Revisiting the Public Procurement stalemate

Last Thursday, the National Assembly adjourned for six months the debate on a bill to amend Public Procurement Act to reinstate Cabinet’s role in the awarding of public contracts. The Act as it currently stands requires Cabinet’s involvement either to be progressively phased out over time or to cease, upon the establishment of the Public Procurement Commission. It also limits Cabinet’s role to one in which it can only object to an award if the procurement entity failed to comply with the applicable procurement procedures.

While it is true that prior to 2003 Cabinet has always had a role in the awarding of public contracts, there were persistent criticisms over the years of the failure of government ministries and departments to adhere to the Tender Board Regulations. In addition, there was public pressure to reform the Government’s tendering procedures since 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. There was also no mechanism in place to address their concerns.

As a result, the Constitution was amended in 2001 by the insertion of nine articles which essentially replace Cabinet’s involvement with that of an independent and impartial commission with reporting relationship to the Legislature, and not the Executive. With approximately 70 per cent of the national budget going towards public procurement, and more so since the Legislature  approves the budget, it is not inconceivable for the oversight of public procurement to fall under the purview of the Legislature and not the Executive.

Accountability WatchArticles 212W provides for the establishment of the Public Procurement Commission (PPC) “to monitor public procurement and 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”.

 Transitional arrangements

The Procurement Act provides greater detail to give effect to the constitutional provisions. At the time of its passing in 2003, however, the PPC had not been established. The Act therefore acknowledges this, and accordingly vests the key responsibilities of the PPC with the National Procurement and Tender Administration Board (NPTAB) until such time that the PPC is established. In addition, Section 54(1) of the Act gives Cabinet the right to review all procurements exceeding $15 million, with the following proviso:

Cabinet and, upon its establishment, the PPC shall review annually 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 the Cabinet’s involvement and decentralizing the procurement process.

However, Section 54(6) requires Cabinet’s involvement to cease upon the establishment of the PPC, except for pending matters. As pointed out in my article of 10 June 2013, these two sections contradict each other.

The Government, for its part, is arguing for the retention of Cabinet’s involvement as a permanent feature and not in a progressively phased out manner, as envisaged by section 54(1). On the other hand, the combined Opposition wants Cabinet’s involvement to cease and is relying on section 56(6) as the basis for its arguments. As a result, the stalemate continues to exist.  With a view finding a compromise solution to resolve the matter, I had recommended the following:

For the procurement of goods and services, Cabinet could relinquish its role almost immediately since this is a relatively simple task for an independent, impartial and competent PPC to oversee;

For the execution of infrastructure works, Cabinet could be allowed to have a say in the award of contracts in excess of $100 million but under the existing arrangement whereby it can only object to an award on procedural grounds. This should, however, be a transitional arrangement. After three years, Cabinet could relinquish entirely its involvement in the procurement process to allow for the PPC to formulate a decentralized structure having regard to the existing framework involving the NPTAB, and regional, district and ministerial tender boards;

The National Assembly should take measures to establish the Public Procurement Commission Tribunal to hear appeals against any decision of the PPC;

If after three years of its existence, there is any unhappiness with the way the PPC is functioning, request can be made for the Standing Committee on Constitutional Reform to review its operations; and

Once the members of the PPC are appointed, its secretariat should be set up and staffed with competent officers, including a Chief Executive Officer serving as the Commission’s Secretary.

These recommendations, however, did not find favour with the combined Opposition which is insisting that section 56(6) must prevail, i.e. no Cabinet involvement as envisaged by the constitutional amendment. On the other hand, while acknowledging the inconsistency between sections 54(1) and 56(6), the Government wants to reinstate Cabinet’s role as a permanent feature.

Revisiting the constitutional requirements

In the light of the continuing stalemate, I have decided to revisit the constitutional requirements relating to the establishment of the PPC. To begin with, the PPC must function in accordance with law and such policy guidelines as may be determined by the National Assembly. It does not, however, award contracts but rather plays an oversight role. It watches over the system to ensure strict compliance by the various tender boards and procuring entities as regards the laid-down procedures. Of course, it has the authority to amend these procedures as it sees fit.

The PPC’s intervention in the award of a contract would only occur if a complaint from a supplier, contractor or a public entity is received.  After investigation, if there is merit in the complaint, the PPC proposes remedial action.  Such action is subject to appeal to a Tribunal, with further appeal to the Court of Appeal.

The PPC is required to be independent and impartial, and to discharge its functions fairly.  Independence in this regard includes non-interference from the Executive. Since Cabinet is an integral part of the Executive, it should not have a say in the work of the PPC and must not be seen to play any supervisory role over, or to review the work of the PPC. The situation has, however, become complicated with the passing of the Procurement Act and the insertion of section 54(1), dealing with the progressive phasing out of Cabinet. It is now further compounded by the Government’s insistence that Cabinet’s involvement must be a permanent feature.

Regrettably, the Government’s position is a signal that it is not inclined to place confidence in the work of the PPC despite: (a) the PPC’s reporting relationship with the Legislature; (b) its membership to comprise experts enjoying the full confidence of the National Assembly; (c) members’ ineligibility after serving two non-consecutive terms; and (d) right of appeal to a Tribunal and thereafter to the Court of Appeal against any decision of the PPC.

On the other hand, if for argument’s sake, upon the establishment of the PPC, Cabinet is given the right to object to the award of a contract of course on procedural grounds only, this is unlikely to call into question the work of the PPC. Rather, in such a situation, Cabinet will be providing another layer of oversight and will be assisting the PPC in the monitoring of the public procurement system. However, the framers of the Constitution, of which the Government was a party, want Cabinet’s role to cease completely with the establishment of the PPC. There is no doubt about this, especially since nowhere in the constitutional amendment is there any mention of Cabinet. Therefore, the combined Opposition’s stand appears consistent with the constitutional intent on the matter.

It seems to me that the resolution to the problem from the Government’s point of view is to go back to the Constitution and make the appropriate amendment to make it clear that Cabinet’s involvement must remain. However, such an amendment will require approval by the votes of not less than two-thirds of all the elected members of the National Assembly since it would constitute the removal or variation of one or more of the functions of the PPC. If such an approach fails, then the only option left is for either party – the Government or the combined Opposition – to seek a judicial review of the matter. The issue of the establishment of the PPC has been in limbo for too long, i.e. 12 years, and the time is long overdue to bring about a resolution.

I do not believe that amending the Procurement Act is the way to go since it will nullify the objectives of establishing the PPC. The Procurement Act is subordinate to the constitutional provisions. Accordingly, any amendment to it in the way the Government is proposing will destroy the constitutional intent on the matter and can be deemed ultra vires the Constitution.

On a final note, it is not publicly known that Cabinet has ever objected to an award, whether on procedural grounds or otherwise.  The reason is simple. The Minister of Finance, who is a key member of Cabinet, appoints the seven members of the National Procurement and Tender Administration Board (NPTAB): not more than five from the Public Service; and not more than three from the private sector after consultation with the representative organisations. He also appoints the Chairman whose position is a full-time one. In addition, NPTAB reports to the Minister.  In such a situation, Cabinet will be hard-pressed to object to an award because in doing so, it will be questioning the work of the Minister. On the other hand, the NPTAB will find it difficult to recommend an award which Cabinet is likely to reject. Therein lies our dilemma. One hopes that that the situation will change upon the establishment of the Public Procurement Commission.