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1. The interim instruction of June 1, 1998 was prepared to assist Bank staff in carrying out Country Procurement Assessment Reports (CPARs). A key objective of the new procedures introduced by the instruction was to promote dialogue with governments on how to strengthen their public procurement systems. A further objective was to assess, in practice, the efficiency, transparency, and integrity of a country's entire procurement system and the risk it may pose to the use of Bank funds. The CPAR was also intended to provide a key input to the Country Assistance Strategy (CAS) for the Bank to support public procurement reform as part of an agreed implementation strategy.

2. The CPAR instruction of June 1998 anticipated periodic evaluations of its effectiveness and subsequent revision or modification as needed. In the intervening period, there have been a number of important developments that make such a revision timely. First, with transparency and broader governance concerns having become an integral part of country assistance strategies, the efficiency and transparency of public procurement systems has been seen increasingly as an important component of public sector management. Second, changes in the Bank's business over the years, including the increased use of adjustment lending and the introduction of poverty reduction support credits (PRSC) and debt relief initiatives, has resulted in the need to undertake a comprehensive diagnostic of the country's fiduciary accountability environment, including an assessment of the country procurement system, as part of the process for agreeing to such lending. Finally, in July 2000 the CPAR was officially designated as economic and sector work (ESW) requiring revisions to the instruction to comply with Bank business processes for ESW.

3. At the end of FY01, the Quality Assurance Group (QAG) undertook, at the request of the Procurement Sector Board, a review of some 20 CPARs conducted since the introduction of the 1998 instruction. This review has identified areas for improvement regarding the (a) internal quality of the assessments; (b) skill mix of the task team conducting the assessment; (c) coordination of the products with other Bank economic and sector work (ESW); and (d) overall impact of the assessments. Consequently, a revision of the interim instruction of June 1, 1998, was undertaken. The new instruction introduces:

(a) Mandatory steps to comply with business processes for ESW;
(b) Guidance aimed at strengthening the analytical content and internal quality of CPARs;
(c) Steps to improve the impact of the CPAR, including coordination with other fiduciary ESW, follow-up actions plans, monitoring and evaluation, and capacity building strategies;

Revisions have also been made to other sections of the existing CPAR procedures. These revisions are aimed at strengthening consultation mechanisms with interested donor agencies, providing clearer guidelines on the scope and content of the CPAR, and guiding staff on possible sequencing of reforms including near-term capacity building, monitoring, and training measures that can be undertaken while approval for longer-term measures, e.g. legislative revision to procurement laws, is being sought.

4. The draft instruction was circulated to bilateral and multilateral donors for review and comment during the Heads of Procurement meetings held at the Inter-American Development Bank during 25-27 March 2002. Comments received from the participating organizations have been incorporated into the instruction. At the conclusion of the March meetings, the participants agreed to use the CPAR as an assessment tool and to continue to coordinate and participate actively in assessments and follow-up activities in client countries. In order to facilitate this cooperation, the World Bank shared the planned schedules for conducting CPARs through Fiscal Year 2004.

5. The revised CPAR procedures, April 2002, are attached. Questions on these revised CPAR procedures should be addressed to the Director, Procurement Policy and Services Group, Operations Policy and Country Services (OPCPR).