Introduction
Public procurement is perhaps the single most important activity of the State, consuming the greatest portion of expenditure. As such, there must be strict and elaborate rules backed by related legislation to ensure competitiveness, transparency, proper accountability and good value for money.
This article is examines Guyana’s public procurement systems to assist the general public to have a better understanding of them. The requirements are to be found in Article 212W of the Constitution and the Procurement Act 2003.
Article 212 W – The Public Procurement Commission
In 2001, the Constitution was amended to provide for the establishment of a Public Procurement Commission. The main responsibility of the Commission is to monitor public procurement and the related procedures 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.
This amendment was mainly in response to persistent criticisms by the Auditor General over the years of the failure of government ministries and departments to adhere to the Tender Board Regulations. There was also public pressure to reform the government’s tendering procedures. In particular, many stakeholders held the view that the arrangements in place did not provide them with confidence as to the fairness and transparency in the award of government contracts, and there was no mechanism in place to address their concerns.
The Public Procurement Commission is independent of the Executive and reports to the Legislature. It is required to consist of five members with expertise and experience in procurement, legal, financial and administrative matters. The members are to be appointed by the President after they have been nominated by the Public Accounts Committee and approved by no less than two-thirds of the elected members of the National Assembly. A member can only be removed from office except as provided for in the Constitution.
These are important safeguards to not only secure the independence and impartiality of the Members but also ensure that they enjoy the confidence of Members of the National Assembly from both the Government and Opposition sides. In addition, none of the functions of the Commission can be removed or varied except by the votes of not less than two-thirds of the elected Members of the National Assembly. However, any addition thereto requires the votes of a majority of elected Members.
The key functions of the Commission are 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 National Assembly;
● Safeguard the national interest in public procurement matters, having due regard to any international
obligations;
● Monitor the performance of procurement bodies with respect to adherence to regulations and efficiency in procuring goods and services and the execution of works;
● Approve of procedures for public procurement, disseminate rules and procedures for public procurement and recommend modifications thereto to the public procurement entities;
● 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 National Assembly;
● Monitor and review the procurement procedures of the ministerial, regional, and national procurement entities as well as those of project execution units; and
● Investigate complaints from suppliers, contractors and public entities and propose remedial action.
Despite this important constitutional amendment aimed at securing public confidence in the public procurement process, after eleven years, the Public Procurement Commission is not yet in place. Under pressure from the Opposition parties, the Government had promised that the Commission would have been established by the end of June 2012. And recently, the former Speaker of the National Assembly, Mr. Ralph Ramkarran, indicated that it should not take more than 72 hours to have the Commission in place.
The Procurement Act of 2003
The Procurement Act 2003 is more detailed and provides for the regulation of the procurement of goods and services, and the execution of works in order to promote competition among suppliers and contractors as well as fairness and transparency in the procurement process. It replaces the Tender Board Regulations, which had become outdated and did not have the force of law, with a comprehensive and modern set of rules, codified in the form of legislation.
The Act acknowledges the non-establishment of the Public Procurement Commission. It accordingly vests the key responsibilities of the Commission with the National Procurement and Tender Administration Board until such time that the Commission is established. In addition, the Cabinet has been given the right to review all procurement exceeding $15 million with the proviso that, upon the establishment of the Commission, this threshold would be revised upward so that over a period of time the Cabinet’s involvement would be phased out. Another provision is that if there is a conflict between the Act and an international agreement, the latter takes precedence over the former.
The Act deals, inter alia, with the following: authority
limits and levels; composition of the various tender boards; eligibility requirements for suppliers/contractors; prequalification procedures; specifications of goods/services; prohibition of contract splitting; restricted tendering: sole source procurement; two stage tendering: tender security (performance bond); tender evaluation; and tender award.
Authority limits and levels: There is a hierarchy of authority limits and levels in the assessment of bids and in the award of contracts. At the lowest level, the head of the budget agency (accounting officer) awards contracts up to a certain limit. At the highest level, Cabinet approves of all contracts in excess of $15 million. Between these two levels, there are National, Regional, Ministerial and District tender boards along with their evaluators that carry out the assessment and approval of contracts.
Composition of the various tender boards: The National Tender Board reports to the Minister of Finance and consists of seven appointed by the Minister: not more five from the Public Service; and not more than three from the private sector after consultation with their respective organizations. These members are selected from among persons of unquestioned integrity who have shown capacity in business, the professions, law, audit, finance and administration. Two members shall serve full-time of which one is the Chairman. As in the case of regional and ministerial tender boards, the term of office for all members is two years, and each member is required to file financial declarations with the Integrity Commission.
The Regional Tender Board consists of five members, three of which are appointed by the National Tender Board while the remaining two are from the regional administration. The Chairman is selected from the three appointed by the National Tender Board and is a full-time appointment. The other members serve on a part-time basis.
Ministerial tender boards comprise five part-time members: three are appointed by the Minister; and two by the National Tender Board. There are also District Tender Boards, comprising three part-time members: two appointed by the Regional Tender Board; and one from the Neighbourhood Democratic Council.
One apparent shortcoming of the Act is that it is not clear whether members of the various tender boards can be re-appointed after serving for two years.
Eligibility requirements for suppliers/contractors: The main considerations are technical competence; availability of financial resources, equipment and other physical facilities; and managerial capability, reliability, experience, and reputation. There is provision for disqualification because of: (a) continued unsatisfactory past performance; (b) conviction of criminal offence relating to professional conduct or the making of false statements or misrepresentations of qualifications in the last ten years; (c) suspension or debarment “in this or other jurisdictions over the last three years”; (d) knowingly submitting information about qualifications that is materially inaccurate, incomplete or false; or (e) failure to rectify non-material deficiencies promptly upon request
Prequalification procedures: For large and complex works/services, it may be desirable to limit the bidding to only those who meet the specified criteria since this is likely to reduce significantly the administrative burden of evaluating a large number of bids. Invitations are normally issued for suppliers/contractors to apply for prequalification, and when the actual works/services are advertised, only those prequalified are eligible to bid.
One apparent shortcoming in the Act is that there is no provision for the prequalification assessment to be done by the relevant tender board and its evaluators but rather the budget entity.
Specifications of goods/services: The description of goods/services in the tender documents should as far as possible be generic in nature. Brand names should not be mentioned, and standardized terms should be used in the tender documents. This is an important safeguard to ensure that there is no bias in favour of a particular contractor(s).
Prohibition of contract splitting: Proposed works/services should not be split or sub-divided to avoid assessment by the higher tender adjudicating bodies. For example, a proposed work, which is estimated to cost $25 million, should not be divided in two lots of say, $12 million and $13 million to avoid review by Cabinet.
Prior to the passing of the Act, successive reports of the Auditor General have highlighted the prevalence of contract splitting at various ministries and departments. (To be continued next week)
