In our article of 9 October 2023, we had stated that the award of the contract for the construction of sluice and pump station at Belle View, West Bank Demerara, violated the Procurement Act for two main reasons, the contractor’s lack of the requisite experience in undertaking works of this nature as stipulated in the bid documents; and the contractor’s bid was the third lowest responsive bid. Despite a complaint filed with the Public Procurement Commission (PPC) by a Member of Parliament as to the basis of the award and the Commission’s on-going investigation into the matter, the Minister of Agriculture announced that the execution of the contract will proceed. One would have thought that the contract would be put on hold, pending the outcome of the investigation. What would happen if the PPC rules that there has been a breach of the Procurement Act in relation to the award of the contract?
In another matter, despite the audit report issued some three years ago that identified US$214.4 million in disputed expenditure in relation to ExxonMobil’s pre-contract contract costs and the fact that the GRA has accepted the outcome of the audit, the Government is still to decide whether to go to arbitration to resolve the matter. Yesterday, Stabroek News reported the U.S. oil giant indicating that discussions are still on-going as to the way forward. This is rather unfortunate, considering that Guyana stands to lose US$107.2 million in oil revenues.
In last week’s article, we began a discussion of the various anti-corruption measures implemented by the Guyanese authorities over the years. Despite this, Guyana continues to score poorly on the Corruption Perceptions Index (CPI), as evidenced by the recently released 2023 CPI. We also sought to identify what may have been reasons for the unfortunate state of affairs. So far, we have covered three areas – the creation of the Guyana Revenue Authority in 1996; Guyana being a signatory of the Inter-American Convention Against Corruption in 1997; and the passing of the Integrity Commission Act 1997. In today’s article, we continue our discussion from where we left off.
Public Procurement Commission
Amid widespread concerns about the basis of the award of contracts for the procurement of goods and services and the execution of works as well as the extent of leakages in the Government’s procurement systems, the Constitution was amended in 2001 to provide for the establishment of the PPC to monitor public procurement and the related procedures to ensure that the procurement of goods and services and the execution of works are conducted in a fair, equitable, transparent, competitive and cost-effective manner in accordance with law and policy guidelines as determined by the National Assembly.
The Commission is to comprise of five members appointed by the President after their nomination by the Public Accounts Committee (PAC) and the approval of at least two-thirds of the elected Members of the Assembly. It must function independently and impartially and discharge its responsibilities fairly. The commissioners are required to have expertise and experience in procurement, legal, financial, and administrative matters to enable them to discharge their responsibilities effectively. It is particularly important for the Commission to be viewed as independent of the political process. In principle, no one should be appointed a commissioner if he/she is a member of a political party or is closely associated with that party. It is the duty of the PAC to ensure that these requirements are scrupulously followed.
It, however, took 15 years for the actual Commission to be activated through the appointment of the first commissioners in October 2016. The main reason for the failure to adhere to this important constitutional requirement for so long was the reluctance of the Cabinet to surrender its role in offering “no objection” to the award of contracts in excess of G$15 million, a practice that still continues to date. In accordance with Section 54(1) of the Procurement Act, the Cabinet and the PPC are to review annually the above threshold with a view to increasing it over time and progressively phasing out the Cabinet’s involvement in favour of decentralized process. By Section 54(6), the Cabinet’s involvement is to cease upon the constitution of the PPC, except for pending matters.
At the time the first commissioners were appointed, the Chairman of the PAC was President Irfaan Ali. Instead of following a rigorous process involving public advertisement, shortlisting of eligible candidates, interviewing, and selecting the best candidates for consideration by the Assembly, the PAC took the least line of resistance by requesting the two major political parties to nominate their candidates – three from the People’s Progressive Party/Civic; and two from the APNU+AFC. This practice was repeated in relation to the appointment of the current commissioners. Is it any wonder that there is widespread dissatisfaction as regards the functioning of the PPC, especially when one considers the remuneration packages of the commissioners? One could also legitimately ask whether all commissioners are functioning on full-time basis. The constitutional amendment did not envisage a full-time role for all the five members. Perhaps, the PPC could clarify this matter.
One hopes that in the next round of appointment, due to be made next year, the PAC will get its act together and follow the established practices in selecting candidates for consideration by the Assembly. The Assembly also has a role to play in ensuring that the best candidates are selected, free of political considerations, and in keeping with the spirit of the constitutional amendment of 2001.
Audit Office of Guyana
As part of the constitutional amendments of 2001, the Audit Office became somewhat insulated from the Executive through the submission of the Auditor General’s reports directly to the Speaker of the Assembly for laying in the Assembly, instead of the Minister of Finance.
Under the previous arrangement, the Auditor General would have been hard-pressed to be as critical as he would have liked to be of the financial operations of the Government. The Minister, for his part, could have delayed the submission of the report to the Assembly if he was unhappy with the contents.
The amendments also include the requirement for the PAC to exercise general supervision over the functioning of the Audit Office in accordance with that office’s rules, policies and procedures as approved by the PAC. It has been argued that the PAC’s involvement is inconsistent with Article 223(4) of the Constitution which states that in the exercise of his duties, the Auditor General shall not be under the direction or control of any person or authority. That article is clear in that no one should dictate how the Auditor General should perform his audit. Suffice it to state that independence is not an absolute concept and there are degrees of independence. That apart, the question that was asked at the time was: What guarantees can be given that the Auditor General would not abuse his authority after delinking the Audit Office from the Public Service? The latter was responsible for the recruitment, transfer, promotion, disciplinary actions, and setting the salaries of staff in the Audit Office. Since the Auditor General reports to the National Assembly, it is entirely appropriate for the PAC to have an oversight role over the functioning of the Audit Office.
The Auditor General is required to prepare and submit to the PAC for its approval quarterly reports on the performance and operations of his office. The Audit Office is also subject to an independent annual systems and financial audit, and a copy of the related report is to be forwarded to the PAC.
The constitutional amendments also provide a clear definition of what constitutes the public accounts. By Article 223 (8) (b), the public accounts shall include: (i) all central and local government bodies and entities: (ii) all bodies and entities in which the State has a controlling interest; and (iii) all projects that are financed by way of loans and grants by any foreign State or organization. A key aspect of the amendment relates to the financial independence of the Audit Office. By Article 222(a), in order to secure the independence of the various constitutional agencies listed in the Third Schedule, the expenditure is a direct charge on the Consolidated Fund determined as a lump sum by way of an annual subvention approved by the Assembly after a review and approval of an entity’s budget as part of the determination of the national budget. Each entity is to manage its subvention as it sees fit for the discharge of its function, subject only to conformity with the financial practices approved by the Assembly to ensure accountability, and all revenues are to be paid into the Consolidated Fund.
The Audit Act 2004 builds on the constitutional amendments by providing greater details relating to strengthening the independence of the Audit Office, delinking it from the Public Service and providing it with greater autonomy and flexibility to execute the Auditor General’s mandate. The key provisions of the Act will be discussed in next week’s article.
