plazo

1) Definición por parte del Gobierno de una política y una estratégia negociada con los principales partidos políticos para la ejecución de las acciones necesarias en el corto, y mediano plazo, para el mejoramiento del marco legal y regulatorio del sistema de adquisiciones.

SEF/STP

Tema 2 Ley de contratación de obras y servicios antigua y obsoleta y desprovista de las regulaciones necesarias.

Acción de corto Plazo

1) Reglamentar la Ley 105 por la vía de un Decreto Presidencial, ya sea restableciendo formalmente la antigua regulación 395 o emitiendo una nueva regulación. En cualquier caso la Comisión de Licitaciones creada por la regulación 395 debe restablecerse, y en la regulación incorporarse mejoras.

2) Nombramiento de una Comisión para examinar todo el marco legal relacionado a las adquisiciones, y recomendar los cambios para una simplificación de marco jurídico y normativo.

Ejecutivo

Ejecutivo/ SEF

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Tema Específico

Acción Recomendada

Fecha de Inicio y

Terminación

Agencia Responsable

Comentarios

Acción de Mediano Plazo

3) Aprobación por parte del Parlamento del proyecto de Ley, preparado por la Comisión nombrada por el Presidente Fernández, para la contratación de obras propuesta por el Presidente Fernández. Este esquema retiene el 30% para la adjudicación grado a grado (contratación directa).

4) Enmendar la Ley referida en el Tema 2, párrafo 3 arriba para: (i) reducir mas aún el porcentaje de contrataciones grado a grado; (ii) implementar de las recomendaciones de la Comisión referidas en el tema 2, párrafo 2 arriba; y (iii) revisar la ley tomando en cuenta el modelo de Naciones Unidas, e incluir en la enmienda las mejoras necesarias.

Parlamento

SEF/ Parlamento

Tema 3 Vacío Jurídico en la Ley 105 para la contratación de obras y servicios. La Ley no cuenta con el reglamento necesario.

Acción de Corto Plazo (Recomendación yá mencionada en

el tema 2, párrafo 1)

1) Reglamentar la Ley 105 por la vía de un Decreto Presidencial, ya sea restableciendo formalmente la antigua regulación 395 o emitiendo una nueva regulación. En cualquier caso la Comisión de Licitaciones creada por la regulación 395 debe restablecerse, y en la regulación incorporarse mejoras.

Ejecutivo

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Tema Específico

Acción Recomendada

Fecha de Inicio y

Terminación

Agencia Responsable

Comentarios

Tema 4 El reglamento para compra de bienes

No. 262-98 aprobado en Julio de 1998, esta vigente pero su aplicación inconclusa.

Acción de Corto Plazo

1) Aobación por parte del Poder Ejecutivo del reglamento orgánico funcional de la Dirección General de Aprovisionamiento, y preparación y ejecución por parte de la DGA de un plan de acción para poner en marcha la aplicación del Decreto.

SEF/ Ejecutivo

Tema 5 Ejecución de Obras públicas por parte del Poder Ejecutivo por la vía del grado a grado.

Acción de Corto Plazo

1) Demostración, por parte del Poder Ejecutivo y Secretaría de Obras Públicas, con hechos concretos, de su voluntad de aumentar la transparencia en la adjudicación de obras, reduciendo mas aún el porcentaje del grado a grado, independientemente de la aprobación de la Ley indicada en el tema 2 párrafo 3 arriba.

2) Emitir un Decreto Presidencial limitando la

adjudicación grado a grado.

Ejecutivo/ SEOPC

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Tema Específico

Acción Recomendada

Fecha de Inicio y

Terminación

Agencia Responsable

Comentarios

Tema 6 Mecanísmos de control de presupuesto para ejecución de proyectos, no garantizan la disponibilidad oportuna de fondos para la ejecución de los mismos

Acción de Medio Plazo 1) Tomar acciones concretas (ver posibilidad por la vía de

Decreto Presidencial), dentro del plan de reforma de la administración financiera del estado, para dar solución a este problema. El informe del Banco sobre evaluación financiera tratará este tema en detalle).

Ejecutivo/ SEF

Tema 7

Diversidad muy grande de documentos de licitación para bienes, obras y servicios de consultoría. En consecuencia el manejo es ineficiente para los entes ejecutores y confuso para los proponentes locales y extranjeros.

Acción de Corto Plazo 1) Preparar documentos estandar para bienes, obras y

servicios de consultoria (formalmente respaldado por Decreto Presidencial). Hasta tanto la Comisión de Licitaciones se establezca, esta responsabilidad será de la DGA para bienes y de la Secretaría de Obras Públicas para obras y consultoría.

SEOPC/ DGA

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Tema Específico

Acción Recomendada

Fecha de Inicio y

Terminación

Agencia Responsable

Comentarios

Tema 8 Reglamentos de adquisiciones de obras vigentes no contienen los elementos básicos que promuevan competencia, economía y eficiencia.

Acción de Corto Plazo 1) Mejorar los reglamentos para obras, por la vía de

Decreto Presidencial (DP), incorporando las recomendaciones del Banco. En lo posible, analizar la posibilidad de reglamentar via DP la contratación de consultores.

Acciones de Mediano 2) Continuar con las acciones pendientes del punto

anterior.

Ejecutivo

Ejecutivo

Tema 9 Falta de un organismo independiente que realice auditoría de los procesos de adquisiciones.

Acción de Corto o Mediano Plazo 1) Insituir el establecimiento de auditorías independientes

de procesos de adquisiciones, ya sea fortaleciendo la Camara de Cuentas u otro organismo que reporte directamente al Parlamento.

Ejecutivo

Tema 10 La profesión del especialista en adquisiciones no existe en el País.

Acción de Corto o Mediano Plazo 1) Imponer a travéz de la ONAP la contratación de

personal de adquisiciones, sobre la base de calificaciones y experiencia específicas para el cargo, las cuales estarían definidas por dicho organismo.

ONAP/ STP

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Tema Específico

Acción Recomendada

Fecha de Inicio y

Terminación

Agencia Responsable

Comentarios

Tema 11 Debilidad Institucional en materia de adquisiciones.

Acción de Corto Plazo 1) Institucionalizar las actividades de capacitación en

adquisiciones a nivel nacional, y preparar e implemntar un plan de capacitación y fortalecimiento institucional bajo la coordinación de la Secretaría Técnica de la Presidencia, en forma provisional, hasta tanto se establezca la Comisión de licitaciones.

STP

Tema 12

Falta de un sistema eficiente de registro de proveedores, contratistas y consultores a nivel nacional.

Acción de Corto o Mediano Plazo 1) Establecer un registro nacional confiable de

proveedores, contratistas y consultores accesible a todas las entidades públicas a nivel nacional.

Comisión de Licitaciones

¿?

Tema 13 Falta de un sistema de información publica relacionado con los procesos de licitaciones, adjudicaciones realizadas, plan de nuevas licitaciones, requisitos para presentación de ofertas, y datos estadísticos..

Acción de Corto o Mediano Plazo 1) Establecer un banco de datos electrónico para

información al público. Sistemas existentes en otras partes del mundo (caso Compranet en Mexico) pueden ser considerados como modelos.

Comisión de Licitaciones/

DGA

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REPÚBLICA DOMINICANA Informe de Evaluación de los Sistemas de Adquisiciones

Volumen II – Información Básica y Análisis

Anexos

Anexo A: Marco Legal Anexo B: Practicas Comerciales Anexo C: Marco Financiero Anexo D: Sector Público – Adquisiciones de Bienes/Obras Anexo E: Sector Público - Selection de Consultores Anexo F: Desempeño/Experiencia en el Campo de Adquisiciones Anexo G: Sector Privado - Adquisiciones Anexo H: Comparación entre los Procedimientos de Licitaciones Públicas

Nacionales y las Políticas del Banco en ésta materia

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ANNEX A – LEGAL FRAMEWORK

GENERAL FEATURES 1. Legal System (i.e. Common/Civil Law: Socialist; Shari’a; Other The Dominican Republic is a civil law jurisdiction based on the Napoleonic Codes (Civil Code, Civil Procedure, Penal, and Commercial Procedure) adopted in France at the beginning of the nineteen century. These codes were introduced to the island, first by the French in 1804 and later again under Haitian rule, and adopted formally in 1884 as part of the national legal system. Notwithstanding the fact that these codes have been modified through the years, it is argued that they do not always keep up with the changing social environment and should be revised on a more periodic basis

2. Form of Government (i.e. Federal or Centralized)

The Government of the Dominican Republic is essentially republican, democratic and representative. It is divided into the Legislative Branch, the Executive Branch and the Judicial Branch. These three branches are independent in the exercise of their respective functions. See Article 4 of the Constitution of the Dominican Republic.

Legislative Power is exercised by the Congress of the Republic consisting of a Senate and a House of Representatives. Senators and Representatives are elected by direct vote. The Senate has one member elected to serve each province and one member for the National District, who serve for four-year terms. The members of the House of Representatives are elected every four years by the population of the provinces and the National District. There is one representative for every fifty thousand inhabitants or fraction in excess of twenty-five thousand, and in no case may there be fewer than two [representatives per province].

Executive Power is exercised by the President of the Republic, who is elected every four years by direct vote, and may not be elected for consecutive terms. The Vice President is elected in the same way, through general elections. The President and Vice President shall be sworn in on the August 16th following their election.

The powers of the President of the Republic include the power to appoint the Secretaries and Under-Secretaries of State and the other public officials and employees whose appointment is not delegated to any other branch or autonomous agency recognized by the Constitution or by law; to promulgate and publish the laws and resolutions of the National Congress; to issue regulations, decrees and directives as necessary; to enter into contracts, submitting them for the approval of the National Congress when they contain provisions regarding the allocation of national revenues, the transfer of properties valued at over RD$ 20,000.00 or the raising of loans, or when they stipulate exemptions from taxes in general; to submit to the National Congress during the second ordinary session of the legislature the proposed Revenue Budget and Budget for the upcoming year; to repeal through decree based on reasonable grounds the decisions of

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municipal governments; to authorize or deny to municipal governments the power to transfer properties and to approve or reject the contracts they enter into when establishing securing municipal properties or revenues; etc.

The business of public administration is handled by Secretariats of State as created by law. Under-Secretariats of State may also be created as deemed necessary and are both subordinate and answerable to the respective Secretariat of State. The law defines the powers of the Secretariats of State.

Judicial Power is exercised by the Supreme Court of Justice and by other courts of the judiciary created by the Constitution and by law. This Branch enjoys administrative and budgetary autonomy. The law shall govern the judicial professional and the system of pensions for judges, officials and employees of the judiciary. The judges of the Supreme Court of Justice as appointed by the National Judiciary Council, which is presided over by the President of the Republic and in his absence shall be presided over by the Vice-President of the Republic, and in the absence of both the President and the Vice President shall be presided over by the Attorney General of the Republic. The other members are the President of the Senate and a Senator selected by the Senate who belongs to a party other that the party of the President of the Senate, the President of the House of Representatives and a Representative selected by the House of Representatives who belongs to a party other than the party of the President of the House of Representatives, the Chief Justice of the Supreme Court of Justice selected by that court, who shall act as Secretary.

The Supreme Court of Justice elects judges of the Courts of Appeal and First Instance, judges of the Land Court, investigating magistrates, justices of the peace, and other judges to fill such positions as may be established by law. The Supreme Court also creates the administrative positions that are necessary to enable the Judicial Branch to exercise the powers vested in it by the Constitution and by law.

The Court of Audit is made up of at least five members elected by the Senate from the list of candidates submitted to it by the Executive Branch. In addition to its powers under the law, it is empowered to examine the general and specific accounts of the Republic and to submit the audit for the previous year to the Congress during its first ordinary session each year. Government of the National District and the Municipalities is the responsibility of municipal councils, with council members and deputies elected every four years together with the Mayor by the people of the National District and the Municipalities. The municipal councils and the Mayors are independent in the exercise of their duties, with the restrictions and limitations imposed by law. Each Province is headed by a Civil Governor, appointed by the Executive Branch. Provincial organization and systems, as well as the powers and duties of the Civil Governors, are determined by law.

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All the above powers and rights are enshrined in the Constitution of the Dominican Republic. 3. Describe the Public Sector Institutional Setting

The Functional and Administrative Structure of the Dominican Republic is based on constitutional rules, within which the Executive Branch, which leads the public sector and the Secretariats of State operate. The Secretariats of State include the Administrative Secretariat of the Office of the President; the Technical Secretariat of the Office of the President; twelve Secretariats; and at the same level in the hierarchy, the Office of the Attorney General of the Republic.

The Secretariats of State are classified according to the analysis of the National Government and Personnel Office, contained in the Government Organization Manual. They are governed by Law 4378 of February 7, 1956, by regulatory provisions, and by their own enabling legislation. In contrast, the legal status of the Office of the Attorney General of the Republic is established by Law 821 on judicial organization, dated November 21, 1927.

Law 4378 of February 7, 1956 establishes which Secretariats are responsible for matters of public administration, and the general duties and powers of the Secretariats of State, the Under-Secretariats of State and the autonomous agencies. It also specifies that autonomous agencies established under other laws are indeed autonomous and regulated by their own enabling legislation but are subject, as far as their operations are concerned, to the supervision of the Secretariat of State that has jurisdiction.

Law 10 of September 8, 1965 abolishes the Secretariat of State of the Office of the President and creates the Administrative and Technical Secretariats, modifying organic law 4378 on the Secretariats of State of February 10, 1956, and its amendments.

Among other powers, Law 10 gives the Technical Secretariat of the Office of the President the role of preparing development plans and programs, in coordination with government departments and autonomous agencies. Ministries and autonomous agencies set up programming offices to advise their officials, and to act as their own advisory mouthpieces. Decentralized Government Agencies:

This subject is referred to in the Government Organization Manual under the heading of state powers, but administrative functions are decentralized and delegated to the following institutions: the Central Bank of the Dominican Republic, the Reserve Bank, the Agricultural Bank of the Dominican Republic, the Workers Bank, the State Sugar Board, the Dominican Agricultural Institute, the National Water Resources Institute (Indhri), the Dominican Electricity Corporation (CDE), the Dominican Corporation of State Enterprises (CORDE), the National Institute for Potable Waters and Sewer Systems (INAPA), the National Housing Bank, the National Institute for Assistance and Housing (INAVI), the Price Stabilization Institute, the Dominican Social Security Institute, the Dominican Red Cross, the Institute for Development and Corporate

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Credit, the Dominican Port Authority, the Dominican Export Promotion Center, the National Parks Administration, the National Cotton Institute, the Autonomous University of Santo Domingo, the Dominican Municipal League and the Municipalities, et al.

In addition to the provisions of Article 82 of the Dominican Constitution, the form of the municipal governments is provided for in Law 3455 of December 21, 1952. The municipal governments are legal entities with their own assets and autonomy.

The control and monitoring agencies of the Public Treasury are the Secretariat of State for Finance and its departments, the National Treasury, the Budget Directorate, the General Directorate of Domestic Taxation, the General Directorate of Internal Revenue, the Court of Audit, and the General Accounting Office of the Republic. Revenue collection and supervisory agencies include: the National Lottery, created on June 27, 1927 and governed by Law 3435 of November 21, 1952; the Superintendency of Banks, created on November 9, 1947 under the General Banking Law, No. 708 of April 14, 1965; the Superintendency of Insurance, created on January 9, 1969 pursuant to Law 400 of the same date; and the Directorate General of Government Supply created on June 30, 1966 and governed by Law 295 of the same date. Handling of Public Funds:

The Executive Branch, which heads the machinery of public administration, has primary responsibility for the country’s financial policy, and therefore for the handling of public funds. Each year it must submit revenue estimates and a budget to the legislature, which when approved by Congress empower it to make the necessary arrangements, in accordance with the national revenue collection process.

The budget is divided into chapters corresponding to the different branches of the public sector, which may not transfer funds except as provided by a law.

When the formalities of the budget have been completed, it is the responsibility of the Secretariat of State for Finance and its departments to make the necessary arrangements to order expenditures and distribution of public funds on the basis of the Executive Branch’s financial policy and with the concurrence of the National Treasury, which receives the revenues, the Comptroller and the Auditor General, who keeps the public accounts, and the Budget Director, who handles the distribution of disbursements according to the appropriations bill and the budget being executed. Centralization and Decentralization:

The public sector in the Dominican Republic developed under two types of decentralization: agencies decentralized on a geographic basis, such as the municipal governments; and decentralized agencies in service categories, such as the Autonomous University of Santo Domingo. Control of Decentralized Agencies:

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Despite their absolute autonomy, the State maintains control over decentralized agencies, through audits ordered by the Executive Branch, which thus keeps itself informed regarding the uses and distribution of the funds allocated (from the national budget, for the most part) and disbursed to them.

When discussing the State enterprises, Dominican economists compare them to the decentralized agencies because they require legal, budgetary, political, financial and other controls.

In the budget context, the National Budget Office periodically checks progress with budget execution. Its General Director, staff and authorized agents have access to the books, records and documents of the different public entities.

In the area of financial control, Law 749 of January 6, 1978 requires that the autonomous state institutions obtain prior approval from the Executive Branch before seeking loans on local or foreign markets. It also subjects the budgets of these agencies to the approval of the Executive Branch. Political control is in the hands of the government, which can conduct outside audits of all State enterprises. State Enterprises:

These entities operate as autonomous agencies, including those that are grouped under the Dominican Corporation of State Enterprises (CORDE), created by Law 289 of June 30, 1966 as an independent corporate body with its own assets and unlimited duration. These enterprises have state financial resources or backing. The State Sugar Board comes under CORDE but is autonomous. As a state company in the private domain, it pays taxes on the income it brings to the Treasury General Account, in accordance with the legislation creating CORDE. 4. Does the Constitution contain any provision directly bearing on public sector procurement ? (If so, describe).

Article 103 of the Constitution of the Dominican Republic establishes that mineral deposits belong to the State and may only be exploited by individuals under concessions or contracts granted to them under conditions determined by law.

Article 110 of the Constitution states that: “no exemption shall be recognized, nor shall any exoneration, reduction or limitation of taxes, contributions or fiscal or municipal duties be granted for the benefit of individuals, except by law. Nonetheless, individuals may acquire, through concessions authorized by law, or through contracts approved by the National Congress, the irrevocable right to benefit, for the entire period stipulated in the concession or contract, and in compliance with obligations imposed upon them by either of such instruments, from exemptions, waivers, reductions, limitations on taxes, contributions or fiscal or municipal duties applicable to specific works or companies that benefit the public, or specific works or companies to which it is advisable to attract the investment of new capital for the purpose of developing the national economy, or for any other purpose of social interest.”

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5. Is the country a signatory of the Agreement on Government Procurement of the World Trade Organization ? The Dominican Republic is signatory to the Agreement on Government Procurement of the World Trade Organization. 6. Does the basic contract law contain any provision directly bearing on public sector procurement ? (If so, describe). The basic law does not contain provisions on contracts. All matters relating to contracts are regulated in the Dominican Civil Code: sale or lease of chattels, works and industry ventures, property rental and maintenance contracts, corporate contracts, loans for use but not consumption, pledge contracts, etc.

7. Is there a separate body of the law which regulates public sector procurement, or is it governed by regulations issued under an organic finance act ? Public sector procurement is governed by:

(i) A basic law 105 of march 15, 1967, which establishes that all engineering and architecture works above RD$10,000 (about US$700) should be awarded through a public competition process. This law provides broad discretionary powers to the Executive Branch to award construction contracts without competition (direct contracting) in exceptional cases, without defining the conditions for exception. Based on this clause the EB has been awarding the majority (more than 95%) of the contracts for the construction of public works funded by local funds, by direct contracting;

(ii) Regulation 395 of september 27, 1966, for the award construction contracts by public entities, including municipalities. Under this regulation, a Bidding Commission (Comisión de Concursos) was created;

(iii) Law 295 of june 30, 1966, for the supply of goods to public institutions, through the Government Supply Commision (GSC) and the General Supply Administration (GSA), both created by this law, both created under this law; and

(iv) Regulation 262-98 of July 1998, for the supply of goods and services (does not include consultant services) by the public institutions. Although law 295 is still in effect, regulation 262-98 is partially under implementation by public institutions. Because of lack of funds, the General Directorate for the Supply to State Enetrprises created by this regulation, is not in operation (see question 9 below).

There are several other law and regulations governing concessions, the creation of the Domincan Port Authority, the establishment of the Public Service Commission, etc. These are listed in Annex 2 of the report.

8. Do other bodies of law regulating associated aspects of procurement contain provisions which are directly related to problems identified within the local system ? (e.g. Labor, tax, customs, insurance and banking laws, foreign exchange controls or laws defining national standards – If so, describe)

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Dominican legislation has various currency laws, banking laws, laws on international fund transfers, tax laws, insurance laws, labor laws, customs laws, etc. Although they do not contain provisions relating to the procurement system, they contain factors that may indirectly contribute to or harm the procurement activities. To this effect, we underline the following:

The National Customs were established under Law 3489 of February 10, 1953 for the collection of import and export duties, as well as other taxes, duties and services for which it is responsible.

Law 16-95 on Foreign Investment regulates foreign cash or species contributions to the capital of a company operating domestically and other investment measures, including t technology and equipment transfers, allowing remittances overseas, in freely convertible currency, without need for prior authorization, [of] the amount of capital invested and the dividends declared during each financial period up to the total amount of current net profits during the period, subject to prior payment of income tax.

In establishing and conducting commercial operations, foreign companies are covered by domestic laws and their domicile is governed in accordance with Law 259 of May 2, 1940 (Alfonseca Salazar).

The labor laws stipulate the nationalization of labor, with 80% of the company’s workforce being Dominican citizens.

The provisions on construction: law 6200 of February 22, 1963 and Law 6160 of January 11of the same year, as well as the law on bidding and drawing for State works.

Monetary Law 1528, published in Official Gazette 6699 on October 13, 1947, refers to the monetary unit and, among other things, to fees, contracts and obligations that may be denominated in pesos, to the monetary issue for which the Central Bank of the Dominican Republic is responsible, to the international parity of the currency, to the currency exchange and convertibility system and other general provisions and penalties.

The organic law of the Central Bank of the Dominican Republic, created by Law 1529 of October 9, 1947, gives the bank legal standing with its own assets. The bank is responsible, among other things, for maintaining the national monetary system, for accommodating the pace of productive activities, payment methods, and credit policies and for collaborating in the coordination of monetary and fiscal policy.

General banking law no. 708, published in Official Gazette 8940 of April 19, 1965, establishes that the banks’ legal system is the responsibility of the Superintendency of Banks. It also indicates which entities may conduct loan operations, banking business, as well as everything associated with deposits and reserves, bank transactions, etc.

The Reserve Bank of the Dominican Republic [is governed by] its organic law 6133 as published in Official Gazette 8728 of January 9, 1963, has autonomy and its own assets, and is empowered to carry out banking operations in general.

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Regulation 4921, published in the Official Gazette No. 6749 of February 11, 1948,

to implement the law governing international fund transfers (no. 251 of May 11, 1964) for obligations resulting from current operations establishing payments going from the Dominican Republic to other countries and from other countries to the Dominican Republic. These include payments for interest on loans or profits from other investments and normal short-term banking and credit operations and those whose purpose is to effect transfers of capital.

Law 5884 published in Official Gazette 8645 on March 31, 1962 and governing the relations between the Dominican Republic and the Inter-American Development Bank.

Law No. 11-92: the Tax Code of the Dominican Republic, establishing the general standards, procedures and penalties for the tax obligation, determines the subjects and purpose of taxation, taxed income, tax on transfers of industrialized goods and services and the selective tax on consumption.

Law 400 of January 9, 1969 creating the Superintendency of Insurance, under the direction of the Secretariat of Finance, and Law 126 of March 10, 1971 on private insurance in the Dominican Republic. The Civil Code and the Commercial Code contain provisions in the area of insurance contracts.

Law 385 on work-related accidents as promulgated November 11, 1932 and Decree 1805 approving the premium schedule for work-related accident insurance and the decrees amending it.

9. Is the system clear, comprehensive and consistent? Does it cover all essential aspects with no unduly complicated, unnecessary, conflicting or outdated regulations and are rules found in various distinct sources or within a well coordinated legal framework?

The legal procurement framework is regulated by a number of outdated laws and regulations (see paragraph 7 above). These are not comprehensive nor consistent and do not contain the essential aspects for a transparent and efficient procurement system. Procurement auditing is not carried out by independent agencies. Public institutions are audited only by their respective internal auditors. The General Comptrollers Office (GCO) conducts audits of the public accounts and moneys spent only, and does not review any documentation related to technical and/or administrative procurement processes. The General Comptroller reports directly to the President of the Republic and not to Congress as in many other countries, therefore, lacking autonomy for issuing independent opinions. Under the present procurement legal and regulatory framework it is impossible to have any accountability of the procurement processes. The only Government, quasi independent, auditing agency reporting to Congress is the Board of Accounts, which, because of the lack of staff, structure and lack of financial resources, does not discharge its responsibilities efficiently. The work of this Board is limited to auditing, and at the request of an interested party may conduct and ex-post investigation of procurement claims.

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The centralized normative system with de facto operational decentralization keeps

broad discretionary powers of the Executive Branch delegated to public institutions and control powers in the decentralized agencies. The procurement law for works is antiquated and there is no regulatory authority. The regulations also fail to provide adequate treatment for consulting services.

The Government of President Fernandez appears to be committed to improve the

the legal and regulatory procurement framework. As an indication of this, on June 1998, the President of the Republic appointed a Commission to prepare a new draft procurement law for the supply of goods, works and services to the public sector under locally funded contracts 1. Such commission is chaired by the Secretary of Public Works, and composed by representatives of the public and private sector, including representatives of professional associations and members of the opposition party. The Commission has completed a draft law and a revised version by the Executive Branch has been submitted to the National Congress in November 1998 ???, for its consideration. This draft appears to be a comprehensive piece of law, which could significantly improve existing procurement regulations.

Another indication of the Government commitment was the issuance of regulation 262-98 approved by Presidential Decree.

In practice there is a disconnect between the Governments will to improve the procuremt legal and regulatory framework, and its hability to either implement new regulations (the case of regulation 262-98) and get Congress approval of the new law for procurement of works and services.

10. Is the hierarchy of the sources of procurement rules well established ? The hierarchy of the source of procurement rules is not well established. The legal and regulatory framework, jurisdiction, and scope of application must be defined, updated and standardized; bureaucratic red tape must be simplified; and responsibility and the order of priorities must be established. 11. Do the same rules apply to central and local governments?

First, one must start with the fact that the central government is concentrated in the Executive Branch and the Secretariats of State. Secondly, there are the autonomous agencies instituted by laws creating them and decentralized agencies of the State, which have their own autonomy and assets, with administrative decentralization. These include the municipal governments. The scope of application of the procurement rules and regulations for works, goods and services in the Dominican Republic is the same, except for special provisions contained in the laws that created the decentralized or autonomous agencies.

1 Contracts funded by loans of international organizations would follow the procurement guidelines of

those institutions.

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For example: • Works (State, municipal governments and official agencies):

Law 5557 of June 21, 1961 establishes that the construction of State Engineering and Architecture works valued at more than RD$5,000.00 is subject to competitive bidding. However, the law delegates to the Executive Branch the power to approve the regulations governing such competitive bidding with the force of law and authorizes it, when circumstances make this advisable, to order as an exception that force account be used for specific works. This law was repealed by Law 105 (see question 8 above) that makes subject to competitive bidding for award all engineering and architecture works valued at more than RD$10,000 which the State, the Municipal Governments and other official agencies and institutions propose to build. However, the Executive Branch may as an exception contract in stages for the construction of works or the performance of programs in the public interest.

Regulation 395 of September 26, 1966 on procurement of works by the State, the Municipal Governments or other official agencies and institutions repeals Regulation 8411 of August 2, 1962 and establishes that the department or agency responsible for the supervision and control of the work must give the Chairman of the Bidding Commission notice that the work will be submitted for competitive bidding. The members of the Bidding Commission are appointed by the Executive. The Commission is empowered to exclude from a specific drawing works that for acceptable reasons should not be subject to drawing. Once works are awarded, the Executive Branch is informed for the purpose of issuing the respective contracting authority and the Commission shall notify the head of the Municipal or Autonomous agency involved in the works to be carried out, for the purposes that apply to them. • Purchasing (by government):

Regulation 538 on the operations of the Government Supplies Commission (created by Law 295 of June 30, 1966), includes among the functions of the Commission that of inspecting the activities of Government institutions, including its autonomous agencies, with respect to supplies. The Commission may delegate its routine purchasing powers to the Ministers or heads of government agencies, to the General Director of Supplies, to the existing public agencies, within the limits of the regulation.

Law 295 created the Supplies Commission attached to the Office of the President of the Republic to formulate and recommend to the Executive Branch supply policies and regulations for the entire government. It has the power to carry out all Government purchasing and to dispose of the State’s property. It is a division of the Secretariat of Finance.

Purchases of goods made by the decentralized agencies of the Government, with the exception of purchases that apply generally to all public agencies; the procurement and supply of equipment essential to State security; purchases made by Dominican embassies

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or consulates overseas; and purchases and services of an urgent nature not exceeding the sum of RD$ 50.00 are exempt from the authority of the Supplies Commission. Emergency purchases and purchases not in accordance with this provision are justifiable only to avoid loss of life or State property and to avoid extended delays in government programs which could represent large expenditures. In order to make use of these exceptions, the head of the Ministry or decentralized agency must be responsible for justifying the request for such purposes.

Law 322 on bidding and drawing for State works, published in Official Gazette No. 9556 of June 15, 1981, establishes that in order for a foreign company or individual to participate in biddings, drawings or any other award procedure or to be contracted by the Dominican State, that individual or company must be affiliated with a domestic or mixed capital company. The law even provides that foreign participation may be no more than 50%, and no more than 70% as an exception. The implementing regulation, No. 578-86 of June 14, 1986, assigns to a foreign companies board the role of reviewing and analyzing all contracts with the State, autonomous institutions, municipal governments or companies in which the State appears as a shareholder, when a foreign company or professional has some participation in the contract. • Goods and Services (except consultants) by Central Government and

decentralized institutions: The purchasing and contracting of goods and services by the public administration is governed by Decree No. 262-98 and is applicable to the Central Government and the decentralized institutions in matters relating to contracting rules and procedures. Municipal Agencies and Public Enterprises have the option of adopting the policies, rules and procedures described in this regulation. The system is organized on the basis of a regulatory centralization and operational decentralization criteria. 12. Are there procurement rules established for parastatals? Describe.

Other than the provisions indicated above, there is no definition nor are there any regulations in this regard.

13. Is the procurement function decentralized? If so, describe basic structure, name the main decentralized procuring entities and indicate whether their role, rights and responsibilities are clearly delegated in writing.

Procurement of works, goods and consulting services is decentralized within each of the twelve sector Ministries, decentralized government agencies (Central Bank, Reserve Bank, CDE, INAPA, INDRHI, INAVI, Dominican Port Authority, the Airport Commission, National Parks Administration the Autonomous University of Santo Domingo, National Cotton Institute, Dominican Social Security), and state enterprises (operating like autonomous agencies) grouped under CORDE. Procurement of works and goods related to a project by most of the sector Ministries, decentralized agencies and state enterprises is carried out through project executing units. Most of the implementing agencies do their own procurement planning, preparation of bidding documents, invitation for bids, evaluation of proposals and recommendations for award.

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Recommendation for award and contract signature by sector Ministries is approved, depending on the amounts established in their internal procurement regulations, by the Minister, Undersecretary, administrative Director, of Chief of purchases.

The decentralized and state enterprises have their own Boards of Directors and within their organization the complete procurement process, including contract awards is carried out internally based on their own developed bidding procedures and regulations, without requiring external approval. These agencies have developed their own set of bidding documents, sometimes a hybrid mixture of standard bidding documents of FIDIC, IDB and World Bank. Under donor’s financed projects they follow the procurement guidelines of the financing agencies. Procurement of goods and particularly works executed by the central government is centralized in the Technical Secretariat of the office of the President (see description below). The main procurement entities in terms of volume of contracts are the SEOPC, the Technical Secretariat of the Office of the President, INDRHI, INAPA, CAASD, CDE, INAVI, Ministry of Turism and Ministry of Health. 14. Is there an entity(ies) with oversight responsibilities for procurement functions throughout public administration (e.g., with primary regulatory powers, responsible for harmonization of rules and monitoring of compliance)? If so, identify and describe responsibilities and structure. Is it operationally involved in procurement? Is it the Central Tender Board?

The only two entities with oversight responsibilities for procurement functions are the Bidding Commission (Comisión de Concursos) and the General Directorate for Government Supplies (Dirección General de Aprovisionamiento del Estado). There are other two institutions, one responsible for the auditing of the accounts and moneys spent by public institutions and the other to review the auditing conducted by the first one as well as to review, on an ex-post basis, the execution of contracts awarded by public institutions.

Bidding Commission: The bidding commission was established by law under regulation 395. The Bidding Commission is appointed by the Executive Branch, and must consist of at least five people. Its members must include an engineer or architect selected by CODIA (Dominican College of Engineers and Architects), as well as other non-voting observers with a voice on the Commission. The bidding commission is responsible to oversee the compliance of the procurement regulations established in such regulation for the award of contracts by the state and government agencies, and at the request of the party in charge of the project will take care of the invitation for bids, will review the evaluations and recommendations for award, and will approve the award of contracts. In practice the Commission is not working because it has no legal satus since ….., when regulation 395 was repealed as a result on cancellation of the law 247. The consequence

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of all this is a legal vacum on procurement legislation, because the only procuurement law in effect is law 105 without its corresponding regulation. Government General Supply Directorate and Government Supply Commission: The Government General Supply Directorate (GSD) and the Government Supply Commission (GSC) were originally established under law 295 of June 1966. Their functions and responsibilities have been re-defined under regulation 262-98 (regulating the supply of goods and services, except consultants, based on normative centralization and operational decentralization criteria) approved by Presidential Decree.

The GSC is responsible for the approval of the rules and regulations for the procurement of goods and services (except consultants), and for ensuring compliance of such rules and regulations. The GSC, attached to the Presidency, shall consist of the Minister of Finance, as chairman; the Minister of Defense; the Minister of Interior and Police; the Secretary of the Technical Secretariat of the Presidency; and the General Director of Budget. Actual procurement of goods and services has now been delegated to the Central Government agencies and decentralized public institutions (originally the GSC was responsible for the purchases on behalf of the public institutions).

The GSD, a branch office of the Ministry of Finance, is responsible for: (i)

developing and getting the GSC approval of the procurement policies, rules and procedures for the purchase of goods and services; (ii) ensuring the proper application of such rules and regulations; and (iii) establishing and maintaining an updated data bank of prices for goods, including a complete record of all contract awards. The specific responsibilities of GSD’s director are:

(a) act as the executive secretary of the GSC; (b) develop and implement an information system to provide the GSC the required background for determining the basic policies for the purchase of googs and award of contracts; (c) develop and implement a catalogue of goods and service normally required by the public administration; (d) design and implement an information data bank system to provide updated information to all public entities regarding costs of goods and services, delivery periods, payment conditions, etc.; (e) establish a methodology for the preparation of annual procurement programs of goods and services, based on the government budget and action plan; (f) design and implement an operational manual of procurement rules and procedures, methods of procurement, and bidding documents for different procurement modalities. The manual should be approved by the GSC;

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(g) conduct regular inspections to the government agencies to ensure the application of the procurement regulations as well as of the policies approved by the GSC; (h) provide training to the staff of the GSD and project executing units; (i) maintain an updated list of suppliers of goods and services, based on the information provided by the project executing units; (j) maintaining a national registry of suppliers of goods and services who did not comply with the responsibilities and obligations under their contracts; and (k) receive complains and suggestions from suppliers of goods and services.

The GSD is not functioning as per the mandate of the new regulation, because the new structure and internal regulations required to carry out its responsibilities under the new legislation, has not been approved yet by the Commission of Supply, whose chairman, the Secretary of Finance. The new organic and functional regulation was submitted to the Chairman of the Commission of Supply in November 1998, and as of June 15, 1998, it was still pending. Because of this, no budget has been assigned and no staff has been appointed to carry on the responsibilities listed above. The Director of the GSD indicated to the Bank that an IADB loan approved last year is expected to finance the provision of technical assistance, and training as well as the provision of equipment (hardware and software) to help the GSD in the discharging of above responsibilities. Unfortunately, the IADB is pending for approval by Congress since last year.

General Comptollers Office: The General Comptrollers Office, established by law 3894 on August 9, 1954, reports directly to the executive branch and is responsible for the control and audit of all public accounts, including autonomous agencies and Municipalities. The above law requires to conduct annual audits and the results of this exercise is an audit report of the public accounts presented to the President of the Republic at the end of each year. To carry out its work, it is entitled to conduct inspections of the offices of any public entity and/or office of any employee responsible of public funds or public property. Although the general comptrollers office has access to all records and documentation, their review is mostly centered to inspect the public accounts with regards to budget allocations and expenditures, and it does not audit or review procurement processes. Occasionally may review a contract for the supply of goods, works or services to verify actual expenditures. As part of a modernization process it has: (i) started to implement the auditing process utilizing international parameters; (ii) established an office open to the public to report cases of corruption, on a very confidential basis; and (iii) established a code of professional ethic for the auditors and the general comptroller. Because of lack of resources the modernization program is moving slowly and training of its staff has been scarce. 15. Is there a Central Tender Board or similar institution ? What are its duties and responsibilities ? Do procuring entities or the Central Tender Board issue the award recommendation ?

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There is no Central Tender Board or Committee, which has jurisdiction over all public bodies and/or parastatals in regard to procurement. However, it should be noted that each public institution has its own tender committee, comprising members selected from within the organization and established in accordance with the procurement regulations of the institution.

16. Does the system allow/facilitate the introduction of new and innovative techniques and contracting practices without compromising basic principles?

Procurement legal arrangements do not allow nor prohibit the use of new and innovative techniques and contracting practices. In practice, provided the basic procurement requirements are met, most of the public institutions are permited to pursue its own contracting procedures, techiques and methods.

17. Are there rules/procedures regarding bidder suspension and debarment?

There are no formal rules and/or procedures regarding bidder suspension or debarment.. Some executing agencies maintain a formal and and others an informal records of contractors, consultants and suppliers that have poorly performed, and debarment of bidders from participation in procurement processes, in practice, takes place.

18. Is the country a member of any regional trade or customs agreement ? (Specify) The Dominican Republic was a signatory to the General Agreement on Tariffs and Trade (GATT) at the Annecy conference in France in 1949. The country is also signatory to the final minutes of the Uruguay Round of Negotiations signed in April 1994, whose results included the creation of the World Trade Organization and the approval of the General Agreement on Trade and Services (GATS) and the Agreement on Intellectual Property Rights related to trade. As a member of the GATT the country follows trade practices which promote the free flow of goods and services to and from the country. The country is in the process of reforming its legal and economic framework in order to comply with the guidelines set forth in the Uruguay round of negotiations of the GATT.

The Caribbean Basin Initiative (CBI) seeks to promote economic development by expanding foreign and domestic investment in the Central American and Caribbean regions through private sctor initiative. The CBI offers to the Dominican Republic duty free entry to the United States of products originating in CBI countries, provided the rules of origin established for this purpopse are met.

The Dominican Republic is also part of the Lomé Convention between the European Union (EU) and its member states, with a group of African, Caribbean and Pacific (ACP) countries. In general, goods originating in ACP countries are exempt from paying custom duties when they enter the EU.

The Dominican Government is exploring the possibility of joining regional trade groupings with Central American countries such as the MCCA (Central American Common Market) and with CARICOM. The Dominican Republic asked to join

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CARICOM in 1990 but access was denied for all new applicants in 1992. Nevertheless, the country has active commercial exchanges with the regional group.

19. Are there primary/secondary boycotts? (Specify) In the procurement sector there is no clear and consistent evidence of such conduct, much less of sanctions having been applied in this regard. However, in previous years there were daily complaints concerning this issue in the customs sector. This situation has been much improved, particularly during the last three years.

Recently, the United States Department of State publicly complained about the procedures applied by Customs for clearance of merchandise, which it categorized as arbitrary, stating that in order to streamline processing, importers must pay “negotiated fees.” However, it recognized that speed in releasing merchandise from ports has improved in comparison with how arduous and slow this process was in the past.

20. Are there provisions regarding preferences for particular categories of suppliers of goods and services? (Specify) Is the purchasing entity compensated by the government for awarding contracts to higher cost national or local firms? There are no formal provisions for domestic preferences for the supply of goods and services, unless those goods and/or services are financed by international funding agencies (World Bank, IDB, etc.), which allow such preferences and are specifically spelled-out in the loan/credit agreements. The Government of the Dominican Republic does not subsidize any Government executing agency for contracts awarded to local suppliers at higher costs.

BASIS OF TRANSPARENCY

1. Is there a legal or regulatory requirement for public disclosure of procurement legal texts?

Yes. The law establishes that legal texts should be published in the National Gazette.

2. Are there mandatory requirements for maintaining written methods of procurement? Are they available to the general public?

There are none. Some state agencies keep records in their files on solicitations and bidding. Those that have contracts without external consultants maintain more planned organization. Availability to the public depends on each agency.

Regulation No.395 on procurement of works planned for construction by the State, the Municipal Governments or other official agencies and institutions provides for a potential bidders registry of qualified professionals and companies, for which the

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Commission is responsible, and a registry of master builders for purposes of the award procedure for works valued at less than RD$ 5,000.00.

Regulation 262-98 empowers the General Supplies Administration to maintain an updated list of government providers and a registry for this purpose. So far the GSA has not been able to establish and maintain such registry. 3. Are requirements for advertisement of contracting opportunities adequate? Is the country’s national gazette published in a timely fashion? Is it available to the general public?

There are no legal requirements for advertizing of contracting opportunities in the official Gazette. Nevertheless, chapter 1 of regulation 395 for the procurement of works indicates that the Chairman of the Commission shall establish through publication in the press the date for the bidding and the dates for obtaining the bidding documents and for submitting bids as well as the date when these bids are to be opened. These periods may be extended through notices published in the press. Article 36 of regulation 262-98 for the procurement of goods and services, provides that every public bidding should be advertized at least for three days in the local and foreign (if needed) newspapers, with at least fifteen days prior to the bid oppening date. Law 105, for the procurement of engineering and architecture works, establishes that in order to award works through bidding, the respective Department or the Bidding Commission must issue a single notification at least ten days prior to the opening of the bid period.

For the supply of goods under locally-funded contracts, most public institutions would advertise contracting opportunities in the local newspapers and the advertising time would vary from one institution to another, but in general the time allowed for prsentation of bids is reasonable. For the construction of works, since most of public works funded with local resources is awarded by direct contracting, advertisement is not very frequent. In general, requirements for advertising contracting opportunities is not adquate. Contract opportunities for the supply of works, goods and services under contracts funded by international organizations, would be published following the procurement guidelines of those institutions. 4. Are requirements regarding public bid opening, if any, appropriate?

The provisions in the law regarding bid oppening are not fully appropriate. However, most public institutions have their own internal procurement regulations and in general the requirements are approporiate. Some institutions (CDE, INDRHI, INAPA) have drafted their internal procurement regulations based on the guidelines of international organizations.

Article 6 of Regulation 395, provides the following requirements for the opening of bids, their acceptance or rejection and the withdrawal of bids:

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(i) proposals received after the period stipulated in the notice has expired shall be returned unopened, except for those that have an official postmark indicating they were mailed in due time.

(ii) the Commission shall proceed to inform the bidders of the basic budget prepared by the respective technical agency. Once the budget amount has been reported, opening of the bids shall proceed. Bids shall be read aloud in the presence of the bidders in attendance or their authorized agents by a member of the commission or someone else designated for this purpose. This shall be done on the date and at the time and place indicated in the notice published for this purpose in the press. The notice or invitation to attend the opening of bids shall be published in a newspaper with national circulation at least 48 hours prior to the date indicated for the opening of bids.

(iii) prior to the opening ceremony, the bids shall be compared and proposals with signatures not appearing in the registry and thus not qualified to engage in the activities for which the invitation to bid was issued shall be rejected. Bids not accompanied by the respective securities shall also be rejected.

5. Are negotiations after bid opening or award selection generally forbidden? There are no legal provisions in the procurement legislation prohibiting negotiations after bid opening or award selection. However, many institutions would specify in the bidding documents that negotiations after bid opening or award selection are prohibited. No references to examples of subsequent negotiations were found. 6. Do rules on negotiated procurement, if any, provide the basis for a fair and transparent process? Detail.

No documentations on cases of negotiated procurement were available to the Bank. Some of the persons interviewed by the Bank indicated that most of the construction works awarded by direct contracting are exposed to negotiations after bid opening or award selection. No information was found on whether the negotiation rules provided for a fair and transparent process.

7. Are conditions for use of various procurement methods clearly established and is there an explicit requirement that open competitive bidding is the preferred or default method?

There are some provisions in the law regarding procurement methods for the supply of goods and services. For the procurement of works the provisions in the law are very limited and obsolete. Although there are no provision in the law indicating that open competitive bidding is the preferred or default method, law 105, article 2, allows the executive branch to award contracts on a direct basis (grado-a-grado) whenever those works are of public interest. Under the umbrella of this provision, the Executive Branch has awarded in the last years the majority of the contracts for the construction of public works, funded with local resources, by direct contracting.

Law 295 indicates that government procurement of goods and services shall be carried out through competitive bidding, ensuring equitable and fair treatment for all

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qualified suppliers within the specifications required for the procurement. However, it does allow emergency acquisitions to avoid loss of life, when public safety is seriously at risk, to avoid serious loss of State properties, to avoid extended delays in Government programs that may represent substantial costs, all under the authority of the corresponding department head.

Law 105 establishes that the award of all engineering and architecture works valued at more than RD$ 10,000.00 to be executed by state agencies, the Municipalities or autonomous agencies, should be through a public bidding process. However, the Executive Branch may contract in stages for construction works or performance of programs in the public interest which in its judgment are necessary for the common welfare.

Regulation 262-98 establishes that the procurement of goods and services shall be carried out through public bidding (above RD$ 3,000,000 – about US$200,000); bidding by invitation (above RD$100,000 and not exceeding RD$3,000,000); and local or international shopping ( RD$50,000-100,000 via five quotations – RD$5,001-50,000 via three quotations – up to RD$5,000 via one quotation). The law allows for dispensing with one or all of the formalities established in this regulation in cases of emergency and for contracts that must be awarded rapidly so as to avoid damage to the public interest, serious damages to persons or irreparable damage to works and instalations. 8. Is there a requirement for public notice of contract awards?

Regulation 268-98 for the supply of goods and services establishes that the award is made by the authority competent to approve the contract, and that the award must be communicated to the successful bidder or bidders and published in a newspaper with national circulation within three working days of the award and, when the institution is part of the Central Government, the contracts must be registered with the General Accounting Office of the Republic. With regards to the contracting of works and consulting services, the present regulations does not contain provisions for public notice of contract award. 9. Are requirements for bid and contract securities clear and appropriate? Are they required of all bidders?

The law does not require that bidders and contractors give any security against

withdrawal of the bid after opening nor for performance of a contract. In practice, this requirement is set forth in all bidding documents for the supply of goods and works issued by the executing agencies, and the requirements appear to be clear and appropriate. The amount, which is a percentage of the contract price, varies widely depending on the agency and the source of financing. In the case of projects funded by international financing agencies, the executing agencies would follow the requirements of those agencies. For locally funded construction and supply contracts implemented by public agencies, the percentage will vary between 1 % and 3 % for bid securities and between 5 % and 15 % for performance securities, depending of the executing agency. There are cases in some regions where bid securities are not required in the case of

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contracts for earth works. In the case of locally funded contracts for the supply of goods executed by regional agencies, there are no requirements for presentation of bid and performance securities. Bidding documents specify that the bidder shall remain bound by his tender for a period of 90-120 days as from the date of submission of tenders.

With regard to the form and type of the bid and performance securities, for projects funded by international financing agencies, they would follow the requirements of those agencies. For other local competitive bidding and locally funded projects executed by ministerial, descentarlized. autonomous executing agencies, the bid securities shall be in the form of a certified check (in some cases specified to be made payable to the Minister, chairman or administrative manager as the case may be, or a letter of credit or guarantee from a bank located in the country of the executing agency. The performance securities shall be provided by a local bank or insurance company, in the form specified by the executing agency in the bidding documents. 10. Are qualification requirements for bidders, if any, fair and appropriate for the purpose of the contract?

For the purpose of the contract, the requirements relating to bidder qualifications are appropriate but not sufficient. In those agencies where specialized consultants appear, such requirements are consistent with international guidelines. More than in laws and regulations, this is established in the basic documents prepared by each entity, particularly those based on international public bidding and where international bodies such as the World Bank and the Inter-American Development Bank and others are involved. A simple review of such documents shows that there are entities that are more demanding in terms of the requirements regarding qualifications.

In some cases, we find that the points system used does not specify what is required, but is limited to indicating the number of points possible for each criterion. This indicates that such a system is not objective and does not contain clear conditions for prequalification.

The law has no provision with respect to the bidders qualification’s to be specified in the bidding documents, for the supply of goods, works and consultant services. Bidding documents for the construction of works under locally funded projects, would normally require the bidder to present: (i) details of similar projects completed by the construction firm, and this information must be substantiated with documentary evidence; and (ii) a list of the personnel to be employed in the works, including the details of their qualifications and experience. The bidding documents do not specify the methodology, criteria and weighting given for evaluation purposes and the information requested is used by the evaluating committee at their own discretion. There is public perception that bidders are not treated in a fair manner. The executing agency reserves the right to reject any or all the bids and the reasons for the rejection of applicants will not be given. 11. Do requirements for bid examination and evaluation provide the basis for a rational and fair process?

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The applicable laws do not contain provisions on the examination and evaluation of bids based on rational and fair criteria. Discretionary authority prevails in each institution. Evaluation is carried out in the institutions by Technical Committees, some of which are permanent in nature while others are not. From the examples seen, bids and qualification are determined according to the terms and criteria described in the documents. However, in other cases, the particular specifications are not described in the bidding documents.

For internationally-funded projects, bidding documents are prepared on the basis of the guidelines and/or standard bidding documents of those institutions and the requirements provides a basis for a rational and fair process. Under locally funded projects some of the executing agencies bidding documents do not envisages preliminary bid examination. For evaluation purposes, the requirements established in the bidding documents (see question 10 above) do not promote a fair and transparent process. 12. Are summaries of information about public procurement published (e.g. number of bids received, number of contracts awarded, names of successful bidders)? If so, describe scope and frequency. No, procurement summaries are not published under regular procurement of goods ans services. Some information about the results of a procurement process and award results is made public for large contracts, specially those recently awarded under the privatization (capitalization) program of the power sector, by the the Commission for Public Reform created in 1997. 13. Does government hold regular meetings with the business community to discuss public procurement issues?

Not as a general rule. However, if there are specific type of procurement issues which are of the interest of the business community who are interested in the supply of goods, works or services, the Government may hold public meetings (as an exception to the rule) to discuss such issues. 14. Is there a conflict of interest policy in effect? (If so, describe its essential features). There are rules on conflicts of interest although there are no prevention and monitoring mechanisms. The Penal Code, Law 14-91 on Civil Service, and Regulation 262-98 provide regulations on inconsistencies and conflicts of interest for public servants.

Article 75 et seq. of the Penal Code provides penalties for public employees who make arrangements in violation of the law, or who accept bribes, gifts and promises in the performance of their public role.

Law 14-91 on Civil Service provides that public servants must conduct their duties honorably. They are prohibited from accepting advantages or benefits in cash or in kind,

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from directly or indirectly participating in the signing of contracts and in obtaining concessions or benefits that involve privileges accruing to them.

Regulation 262-98 prohibits public employees, their families and relatives, including legal entities in which they hold more than 25% of the corporate capital or hold a managerial or representative position, from directly or indirectly participating in procedures for procurement of goods and services in public institutions. 15. Are the laws on bribery of government officials enforced? Do government bidding documents and contracts contain anti-bribery and anti-corruption conditions?

Through Decree No. 322-97, the Executive Branch created the Department for Prevention of Administrative Corruption as an agency of the Office of the Attorney General of the Republic. It is responsible for the design, enforcement and management of the national program to combat administrative corruption. In this regard, complaint windows have been installed in various state agencies, and the DPAC conducts investigations, provides education and takes preventive measures. This is the only example of the fight against corruption created by Public Authority existing in the Dominican Republic. Rules designed to prevent bribery and corruption do not appear in most government bidding documents and contracts.

BASIS OF ACCOUNTABILITY OF PROCUREMENT OFFICIALS 1. Are government employees expected to follow a published code of ethics? If so, describe its basic features.

As explained earlier there are some legal provisions regarding a code of ethics applicable to public procurement. Specifically, the code of ethics for public servants is described in Chapter X of regulation 81-94 of March 29, 1994, for the application of the Civil Service and Administrative Career Law. As part of the Government plan to prevent corruption, the DPAC is pursuing very hard the application of such Career Law. The DPAC conducts television campaigns and announces through murals and decals that crimes of corruption are subject to criminal penalties. Article 129 of the above Chapter X, include provisions establishing clearly that no person in public life shall, in return for any thing done in the execution of his duties, ask for or accept for himself, any money, property, benefit or favor of any kind over and above that which he is entitled to receive for the performance of his duties.

Bidding documents for projects executed by some of the public institutions (INDRHI for example) would include specific paragraphs for disqualification of contractors involved in collusion activities among participating proponents or in previous proved fraudulent practices. 2. How easy is it for bidders to report bribes by others and solicitation/extortion of bribes by government officials?

Bidders could easily make a public statement via newspapers or television and

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even engage in litigation or file a law suit against who the bidder feels like, following the civil court procedures under the Civil Law. Because this would normally imply a long and difficult process, interested parties are not encouraged to follow this procedure. Within the General Comptrollers Office, the Government has established an office where the public and interested parties may report a complain. This office is quite new and no records were available as to the actions taken by this office after receiving a complain. 3. Do bidders have adequate access to administrative or judicial review/appeal ?

No. There are no provisions in the law in that will allow bidders access to administrative or judicial review about procurement decisions. 4. Are there measures/initiatives to curb/control corruption, e.g. anticorruption statutes and/or bodies, whistle- blower statutes, comprehensive reforms of the civil service/judiciary, regional initiatives, provisions in the criminal law, anti-bribery provisions, etc.? (If so, describe) The Government has shown interest to address the corruption issue. In July 1997, the Government has established (Decree 322-97) the Department for Prevention of Corruption (DPC) as an important branch within the office of the Procurador General of the Republic. Under his leadership, a National Strategic Plan for Corruption Prevention (NSPCP) was proposed by the DPC and approved at a National Conference held in Santo Domingo on November 28-30, 1997. The NSPCP was launched in early 1998 and foresees three stages in the campaign against corruption: consciousness raising, implementing specific actions, and maintaining change. The plan organizes the specific actions in several categories, legal, educational, social and institutional. As shown in more detail in Annex A – Question 4 under Basis of Accountability of Procurement Officials, the plan emphasizes classic themes such as circumscribing government's role, generating more oversight and feedback from citizens, and making systems less vulnerable to corruption, and is sub-divided in four major areas, namely Legal, Educational, Social and Institutional. On the Legal aspect, the reform of procurement laws and regulations is specifically mentioned as one of the main elements to help reducing corruption. Details of the different categories are shown below. A. Legal

a) Ratify the Interamerican Convention; b) Include in the Constitution the Department of Corruption Prevention; c) Reform the law about the declaration of wealth; d) Reform of the procurement laws; e) Reform the allocation of public lands and properties; f) Raise the criminal penalties on corruption, penalize illicit enrichment, etc.

B. Educational

a) Diagnostics: Meeting with public employees, surveys and studies of corruption, evaluation workshops of the anti-corruption plan, and self evaluation by public employees;

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b) Training: Training and consciousness raising of public servants (workshops, code of conduct, training in various technical tasks such as investigation); c) Promotion: Promote a new culture and a new spirit in the Dominicans about public service (programs in schools, curriculum reform, daily radio programs, theater and art groups to deliver anti-corruption messages).

C. Social

a) Promote participation in the fight against corruption (workshops with citizens, education about rules and regulations) b) Facilitate complains and denunciations (create a hot line for free telephone calls reporting corruption), promote public campaigns and work with churches and other institutions within the Dominican civil society.

D. Institutional

a) Strengthen anti-corruption institutions (create new anti-corruption units in every state dependency, strengthen the Department of Corruption Prevention); b) Establish a system to monitor the economic and social status of public employees (declarations of wealth, data bank, and legal and administrative reforms to support this); and

c) strengthen public administration (process control systems, data base of standard prices).

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ANNEX B – TRADE PRACTICES

1. Are foreign firms engaged in trade with the country required to use a national agent?. Are foreign firms allowed to establish business in Guyana ?

Article 12 of Law 173 protects importers of merchandise and products who wish

to avail themselves of the law and in such case establishes that in the case of a foreigner, that foreigner must have established their domicile in the country for a period of no less than four years prior to starting such activities.

Foreign firms are allowed to establish business in the Dominican Republic following the requirements established in the law for foreign investments. For their organization and establishment, foreign firms are required to have a foreign partners and shareholders domiciled and residing in the country for the last four years or must obtain the authorization from the Executive Branch to carry out commercial activities in the Dominican Republic as well as the registration from the National Taxpayer Registration Office. 2. Are there indications that over-invoicing or under-invoicing are common practices? For which purposes?

Under-invoicing is one of the major problems faced by Customs Administration nowadays. Because of the high tax brackets, under-invoicing is done to evade customs duties and other related expenditures, and delays significantly the customs time clearance process, which normally should be two to four days. Over-invoicing is also done in a few occasions, to inflate the cost of goods and eventually pay less Income, Property and Corporation taxes. A draft law on Tax Reform is now being considered by Congress which would significantly reduce import duties.

In the complaint that appeared in the morning edition of El Siglo newspaper on April 28th, published an article asserting that Customs officials customarily reject invoiced prices as the basis for computing customs charges and invoices and use their own data base of assumed estimates. Some of the persons interviewed by the Bank complained that payment on invoices are stretched out and that payment procedures are quite bureaucratic, thus hampering a rapid payment request process.

3. Are goods frequently described incorrectly on the invoices?

In the commercial invoices issued by suppliers, we did not find incorrect descriptions in the documents reviewed, although in few cases shipping acknowledgments are not necessarily entirely consistent with the description in the commercial invoices. Some of the staff interviewed by the Bank indicated that shipping acknowledgments contained descriptions such as “said to contain”, “closed package,” etc., and not including the value of the merchandise is a widespread practice.

4. Are there indications that import documents are falsely labeled?

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In the area of trade there are indications of false labeling on import documents.

Public complaints have been made of contraband merchandise, false shipping acknowledgments, declaration of incorrect goods and tax evasion. Many importers do not declare the value of the cargo in order to avoid paying for freight and insurance. Customs laws allow the payment of a bond for removing merchandise for persons of doubtful credibility in terms of the submission of the original documents. There are even specific cases of alteration in the data on cargo manifests. Current customs authorities have managed to reduce the use of false labeling. 5. Is there evidence of any other trade malpractice affecting public sector procurement?

Customs officials reported that there are not any evidence of trade malpractice that will affect public sector procurement. Nevertheless, some Government executing agencies reported that the processing time to get out the goods from the custom premises some times is too long, mainly because of the lack of petty-cash to pay for unloading port charges, commissions, etc. 6. Is there a pre-shipment verification program? Who conducts the inspections? What goods are inspected?

There is no pre-shipment verification program in the country. Customs authorities

check the cargo prior to shipment, once the cargo is unloaded, and again in the warehouses at the cargo destination.

7. Is there a threshold for pre-shipment inspection? What is the amount? There is none. 8. If pre-shipment inspection is conducted by a private company, what is the duration of the contract with the company? Was the contract awarded following a competitive process? Not applicable. 9. Is pre-shipment inspection, if any, conducted according to generally established procedures? Are there indications that the inspection is not effective?

Not applicable. 10. Are goods also normally inspected upon arrival?

Yes, the inspection of goods upon arrival is routine. Inspections are conducted by customs agents in the presence of inspectors from the Dominican Port Authority or the Airport Authority as applicable and of the consignee of the cargo, with issuance of a verification card. There are no private companies involved in the verification process.

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The law authorizes General Tax Deposit Warehouses under private operation and supervised by Customs. 11. Are inspection procedures in conformance with established practice? Yes, all inspections are carried out following international standards on this matter. 12. Do pre-shipment/post-shipment inspections, if any, unduly increase the procurement lead time?

More than the post-shipment inspections in the customs premises, which are still very slow, what really increases the procurement lead time is the bureaucratic red tape for customs processing.

13. Is counter-trade used? Are there barter agreements? What percentage of the country’s total trade is involved in these practices? For which basic products?

There is some counter-trade, but it is not a customary practice. There are cases of barter, specifically with Cuba and Venezuela. The Dominican Republic maintains trade relations with other countries that allow for counter-trade and barter, but this is not customary practice. There are past experiences through organizations such as Cedopex and exchanges with Eastern Europe and Cuba. Currently the Dominican Republic is part of regional agreements with Central America, and he Caribbean countries via the CARICOM.

14. Are the ICC’s INCOTERMS generally understood and commonly used in the country? Are other trade terms used? What are the most commonly used trade terms? FOB? CIP? CFR? DDP?

These terms are used and understood at various levels of the population, and particularly in maritime trade, air trade, import-export, etc. The terms regularly recognized and used are FOB, CIF and CF.

15. Are there indications suggesting price-fixing in open bidding?

There are no indications suggesting price-fixing in public bidding 16. Are licensing and customs procedures generally transparent and efficient?

Generally not. Customs procedures are cumbersome but efforts are currently being made to make them more efficient. The granting of licenses to customs agents and to importers is easy in practice and essentially it is an administrative process. In order to obtain such licenses, a commercial corporation should be established following the legal requirements, and it should be proved that taxes have been paid, that the company has a track record of good conduct and non-delinquency. Good banking references and work experience is a must.

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17. Are “facilitation” payments normally necessary to clear goods through customs, obtain work permits for expatriate labor, or process monthly payment certificates/invoices?

In the past “facilitation” payments for clearing goods through customs were a matter of public knowledge. However, in recent years there is an education and prevention campaign being conducted by government authorities, with effective measures that have almost entirely eradicated this unfair practice.

Expatriate workers must obtain provisional residency in order to work in the Dominican Republic, although many cases are seen of undocumented foreigners working in state refineries and in construction, especially members of the Haitian community. The procedure for obtaining provisional residence takes about six months, involves unnecessary red tape and requires a letter of guarantee from a Dominican citizen, as well as other documents.

Title I, Book III of the Labor Code of the Dominican Republic, regarding regulation of contract conditions, establishes that at least 80% of the total number of workers in a company must be citizens of the Dominican Republic. The Code provides that the salaries received by at least ….. of the total number of workers in a company must total at least 80% of the full payroll. Executive or managerial and technical staff are exempt from this provision.

The Dominican Republic is a signatory of the Convention on equal treatment of foreign and domestic workers in the area of workmen’s compensation which was issued in Geneva by the International Labor Office on May 19, 1925 and approved by the National Congress by Resolution No. 4528, promulgated on August 31, 1956, in Official Gazette No. 8025 dated September 12, 1956.

18. Are local staff familiar with shipping and other trade documents? With documentary credits?

Agency staff and merchants usually engaged in international trade are familiar with shipping documents, trade documents and documentary credits. However, they are not familiar with their legal complexities. Customs staff are regularly trained on issues related to trade, shipping, documentary credits, and others. 19. Are local staff experienced in import planning and importation procedures? Yes. Local staff in most of the Ministries and autonomous agencies are familiar with import planning and importation procedures. Some regional executing agencies are less familiar and normally will require assistance from their headquarters in Santo Domingo.

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ANNEX C – FINANCIAL FRAMEWORK

1. Are banks capable of issuing Letters of Credit?

Yes, all banks in the Dominican Republic are capable of issuing letters of credits to customers.

Commercial Banks established pursuant to Law 708-65 of April 14, 1965 and the so-called Multiple Service Banks (Multibancos) established through Resolutions of the Monetary Board are the institutions authorized to conduct international trade operations in the Dominican Republic, including the issuance and payment of International Letters of Credit in their various forms, using as the reference currency the United States dollar or any other convertible currency. The banks reserve this type of operation primarily for their clients, i.e., for those which whom they have previously established some relationship such as acceptance of deposits or opening of accounts. They also receive international collections. Dominican commercial banks are correspondent banks or representative agents of the world’s major banks, particularly European and North American banks

2. Are banks generally creditworthy?

Yes, Dominican banks are generally creditworthy, have reserves deposited with other banks and a compulsory deposit with the Central Bank of the Dominican Republic which is called the “legal reserve” consisting of a percentage of the various deposits made, allowing the bank to respond to its depositors’ claims. However, the country does not have the system of specialized funds fully guaranteeing deposits as in other countries, except for very limited amounts in the system of mutual savings and loans. Thus, in the past when the authorities failed to properly supervise the “legal reserve” accounts of some banking institutions, and allowed overdrafts or disclosures regarding those accounts, these entities ceased to make payments and were subject to intervention by the authorities, leading to a type of “bank holiday” at these institutions. The State tacitly admitted its responsibility and years later assumed the debts owed to depositors. The situation which led to the above has now been overcome and currently Dominican banks are managed with discipline (supervision) and standards of prudence in accordance with criteria established in Basel in the 1980s for the banking system worldwide. 3. Can bid, performance and advance payment securities be obtained easily locally? What formats are permitted? Bank guarantees? Bonds? Other? Provide details on cost, if available. Yes. bid, performance and advance payment securities are available locally at all commercial banks and these are offered at an established commission which may vary based on the bank’s assessment of the risk associated with the supplier/contractor. The most common format is the provision of a bank guarantee.

Insurance bonds (polizas de seguro) are available through Dominican and foreign insurance companies authorized to operate in the country, and applicable rates are

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controlled by the State. They are always simple rather than joint bonds, because the Private Insurance Law prohibits such companies from providing joint bonds. However, if there is interest, the insurance company could waive the benefit of exemption and allow itself to be a party and subject to claim at the same time as the insured. Banking institutions, on the other hand, may not provide bonds, although in exceptional cases it is possible to use some type of banking operation to support or back the requesting party, with the parties providing that the proceeds from the banking operation shall be transferred or ceded to the beneficiary of the security. This is very rare in practice. 4. Are the requirements for issuance of bid, performance and other securities to local suppliers/contractors reasonable? The issuance of a bank guarantee is subject to the bank’s evaluation of the associated risks of the supplier/contractor. The requirements are reasonable and on a case-by-case basis the parties are free to negotiate the conditions that best suit them for the provision of the securities. 5. Do local suppliers/contractors have reasonable access to credit? Local suppliers and contractors have no problem to obtain credit from local Banks, provided they can provide a reasonable collateral as a guarantee. When the individuals are already known to the banking institutions, i.e., when they are clients, the banks are generally quite flexible, despite the existence of so-called prudent standards in effect under Resolutions of the Monetary Board. Small firms have difficulties in obtaining credits from commercial banks. In some cases, payments under an existing contract might be used by the firms as collateral, provided this arrangement is known to the hiring party. 6. Do implementing agencies obtain budgetary authorizations for contract payments falling due beyond the current financial year? No, they do not. Normally the implementing agency would review the budget for capital expenditures at the mid of the year. If there is a need for supplementary budget, because of project cost is in excess of approved budget, this may be considered in December for inclusion in the following year budget. Several public officials interviewed by the Bank reported that availability of funds for project implementation is a problem. Even in cases were the project has been approved by the Central Government and the cost of the project included in the National General Budget, when request are made for the release of funds, the Government will inform the implementing agency that either there are no funds or that the budget is insufficient to cover the total cost. There are numerous cases of delays in project implementation (locally or internationally funded) due to the lack of counterpart or budgeted funds for a project. Because of this problem, many public agencies and in many occasions are forced or limited to invite, for the supply of goods or services, only to those companies capable of supporting big payment delays by their purchasers. This would definitely increase the cost of the goods and/or services.

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7. Are major projects or programs clearly identified in government budget estimates?

Yes. By law all projects, independently of their source of financing, should be clearly identified in the Central Government Budget. However, it has been customary for the Executive Branch and several of the autonomous agencies to develop and execute new projects (locally funded) that are not clearly defined nor included in the Government budget. They are the result of either unexpected contingencies or the result of social or political pressure. Government officials reported that there are circumstances were the Government is obliged to execute a project to avoid political and/or social unrest. Discretionary funds (generated by the unused budgeted funds – a maximum of RD$ 2,000 million per annum ), authorized by law are used to implement such projects.

Despite the fact that the General Comptroller’s Office (reporting to the Executive Branch) is required to carry out ex-ante and ex-post review of Government expenditures and Government contributions to locally and internationally funded projects, strict budget control is a difficult task. The big distortion in the Dominican Republic is that “budget control and expenditures” is a myth. The new budget organic law recently submitted to the Executive Branch (the Bank did not get an indication on when this law will be submitted to Congress), among others is expected to address this problems.

8. What procedures are followed to ensure the procuring entity obtains budget authorization prior to inviting bids?

The procuring entity, following the established mechanisms would make the request for budgetary annual allocation for the project in the Central Government Budget. Following standard procedures through the Ministry of Finance, the budget is approved by the Cabinet and Parliament. As explained in the previous question this does not totally guarantee the availability of Government funds for project execution. In several Ministries and autonomous public agencies, there are established procurement internal procedures whereby the office of the internal auditor will review the complete procurement process before a supply contract is signed. 9. Do procuring entities reliably receive the monies authorized? Or is the budget subject to revision during the year by a restrictive cash release system?

As explained earlier, procuring entities do not reliably receive the moneys authorized and included in the Central Government Budget. If the requested monies are beyond the approved budget, supplementary allocations will be considered at the end of the year for their inclusion in the coming year central budget. The Executive Branch may authorize the release of extraordinary funds, out of its discretionary budget, to cover unexpected cost overruns of priority projects. The restricted cash release system is quite common in many projects in the Dominican Republic.

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ANNEX D – PUBLIC SECTOR PROCUREMENT OF GOODS/WORKS

GENERAL RISK ASSESSMENT

1. Is the public sector procurement profession held in high regard? The National Office of Personnel (ONAP) describe the functions and responsibilities and experience required for individuals holding public sector positions, including those responsible for the procurement functions. In most cases, appointment of procurement staff do not meet the requirements and experience specified by ONAP, and are generally guided by principles of friendship and confidence in such personnel by the hiring individual. The public sector procurement profession as such does not exist in the Dominican Republic and in most of the public institutions is not held in high regard. A few corporations and de-centralized public institutions, including PEU responsible for the implementation of projects funded by international organizations, do have experienced staff in charge of the procurement functions. These staff would normally be engineers or economist with some training in procurement. 2. Are pay levels for procurement professionals comparable to that for other public and private sector technical specialists? Give current range of monthly salaries. Pay levels for procurement professionals, with the exception of those working at the PEU responsible for projects funded by international organizations, are not comparable to those paid to private and public sector professional specialists. Current pay levels varies depending on the institution salary policies. They are in the RD$7,000 – RD$30,000 range per month. 3. Is the procurement profession generally staffed with honest and capable individuals?

In most of the Government agencies, and in particular the municipalities, the procurement staff is not properly trained and is not capable of discharging its responsibilities in an efficient manner. In some public corporations, ministries and de-centralized institutions, including INDRHI, INAPA, Secretariat of Public Works, high ranking procurement officers are quite experienced, while the rest of the staff is not well qualified to conduct procurement matters. The procurement positions, at least at the institutions interviewed by the Bank, would appear to be staffed with honest individuals. 4. Does a code of ethics exist that procurement professionals are expected to follow?

As indicated earlier in Annex A – Basis for Accountability – Question 1, the country have a code of ethics that all public servants, including procurement officials, should follow. The Department for the Prevention of Corruption, as part of the

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Government plan to prevent corruption is trying to enforce such code of ethics with some success. This is something new in the Dominican Republic and appears to be in the good direction. Within some institutions, the case of INDRHI, an ethics committee has been appointed and has started to play some role. 5. Are the authorities relating to procurement clearly delegated to the entities carrying out the process? Are the applicable procedures clearly defined? The authorities relating to procurement activities are clearly delegated to the procurement authorities in the respective project executing agencies. The approval limits and procedures to process purchase orders and contracts for the supply of goods, works and services are established in the internal regulations for procurement of the institutions where those executing units belong. Different purchase modalities, depending on the amount of the purchase, are established by law. Regulation 262-98 applies to the procurement of goods and law 105 applies to procurement of works and services (see Annex A – Legal framework – Question 13). Approval of capitalization procurement processes (under law 141-97 for the reform of public enterprises – CDE’s generating and distribution facilities were capitalized) requires the approval of Congress and the Executive Branch.

The applicable procedures are not clearly defined in the laws and regulations. Each public entity would have their own internal procurement regulations where delegation of approval of the several stages of the procurement cycle is given to different authorities within the companies organization, depending on the contract amounts. These defers quite substantially from one institution to another.

6. Are procurement decisions ever overridden by higher governmental agencies? If so, by whom? To what degree is the procurement decision-making process independent from politics? There are only two institutions, the Comptroller’s Office and the Chamber of Accounts, responsible for overseeing and auditing the public accounts. On an ex-post basis, after a contract is being signed and even under execution, these institutions may object a procurement decision taken by a government ministry or de-centralized agency. There are no records that a contract was suspended as a result of an ex-post review. There is no agency in the Dominican Republic responsible for auditing of procurement processes within the public administration. Experience with Bank-funded projects indicates that procurement decision-making processes have been independent from politics. Several public and private sector officials indicated to the Bank that, under locally-funded projects and in particular when dealing with the construction of public works, the decision making process and final decision on a contract award may be interfered and influenced by political pressure. 7. Does the highest level of government encourage/support/enforce compliance

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with existing procurement regulations? Are violations investigated and procurement/other responsible officials held accountable? Most of the staff consulted in the Dominican Republic on this matter responded that, although the highest level of Government would try to encourage compliance of procurement regulations, the mechanisms are not in place to monitor and enforce such compliance. The Bank has no information on whether procurement violations have been investigated and responsible officials held accountable for their decisions. Several private sector representatives interviewed by the Bank indicated that: (i) many procurement violations have been reported and that after the investigations were concluded no actions were taken; and (ii) several violations were reported and that no investigations were conducted.

ORGANIZATION

1. Is appropriate information on procurement adequately disseminated (i.e. procurement staff are aware of updated rules and thresholds, and other issues relevant to their assigned responsibilities) ?

Most of the public entities interviewed were aware of the procurement laws and regulations, most of them issued in the 1960’s. A regulations issued in July 1998 (the most recent one) for the procurement of goods and services (regulation No. 262-98) by the public administration, is well known by most of the public institutions and is being widely published in the official gazette and local newspapers. Dissemination of the Bank and other International donors sample bidding documents and procurement guidelines, in general, does not reach to reach to all levels of staff involved in procurement. Some of the officials, particularly low ranking procurement staff at several executing agencies, did not have copies of basic documents and in some cases were not even aware of their existence, and if they were aware often they do not take advantage of the information. 2. Are the procurement and supply management functions clearly distinguished?

The procurement and supply management functions are clearly distinguished at the Ministerial, state corporations and autonomous Government agencies. Within their organizational structures there are departments responsible for the purchase of the goods and departments responsible for storage, record keeping and delivery of goods to the project sites or users. These activities at some of the Ministerial agencies and most of the regional agencies reportedly are quite weak. 3. Is contracting authority reasonably delegated (i.e. there are no unnecessary levels of approvals or cumbersome procedures)?

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The contract authority is reasonably delegated. The procurement modalities for the supply of goods and services are established by law (regulation 262-98), and the approval levels are established in the internal procurement regulations of each public institution. In most of these agencies, the approval levels for placing purchase orders or signing of supply contracts up to RD$100,000 (about US$67,000) would require the authorization of the General Services manager or in his absence by the deputy administrative manager. Contracts exceeding RD$100,000 and 400,000 would require the signature of the procurement director and deputy executive director or procurement director and executive director respectively (see table ?? under Question 14 – Annex A – Legal Framework. For the procurement of works under public bidding, an evaluation team would normally be established following the agency internal procurement regulations, and this evaluating team would be responsible for making the evaluations and recommendations for award to the procurement committee. The executive director will be responsible for the signing of the construction contract. The procurement committee, in the case of INDRHI, would be chaired by the technical manager and composed by the planning manager, managers of the hydroelectric and irrigation departments, the project manager, and the procurement manager who will act as the secretary of the committee. 4. Are thresholds for contracting powers regularly updated? There are no established mechanisms for periodical review of the procurement thresholds in the various Ministries and public institutions. Revisions are done in an ad-hoc basis by each institution requiring the approval of the Minister in charge or board of directors as the case might be. Thresholds above which procurement of works are subject to public bidding are not regularly updated. Law 105 of 1967 requiring that works exceeding RD$10,000 (about US$700) should be awarded through public bidding, has not been updated since then. In the case of procurement of goods, the thresholds above which procurement should be awarded via public bidding, short list or direct contracting, were updated in 1998 after more than 30 years (old regulation 295 goes back to 1966). 5. Do procuring entities have internal quality control mechanisms? Are they regularly audited? Most of the public institutions have internal quality and control mechanisms to monitor procurement processes, only a few are reasonably good and most of them very weak. In general auditing is not carried out regularly. For example at the Ministry of Education, the office of the internal auditor would review the whole procurement process to ensure compliance with internal and national regulations, before contract awards authorizations are granted. The Financial Director would also ensure that the funds are available before clearing a contract for signature (see Annex C – Question 6). Procurement auditing is not done in a regular way, compared with the financial auditing that is done on an annual basis to comply with the financial agencies requirements, for which the PEU would normally look for the MOF or Technical Secretariat guidance. There is no external and independent audit of the procurement processes in the public institutions. External auditing is only done by the office of the Comptrollers General and is limited only to a review of the public accounts and moneys spent. The Chamber of Accounts may also carry out, at the request of an interested party, a review of a

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procurement process and contract award. Because of lack of resources the Chamber’s capacity to carry its work is very limited (see Annex A – Question ...). 6. Are procurement staff experienced in international procurement? Most of the procurement staff interviewed by the Bank, responsible for the implementation of locally-funded projects, are not familiar with international procurement rules and guidelines, mainly because they conduct their procurement through national tendering using in-house prepared bidding documents. Some agencies, such as the Secretariat of Public Works and Communications, INAPA, and INDRHI are familiar with international procurement because they execute internationally-fubded projects and carry out international bidding processes using documents based on standard bidding documents of international organizations. These companies have their own standard bidding documents, based on FIDIC or other international financing agencies, for national tendering. Some of the procurement staff working for PEU responsible of internationally-funded projects are experienced in international procurement. Not many public employees have the opportunity to attend seminars on international procurement. To some extent the IADB has provided training in International procurement, and Government officials claim that this effort need to be complemented by other international organizations, including the World Bank. 7. Is career advancement primarily based on job-related accomplishments and factors?

The procurement career as such does not exist and career advancement based on this field hardly exist. Career advancement is mainly based on seniority or personal initiative. 8. Do adequate formal and on-the-job training programs exist for entry- and higher-level procurement staff that contribute to proper professional career development?

There are no formal training programs for entry and higher level procurement staff at all. Few corporations and public entities provide on-the-job training in regard of general procurement procedures. The only formal procurement in offered by the international financing agencies, as part of the projects funded by those institutions. This is one of the most serious short-comings. 9. Are there additional training resources in the country which are currently utilized or that could be utilized to complement Government/donor-administered programs (e.g. universities and private institutions)?

Yes, there are some institutions in the country offering procurement training under their post-graduate programs that would complement the Government/donor programs. This is the case of the National University Pedro Enriquez Ureña (UNPHU), The Pontificia Universidad Catolica Madre y Maestra (PUCMM), the Technological Institute

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of Santo Domingo (INTEC), and the Office of National Administration and Personnel (ONAP) among others. The Universidad Autónoma de Santo Domingo (UASD) is developing a training graduate program in procurement, and procurement staff from INDRHI has been asked to help in this endeavor.

10. Did previous training programs lead to an obvious improvement in the quality/productivity of procurement work?

The IADB informed the Bank that the procurement training provided by them has lead to improve project management productivity and quality in some of the projects funded by them. 11. Do procurement staff have adequate project/contract management capabilities?

With very few exceptions (INDRHI, SEOPC, INAPA) the PEU responsible for the implementation of externally-funded projects, have procurement staff experienced in project/contract management. This is not the case at most of the Ministerial, Regional executing agencies, and Municipalities. 12. Are procurement agents used? Under what circumstances? How are they selected? Describe normal basis for compensation and contract duration.

No experience with procurement agents were reported. 13 Is procurement monitoring and administration computerized? How adequately do procurement entities track the key steps in the procurement process and collect appropriate project-related cost and schedule information?

Procurement monitoring and administration is computerized in very few executing agencies (i.e. SEOPC, INAPA, and INDRHI) including the PEU responsible for the implementation of externally funded projects, and tracking of key procurement steps, including costs and schedules are reasonably carried out. In most of the Ministries and other public institutions, including Municipalities, procurement monitoring is carried out manually. Most public institutions keep some kind of price records and they are updated on an annual basis. At the Regional agencies, including municipalities, these activities are extremely weak and in some cases non-existent.

PROCESS - PLANNING 1. Are project implementation units adequately staffed with trained procurement, planning, scheduling, expediting and cost estimating personnel?

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In general the PEU are not adequately staffed. There are very few exceptions where the PEU in charge of the implementation of foreign-funded projects (INDRHI, INAPA, SEOPC, and Ministry of Public Health are examples), the agency would hire consultants with procurement management experience. These units would normally consist of an experienced project director and specialized professionals, and would use above consultants to handle procurement planning, scheduling and cost estimates. In all other Ministries, Regional agencies and Municipalities responsible for the implementation of locally funded projects, because of the low salaries paid to staff and insufficient budget they are unable to recruit qualified staff and the units are poorly staffed. Specialized procurement staff in these agencies is almost non-existent. 2. Is overall planning for complex goods, works and other contracts done in sufficient detail to produce realistic project definition, achievable completion schedules and accurate cost estimates?

The Ministries and Government agencies would normally use consultants for the design and implementation of major and internationally-funded, complex projects. At the design and engineering stage, detailed project cost estimates, implementation schedules and disbursement profiles would be prepared, with the assistance of consultants and in some cases of Bank staff. In general this information is reliable and provides good estimates on project costs and completion dates. 3. Is the early technical and financial planning well coordinated so that projects are fully funded when work needs to begin, based on accurate cost estimates?

In very few cases yes. Under externally-funded projects, financial projections would normally show the project costs and sources of funding including local contributions. Since budget allocations for capital expenditures are made on an annual basis, although there are formal obligations under credit agreements, there is not always assurances that the GOG will make the funds available on time. In locally-funded projects technical and financial planning are not properly coordinated, and there are no assurances that funds will be available to complete the projects. 4. Are appropriate methodologies used to plan multiple inter-related procurement activities on large projects (e.g. the critical path method)? For very few donor-funded projects, Yes. For all other projects, at the most only bar charts are used. 5. Are project components appropriately packaged for procurement purposes? In general, yes. 6. Are completion schedules generally met for goods, works and consultant services contracts? If not, what is the major cause for slippage? Is sufficient time generally allowed for external reviews/clearances?

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No, they are not. The experience under Bank-funded projects shows that completion schedules are generally not met because of: (i) weak project monitoring; (ii) delays in processing procurement matters; (iii) and lack of counterpart funds required to complete the project, despite the fact that budget allocations have been included in the Government annual capital budget. Some of the staff interviewed by the Bank reported that the latter was quite common in several Ministries and public agencies. 7. Do procurement units regularly conduct market surveys to update their knowledge of prevailing prices for goods and works? With regards to goods in the local market, there are some public agencies (INDRHI, INAPA, Ministry of Education, Ministry of Public Health) where their procurement units try to maintain an updated computerized or manual price list, but it is weak and not trustable. With regard to works contracts the PEU would rely on the engineering estimates prepared by their technical department and/or consultants. Under regulation 262-98 (see Annex A – Question 14) the General Supply Directorate has been given the responsibility to develop and maintain a system with updated information on the prices of goods in the local and international market, including their delivery periods. For the reasons explained earlier in Annex A, this system is not available yet, and moreover its design has not even started. 8. Are procedures and methodologies for planning procurement of recurrent items (i..e. inventory control, forecasting of future requirements, classification, coding, accounting/financial management, spare parts management, and delivery systems) adequate?

In general the procedures and methodologies for planning procurement of recurrent items are not adequate. Some agencies, particularly those in charge of delivering public services, would do the required planning reasonably well, but actual purchase of the required goods would be substantially delayed, causing serious operational problems and therefore affecting the quality of the service they provide.

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PROCESS – DOCUMENT PREPARATION

1. Do standard documents exist for goods, works and other types of contract? List. Are other international contract formats used? If so, identify

Yes. Under externally-funded projects only the PEU would use the standard

bidding documents of the respective funding agency. The SEOPC, INDRHI, INAPA, Ministry of Public Health reported that for locally funded projects, goods, works and services would be procured under National Competitive Bidding, using in-house prepared bidding documents on the basis of the World Bank or the IADB standard bidding documents.

Some PEU, depending on the source of project funding, would use standard

bidding documents of those agencies (IADB, WB). Contract format based on FIDIC samples are used by some PEU. 2. Are these documents, if any, readily adaptable to specific contract situations (i.e. by modifications made through a Bid Data Sheet, Special Conditions of Contract or similar)? Generally yes. 3. Are there separate documents for international and national competitive bidding not financed by the Bank? For projects not funded by the Bank the public institutions would use either the standard bidding documents of other funding agencies, or in-house prepared documents depending on the funding source. These in-house bidding documents, some times are based on the SBD’s of international agencies, and others are a hybrid mix of FIDIC conditions for contract for woks and those SBD’s. Locally-funded projects would normally be executed via local competitive bidding only. 4. Do Instructions to Bidders (ITBs) contain all information necessary to prepare responsive bids and clearly understand evaluation criteria and their method of application? Yes, under internationally-funded projects. Otherwise, in general no, because the existing regulations do not require that bidding documents should clearly establish the evaluation criteria and method of application. Some agencies (INDRHI for example) would specify in the bidding documents for works, the information that would be used to evaluate the proposals and would provide the weights assigned to price (normally 80 %), time to complete the works, financial situation, and technical experience and capacity to perform the works. Other Government agencies such as the Ministry of Public Health (for hospital services) and the Ministry of Public Works and Communications (for civil works) would use similar criteria, and the main difference would be the weighting assigned to price, quality of the proposal, financial strength and experience of the firm.

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In these cases the bidding documents would not provide any information on how the point system and weights would be quantified. For the supply of goods under locally-funded projects, bidding documents (the Ministry of Education for example) would normally indicate that the award of the contract would be based primarily in price, provided technical specifications and some time required services are met. 5. Do they contain other necessary information, such as eligibility requirements, basis of bid, language and currency of bids, common currency for purposes of evaluation, source and date of the exchange rate, etc.? Are sample forms and other appropriate sections of the documents provided? Yes, on all internationally-funded projects and most locally-funded projects. 6. Are bidders required to provide bid security in an appropriate amount as a condition of responsiveness of their bid? Yes. 7. Is pre-qualification or post-qualification provided for? Pre and post-qualification is provided for in bidding documents. Pre-qualification is more common. 8. Are qualification criteria appropriate and clearly described? Yes under internationally funded projects. Under locally-funded projects in most of the cases, specially those Ministries or Institutions dealing with public and infrastructure works. 9. Are conditions of contract equitable? In general yes. 10. Are conditions of contract generally equitable? Do they provide adequate coverage for most important commercial and legal issues (for the method of procurement, size, nature and type of contract used) and provide adequate protection to the Government, without putting undue risk on bidders? In general yes. 11. Are standard purchase orders used for shopping? Most of the institutions interviewed by the Bank uses standard purchase order for shopping.

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PROCESS – PRE-QUALIFICATION

1. Is pre-qualification carried out when appropriate ? What types of contracts is it used for ? Works ? Goods ? Other ?

Normally pre-qualification is carried out for large civil works (above US$10 million) and service contracts, under internationally-funded projects. Under locally-funded projects pre-qualification is done only in very large civil works contracts

2. Is the pre-qualification process fair and transparent? Are decisions made promptly? Are foreign firms allowed to apply? The process is not always fair and transparent. Several contractors claimed that evaluation procedures and contract awards some times takes too much time. Foreign firms are allowed to participate in association with local firms. 3. Are standard pre-qualification documents used ? Do they clearly and completely describe all the prerequisites for submitting responsive applications for pre-qualification ? Is financial information routinely requested and critically evaluated to assess an applicant’s financial; capacity to perform ?

Yes under internationally-funded projects. Otherwise no.

5. Do procuring entities verify prior to contract award if a successful bidder continues to meet pre-qualification requirements?

Normally yes, but it takes some times too long to do it. 6. Are suppliers required to have a local agent in order to qualify to bid for goods and services ? Yes, according to law 322 foreign suppliers are required to have a local agent in order to participate in a public bidding for the supply of goods or services. 7. Do procuring entities maintain updated lists of qualified suppliers and contractors and updated market information on commonly procured goods, including spares and consumables? Is supplier and contractor performance routinely evaluated and are any standing lists of pre-qualified suppliers and contractors updated and modified based on this information. Can newcomers readily apply and be qualified? Some agencies maintain lists of qualified suppliers of consumable goods but they are not regularly updated with market prices. Standing lists of pre-qualified contractors are not updated, and in some sectors such as transport, water and irrigation, newcomers can readily apply for qualification.

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PROCESS - ADVERTISEMENT

1. Are contracts to be awarded by competitive bidding publicly advertised?

Yes. It is required by law, independently of the source of financing of the project. 2. Is sufficient time allowed to obtain documents and prepare bids?

Under current practices, time (given in days) allowed to obtain documents and prepare bids are as follows: LCB ICB

(a) Procurement of goods and works ** 30-45 30-45

for donor-funded projects. (b) Procurement of goods and works 7-21 -

locally funded. (c) Procurement of goods and works for locally funded emergency projects 7 -

PROCESS – COMMUNICATIONS BETWEEN BIDDERS AND THE PROCUREMENT

AGENCY

1. Are requests for clarifications answered promptly and completely in a written form? Yes, and the same information id provided to all potential bidders who have

purchased the bidding documents. 2. Are clarifications, minutes of the pre-bid conference, if any, and modifications of the documents promptly communicated to all prospective bidders? Yes. 3. Are bidders afforded sufficient time to revise their bids following a modification of the documents? Yes. 4. Do procuring entities maintain accurate records of all communications with the bidders (before and after the deadline for submission)? Yes.

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5. Are there communications between the procuring entities and the bidders, other than appropriate requests for clarification of a bid made by the evaluating committee? No.

PROCESS – RECEIPT OF BIDS AND OPENING

1. Are bids received prior to the deadline securely stored? Regulations do not provide any guidance in these respect. Each Government agency have its own regulation on this matter. At the Secretariat of Public Works and Communications (SEOPC), bids will be received at the offices of the bidding commission of the SEOPC at the time indicated in the bidding documents. Some agencies (Ministry of Education) would require indicate in the envelopes “ Do not open until such time as specified in the bidding documents”. In the case of ICB for the supply of goods, the SESPAS (Secretariat of Public Health and Social Assistance), foreign bidders are allowed to deliver their proposals at the required date and time at the Dominican Republic embassy (if available) of the bidder’s country. In very few occasions bids will be received one hour ahead of time. 2. Are public bid openings conducted? Yes, and accredited representatives of the bidders are allowed to be present at the bid opening ceremony. 3. If so, are they conducted at a specified place closely following the deadline for submission? Generally how long after are they scheduled? Bids are normally opened within 15 – 60 minutes after the closing time. 4. Do bid opening procedures generally follow those specified in the Guidelines? What information is read out at the opening ceremony? Are minutes kept?

Yes they follow. The information read is: (i) bidder’s name; (ii) Bid Price; and (iii) engineers estimate. Minutes of the bid opening are prepared and maintained in the records. Some institutions provide a copy of the minutes to all present representatives. 5. Do bid opening procedures differ for goods, works or other types of contracts? If so, how?

Bid opening procedures for goods would differ from those for works if in the later case a pre-qualification is involved. In this case only pre-qualification documents would be received and at a later date only pre-qualified proponents will be invited to the price bid opening ceremony.

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In the case of privatization processes (capitalization in the case of the Dominican Republic), where pre-qualification of bidders took place, bid opening of price proposals are very formal and the award is announced during the bid opening ceremony, after the privatization commission has confirmed compliance with all prescribed bid requirements.

PROCESS BID EXAMINATION AND EVALUATION

1. Are evaluations conducted by qualified evaluating committees ?

Generally yes. When needed committees would require the assistance of consultants.

2. Are evaluating committees appointed ad hoc for each evaluation ? In some institutions these committees are appointed ad hoc for each case (INDRHI

case). In other cases there is a permanent core committee, which may require an expert’s opinion in some cases, but the rest of the members of the committee are the same persons. .

3. Is responsiveness determined on the basis of the documentary requirements described in the documents and according to established practice? Yes. 4. Are bid evaluations carried out thoroughly and on the basis of the criteria specified in the documents? Yes. 5. Is the successful bidder’s qualification to perform the contract determined solely on the basis of the criteria stated in the documents? (See above) If not, what other criteria are considered ? In general yes. But tend to emphasize on price. 6. Are evaluations normally completed within the original bid validity period? Most of the time.

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7. Are bid evaluation reports prepared containing all essential information (i.e. a clear and complete description of the evaluation process, including the reasons for rejecting any bid as non-responsive, how the stated evaluation criteria were applied, and how the successful bidder’s qualifications were verified)?

Yes.

8. Describe any significant differences between goods and works procurement relating to the above.

Qualification of technical capability of the bidder, changes in the composition of members of the evaluating committees, prices of the proposal (largest weight given to price in the case of goods)

PROCESS – CONTRACT AWARD AND EFFECTIVENESS

1. Are contracts required to be awarded to the lowest evaluated responsive bidder who has been determined to be qualified to perform the contract satisfactorily? Always in the case of Bank’s projects. Not always under locally-funded projects. Some times there is a tendency to award to the bidder having the lowest price without due consideration to an analysis of the price breakdown 2. Are negotiations conducted with bidders, before or after selection? Bank experience with the transport sector indicates that in general, negotiations are not conducted except in the case of concessions, some consulting services or some turn-key projects, and in all cases negotiations are conducted after the selection process is completed. One of the agencies (INDRHI) indicated that in most of the cases negotiations are carried out before the selection. This need to be re-confirmed. 3. Are additional Government approvals required before contracts can be made effective?

Once the recommendations for contract award is approved by the required level of authority, the procurement contract is processed within the PEU and signed, as a rule by the Minister on Executive Director in charge. There is no need for additional Government approval for contract signing and effectiveness except in those cases of privatization and sale of public assets via local or international tendering.

4. Is performance security required in an appropriate amount and in an appropriate format?

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Yes. Performance security is required in the appropriate format for an amount equivalent to 5-20 % on the contract amount. 5. Describe any differences between goods and works relating to the above.

Performance securities percentages will vary between 5-10 % for goods and 5-20 % for works, depending on the executing agency.

PROCESS – CONTRACT ADMINISTRATION

1. Are there manual or computerized procurement and/or contract monitoring systems? Yes, there are manual procurement monitoring systems in some of the PEU. Computerized systems are only available in some of the PEU (INDRHI) responsible for the execution of externally-funded projects. 2. Are suppliers and contractors generally paid on time? What is the normal time lapse from invoice submission to final payment? In the case of the supply of goods under Letters of Credit arrangements, payments are made generally on time according to the terms established in the LC, with the exception of the final payment which is paid after reception of the goods by the owner. Reception sometimes takes more time than required. Payments under construction contracts are generally paid within 30 – 120 days after the date of submission of the invoice by the contractor. This record is only applicable to the PEU responsible for the execution of-externally funded projects.

Above record is not applicable to cases under locally-funded projects. Several private sector officials interviewed complained about payment delays under contracts for the supply of goods, works and consulting services. As indicated earlier in Annex C, lack of funds for a project is quite common even in those cases were funds have been approved in the budget. Staff interviewed by the Bank indicated that because of this, many times they have to rely only on those suppliers capable of accepting payment delays of even a year. This will cause a significant increase in cost. 3. Are there appropriate procedures to monitor delivery of goods and services to verify quantity, quality and timeliness? Yes, in the case of externally-funded projects. Otherwise procedures are weak or non-existent. 4. Are contract changes or variations handled promptly in accordance with the contract conditions and established practice (i..e. change/variation orders are given

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and/or confirmed in writing, constructive change orders are avoided, unit rates in the contract are honored but the supplier or contractor is allowed to agree to any new unit rates introduced and the completion schedule for each change or variation, etc.)?

Yes. This is not a problem under contracts funded by international organizations, where procurement guidelines of those organizations are used, and in some of the locally funded contracts(SEOPC, Education, INAPA, CDE). Some contractors complained that contract amendments take too long. Procedures for contract changes are clearly specified in contract documents, and unit prices are honored and only adjusted according to prescribed adjustment formulas. There are no provision in the law for contract price adjustments. Some agencies, particularly in the regions, under locally-funded contracts for the execution of works, payment of contract variations (either due to increase of work, inflation or increase of the price of fuel, materials or salaries authorized by the GDR), is a problem because they are not clearly and properly specified in the bidding documents, and the decision of the project manager in case of discrepancies is final. In the case of consultant contracts some agencies would specify in the bidding documents that the contract conditions could be changed by written agreement among parties. 5. Do procuring entities normally make a good faith attempt to resolve disagreements through informal negotiations ? Generally this would be the case. Some agencies (INDRHI) would prefer formal negotiations duly documented. 6. If this fails, are the resulting disputes handled in accordance with the

contract conditions?

Yes.

7. Are supplier and contractor claims handled fairly based on a clear recognition of both parties’ obligations under the contract? Generally yes. 8. Are works contracts supervised by independent engineers? Does an employee of employer act as engineer in some cases? On large projects funded by international organizations supervision would normally be conducted by independent consulting engineers, and the agency engineer would work and cooperate with the consulting firm without interfering their work. Under locally-funded projects, construction supervision is carried out by the executing agency engineers. 9. Are contract managers/administrators skilled in resolving problems in a timely manner and dealing with unforeseen circumstances arising during the life of

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the contract? Do they adequately document all actions of contractual import taken by the purchase/employer during implementation? Yes, under most contracts funded by international organizations the PEU would have consultants or local professionals with experience in contract maagement. Otherwise no. 10. Are contractual remedies utilized only when appropriate and in accordance with the contract conditions? Yes, under contracts funded by international organizations. Otherwise not always the case. 11. Are contracts generally completed on schedule and within the originally approved contract price? Or are cost and time overruns frequent? If so, in which sectors and for which particular kinds of contracts? Are fair final acceptance procedures used and certificates issued in a timely fashion? Bank experience indicate that time and cost overruns are frequent (about 50 % ) in infrastructure projects (water supply, roads, power) and more in social sectors. Certificates are not normally issued in a timely manner following procedures established in the bidding documents. 12. Are contracts generally administered in a fair and equitable manner (e.g. the purchaser/employer grants extensions of time when delays are attributable to its untimely action, fair compensation is provided to offset additional costs caused by its mistakes, etc.) Construction contracts managed by PEU responsible for externally-funded projects, in general are administered in a fair and equitable manner. Others no. 13. Are under-inspection, over-inspection and/or improper rejection of goods, materials or methods of carrying out the works a common problem? Cases of under-inspection is common. 14. Are disruptions of the supplier’s or contractor’s orderly performance common?

They are not common. 15. Can any of the improper contract administrative practices identified above, be attributable to a problem identified in the local procurement environment? Specify

Rather than improper practice, a cost-ineffective practice has been identified in some Ministries. Because of lack of funds, at the time of contract signature, purchase order or payment, on projects that were properly incorporated in the national budget (see

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previous comments) agencies have been forced to procure goods from a limited number of suppliers that are in conditions to accept payment delays up to a year, at a very high cost. 16. Are procurement evaluations/audits conducted? If so, describe scope, frequency, who carries them out, etc. Procurement evaluation/audits by independent agencies are not carried out in the Dominican Republic. This is a major flaw and badly needed practice. One of the interviewed agencies indicated that auditing of the procurement processes are carried out by their internal audit department as part of the agency internal procurement regulations. In the case of Bank-funded projects, the transport sector have recently reported that this practice is now being implemented by the SEOPC. In fact they are now conducting a technical procurement audit.

PROCESS – RECORD KEEPING

1. For contracts to be awarded on the basis of competitive bidding, does the procuring entity maintain a complete record of the process? This would include e.g. copies of all public advertisements, pre-qualification documents (if used), the pre-qualification evaluation report documenting any decisions not to pre-qualify certain potential bidders, the bidding documents and any addenda, a record of any pre-bid meetings, the bid opening minutes, the final bid evaluation report (including a detailed record of the reasons used to accept or reject each bid, copies of bids, appeals against procedures or award recommendations, a signed copy of the final contract and any performance and advance payment securities issued, etc.

The PEU in charge of executing externally-funded project maintain a complete record of the procurement process, which is available to supervision missions. This activity is less efficient at those PEU in charge of locally-funded project, and in most of the cases when available they are incomplete and get lost after certain period of time. The law requires that a copy of every contract executed by a public agency be sent to the National Budget Office, for budget control purpose rather than procurement.

2. Are adequate contract administration records maintained? (These would include contractual notices issued by the supplier, contractor, purchaser or employer; a detailed record of all change or variation orders issued affecting the scope, quantities, timing or price of the contract; records of invoices and payments; certificates of inspection, acceptance and completion; records of claims and disputes and their outcome; etc.)

Generally not. Some of the PEU (mostly infrastructure sector) responsible for the implementation of internationally-funded projects, yes.

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3. For small contracts or purchase orders for goods procured using shopping procedures, is a database maintained showing the current market price for commonly needed items? A computerized data base is not available. In several agencies, records are kept in files for commonly used materials and supplies, and prices are regularly maintained. The SEOPC also maintain similar records of civil works and construction materials unit prices. 4. Are periodic reports prepared on overall procurement activities? By and for whom? Most of the PEU responsible for the implementation internationally-funded project prepare periodic reports on the status of their procurement matters, to meet the donors requirements. These reports are normally prepared by the project chief. No information on this was available from the other PEU responsible for the execution of locally-funded projects.

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ANNEX E – PUBLIC SECTOR SELECTION OF CONSULTANTS Note: It is important to highlight that there are no law or regulations applicable to consulting services. In the absence of such regulations, public institutions would use either the standard bidding documents of the international financial agencies that would finance the service, or in-house developed documents, some of them based on the standards of the international agencies. As a result of this there a many and different types bidding documents used. 1. Are procuring entities generally well staffed, experienced and capable of carrying out a professional selection process for consultant services? Do they administer consultant contracts effectively? In the case of the PEU responsible for implementing externally funded projects, yes. Otherwise, no. 2. Is the winning consultant firm normally chosen by comparing competitive proposals submitted by a short list of qualified firms? Where do implementing agencies obtain the information necessary to develop short lists? If not, specify what other methods are used and when they are used. In the case of the PEU responsible for implementing externally funded projects, consultants would be selected from a short list of consultants. Suggested names and list of consultants would normally be obtained from donors and financing agencies, and consulting firms, as well as from public requests. Some of the large agencies (i.e. INDRHI, CDE, INAPA, etc.) a register of consultants is maintained but not regularly updated. 3. Do requests for proposals clearly describe the selection process and evaluation criteria? In the case of the PEU responsible for implementing externally funded projects, yes. Otherwise, no. 4. Do the Terms of Reference describe the requirements of the assignment clearly and completely, including background, scope and objectives, deliverables, time frame, anticipated staff-time, and government contributions? In the case of the PEU responsible for implementing externally funded projects, yes. Otherwise, no. 5. Is selection based only on technical considerations or also on price? The law does not contain any provision regarding procurement of consulting services. Generally the PEU responsible for executing externally funded projects would use the funding agency guidelines. Generally for construction supervision of infrastructure works a 70 % and 30 % weight would be given to technical and price components, and a minimum of 75 % would be required to qualify. Price proposals with

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either 15 % above or below the average of the price proposals of all bidders would be given zero points. In other sectors price is given way too much weight and in many instances the agency would get a poor job. None of the agencies and staff interviewed by the Bank indicated that consultants’ selection was solely based on technical qualifications. 6. Are technical criteria detailed and appropriate and their relative weights reasonable?

In general yes. 7. If price is also a selection factor, are technical evaluations completed before opening and consideration of price proposals? Are the relative weights chosen for each factor appropriate? Yes. Price selection is a factor and generally the PEU would complete the technical

evaluation before price considerations. Regarding price weighting refer to question 5 above.

8. Are there standard conditions of contract? Are they fair and equitable to the consultant? Do they adequately protect the interests of the client? Yes, under externally funded projects. 9. What form of compensation is used? Unit rates? Lump sum based on milestones? Other?

In most cases, especially those in the infrastructure sector requiring consulting services above one year of duration, unit rates are used and payments would be computed based on actual time spent by the consultants. Reimbursable expenditures would be paid as agreed in the contract. Lump sum arrangements are used normally for small and short contracts with very well defined product outputs.

10. Are consultants required to submit proposal, performance and/or advance payment securities?

Normally, consultants would be required to present performance and advance payment securities, issued by a Bank in a format established in the bidding documents. Bid securities are not required in the Dominican Republic. Invitations to submit proposals for locally funded studies, normally very small, would not require submitting such securities.

11. Is there a conflict of interest policy provision included in the conditions of contract? (If so, describe)

Yes, standard conflict of interest provision would be specified in the conditions of contract funded by international organizations and in some locally funded contracts

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(INDHRI, SEOPC). No information was available regarding small locally funded consultant’s studies

12. Are evaluations conducted by committees with appropriate expertise? Generally yes. 13. Are general criteria broken down into appropriate detailed criteria agreed by the evaluating committee before conducting the evaluation? Yes. 14. Are all criteria applied consistently, fairly and impartially by the evaluators? Are the individual score sheets kept as part of the procurement record? Most of the time yes. 15. Are evaluations conducted individually by each member of the committee and the results averaged? Yes. 16. Are new factors or weights added after the issuance of the request for proposals, which are considered during the evaluation? No. 17. Are evaluation reports prepared containing essential details of the process, results, and matters to be taken up during contract negotiations? Yes. 18. Are evaluations normally completed within the time originally requested for the validity of proposals? Most of the time.

19. Is nationality and salary levels paid to expatriate consultants a problem? Nationality is not an issue in the selection of consultants. However, because of the GDR reluctance to pay high salaries to international consultants, there is an understandable preference to hire local or regional consultants when available. consultants.

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ANNEX F – PROCUREMENT PERFORMANCE

1. What are the approximate annual values of public procurement for goods, works, and consultant services, respectively? If possible, distinguish between procurement for projects and ongoing programs. Not available. 2. What are the approximate percentages of goods, works, and consultant services financed by external donors? Not available 3. What percentage of public procurement follows competitive bidding procedures? Other methods? Not available. 4. What percentage of competitively bid procurement is donor financed? Not available yet.

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ANNEX G- Private Sector Procurement

1. Is there a reasonably well-developed private sector which freely trades goods and procures works and other services?

Starting with the fall of the regime of Rafael L. Trujillo in 1961, and particularly since 1966, the private sector in the Dominican Republic began to establish itself as a vigorous force that combines the efforts of individuals in national development. Currently, there is an well developed and dynamic industrial sector which includes those who operate in free export trade zones, the mining sector, the construction sector, an agricultural sector, a broad commercial sector and small businessmen, as well as a powerful tourism sector which due to its characteristics strengthens the service economy. 2. What is the approximate volume of such procurement? Are any private sector contracts comparable in size to those in the public sector? Are they for goods, works or other types of contracts?

Although the Dominican Government has carried out important works such as bridges, highways, road, hydroelectric dams, and irrigation canals, the private sector also makes significant investments, particularly those that have been produced in the various sectors that make up the economy. In the case of the Free Trade Zones, and in Tourism, the large investments have been made by the private sector, although often with certain facilities provided by the public sector, such as in the case of mineral exploitation under concession, or low-price sale of properties, tax exemptions under special laws, and other facilities. The telecommunications sector has seen significant development, but it has traditionally had much support from the government. 3. Who are the main importers of raw materials and finished goods? Are they traded on the basis of the INCOTERMS? Do they allow payment through documentary credits?

The private sector has been the major importer of raw materials and finished products, as both industrialists and merchants import great quantities. The INCOTERM principles are used in international trade relations for goods entering the Dominican Republic or for exports produced in the Dominican Republic. Payment through documentary credits (letters of credit or collections) is perfectly admissible and practiced. 4. Do private sector companies purchase commodities through brokers and/or by competition linking price to the international commodity market?

Purchase of commodities is done using both modalities, with preference going to free competition. 5. What kind of procurement practices do private sector purchasers and employers generally follow? Do they differ for goods, works or services?

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Generally, it is customary to grant grace periods for payment purposes as well as to allow deferred payments. Commissions are charged on purchases, prices reductions are granted on the basis of the amounts procured, and other normal practices in international trade. 6. Is private sector procurement planning adequate? Do firms carry out market surveys and use other available information when they prepare their cost estimates? Is packaging done well? What level of technical, schedule and other detail goes into their procurement plans?

There are companies with excellent planning and organization that make use of market surveys and other administrative tools and use the latest technology, but there are also other smaller companies in the private sector that operate on the basis of intuition and business sense without using scientific tools. The procurement procedures of large companies are consistent with principles of efficiency and economy and are based on worldwide competition. Large companies such as REFIDOMSA, FERQUIDO, Cemento Nacional, have access to worldwide information on suppliers, quality, prices and availability of goods. Some of these companies retain international auditing consulting firms, which include in their review the procurement processes. Smaller companies do not have access to the same type of information worldwide. They would use a much simpler approach, which is to place direct purchase orders to suppliers known to them, without any procedure of comparing prices among several suppliers. It is probable that these companies are buying their goods in cost-efficient manner. 7. Do firms carry out public bidding including advertising in the news papers? Large firms would normally advertise their requirements for the construction of works and to a lesser extend for the supply of goods. For the latter, they would normally Request quotations from well known suppliers and manufacturers. 8. Are bids invited from short lists (as for LIB)? If so, describe what criteria are used to develop these lists. Are standing lists developed by use of periodic pre-qualification? Are reasonable technical and financial criteria used? How often are standing lists updated? As indicated before, large companies maintain a good record of potential suppliers with good references in terms of price and quality, and depending on the type of good or service a short list would be prepared and short-listed firms would be invited to present proposals. Purchase of raw materials for large companies would be done through a procurement agent or company following closely the market conditions and negotiating prices based on large purchase volumes. 9. Under what circumstances is direct contracting permitted? Direct contracting is a normal practice of the private sector.

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10. How detailed are the bidding documents used to invite bids for goods, works or services? Depending on the size of the purchase, bidding documents are very detailed and well prepared. 11. What criteria are used to determine the winning bidder? Cost, quality, compliance with specifications? Time of delivery or completion? Familiarity?

Generally most of these criteria are used, depending on the purpose of the bidding. Cost, quality and completion of the works are the criteria mostly used in awarding contracts. 12. Do private sector procuring entities usually carry out price negotiations with the apparent winner after bids are submitted? Yes, this is a normal practice in the Dominican Republic. 13. Do private sector companies monitor procurement and contract implementation efficiently? Do they utilize modern computerized methods? Most of the large companies are very familiar with available computerized methods for supervision of contracts and monitoring of them would be done quite efficiently. For smaller companies this would not be the case 14. Are employees required to follow corporate ethics policies and procedures?

Companies that would require employees to follow such corporate ethics policies and procedures are the exception. It has been on the basis of the New Labor Code for the Dominican Republic, Law 16-92, that "know-how" has been provided with limitations on the employee who ceases to be employed by a company. Article 75 of such law states: "If the employee resigns his position with an employer who has spent money for the employee to acquire technical training or pursue studies to train him for his work, for a period equal to twice the amount of time used in the training or studies, but in no case for more than two years, his hiring by another employer during this period involves civil liability of the employee and jointly that of the new employer with respect to the first employer. " The Code also maintains as grounds for dismissal the disclosing of manufacturing secrets, reserved matters, formulas, etc. (Art. 88, item 91); and the disclosing of secrets could sometimes be penalized under Article 377 of the Penal Code. 15. Could some private sector procurement practices be adopted by the public sector? (Indicate which ones)

A good and successful procurement practice in the private sector is the direct negotiation of a price contract. The need for transparency in spending taxpayers money, precludes this possibility.

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16. Has there been any experience with private sector contracts for the provision, operation, maintenance of infrastructures for various public services (BOO/BOT/BOOT/ etc.)? (Describe)

Before the enacting of Law 141-97, which provided the basis for the privatization of public enterprises, starting in 1990 the government has opened the door to local and foreign private investors in the area of electricity. Several contracts under BBO and operation and maintenance arrangements were executed by CDE for the supply of electricity during emergency conditions, under power purchase agreements entered between CDE and private companies. Staff interviewed by the Bank indicated that the experience with those contracts were not satisfactory and that those contracts mostly benefited the private investor at the expense of high costs to consumers. Recently, CDE has entered into a power purchase agreement with a foreign company, Smith/Enron, which is operating a combined cycle power station producing about 20 percent of CDE’s full capacity.

Currently, the Dominican Mills and the Dominican Electricity Corporation (CDE)

are being privatized (under the new Law 141-97) using the capitalization approach, whereby the private partner would own about 50% of the shares and be responsible for the operation and maintenance of the facilities.

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Annex H - Checklist comparing National Competitive Bidding Procedures and World Bank Policy

Yes No Bank Policy 1. Are there eligibility restrictions based on nationality of

bidder and/or origin of goods (other than primary boycotts)? Comment: Preference is given to goods manufactured and/or assembled in the country (Article 7c of Law 295

for the supply of goods to the state.

X Not allowed

2. Are there primary boycotts which are established by law? X Only primary boycotts are acceptable

3. Are bidding opportunities advertised in the local press? Comment: Yes under projects financed by international

organizations. On locally funded projects, this happens only for the supply of goods and in very few occasions for public works. Contracts for this type of works are normally awarded by direct contracting, without any advertising.

X X Required

4. Are prospective bidders allowed at least 30 days for bid preparation (except for commodities/small goods contracts)?

Comment: Although the law not specify the number of

days, normally 7-21 days will be allowed. There are cases were bidding time is less than a week.

X X Required

5. Are contractors/suppliers pre-qualified for large/specialized contracts?

Comment: With the exception of large contracts for works awarded by direct contracting, pre-qualification would normally be done using the registries of each organization, which are not always up to date.

X X Required

6. Are minimum experience, technical and financial requirements (for pre -or post-qualification) explicitly stated in the documents?

Comment: The minimum conditions are not normally specified in bidding documents.

X

Required

7. Is an invitation to pre-qualify advertised for each procurement involving large or complex potential contracts? Comment: Normally not done. Most public agencies

X Required

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will rely on their own registries, which in some cases are not up to date.

8. Are joint ventures with local firms required for foreign firms’ eligibility? Comment: For projects funded by International organization it is not required. For locally funded projects, law 322, 1981, requires tjoint ventures with local firms

X X Not allowed

9. Are joint venture partners jointly and severally liable?

X Required

10. Are there set limitations to the number of firms who can bid for a contract?

X Not allowed

11. Are parastatals allowed to bid?

Comment: There are no legal provisions prohibiting this.

X Acceptable only if they (i) are financially autonomous, (ii) operate under commercial law and (iii) are independent from borrower and its purchasing/contracting authority

12. Are bidders required to register with a local or federal authority as a prior condition for bidding?

Comment: Local firms are required to be registered at the CODIA. Foreign firms not but should have joint ventures.

X Should be discouraged. Acceptable only if registration criteria, process and cost reasonable/efficient and qualified foreign firms not precluded from competing

13. Are extensions to bid validity allowed?

X Acceptable only if justified by exceptional circumstances

14. Are there restrictions on the means of delivery of bids?

X Not allowed, except when bidders have to submit physical samples. Then they can be required to deliver bids by mail, by courier, by hand, etc.

15. Is preference given to suppliers or contractors based on region or locality of registration, small size, ethnic ownership, etc.?

X Not allowed

Yes No Bank Policy

16. Are there restrictions on sources of labor and material? Comment: Labor Code ,Tittle 1 requires that a at least 80% of the employees of a Dominican company should Dominican.

X Not allowed, except for unskilled labor, if available locally

17. Is public bid opening required? Does it occur immediately or closely following the bid submission

X Required

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deadline?

Comment: It is required and it takes place immediately after the date and appointed hour, in presence of bidders representatives.

18. Is a ”two envelope” bid opening procedure permitted for procurement of goods or works?

X Not allowed

19. Is automatic re-bidding required if too few bids are received?

X Acceptable, provided all responsive bidders are allowed to bid, the process is efficient and no serious delays result

20. Is “bracketing” used in bid evaluations? X Not allowed

21. Is award made to lowest evaluated qualified and responsive bidder?

X Required

22. Are price negotiations conducted with “winning” bidders prior to contract signature?

X Not allowed, except where the bid price is substantially above market or budget levels and then only if negotiations are carried out to try to reach a satisfactory contract through reduction in scope and/or reallocation of risk and responsibility which can be reflected in a reduction in Contract Price. (See Guidelines para 2.60)

23. Are price adjustment provisions generally used?

X Not required, but recommended for works contracts of 1 year or more in duration when domestic inflation rate is high

Yes No Bank Policy

24. Are the terms and conditions used in goods and works procurement generally appropriate for the size and nature of contract intended?

X Required (to be acceptable they should be balanced, reasonable and clearly address the most important issues that lead to problems during performance, e.g. risk allocation, payment, inspection, completion/acceptance, insurance, warrantees, changes, contract remedies, force majeure, governing law, termination, etc.)

25. Are contract scope/conditions modified during implementation?

X Acceptable, but advance Bank approval of changes subject to prior review needed if required

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under the Loan Agreement.

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GENERAL EXPERIENCE 1. Are Government Organizations generally perceived by suppliers, contractors and the public as fair and efficient in their procurement practices ?

Suppliers, contractors, consultants, and the public in general perceive the Government organizations as fair and efficient, when they refer to projects funded by international organizations. In those cases where projects are locally funded, the local contracting and consulting community in particular , have the feeling of unfair treatment, and there is a broad perception among the civil society in general that the purchases of goods and works by the GDR is not carried out in an efficient and cost effective manner and that corruption might be underlying in all governmental business.

Several local contractors complained that the Government is executing huge and important public sector works, and that all contracts for those works are awarded by direct contracting. The perception is that corruption is present in the selection process, that the Government is favoring only a few large construction companies and that medium and small companies are left out. Government officials claim that large contracts awarded by direct contracting are given normally to two or three companies which are selected in a competitive process, but the majority of the construction community claim that such process is developed under a “cartel” scheme and that actual competition does not exist.

The Association of engineers, architects and surveyors (CODIA) indicated that the Association has about 16,000 members (some of them are owners of large, medium and small construction companies) and that less than 20 % of its members handle more than 80 % of public woks in the Dominican Republic.

Almost all of the people interviewed by the Bank have expressed that, unless a new legal and regulatory scheme in established in the country, there is little hope that things will change. It is also true that civil society recognizes the efforts of President Fernández to curb corruption and have praised the work of the Department for Prevention of Corruption.

2. Has the Country been rated in Transparency International corruption surveys ?. What results ?

The country has not been rated in Transparency International corruption surveys.

3. Which of the following factors are considered to be a problem by persons familiar with public procurement in the country ?

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Factors Yes No Inappropriate or outdated laws and regulations x Poor compliance and enforcement of existing laws x Poor information about procurement needs x Shortage of experienced professional staff x Poor training of procurement staff x Low pay for procurement staff x Poor procurement planning x Poor procurement methods and procedures x Lack of good standard procurement documents x Cumbersome contract approval procedures x Lack of delegation of contracting authority x Inadequate appeal mechanism x Interference by higher level officials x Lack of anti-corruption measures and enforcement x

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EXPERIENCE WITH WORLD BANK-ASSISTED PROJECTS 1. How many Bank projects have been completed in the country? are now underway? In which sectors?

As of June 23, 1999, thirthy eight loans/credits have been approved by the Bank and the corresponding projects completed in the Dominican Republic, with a total disbursed amount of US$567 million.

The ongoing World Bank portfolio in the Dominican Republic consists of 7

projects (including the Telecommunications project, approved but not effective yet) for a net commitment amount of US$296 million. The undisbursed amount stands at US$151 million while the ratio of total disbursed loans during FY99 in relation to the undisbursed balances of all loans as of end FY98 is 11 percent. The ongoing projects are the Hurricane Georges Emergency Recovery Project, Environment Policy Project; Provincial Health Service Project; National Highway Project; Basic Education Project; Irrigation, Land and Watershed Project; and the Telecommunications Regulatory Reform Project.

Of the 7 projects only one (Basic Education) is an actual problem project as it has

been rated unsatisfactorily in implementation progress since March, 1999. Overall, this results in a "Project at Risk" ratio of 17 percent.

2. Which organizations have been responsible for procurement in these projects? All projects, with the exception of the Hurricane Georges project, have been implemented by the corresponding Ministries in charge through PEU established in agreement with the Bank. In the case of the Hurricane George project, a PEU has been established under the umbrella of the Technical Secretariat of the Presidency of the Republic. In all cases those PEU are responsible for procurement under the projects. 3. What thresholds for prior review for goods, works and consultant services are currently in effect for ongoing projects? Are they the same for all projects?

Prior review by the Bank is required on procurement documentation (bidding documents, bid evaluation and recommendation for award and draft contracts) for the following projects and procurement actions: Emergency Operations (Hurricane George) Project: (a) all ICB and LIB procurement; (b) all civil works above US$500,000; (c) all consultants above US$50,000 (firms); US$10,000 (individuals); and all single source regardless of value. Environmental Policy Project: Each contract for goods estimated to cost more than US$50,000..

Provincial Health Service Project: (a) each contract for goods (other than pharmaceuticals and medical supplies) estimated to cost US$50,000 or more; and (b)the

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first two contracts for works estimated to cost the equivalent of more than US$50,000 but less than US$500,000.

National Highway Project: (a) all contracts for the provision of goods and works awarded under ICB; and (b) the first two contracts per year for the construction of works under NCB estimated to cost less than US$3.0 million but more than US$250,000; and (c) the first two contracts per year for the supply of goods under NCB costing less than US$250,000 but more than US$50,000

Basic Education Project: (a) each contract for technical assistance and each contracts awarded under ICB; (b) first contract for the supply of educational materials, awarded under NCB, and costing more than US$50,000 but less than US$250,000; (c) first contract for the provision of works, awarded under NCB, costing more than US$250,000 but less than US$3.0 million

Irrigation Land and Watershed Project: (a) each contract for the provision of goods and works awarded under ICB; (b) the first contract awarded under NCB for the supply of goods costing less than US$200,000 but more than US$25,000; (c) the first contract awarded under NCB for the provision of works costing less than US$1.0 million but more than US$200,000; and (d) the first contract awarded under NCB for the supply of goods (smaller sub-project) costing more than US$25,000

4. Do project audits/completion reports/supervision reports indicate significant procurement problems? Any cases of misprocurement? Describe. Project completion reports and in particular supervision reports of some of the seven projects in the Dominican Republic portfolio have reported procurement problems. One out of seven projects under implementation (Basic Education Project) have rated procurement as unsatisfactory. In this case, preparation of bidding documents is very slow as well as internal administrative procedures within the PEU and the Ministry of Education per-see. These issues in part have contributed to the slow implementation of the project and revised disbursement lag is about 86 %. The Minister of Education has agreed to hire an independent consultant to make specific recommendations to for reducing, among others, procurement procedures and delays. In the case of the national highway project, there have been some delays in project implementation and disbursements due to bidders complains to the Secretariat award decisions, which were reviewed by the Bank and found that they were properly justified. The Bank has declared no cases of misprocurement in the last ten years. 5. Have procurement issues caused serious implementation delays, cost overruns, disbursement delays? Describe.

Procurement related issues have caused delays in project implementation, cost overrun and disbursement of funds in the case of the Basic Education Project Secondary (see comments in question 4 above). Further delays in the implementation of this project, may result in substantial losses for the Government due to: (i) delays in the realization of benefits accruing from the project; (ii) payment of commitment fee to external funding

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agencies, normally higher than the percentage paid on undisbursed balance; and (iii) cost overrun on account of inflation. 6. Does the Bank receive a large number of complaints about procurement procedures, selection decisions in the country?

The Bank has received some complains in some projects funded by the Bank regarding procurement of goods, works and services, but non of them (in the last nine years) have been considered a misprocurement case and therefore have not resulted in cancellation of funds. In the case of the transport sector under the SEOPC, only three procurement complains in the past ten years.

7. Are contracts generally awarded within the planned, usual time frame required for similar operations by experienced and efficient organizations? Compared with efficient and experienced organizations, contracts awards for similar operations takes much longer. 8. Are there serious problems or conflicts between local practices and World Bank Guidelines, which should be addressed on an interim basis pending implementation of recommended long-term action plans? The most serious problem today in the Dominican Republic is the very weak procurement legal and regulatory framework. Regarding the contracting of works, the only legal instrument is law 105 of 1967 without a regulation. Law 105 repealed old law 5557 and its regulation 395, which provided a good basis for efficient procurement, and included the establishment of the Bidding Commission as a supervisory and control mechanism of law 105 and regulation 395. Since 1967, after the enactment of law 105 no regulation has been issued. This situation has created a legal vacuum and forced or allowed all public agencies to establish their own regulation without any control from an independent and credible entity. The Bank could not get any information on the reasons why this abnormal situation was not taken care of. On top of this, Article 2 of law 105 allows the Executive Branch to award contracts for works using direct contracting procedures, when in the opinion of the EB such works are of public interest. Under the umbrella of this article is that for the thirty years most of the locally funded public works have been awarded by direct contracting.

With regards to the procurement of goods the only legal instrument is regulation 262-98 approved by Presidential Decree on July 10, 1998. This regulation derogated regulation 295 of June 1966, and, if implemented in full it may substantially improve present legislation for the procurement of goods. The basis of this regulation is the centralization at Government level of the normative functions (creating the Commission of Supply and the General Directorate for Government Supplies) and decentralization of the operational functions to the central government and decentralized agencies. This basic premise requires a new structure for the General Directorate and the implementation by the General Directorate of ten specific instructions listed in the regulation. Unfortunately, as of the date of the report the new structure is not in place

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(reglamento orgánico funcional is missing), there is no budget allocation for the Directorate to function, and most of the specific instructions mandated by the above regulation were notimplemented.

Government officials indicated that the new structure for the General Directorate

has been prepared and submitted to the Chairman of the Commission of Supply (the Secretary of Finance) on November 1998. No information was available to the Bank mission as to the reasons of this delay. Implementation of the above specific instructions will be carried out with financial assistance of an IADB loan for institutional reform. Unfortunately, such loan approval is long overdue and expectations that Congress (majority opposition) will approve it shortly are slim. Finally, the country does not have any law or regulations for the contracting of consulting services. The Government of the Dominican Republic have expressed strong commitment to the enactment of a new procurement law, based on the draft prepared by the Commission appointed by the President of the Republic. Before this law is approved and becomes operational, there are several actions that have being recommended in the report that would require only a Presidential Decree and might be implemented in the short term. The Bank expects to reach an agreement with the GDR on the proposed Plan of Action, and, if requested by the GDR, the Bank would be prepared to propose to itsmanagement the approval of an IDF grant to partially finance the proposed plan.