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Re-engineering public procurement
The Association of Public Procurement Professionals (APP) congratulates Government for giving supply chain officials a new instrument to carry out procurement exercises. The Public Procurement Bill is highly commendable in the sense that it addresses major issues that are vital to improve standards of transparency, openness and fairness as well as efficiency in managing major public procurement.
This Bill, together with other important current legislation like the Prevention of Corruption Act 2002 and the forthcoming Competition Bill are the recipe for the Government to demonstrate its commitment to establish the appropriate environment that provides confidence to local and international stakeholders in the new economic model.
The fundamental feature that distinguishes the Bill with the CTB Act 2000 is the establishment of three distinct institutions: Procurement Policy Office (PPO), Central Procurement Board (CPB) and Independent Review Panel (IRP). Most importantly, the Bill establishes a comprehensive framework for managing public procurement with the introduction of PPO. Under the CTB Act, the Central Tender Board has been the regulator as well as the awarding body.
The PPO has been assigned key responsibilities to act as the monitoring office and the policy-making unit. The PPO shall provide guidance on procurement policy to any public body or Ministry. It will also be the advisory body on matters such as procurement systems enhancement, procurement training and development and technical issues international procurement. The PPO can be regarded as the leading office dealing with enhancement, development and policy making in public procurement.
The CPB will have distinct responsibilities for awarding major public contracts. Its core responsibilities will be to vet bidding documents and notices for public bodies, arrange for receipt and opening of bids, set up evaluation teams and oversee evaluation of bids while ensuring consistency, fairness, equity and transparency in the exercise. It is worth noting that this Bill caters for the procurement of Services. This type of procurement was not under the purview of the Central Tender Board.
The opportunity now to allow bidders to challenge procurement proceedings of public bodies at any stage shall indeed position our public procurement comparable to international procurement mechanisms like the EU Directives or the United Nation Commission on International Trade Law (UNICITRAL) model.
The possibility for bidders to challenge establishes more confidence in the process while enabling Government to ensure best value for money as regards public expenditure on goods and services. The IRP shall receive request for reviews on procurement awards and issue deliberations within one month from the date of lodgement of application by unsuccessful bidders. Interestingly, the IRP shall have to make decisions on receivable reviews and provide for remedies within a short time so as to sort out issues. The requirement for public bodies to publish notice of every procurement award within prescribed deadlines shall add more visibility in the process and further up more consideration to bidders.
Reviews to the First Schedule have the impact of delegating more responsibility, accountability, and task to ministries and government departments while requiring substantial control and probity from Local Authorities and Part III public bodies.
However some ambiguities have been identified in the Bill as highlighted below:
Section 2 defines “public official” as including a supplier, contractor or consultant or any of their agents. Section 51 (1) (g) states that ‘a public official involved in planning or conducting public procurement proceedings or contract administration shall declare his assets in such a manner as may be prescribed’. It is not clear whether the public officials who have to declare their assets include suppliers and contractors. It is unrealistic for suppliers-contractors participating in bidding exercises to declare their assets.
Miss better opportunities</B>
Section 32 (2) states that ‘a bid in a sealed envelope received after the deadline for submission shall be returned unopened to the bidder ’. In practice, however, since the names of the prospective bidders are not printed on the envelopes, it would be quite difficult to identify the names of the senders. The major concern here arises whether to maintain confidentiality or reply unsuccessful bidders with their envelopes unopened.
Section 37 (1) states that ‘a public body may seek clarification during the examination of bids from any bidder...’ We suggest that all clarifications should be sought in writing by the authorized person.
The terms and conditions mentioned in Section 46 (1) do not include the Liquidated Damages clause.
Section 51 (f) states that “a public official involved in planning or conducting public procurement proceedings or contract administration, shall for a period of 2 years after leaving the public service not accept a position of authority in any private concern with which he had official dealings”. We understand the rationale behind this clause. However, honest public officers may miss opportunities for better offers in the private sector.
The APP recommends the following actions with the view to assisting Government in its endeavour to promote best procurement practices. Some of these suggestions may be included in the new regulations accompanying the forthcoming Procurement Act:
Public agencies should publish the list of all future major projects at the beginning of the financial year in an official government publication (for instance, Government Gazette) and could also be downloaded from an official website. This exercise would (i) encourage all public entities to make strategic planning (ii) help public bodies to attract a maximum number of eligible bidders and (iii) help potential bidders to make preliminary arrangements (for instance, establishing contact for Joint Ventures) and collecting relevant information on the forthcoming projects.
Invitation to Bid, RFP etc for major projects should also be published in an official paper and be available online. Furthermore, they must be advertised in several newspapers instead of one as mentioned in the Bill.
It is appreciated that the use of websites has been mentioned in the Bill. However, we believe that the authorities should lay more emphasis on electronic procurement. Our research concludes that electronic procurement in its purest form (Reverse auctions, etc.) may take at least five years to be fully operational and are generally implemented in phases.
The initial phase may include: (i) hosting of websites by public agencies where prospective bidders may download tender documents for major contracts and (ii) establishing extranets in the public sector for sharing of information pertaining to procurement.
The objective of the first phase is to promote IT culture among supply chain partners. The successful implementation of this phase would trigger subsequent phases in the right direction.
<I>“The PPO should not restrict itself to training programmes...”</I>
Public bodies spend significant amount of money on small value purchases such as materials, repairs and operating items. A balance should be stricken off between the need for probity and high transaction costs involved in a formal tendering exercise. It is suggested that low value items need to be purchased through an accelerated route such as the use of Corporate Procurement cards.
The Bill provides instruments to promote integrity, equity, transparency and fairness. Moreover, the declaration of assets should be extended to all key officials involved in procurement activities. A code of ethics for procurement practioners would be most welcomed.
The APP suggests the incorporation of the Integrity Pact in the Standard Tender Documents. The Integrity Pact is a tool developed by Transparency International that helps to enhance public trust in Government contracting and enable participants to avoid corrupt practices and their distortionary effects
A dedicated workforce</B>
Despite certain drawbacks, the repealed Public Procurement Transparency and Equity Act 1999 included world class procurement practices. The main reasons practitioners accepted this Act with less enthusiasm include poor communication, lack of appropriate training and a very short transitional period. We sincerely believe that this time the authority would manage the initial period carefully. Major changes would definitely warrant certain confusion during the implementation phase.
Even the best procurement regulations will not guarantee to attain the set objectives without a dedicated workforce. In this new environment, the prerequisite for success is undoubtedly a new breed of procurement professionals. The PPO should not restrict itself to training programmes on the forthcoming Public Procurement Act and Regulations.
The programmes should also include Contract Law and world-class procurement models (UNICITRAL, EU Directives, etc.). With the enactment of the new legislation, procurement practitioners would be given more responsibilities. These persons should be motivated accordingly.
<B> Sacheedanand TAHALOOA, Sattiawansingh BACHOOMUN, Rajen DOORGANAH</B>
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