Fatal flaw in public procurement law | Local company

A FEW weeks ago I wrote an article expressing my skepticism at the call by one of the most powerful local corporations for the government to sell national assets to private companies. The concern was primarily based on the disastrous socio-economic impact of the recommendation on reducing income inequality – a necessary prescription for sustainable national development.

One piece of legislation which aims to promote national development, which has been referenced in the article, is the Public Procurement and Disposal of Property Act (the PA) – specifically Section 7 as amended by Act 27 of 2020 .

Section 5 of the Public Procurement Act provides that its objective is to promote the principles of accountability, integrity, transparency and value for money in the sale and purchase of public goods and services.

In other words, to ensure fairness and equality in the awarding of contracts.

Although Article 7(1) expressly provides that the legislation applies to public bodies and public-private partnership agreements, Article 7(2), both in its original version and in its amended version, constitutes in made a betrayal by the government of the very object of the act.

Prior to the enactment of the legislation, the purchase and disposal of public goods and services was governed by the Central Board of Procurement (CTBO) Order 1961.

Gaps and weaknesses

In 2008, the Ministry of Finance published a brochure on the purpose and objective of the former CTBO.

As with the current law, it emphasized that the main objectives of the CTBO were to promote the principles of integrity, transparency, accountability, fairness, value for money and high performance in public procurement.

However, several shortcomings and weaknesses of the CTBO were identified as major impediments to achieving these goals, according to the Ministry of Finance’s 2008 brochure and the 2005 Procurement White Paper. These included:

a. The Commission’s role was essentially relegated to the tendering process in which procurement bids were identified and contracts awarded;

b. The Board was not involved in the design phase where needs would be identified, scope of work determined, costs estimated, tender documents presented, leading to a regulatory vacuum and leading to increased costs and poor products. quality and costly delays;

vs. The Board was not involved in the implementation phase in which the contract is managed, nor was it responsible or equipped to monitor the projects;

D. Inadequate public information was provided as there was no system in place to provide suppliers of goods and services as well as the general public with complete and up-to-date electronically accessible information on tendering opportunities. tenders and on the status of tenders and adjudications as well as on the progress of these. rewards; and

e. The final blow to BTC’s relevance and role was the decision to grant statutory entities such as NIPDEC full procurement powers, while other SOEs simply ignored BTC .

The result of these developments was a hodgepodge of contracts and procurement procedures that were often not aligned or inadequate with the procuring agency’s objectives, coupled with poorly trained or inexperienced staff.

Major gap

It is in this context that the public procurement legislation replaced the CTBO. Importantly, the legislation filled a major loophole in the former CTBO by creating the position of Public Procurement Regulator with expanded and unprecedented oversight and oversight by the regulator over contracts involving public bodies and partnerships. public-private at the design stage, at the bidding stage and the implementation or execution stage.

These regulatory powers can significantly reduce the risks of corruption, whether in relation to the choice of contractor, the terms and conditions of the contract, the completion of the design phase before selection and the ability to control during the contract. execution of the contract.

In addition, the Regulator has the power to report to the DPP when deemed appropriate, or upon receipt of a request for review, and may order the suspension of the execution of a contractor and the execution of framework agreement which has been entered into force.

So how does such a laudable law facilitate the concentration of wealth in a few hands, while increasing income inequality at an exponential rate? The answer lies primarily in Article 7(2) as originally configured and amended by Law 27 of 2020.

The original wording of Article 7(2) succeeds in creating a semantic conundrum by removing the application of the law to the contracts listed in the paragraph, but in the same breath it provides that in the event of a conflict with the categories of listed contracts/agreements, the terms and conditions of such contracts shall prevail, except that the procurement of goods, works and services shall be governed by this Act.

A contradiction in object and purpose if any. The agreements listed in Article 7(2) are (a) a treaty or other form of agreement to which Trinidad and Tobago is a party with one or more states or an entity within a state; (b) a technical company agreement between the government and an international financial institution; and (c) a technical or other cooperation agreement between the government and the government of a foreign state.

It is argued that the subsection was not intended to include public-private partnerships and contracts for public services and goods, whether with a foreign entity or a local entity.

Regardless of the fact that they defeat the very purpose of the law to create an agency to monitor and oversee every step of these contracts, the words after “a treaty or other form of agreement.. . or an entity within a State” create uncertainty when considered in the context of the category of excluded agreements.

All contracts excluded from regulator oversight in Section 7(2) (a) through (c) involve international treaty and international funding technical support agreements.

Strictly regulated

These agreements are already strictly regulated by the specific categories of international institutions to which they apply.

This restrictive application to the category of excluded contracts is reinforced by a generous application of the rule of interpretation ejusdem generis to the entire subsection.

This rule essentially means “of the same kind” and provides that where general words or phrases follow a number of specific words or phrases, the general words are specifically construed as being limited by those specific words.

In addition, the purposive interpretation rule permits the interpretation of a provision consistent with the object and purpose of the statute.

This view is further reinforced by the Ministry of Finance’s 2008 tender brochure, which states that the Central Tenders Board rules did not apply to international lending and technical organisations, mainly because these entities are well known for having strict procurement regulations and, as is often the case, the government should align its requirements and procedures with the stricter procurement requirements of the credit organizations such as the Inter-American Development Bank, the World Bank and the Caribbean Development Bank.

Contracts excluded

Instead of the 2020 Amendment correcting this glaring ambiguity in the paragraph and ensuring that the objects of the procurement legislation are achieved, the Amendment simply excluded the words after “prevail”; reinforcing that the law would not apply to the very contracts it was meant to monitor. Even more contracts have been excluded from regulator oversight by the addition of Article 7(5). These include:

• legal services;

financial services – on this point, many construction contracts fall into this category, BOLT, BLT and BOOT contracts being considered as financial contracts, according to the brochure of the Ministry of Finance;

• accounting and auditing services;

• emergency medical services; Where

• the other services that the Minister may, by order, determine.

This means failed contracts for the 5,000 houses to be built by a Chinese construction company blacklisted by the World Bank; the PoS hospital construction contract which was terminated by Shanghai Co; the questionable conclusions of the AV Drilling Company oil supply contract; the closure and potential sale of the refinery, the construction of Creek Road, the potential foul play of the firearms department and many more that have yet to be revealed could have been avoided, or the effects minimized, if the regulator had overseen control from design to performance.

Instead, this lack of transparency simply allows the rich to get richer in an environment that facilitates unchecked corruption.

Such legislative provisions ensure that the gap between the wealthy and those in other socio-economic groups widens even further, making the promotion of just and equitable socio-economic policies an unattainable goal for so many outside this privileged group. .

Recommendations

I recommend, as a start, that section 7 be amended to provide oversight of public-private partnerships and contracts with public and private entities other than those specifically excluded by section 7(2) of the procurement legislation and, in particular, construction contracts that use the BOLT, BLT and BOOT models which are classified as finance contracts.

The public should also demand that details of such contracts awarded for a specified sum be disclosed on the website of the state-owned enterprise or relevant government authority, indicating the nature of the contract, the company/person who awarded the contract, monetary value, expected and actual date of completion, and any cost overruns.

This information should be collated and placed on the regulator’s website so that the public can get a better idea and understanding of how our public funds are spent and to whom these contracts are awarded.

And, most importantly, to achieve the very objectives of the legislation of transparency, accountability, value for money, fairness and equity, providing a meaningful opportunity for a wider sector of our national community to participate to entrepreneurial opportunities and reduce the growth of income inequality.