Thursday 23rd June 2005

 

Reforming the way govt spends our money

 
 
 
 
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In June 2004, the Government published a green paper entitled Reform of Government’s Procurement Regime and circulated it for public comment.

The period allocated for comment on the regime was extended to allow for more input from the interested public.

The private sector representation on the committee that drafted the Green Paper included the Chamber, the TTMA and the JCC.

The committee defined public procurement as including all stages of the process of acquiring goods and services when public money is used to accomplish specific public purposes.

Recommendations of the Green Paper Committee

Without going into the background of the work of the committee, sources of reference or other research undertaken, the key elements of the proposed new regime are itemised below.

The Green Paper Committee recommended the following actions:

1. Decentralise the current procurement process

2. Repeal the Central Tenders Board Ordinance

3. Develop new legislation towards decentralisation and incorporating the operating principles of value for money, transparency and accountability

4. Appoint an Independent Regulator who will monitor and audit the process of all state agencies spending public money and who must:

be accountable to Parliament;

establish a central procurement database with information on procurement opportunities, process, contract awards and prices;

establish a national training programme for public and private sectors;

train and certify procurement experts;

develop a code of ethics for procurement officers;

establish an e-procurement system;

prepare guidelines and handbooks on procedures and process.

5. Establish procurement units in all ministries/departments/divisions and other agencies. Staff of these units should include procurement specialists. The ministries that are involved in extensive contracts should include the services of senior procurement specialists. This would entail consultation with the chief personnel office and public management consulting division of the Ministry of Public Administration and Information.

6. Appoint committees in all ministries/departments/divisions and other agencies to award contracts.

The recent process—

review and consultation

The Green Paper Committee has been reconstituted into a White Paper Committee.

The tasks have included reviewing the comments received on the green paper, amending the Green Paper where deemed necessary and carrying out consultations with interested parties.

Over the course of the last three months the White Paper Committee has held at least seven meetings and other consultations.

At the same time, the Government has established a White Paper Implementation Committee that has met with the White Paper Committee and is preparing the way for the implementation of the new system that will be finally agreed.

Some important issues have arisen during the consultation process to date. These include the scope of the regime including the definition of public money and public purpose, the determination of companies included in the state enterprise sector, the types of procedures covered.

The responsibilities of the independent regulator

Training and institutional development requirements

Accountability of individuals in the procurement process

Provision of local content

The transition period between the old and new system

The role of Parliament.

Overall, the proposed system offers an opportunity for procurement practices in T&T to conform with the best international practices, due regard being had to our local specificities and challenges. This can reduce corruption by making all accountable for its functioning sanctionable by the law.

Importantly, it does not seek to mandate uniformity in procurement processes.

No set of procedures will be imposed from above. On the contrary, covered entities will be free to develop processes that work for them and allow them to accomplish institutional goals and speedily and effectively implement projects.

What will be non-negotiable is adherence by these processes to the principles (value for money, accountability, transparency) and the broad guidelines to be developed by the independent regulator after due consultation.

The new system will mark a radical change for T&T.

Much detail is yet to be concretised relating to the operation of the system mainly because these are to be developed by the independent regulator.

The new legal framework is being developed. Implementation difficulties should neither be unexpected nor underestimated.

It is an opportunity to chart a new course for T&T in how the finances of the people of T&T are spent on our behalf by government and its agencies.

Six key points

Decentralisation

This essentially sought to improve the process by placing more authority and accountability in procurement units.

It, also to some extent, sought to reflect a situation where a number of entities, through various pieces of authorising legislation, essentially handled their own procurement.

This would also take some authority from the Cabinet of the day and remove the temptation to become too closely involved in procurement decisions.

This greater autonomy, for example, would include removing the current stipulation for Minister of Finance approval for all contracts valued above $5 million.

Central Tenders Board

The Central Tenders Board would be replaced by an independent regulator with the responsibilities itemised above.

The CTB was given responsibility only for the tendering stage of the process rather than the full procurement cycle.

It has human resource limitations and has had difficulty achieving uniformity of procurement systems.

Clearly the new independent regulator would be crucial to the proper functioning of the new system. Establishing the right organisation, including choosing the proper management, will be an implementation priority.

Value for money

The first principle of the new system does not mean choosing the lowest bidder.

In contrast it means finding the best combination of price and quality to meet the particular procurement need.

The paper suggests elements to be taken into account in assessing value for money and some measures to be taken to give effect to this principle.

Transparency

This second principle involves enshrining that all information regarding the procurement process is in the public domain.

For example potential suppliers must have access to all available information of rules, requirements, how decisions will be taken and on which criteria.

Bids will not be opened in secret but in public and all decisions are recorded and published.

Publishing can include the newspapers, Gazette or the Internet.

An off-shoot of the application of the transparency principle will eventually be the greater use of e-procurement.

Accountability

Officials involved in procurement are held responsible by the law for their actions.

They are expected to follow both the principles of the new system as well as the guidelines that are developed.

The line of responsibility includes not only the procurement officers, but also their managers and boards, in the case of state enterprises.

Promotion of national development

A key element in this regard is the promotion of local service providers and of goods and service.

It is envisaged that this will, as is done in many other jurisdictions, include preferences for small and medium-sized (and micro) enterprises.

Greater use of local capability will contribute to skills development, industry growth and greater local value added.

It is proposed that local bidders will also benefit from a price preference over foreign bidders, but there must be no compromise on quality.

Finally, with an eye to the Caribbean Single Market and Economy, it is understood that local will eventually have to mean Caricom as a regional government procurement agreement is developed.

 

 

 

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