One Step Forward…Two Steps Back… Part I

ecasePreliminary Comments on the Trinidad and Tobago PUBLIC PROCUREMENT AND DISPOSAL OF PUBLIC PROPERTY BILL, 2014

Despite my better judgment I was hopeful that this reform effort would have thrown up something useful.  Procurement as the new “buzz-word” of sorts has penetrated into the very ethos of our citizenry and most concerned and attentive citizens have a fair idea of what we expect from our procurement reform effort. We expect a regulatory regime that is

  • fair to parties bidding on government contracts,
  • gives equal access to government contracting opportunities to all citizens,
  • holds both public and private sector officers accountable for breaches and
  • gives the appropriate flexibility to pursue the social, industrial and sustainable development of the country.

A little context to the most recent public procurement reform effort may be necessary.  After the Piarco public procurement fiasco, resulting in several government officials, contractors and consultants being charged locally and abroad for divers corruption and fraud offences, the civil society, driven primarily by the construction lobby group JCC and the local chapter of Transparency International renewed their calls for comprehensive public procurement reform.  In 2005, after extensive public consultation, then Prime Minister Manning laid the White Paper on Public Procurement Reform in parliament and promised that legislation would be passed within the following year.  That was not to be so.  Following continuing calls for reform of the system of public procurement in state-owned enterprises, the beleaguered government was convincingly swept out of office in May 2010 by a citizenry tired of their calls for greater accountability in the public sector, being ignored.

In 2010, the by that time very sophisticated civil society coalition, under the heading Private Sector Civil Society Group (PS/CSG), spurred on by the results of their most recent efforts, enthusiastically engaged with the new government and invested in the drafting of their own public procurement bill.  In June 2010 the said Public Procurement and Disposal of Property Bill 2010 was laid in Parliament and was eventually forwarded to a newly established Joint Select Committee (JSC) for Public Procurement Reform by December 2010.  The bill in summary proposed a centralized system of accountability through the office of a Procurement Regulator answerable to Parliament and not the Cabinet, along with a decentralized implementation system through any agency procuring goods, works and services using “public money”.

The Caribbean Procurement Institute, the organization I serve, responded to the call of the JSC and submitted an approximately 15000 word submission with copious annexures including a copy of the UN Model Law on Procurement on Procurement 1994 (subsequently amended in 2011).  As a side note, we see no reference in the record of the meetings of the JSC, neither in the Hansard of the consideration of the CPI submissions but nonetheless we are happy to see that many of our recommendations have been taken on board.

While we in total commended the 2010 effort, we pointed out certain problems and some of the key issues we raised, I have highlighted below:

A. Civil Society Involvement

2010 Reforms - A very unique feature of the bill was the proposed establishment of a National Procurement Advisory Council (NPAC) with which the Regulator was mandated to consult, inter alia, in the establishment of guidelines and in review processes.  The NPAC was to be comprised of representatives of seven civil society organizations approved by the President.  The organizations had the power to nominate and remove representatives on the NPAC.  Whilst the objective of achieving greater public participation in the public procurement process is laudable, the method of regulating such involvement must be carefully considered. We pointed out the challenges of granting the power to remove representatives from the NPAC to the civil society organisations themselves and not to the President who appointed them. In a society as small as ours where some civil society organisations have obvious vested interests in the public procurement function it is not to difficult to see that the representatives would be serving at the behest of their organisations and not their respective professional codes of conduct or personal standards of integrity.  Accordingly, the opportunity for conflicts of interest in respect of the NPACs power to review projects and government policy is clear.  We therefore proposed and attached for the JSC consideration forty (40) other templates from other countries across the globe for citizen involvement in public accountability as reported in the 2007 OECD/World Bank joint stocktaking exercise.

2014 ReformsWe note that the NPAC has been removed from the new 2014 Bill.  However, no alternative for civil society involvement has been included, barring the section 16 power to the Office of the Regulator to appoint committees as it deems necessary, comprised of non-members of the board. The issue of public participation in public procurement is not a simple issue and requires a careful balancing of the executive’s power to make policy decisions in the public interest and the concern of citizens to be involved in that decision making process.  It therefore strikes at the heart of the issue of democratization of the public procurement function. We have lived through the experience of citizens wanting to have more of a say in the public procurement process and not having a meaningful avenue requiring the state to listen, barring print, broadcast and now increasingly social media onslaught. The non-mandatory committee model does not provide a   compellable avenue for citizen involvement in public procurement. Reconsidering the arguably flawed NPAC model is a step forward.. but replacing it with what is for practical purposes a non-compellable avenue.. is definitely two steps back.  

B. Synergy with Regional Reform Efforts

2010 Reforms - We pointed out that the 2010 effort paid no attention to the extra-national influences on public procurement reform.  As is characteristic of scandal driven reform efforts, the focus of the civil society organisations leading the effort was primarily on the anti-corruption, accountability and local participation aspects of the public procurement reform.  We urged that ignoring the fact that public procurement policy was arguably one of the most powerful instruments of economic domination between the developed and the developing world could result in us losing the opportunity to self determine in this important area of how we buy, what we buy, when we buy and who we buy from.  The critical linkage between the public procurement function, trade and sustainable development was not addressed in a way mindful of externalities impacting our ability to regulate the government procurement space.  This was evident in two ways: 

                        (i) UNCITRAL Model Law - The CARICOM Draft Framework for Regional Integration of Public Procurement (FRIPP) was ignored.   Since 2003 CARICOM had embarked on an IDB funded programme to develop a regional public procurement protocol.            Member states had agreed that this was being essential to the development of the Caribbean Single Market & Economy (CSME) in Article 239 of the Revised Treaty of Chaguaramas.   One would have thought it obvious that any national reform effort in Member States would be cogniscient of the regional reform effort and seek to ensure consistency.  By the time of the 2010 Bill, the Community FRIPP was almost complete with the provisions said to be primarily based on the UNCITRAL Model Law on Procurement of Goods, Construction and Services 1994. Nonetheless, the 2010 Bill, itself based in      large     part on the White Paper of 2005, eschewed the UNCITRAL model  Law as being "highly prescriptive" and proposed a more flexible "principles based" approach to procurement reform. In our 2010 submissions we pointed out the       inevitable confusion and dissonance between the  national and regional reform efforts and urged greater consultation and symmetry between the two.

2014 Reforms  We note commendably, that in the 2014 Bill, many of the definitions and provisions have now been lifted almost verbatim from the UNCITRAL Model Law on Procurement as revised in 2011. However on other issues there are gaping loopholes which do not find their genesis in the Model Law.   One such hole is the right of cancellation under section 33 of the Act.  Although it is accepted that a procuring entity should have the right to cancel a procurement process (eg the goods, works or services may not be required at all, financial constraints, problem with the award procedure etc) there are several very obvious reasons why such a right should be carefully conditioned. Suppliers have invested time and resources in the process and perhaps held off on doing other work.  Also, there is the obvious suspicion that the right could be abused to favour certain suppliers.  For these reasons, this right has been circumscribed by common law developments and by the UNCITRAL Model Law 2011.

Section 33 reads almost exactly in similar terms as Article 19 of the model provisions in the UNICITRAL which provides for an unconditional right to cancel the procurement PRIOR to the acceptance of the successful submission.  After that point, the Model Law only allows cancellation, if the supplier whose submission was accepted fails to sign the procurement contract as required or fails to provide any required contract performance security (see Article 22). Notably, no similar circumscription of the right to cancel as detailed in Article 22 of the UN Model Law has been provided in the 2014 Bill, thereby giving statutory approval for the right to cancel a procurement process even after acceptance of a successful submission.  This is a very grave omission as it now statutorily empowers a public procuring entity to cancel a procurement at anytime, eliminating recourse even to the recent common law developments.  Again one step forward ... perhaps even more than two steps back!

(Please note that in Part II, we will be highlighting some of the other areas of material inconsistency with UN Model Law provisions and analysing their impact). 

            (ii) CARIFORUM EC EPA - By the time of the 2010 effort, public procurement obligations had already been agreed to in Chapter 3 Title IV (Articles 165 – 181) of the CARIFORUM EC Economic Partnership Agreement (EPA) 2008. Trinidad and Tobago, as a signatory  had thereby undertaken to pass national laws consistent with the EPA. The 2010 Bill did not seem to take this into consideration expressly or otherwise. We recommended that the Committee consider the Chapter 3 conditions carefully, not only with a view to ensuring alignment of domestic provisions to treaty obligations but also with a view to taking more control over the public   procurement regulatory space and proposing amendments to the EPA at the future            scheduled review.  Notably, in July 2013 the EPA Act was passed including the procurement provisions in Chapter 3 Title IV of the EPA.

2014 Reforms  - We note that section 7(2) of the 2014 Bill has attracted quite a bit of what we consider to be meritorious criticism on the exclusion of government to government arrangements and IFI procurement from the provisions of the bill.  We join wholeheartedly with these sentiments and do not wish to belabor the point, save to state, that it is even worse than this.  The section 7 (2) (a) also exempts “procurement of goods,   works or services arising out of – (a) a treaty or other form of agreement to which Trinidad and Tobago is a party with one or more other states;….         Where the treaty or agreement provides for rules or regulations regarding the procurement of goods, works or services”.  What this means is that the   EPA public procurement regulatory framework which allows for eligible   European suppliers to be given the same treatment as local suppliers in respect of government procurement opportunities covered by the EPA andfor non-discrimination against locally established suppliers based on the degree of foreign affiliation to or ownership (see Article 167) will have precedence over this 2014 Bill.   This further decimates the amount of public sector procurement to be covered by the bill.   Another point, which cannot be overemphasized, is that the EPA establishes a supra-national governance framework in the Joint CARIFORUM-EC Council for disputes arising out of the implementation of the EPA.  So once again, one step forward...two steps back..

C. Regulations & Guidelines

2010 Reforms In the 2010 effort we criticized the passage of a bill based on principles only, with power to make the substantive rules of the system delegated to a Regulator and the NPAC which were not yet established.  Our historical appetite for statutory reform without substantive regulations seems unabated.  This approach to statutory reform has become our practice perhaps because the Executive wants the credit for the reforms and are less interested in the real work involved in thinking through the workings of the system.  We urged that it would be impossible properly to assess the effectiveness of the proposed reform effort without the substantive rules also being considered.  It rendered the 2010 effort nothing more than a pretty but empty food basket.

2014 Reforms - Here again although there is an attempt to address this concern by including many detailed provisions that did not exist before, there are some basic gaping holes causing one to wonder what really is the objective of the proposed regulation? There is not a mention of various methods of procurement and their conditions for use. For example, the bill does not provide definitions for “open”, “selective” or “sole” procurement, neither are they even referred to, in the text.   One must assume that this was deliberate because Chapter II of UNCITRAL Model Law 2011 was studiously overlooked on this issue.  It would seem therefore, that once again the drafting of the most basic substantive provisions of the public procurement law is to be delegated. Our criticism therefore remains the same.  It is impossible properly to assess the effectiveness of the proposed reform effort without the substantive rules also being considered.

This is not to say that there is not much to commend the current reform effort.  There are several aspects that are heartening including the creation of procurement fraud offences (sections 59, 60, 61), strengthening of whistleblower protection provisions (section 40),  the strengthening of conflict of interest provisions (sections 17, 59) and the flexibility to limit procurement to promote local industry involvement (section 28). There are however, such gaping loopholes, some pointed out in this Part and others yet to be pointed out, which in my view justify the title of this piece.  In Part II and III, I will consider further the substantive provisions of the Bill.