Our financial laws, rules and regulations are based strictly on the cash-basis of accounting. They assist the Legislature to monitor and control public expenditure and do not permit the roll-over of expenditure from one fiscal year to the next. As a result, all budgetary allocations lapse on the last day of the year, and all unspent balances of budgetary allocations have to be returned to the Treasury. If there is a need to continue a project after the close of the year, as in the case of multi-year contracts, funds have to be re-budgeted in the following year.
In this article, we examine the provisions of the Constitution and the Fiscal Management and Accountability (FMA) Act relative to the above, but more especially in the light of media reports indicating that on 30 December 2019 a Cabinet sub-committee ‘noted’ the proposed award of 57 procurement contracts for certain projects, the majority of which are new capital expenditure works which would roll over into 2020, as can be noted from the listing below. This follows an earlier report that that on 23 December 2019 the sub-committee had noted the proposed award of 54 contracts. The amounts involved in all these contracts have not been disclosed, except for construction of the Yarrowkabra Secondary School in the sum of $827 million. However, judging from the number of contracts approved by the Cabinet close to year-end, the total amount could run into tens of billions of dollars.
According to media reports, among the contracts awarded were the following:
► Ministry of Education: Construction of the Yarrowkabra Secondary School; procurement of curriculum books for Grades 1 and 2 for the piloting of the revised curriculum; procurement of security service for schools in Georgetown; procurement of promethean boards for the University of Guyana; procurement of micro science kits and chemicals; and the supply of juices through the National School Feeding Programme 2020.
►Ministry of Public Infrastructure: Procurement of portable solar-powered runway lights for the hinterland and airstrips; completion of the 400 KWP solar PV farm at Mabaruma; installation of LED lighting at sections along the Linden Highway; rehabilitation of miscellaneous roads in Regions 1, 6, 7, 9 and 10; and provision of supervision consultancy services for the East Coast Demerara Road and for the rehabilitation of connecting end post of the Demerara Harbour Bridge.
►Ministry of Public Health: Provision of consultancy services for the planned new Government Analyst-Food and Drugs Department laboratories and office complex; and procurement of electrocardiograph, anaesthesia machine, operation table, ultrasound machine, vital sign monitoring and sterilizer laboratory reagents for the Medical Laboratory at the Georgetown Public Hospital Corporation.
►Ministry of the Presidency: Procurement of aircraft spares, two new aluminum trailers and other accessories for the Guyana Defence Force; construction of an arms and ammunition depot at Base Camp Seweyo; and provision of consulting services for a Petroleum Commission Needs Assessment at the Department of Energy.
► Ministry of Agriculture: Procurement of one caterpillar hydraulic track-type bulldozer for the National Drainage and Irrigation Authority; construction of rip rap sea defence at Hope, East Coast Demerara; and procurement of geotextile tubes and scour aprons for the National Agricultural Research and Extension Institute.
►Ministry of Communities: Construction of the Aranaputa NDC building; rehabilitation of heavy-duty timber bridge at Konawaruk; rehabilitation of the access road to Haags Bosch Sanitary Landfill; provision of consultancy services in the preparation of a National Civil Aviation Master Plan; and construction of the Abram Zuil Secondary School.
►Ministry of Public Security: Construction of divisional headquarters at Mahdia; procurement of baggage scanners for the Guyana Police Force; rehabilitation of the Special Branch administration building on Camp Street; and procurement of security equipment and accessories for the Guyana Prison Service.
► Ministry of Public Telecommunications: Procurement of two 200KVA generators for the National Data Management Authority; construction of a command centre at Liliendaal for NDMA; and renovation and functional enhancement to the call centre building at Kara Kara, Linden.
► Ministry of Finance: Procurement of two body x-ray inspection system/scanners for the Guyana Revenue Authority; and purchase of motor vehicles.
► Ministry of Indigenous Affairs: Extension of the Indigenous Residence at Princes Street, Werk-en-Rust.
Amid concerns about the awarding of contracts so close to year-end, a senior government official contended that the funds to be used to execute the contracts were provided for under the 2019 Estimates; the process started several months earlier; and proposed procurements were publicly tendered.
A clarification is first necessary as regards the role of the Cabinet in the procurement process. The Procurement Act sets out the detailed procedures for the procurement of goods, services and the execution of works to ensure fairness, transparency and competitiveness in the award of contracts as well as to maximise economy and efficiency in the procurement process. The Cabinet’s involvement is set out at Section 54 of the Act. It requires the Cabinet to review all procurements whose values exceed G$15 million based on a streamlined evaluation report prepared by the National Procurement and Tender Administration Board and submitted to the Minister of Finance. The Cabinet offers “no objection” to a contract award if all the applicable procurement procedures have been followed. Where it objects to a proposed award, the matter is referred to the procuring entity for corrective action to be taken. Since no contract exceeding G$15 million can be awarded without the Cabinet’s no objection, for all practical purposes the no objection constitutes an approval.
With the establishment of the Public Procurement Commission, the Cabinet involvement in the procurement process was to have ceased or progressively phased out in favour of a decentralized system. How-ever, after 19 years since the Constitution was amended to provide for the establishment of the Commission and after more three years since the latter was activated, this requirement is yet to become a reality.
Constitutional requirements
The relevant section of the Constitution on public finance are contained in Articles 217 through 224. Article 218 requires that no moneys shall be withdrawn from the Consolidated Fund except, among others, where the issue of those moneys has been authorized by an Appropriation Act or under Article 220. The latter article refers to a situation when the fiscal year commences without an approved budget in place. In such a situation, the Minister authorizes withdrawals from the Consolidated Fund to meet the cost of essential services of the Government up to four months from the beginning of the fiscal year, or the coming into operation of the Appropriation Act, whichever is earlier. The cost of essential services relates to the minimum expenditure needed to keep government offices open and includes wages and salaries for staff, office supplies, fuel and lubricants, and minor repairs and maintenance. However, no new capital expenditure works are to be undertaken as such works may not be included in the said Appropriation Act.
Article 220 also refers to a situation where Parliament is dissolved and there is no provision or insufficient provision for carrying on the business of the Govern-ment. In such a situation, the Minister can authorize withdrawals from the Consoli-dated Fund to meet the cost of essential services up to three months of the date of dissolution. However, a statement of the related expenditure must be tabled in the National Assembly as soon as practicable, and when approved it is included in the next Appropriation Bill.
Article 221 makes provision for the Minister to make advances from the Contingencies Fund if he is satisfied that an urgent need exists for expenditure for which no other provision exists. However, he is required to table a Supplementary Estimate in the Assembly as soon as possible so as to give covering authorization for the expenditure and to replenish the Fund.
The above requirements are fundamental to the operations of our financial management systems aimed at ensuring proper accountability for the use of public funds. As such, their integrity should under no circumstances be compromised.
FMA Act requirements
Section 16 of the FMA Act requires that there shall be no expenditure of public moneys, except in accordance with Article 218 of the Constitution. In addition, by Section 26, all appropriations of public moneys authorised by Parliament for a fiscal year shall lapse and cease to have effect as at the end of that fiscal year.
By Section 30, no contract or other arrangement providing for the payment of public moneys shall be entered into unless there is a sufficient unencumbered balance available in the appropriation to facilitate payment. In addition, no request for the payment of public moneys shall be made unless the Head of the budget agency concerned certifies that:
(a) The work has been performed, the goods supplied, or the services provided, as the case may be;
(b) The price charged is in accordance with the contract or other arrangement governing the works, goods or services or, if not specified in the contract or arrangement, that the price is fair and reasonable;
(c) Where a payment is to be made prior to the completion of the works, supply of the goods or provision of the services, as the case may be, the payment is in accordance with the contract or arrangement; or
(d) Where a payment is to be made in advance of verification, the claim for payment is fair and reasonable.
Further, no request for the payment of public moneys is to be made if the payment would result in: (i) an unlawful charge against the applicable appropriation; (ii) expenditure in excess of the applicable appropriation; or (iii) a reduction of the balance available in the applicable appropriation such that it would not be sufficient to meet all of the commitments charged against that appropriation.
Section 36 restates Article 220 of the Constitution. If an appropriation Act has not come into effect at the beginning of a fiscal year, the Minister shall be authorised to issue drawing rights on the Consolidated Fund sufficient to fund the ongoing delivery of normal services of Government. The monthly amounts involved for each budget agency are not to exceed one-twelfth of the amounts expended in the preceding year, except for obligations under multi-year contracts. However, the Minister cannot issue a drawing right in relation to a subject matter or for a purpose for which there is no appropriation in the preceding year.
Section 41 relates to the use of the Contingencies Fund. Where the Minister is satisfied that an urgent, unavoidable and unforeseen need for expenditure has arisen for which no moneys have been appropriated or for which the sum appropriated is insufficient, moneys cannot be reallocated, or the related expenditure cannot be deferred without injury to the public interest, he may approve a Contingencies Fund advance to meet such expenditure. The total amount to be advanced is not to exceed two percent of the estimated annual expenditure of the preceding fiscal year or such greater sum as the National Assembly may approve.
To be continued –
