Remaining Concerns with The Public Procurement And Disposal Of Public Property Bill, 2014

10th October 2014 The above mentioned bill is still being reviewed and it is timely to continue to register some remaining concerns about the bill; among them being the lack of consideration of the small business sector and its issues; the removal of the recommended national advisory council that had a critical role to play in the implementation of the new procurement system and the fact that much more Authority needs to be given to the Regulator to facilitate the oversight function and allow for control of the four stages of procurement cycle.

Public Procurement and Disposal of Property Bill  of Trinidad and Tobago –

In order to determine whether the Bill as amended in the Senate will positively address the current system of procurement there are a series of questions to be asked:

 Question– One – Have we successfully incorporated into the bill the small business sector and social issues which procurement bills should include?

The White Paper entitled Reform of the Public Sector Procurement Regime stated that one of the reasons for reform was to guarantee substantial market share to local business, in order to develop and promote domestic industry; There is little evidence that the Procurement and Disposal of Public Property Bill, 2014 sets out to achieve this. Clause 28, of the Bill, states (1) A procuring entity MAY limit participation in procurement proceedings to promote local industry development and local content.

The word “may” suggests an option to do or not. A stronger word is shall and possibly some limits on such allocations should have been in the Bill to give teeth to this provision. There are no criteria or other stipulations to inform such action and the Government Agency, Ministry, etc. can comply or not.

There should be measures to deal with the Small Business Sector as is done in other jurisdictions. A proposal on Set Asides for the sector was developed by the Ministry of Trade and the Small Business Development Company and it could have been incorporated in the Bill.

The Set Asides proposals allowed for:

• the inclusion of a percentage set asides for small businesses which is to be gradually increased over a period of years, • a definition of the small business sector that could be used not only with respect to procurement but also in the gathering of business statistics by organizations such as the Central Statistical Office so that one is able at last to capture data on the performance of the sector • the appointment of A Body To Administer The Set Asides Programme i.e. – an agency input to supervise the contractor/subcontractor relationship in order to improve the performance/operations of our small business persons and ensure both contractors and subcontractors are fairly treated in the programme.

Having a Fair Share Programme and not enshrining in the Procurement legislation the compulsory allocation of a part of Government procurement to small business persons is pointless. Clause 29 requires that due diligence be done on suppliers and contractors. Among other things they have to have: ……. the necessary professional and technical qualifications and competence, financial resources, equipment and other physical facilities, managerial capability, reliability, experience and personnel to perform the procurement contract- and meet relevant industry standards. The above will not come naturally for many of our small business persons. The Fair Share Programme was constituted to help small business persons obtain contracts.  Is it constituted and financed to offer the full range of services necessary to bring our small business persons up to the level required in the Bill for them to obtain government contracts? The question needs to be asked how are small business concerns re awards and administration of contracts addressed in other jurisdictions. Most have Small Business Acts that are geared towards increasing opportunities for the small business sector

Six New Bills Emerge to Assist Small Businesses – By: Edward T. DeLisle & Maria L. Panichelli

On March 7, 2012, a package comprised of six bills, (H.R. 3850–112th Congress: Government Efficiency through Small Business Contracting Act of 2012 (2012); H.R. 3851–112th Congress: Small Business Advocate Act of 2012 (2012); H.R. 3893–112th Congress: Subcontracting Transparency and Reliability Act of 2012 (2012); H.R. 3980–112th Congress: Small Business Opportunity Act of 2012 (2012); H.R. 4121–112th Congress: Early Stage Small Business Contracting Act of 2012 (2012); H.R. 4118–112th Congress: Small Business Procurement Improvement Act of 2012 (2012)), each designed to increase the number of federal contract opportunities for small businesses, cleared the House of Representatives’ Small Business Committee.

Small Business Act for Europe – Adopted in June 2008, the Small Business Act for Europe (SBA) reflects the Commission’s political will to recognize the central role of SMEs in the EU economy and for the first time puts into place a comprehensive SME policy framework for the EU and its Member States.  It aims to improve the overall approach to entrepreneurship, permanently anchor the ‘Think Small First’ principle in policy making from regulation to public service, and to promote SMEs’ growth by helping them tackle the remaining problems which hamper their development.

The symbolic name of an “Act” given to this initiative underlines the political will to recognize the central role of SMEs in the EU economy and to put in place for the first time a comprehensive policy framework for the EU and its Member States through a set of 10 principles to guide the conception and implementation of policies both at EU and Member State level. These principles are essential to bring added value at EU level, create a level playing field for SMEs and improve the legal and administrative environment throughout the EU:

The Small Business Act for Europe applies to all independent companies which have fewer than 250 employees: 99% of all European businesses

I wish to reiterate that we do not need to wait on a Small Business Act to be passed in Trinidad and Tobago to factor in the Small Business Sector. There should be provisions in this Procurement Bill to facilitate the growth and development of the Small Business Sector and that should propose a working definition of the Sector and formal administration of the small business procurement programme. Many jurisdictions are going towards incorporating social issues and environmental considerations in public procurement laws Reforms to EU public procurement laws discussed social issues and environmental considerations as follows:

Under the new Public Procurement Directive, social issues are tackled in a number of ways. Contracting authorities will now be able to consider social aspects amongst other criteria for determining which bid is the most economically advantageous to accept. Price is no longer allowed to be the central determining factor.

In addition, public bodies will be able to limit competition for specific health, social and cultural contracts to mutuals and social enterprises where those organizations satisfy certain conditions.   The reforms also set new mandatory grounds for excluding suppliers from competitions for contracts, and this includes where a bidder falls foul of social and labour laws.

In order to accommodate Small and Medium-sized Enterprises (SMEs) it is important to consider specifying where contracts are particularly suitable for SMEs, split larger contracts into smaller portions to provide SMEs with opportunities to bid for them or to highlight the possibility of SME bids as part of a consortia or have them as subcontractors on major procurements.

Question two – In the Bill have we dealt properly with the issue of transparency?

Transparency requires that citizens know why, how and for what purpose public resources are being used by public officials. When we look at the need for greater transparency it has to be against a backdrop of our concerns with the existing system. The Public Procurement and disposal of Property Bill Of 2014 does not adequately provide for transparency: The Preliminary Comments on The Public Procurement & Disposal of Property Bill No. 2 of 2014 prepared by Caribbean Procurement Institute Ltd & Caribbean Association of Procurement Professionals stated that:

“It should be noted at the outset that like its predecessor in 2010, the PP&DP Bill 2014 does not include detailed provisions governing transparency in the public procurement process. It is left to the Procurement Regulator to issue and review guidelines, prepare, update and issue model handbooks, and approve in respect of each procuring entity special guidelines and model handbooks”

“………. substantial gaps remain as there is no statutory obligation for the ex ante publication of tender rules and procedures, individual procurement opportunities and modifications, information necessary for responsive tenders, notices of intended procurements (over and above annual procurement plans), detailed technical specifications, conditions and criteria for participation, or for the annual publication of invitation for multi-use supplier lists and framework agreements, all of which is required by the EPA Act, UN Model Law and accepted international best practice”

This and the EPA Act, UN Model Law are must read documents for those studying the Public Procurement and Disposal Bill of Trinidad and Tobago No 2 of 2014.

One may ask what are other countries doing to ensure transparency in public procurement?

New Transparency Rules –

The UK Government has identified the need for greater transparency across all government operations. As part of its transparency agenda, the following requirements were introduced for all central government departments (including their agencies), all non-departmental public bodies, National Health Service (NHS) bodies and trading funds (including their agencies):

• all new central government information, communications and technology (ICT) contracts must be published online; • all new central government tender documents for contracts over £10,000 must be published on a single website made available to the public free of charge; and • all new central government contracts must be published in full.

The Government launched a website named “Contracts Finder” (see https://www.gov.uk/contracts-finder) in January 2011 as the Government’s single platform for providing access to the above public sector procurement-related information. In addition, part 6 of the Protection of Freedoms Bill requires public sector “datasets” to be made freely available in an open-source format to enable reuse by third parties, thereby expanding the reach of freedom of information legislation.

Public Services (Social Value) Act 2012

The Public Services (Social Value) Act 2012, which received Royal Assent on 8 March 2012, introduces a statutory requirement for public authorities to have regard to economic, social and environmental well-being in connection with public services contracts.

Clause 36. Of the Procurement Bill of 2014 states – (1) Upon the entry into force of a procurement contract or conclusion of a framework agreement, a procuring entity shall promptly publish on its website or in any other electronic format, notice of the award of the procurement contract or the framework agreement, specifying the name of any supplier or contractor with whom the procurement contract or framework agreement was entered into, the goods or services to be supplied, the works to be effected and, in the case of procurement contracts, the date of the award of the contract and the contract price. The above is not enough, and is simply a restate of what now applies. The publishing of the entire contract along with contractors involved may assist in correcting the present situation in which many contracts are given to the same contractors, may help address the issue of overpricing which affects the value for money principle and may help to allow for better monitoring of the procurement system. For Trinidad and Tobago what is absolutely necessary is the inclusion online of the details of government’s contracts and information about their implementation re disbursements, etc. Presently audits cannot be done without the files and once a matter is being investigated important documents or the file can go missing. Often the persons being investigated are the ones who are in a position to remove sensitive documents. Online contract implementation information can be available to only a few persons who can be authorized to access it. It will allow for an audit to start in the absence of the files. The Act however will have to make provisions for this type of disclosure. The Act can also allow for information of a sensitive nature e.g. trade secrets to be withheld. Online publishing of contract information in this form, will aid transparency, one of the procurement principles of the reform measures.

Question 3 Does the Procurement Regulator have the authority to ensure the smooth operations of entire procurement system?

Re powers of the Regulator, Clause 14 states that in the performance of its functions, the Office may

(1) (a) monitor the procurement of goods, works and services, and the disposal of public property, by public bodies to ensure compliance with this Act; (b) conduct audits and periodic inspections of public bodies to ensure compliance with this Act; (c) issue directions to public bodies to ensure compliance with the Act; and (d) carry out such other activities and do such other acts as it considers necessary or expedient for the carrying out its functions.

(2) A public body shall comply with this Act and any directions issued to it under subsection (1)(c)

The Central Tenders Board had the FULL authority to approve or reject seller’s proposals. It had the authority to dispose of government property. The reform wanted oversight of not just the contract awarding part of procurement but of the entire procurement cycle. Procurement has the following main areas.

1. Needs assessment and design- formerly done by the Government Agencies and Ministries 2. The advertising of requirements re tender documents, evaluation of sellers responses and award of contract- formerly done by the Central Tenders Board 3. The implementation of the contract- inclusive of the monitoring and controlling of procurement – formerly done by the Government Agencies and Ministries 4. Closure and evaluation-formerly done by the Government Agencies and Ministries

The Role of the Regulator envisaged in the White Paper on Public Sector Procurement was to be responsible for all parts of the cycle starting in the Design phase- previously under the responsibility of the Government agencies and Ministries; including the Central Tender’s Board (CTB’s) limited span of dispatch of procurement documents, evaluation of responses, award of contracts and disposal of government property; to execution, monitoring and controlling, auditing and ensuring compliance with the tenants of the Bill by all persons/agencies spending public monies, as well as those spending private monies for public purposes. (e.g. BOLT, BOOT, DFC Projects). How is this oversight function spelled out in the Bill? There is a low priority given in the job duties of the Regulator to the actual work of oversight of the design, award of contract, execution, monitoring and controlling, closing and evaluation phases. A manager has the authority to stop, change, approve or disapprove of actions of those under her/his jurisdiction. The Role of the Regulator is not clearly defined vis a vis the role of the Government agencies that will now be involved in all aspects of procurement. The Act has to deal with the authority to do and to interact with especially in the event that there is resistance by the government agencies and /or individuals who spend public money. What happens in the event that the directives from the Government Agency’s management differ from that of the Regulator’s Office? In a boss to worker relationship, the Boss can instruct the worker to do work in a particular way and have it done. Agreeing on manuals and procedures may not bring about the required change and there is need to fall back to the authority of the Regulator to enforce compliance without lengthy processes of investigations. Of special concern also is the spending of public money by non-government organizations, faith based organizations, and community based organizations many of whom may not have the capacity to develop and maintain systems to assure accountability, transparency and value for money in the procurement process. In addition, very little attention is paid in the Bill to e.g. BOLT, BOOT, and DFC types of arrangements.

As an administrator, there is the need to be able to enforce compliance while undertaking the day to day operations of the Public procurement system, and the Bill has to spell out this authority.

Question 4 – Are the required qualifications and experience listed in the Bill for the Regulator and the Board sufficient to allow them to do the job at hand?

Clause 10 States the Procurement Regulator (hereinafter referred to as “the Regulator”), who shall

(i) possess a degree from an accredited University in a field relating to finance, economics or law or a degree from an accredited University in accounting or equivalent professional qualifications in accounting; and (ii) have at least ten years’ experience in matters relating to procurement, and who shall be the Chairman;

The qualifications as stated can be a first Degree. This person is taking on the mammoth task of managing the country’s procurement and does not need to have procurement qualifications. The experience mentioned in the Bill can be met by many officers in any of the country’s government offices. The qualification allows for a very junior officer to qualify for the position. The Regulator has to ensure all rules and regulations re procurement are put in place among other things and that the system is effectively managed. The position of Regulator should be filled by a person who is a procurement specialist. It is noted that the National Insurance Board of Trinidad and Tobago in looking for a Procurement Manager required someone with a Post Graduate Degree in Management/finance; CPM designation or CIPS Professional Diploma in Procurement and Supply preferred: A minimum of five (5) years Progressive experience in public sector procurement or any equivalent combination of qualifications and experience The qualifications and experience of the other members of the Board are just as limiting namely:

a member with qualifications and experience in accounting; a member with qualifications and experience in finance; a member with qualifications and experience in business management; a member with qualifications and experience in civil engineering; an Attorney-at-law of at least five years’ standing; a member with qualifications and experience in any other field relating to procurement; and no more than four members who represent the interests of the community, women, youth, religion or civil society

Remaining questions are where is the procurement expertise in the Board and Regulator and why this emphasis on Accounting and such areas.

Question 5 – Can significant change in the procurement landscape be expected in the medium to short term?

Clause 13 – outlines nineteen (19) duties of the office of the Regulator. More than 75% is concerned with putting systems in place, a lot of paper pushing. The operationalization of the new system can take years in setting up during which time the Regulator may not be in a position to positively impact the serious problems being experienced NOW in procurement. Recognizing the need for oversight of this very big system, the White Paper on the Reform of the Public Sector Procurement Regime had recommended an advisory council as follows: The National Procurement Advisory Council will comprise –

•Nominees of three (3) Non-Governmental Organizations •Nominees of three (3) organizations representing the manufacturing, retail and construction sectors in Trinidad and Tobago; and •A nominee of a financial institution.

The Council, will be required to:

•advise the Regulator in the development of procurement guidelines, procedures and handbooks;– this was to ensure public understanding and endorsement •oversee and monitor the entire Public Sector Procurement Regime.

In short, the establishment of a National Procurement Advisory Council, drawn from civil society and the private sector, was to support the operations of the Regulator. This critical role was not articulated in the Bill.

Question 6 -Are the principles of accountability and value for money properly distilled in the Bill

Whereas there is an attempt to deal with the issue of transparency in the Bill, there is little attempt made to discuss accountability and value for money. These two principles have to be addressed in the Bill especially the responsibilities of those who perform the procurement function re ensuring value for money.

[Question 7- is the issue of the disposal of government assets properly handled in the Bill?

The answer to the above question is NO. Central Tenders Board had a role to dispose of surplus or unserviceable articles and real estate property belonging to the Government of Trinidad and Tobago or any of the Statutory Bodies. The CTB Act 2— states that “articles” means all goods, materials, stores, vehicles, machinery, equipment and things of all kinds. The more comprehensive listing is disposal of public assets including lands, building, intellectual property rights and other assets, real and financial, fixed and moveable, owned or managed by the stage or State agencies either by sale, lease, concession or license. The role of CTB is being replaced by the Regulator that has only a role to dispose of stores and equipment. Who is overseeing properly disposal? This and other types of disposal e.g vehicles, machinery, etc. need to be addressed Other considerations One of the objectives of procurement legislation is to reduce corruption in the procurement process. Even though Clause 47 gives some measure of protection to informants there needs to be supporting whistle blowing legislation to make the system work. We also need to look at the issue of the difficulty of convictions for fraud and the possible use of Inland Revenue Department more in the fight to stop corruption. One cannot examine procurement legislation without thinking about the possibility of conviction. Notwithstanding the above we have to recognize that it is very difficult to convict persons on fraud charges and we should use the Al Capone model. He was caught on tax issues and so we have to put in place the mechanism for a more active role of the Inland Revenue Department in the fight against corruption re procurement of goods and services. Most court cases will go on for years but taxes have to do with proof of income and proof of paid taxes. We should therefore concentrate on tax reform, whistle blowing legislation and strengthening the systems for protection of witnesses? We should review and improve systems in place in the Inland Revenue department to deal with illegal earnings? We should put in place a mechanism or strengthen that which already exists, for joint work among the relevant agencies to deal with the issue of illegal earnings? Generally, we should review legislation and determine changes needed so that we can more effectively address the issue of ill-gotten wealth. We need to get it right. In a Speech delivered by TTCA President, Mr. Christopher Garcia, at the TTCA Annual Awards & Banquet 2013 he noted that, effective procurement legislation, properly implemented would also solve the following problems that beset the industry:

1. The onerous burden of contractors having to interface with over 100 government agencies, each having different procurement rules and practices. 2. The costly and really frustrating practice of government-funded agencies inviting bids and then cancelling them without any compelling reasons. 3. The manipulation of the prequalification process to favour or disadvantage particular contractors. 4. Government to Government arrangements that fail the transparency and value for money tests. 5. The issue of whether the Design/Build model is really appropriate, and why we continue pursuing this delivery method for everything when other countries are admitting it has failed. 6. The chronic problem of late payments to contractors, that sometimes, stretch years after projects are completed. 7. The interference by Ministers with the operation of State-Owned Companies with respect to payment to Contractors and Consultants, resulting in late payments to other Contractors, Service Providers

As we reflect, we need to think to what extent the above has been addressed in the Bill. Clause 5 gives the objects of the Bill as being: