In several of our articles in this Column, we highlighted the need to have adequate systems and procedures as well as the highest possible degree of efficiency and effectiveness in public procurement. With almost 70% of our National Budget devoted to the procurement of goods and services and the execution of works, these systems and procedures, as well as related laws and regulations, need to be carefully and meticulously monitored to ensure that the best possible value for money is obtained and that they are not in any way abused. Regrettably, for decades various forms of abuse and leakages in our procurement system have been highlighted, and carefully documented and reported. These include:
(a) Poor choice of projects for major infrastructure development works and their financing arrangements, resulting mainly from political considerations instead of sound economic analyses and detailed studies by independent professionals to assess the feasibility and long-term viability of the projects. The Amaila Falls Hydro Project, the Marriott Hotel, the Berbice River Bridge, the Fibre Optic Cable Project and the East Bank Road Expansion Project readily come to mind;
(b) Faulty designs and specifications for the supply of goods and services, and the execution of works due to inexperience or political intervention e.g. the construction of the bridge over the Hope Canal and the Kato Secondary School;
(c) Choice of suppliers and contractors based on considerations other than professional and technical competence;
(d) Inflated contract prices and the strong possibility of kick-backs being offered or demanded;
(e) Ineffective monitoring resulting in the procurement of substandard goods and services, defective work being performed, and overpayments to suppliers and contractors. In all of this, the interest of the State, and hence the taxpaying public, is not left unprotected and undefended; and
(f) The absence of sanctions against delinquent suppliers and contractors.
Having the benefit of watching over our procurement system for about 15 years during my tenure as Auditor General and more recently during the last four years as a civil society activist on governance issues, my best estimate of the extent of leakages is in the order of 20%. Translated into dollar value, this works out to a staggering $32 billion annually.
It is against this background as well as the huge outcry from aggrieved suppliers and contractors about the lack of fairness and transparency in the award of contracts that the Constitution was amended in 2001 to provide for the establishment of the Public Procurement Commission with the clear intention of removing political involvement and influence in the award of contracts. However, it took 15 years for the Commission to become a reality, due mainly to political wrangling over the involvement of the Cabinet.
The constitutional amendment
Article 212W (1) of the Constitution provides for the establishment of the Public Procurement Commission to monitor public procurement and the procedures therefor in order to ensure that the procurement of goods, services and the execution of works are conducted in a fair, equitable, transparent, competitive and cost effective manner according to law and such policy guidelines as may be determined by the National Assembly. The Commission is required to be independent, impartial and must discharge its functions fairly.
The Commission is to comprise of five members who have expertise and experience in procurement, legal, financial and administrative matters. It is not an “either/or” situation in that all members are required to possess expertise and experience in all four disciplines. The President shall appoint the members of the Commission after such members have been nominated by the Public Accounts Committee and approved by no less than two-thirds of the elected members of the Assembly. The members are to be appointed for three years and shall be eligible for re-appointment for one other term of office, not earlier than three years after the end of their first term. In other words, there must be a period of “cooling off” for at least three years before a member becomes eligible for re-appointment for another three-year term. However, among those members first appointed, two shall hold office for four years, the reason being the avoidance of loss of institutional memory, and hence lack of continuity, if all the five members vacate office at the same time.
By Article 212 Z, the Commission shall establish a secretariat comprising its officers and employees, including a Chief Executive Officer (CEO) who shall serve as Secretary. The terms and conditions of the appointment of the CEO and the two other most senior officers shall be subject to the approval of the Assembly.
Functions of the Commission
Article 212 AA outlines the functions of the Commission as follows:
(a) To monitor and review the functioning of all public procurement systems to ensure that they are in accordance with law and such policy guidelines as may be determined by the Assembly;
(b) To promote awareness of the rules, procedures and specific requirements of the procurement process among suppliers, contractors and public bodies;
(c) To safeguard the national interest in public procurement matters, having regard to international obligations;
(d) To monitor the performance of procurement bodies with respect to adherence to regulations and efficiency in procuring goods and services, and execution of works;
(e) To approve of procedures for public procurement, disseminate rules and procedures for public procurement and recommend modifications thereto to the public procurement entities;
(f) To monitor and review all legislation, policies and measures for compliance with the objects and matters under its purview and report the need for any legislation to the Assembly;
(g) To monitor and review the procurement procedures of ministerial, regional, and national procurement entities as well as those of project execution units;
(h) To investigate complaints from suppliers, contractors and public entities and propose remedial action;
(i) To investigate complaints of irregularity and mismanagement, and propose remedial action;
(j) To initiate investigations to facilitate the effective functioning of public procurement systems;
(k) To enlist the aid of such persons, as may be necessary, to assist the Commission with expert advice; and
(l) To liaise with and refer matters to the police and the Auditor General.
Contrary to popular belief, the Commission is not responsible for awarding contracts. Instead, it plays an oversight and monitoring role in relation to the functioning of the National Procurement and Tender Administration Board as well as Ministerial and Regional tender boards.
Appeal of decisions of the Commission
A decision of the Commission is subject to the yet-to-be established Public Procurement Commission Tribunal, with further appeals to the Court of Appeal.
Reporting by the Commission
As soon as practicable after the end of the year of its operations, the Commission is required to submit an annual report to the Assembly. It shall also prepare and publish an executive summary of its annual report and any special report in the media having wide accessibility, within 42 days of their submission to the Assembly.
The Procurement Act and transitional arrangements
The Procurement Act was passed in 2003, two years after the constitutional amendment of 2001. Therefore, there was need to have transitional arrangements until such time that the Commission is activated. The Act specifies that pending the establishment of the Commission, the NPTAB is responsible for carrying out all of the functions of the Commission.
Future role of the Cabinet
By Section 54 (1) of the Act, the Cabinet shall have the right to review all procurements the value of which exceeds $15 million. The review is to be conducted on the basis of a streamlined tender evaluation report. In addition, the Cabinet and, upon its establishment, the Public Procurement Commission, shall review annually the Cabinet’s threshold for review of procurements, with the objective of increasing that threshold over time so as to promote the goal of progressively phasing out Cabinet involvement and decentralising the procurement process.
In conducting its review, the Cabinet may object to the award of the procurement contract only if it determines that the procuring entity failed to comply with applicable procurement procedures. If the Cabinet objects to an award, the matter shall be referred to the procuring entity for further review. It should, however, not be construed that the Cabinet is authorised to award a tender to any other supplier or contractor. The Cabinet may not object later than twenty-one days after an award
In accordance with Section 54 (6), Cabinet’s involvement shall cease upon the constitution of the Public Procurement Commission except for pending matters, whereas Section 54 (1) refers to a progressive phasing out of the Cabinet’s involvement. Therefore, the latter appears to be in conflict with the former. Now that the Commission has been activated, clarification is needed as to the precise role of the Cabinet. In accordance with the Commission’s terms of reference, one expects that one of its first tasks will be to seek the necessary clarification from the Assembly.
Future role of the Bid Protest Committee
Another area that needs to be clarified relates to the appointment of a three-person Bid Protest Committee to review protests from dissatisfied suppliers and contractors, as provided for under Section 53 (4) of the Act. However, the terms of reference of the Commission includes investigating complaints from suppliers, contractors and public entities and proposing remedial action. One suspects that this constitutional provision will have to take precedence over the Act but this is a matter that should also be taken up with the Assembly for the necessary guidance to be provided.
The members of the Bid Protest Committee are to be appointed from among professionals who are particularly competent in the field of procurement. The committee is required to issue its written decision within fifteen business days of the conclusion of a review, stating the reasons for the decision and the remedies granted, if any. Damages may include only compensation to recover the cost of the bid preparation. The decision of the Bid Protest Committee shall be final and immediately binding upon the procuring entity. This means that there is no recourse to the Courts if a supplier or contractor is dissatisfied with the decision of the Committee. It is for this reason that the members of the Committee should be highly skilled and experienced in public procurement matters. It is not clear whether the members of the recently appointed Committee have the necessary backgrounds to discharge their responsibilities as adjudicators and final arbiters in a procurement dispute.