Indonesia

Fragmented Legal Framework and Gaps in Procurement Regulations

• Issue: There are inconsistencies in the application of procurement laws, particularly in the use of Swakelola (self-managed procurement) and procurement by State-Owned Enterprises (SOEs). These inconsistencies create an uneven playing field.
• Recommendations:
  • Conduct a critical review of Swakelola procurement to assess its impact on value-for-money outcomes.
  • Introduce clear rules and guidelines for SOE participation to ensure fair competition​.

Lack of Accessibility to Procurement Regulations

• Issue: Procurement-related legal documents are not easily accessible, making it difficult for stakeholders to navigate the legal framework.
• Recommendations:
  • Improve the organization and accessibility of procurement legal framework documents through an online search platform.
  • Centralize procurement regulations, guidelines, and related anti-corruption policies for easy reference​.

Weak Procurement Performance Monitoring and KPIs

• Issue: The procurement system lacks a comprehensive performance measurement framework, with only a few Key Performance Indicators (KPIs) currently in use.
• Recommendations:
  • Develop a structured performance monitoring system with a robust set of KPIs covering efficiency, competition, and compliance.
  • Improve data analytics capabilities to support procurement policy decisions​.

Limited Integration of Procurement Planning and Budgeting

• Issue: The procurement planning process operates in silos, leading to inefficiencies in budget execution.
• Recommendations:
  • Improve coordination between procurement planning and budget execution to align resources with actual procurement needs.
  • Implement integrated monitoring tools to enhance procurement efficiency​.

Excessive Use of Non-Competitive Procurement Methods

• Issue: Non-competitive procurement methods, such as direct awards, are frequently used, limiting market competition.
• Recommendations:
  • Restrict the use of direct awards and require justification for non-competitive procurement methods.
  • Encourage competitive bidding practices through improved procurement planning​.

Lack of Standardized Bidding Documents for Complex Projects

• Issue: Indonesia lacks standardized procurement documents for Design-Build, EPC (Engineering, Procurement, and Construction), and Turnkey projects.
• Recommendations:
  • Develop and implement standardized bidding documents for large and complex projects to ensure consistency and fairness​.

Limited Use of Value-for-Money and Sustainability Criteria in Procurement

• Issue: Procurement decisions are often based on the lowest-price criterion, rather than sustainability and long-term value-for-money assessments.
• Recommendations:
  • Expand the use of life-cycle costing and sustainability criteria in procurement evaluations.
  • Develop technical guidance for procurement officials on integrating value-for-money considerations​.

Weak Oversight and Enforcement of Procurement Audits

• Issue: Procurement audits are not systematically enforced, reducing the effectiveness of oversight mechanisms.
• Recommendations:
  • Issue clear standards and procedures for procurement performance audits.
  • Strengthen the enforcement of audit recommendations by integrating findings into procurement decision-making​.

Lack of Public Awareness and Reporting on Procurement-Related Corruption

• Issue: There is a reluctance to report procurement-related fraud and corruption, and data on procurement-related corruption cases is limited.
• Recommendations:
  • Align Indonesia’s corruption definitions with UNCAC (United Nations Convention Against Corruption) to strengthen legal clarity.
  • Improve public awareness campaigns and establish better mechanisms for tracking and reporting procurement-related fraud​.

Limited Involvement of Civil Society in Procurement Oversight

• Issue: The legal framework does not sufficiently involve Civil Society Organizations (CSOs) in procurement monitoring.
• Recommendations:
  • Introduce specific legal provisions to enable CSO participation in procurement oversight.
  • Establish mechanisms to incorporate CSO feedback into procurement policy decisions​.