New Procurement Act to end large firm ‘dominance’
Bahamas
The Prime Minister yesterday said the Government’s digital procurement platform has generated $2.6m savings in just four months since its launch as he slammed his predecessors for giving large firms “dominance” in contract awards.
Philip Davis KC, leading-off House of Assembly debate on reforms to the Public Procurement Act, said close to 1,500 companies have registered with the electronic portal with almost 300 public sector contracts put out to bid through it.
“We will also have fully digital public procurement with the roll out of the Go Bonfire Platform: A best-in-class procurement platform that is being implemented throughout the public sector and in the Public Hospitals Authority,” he told MPs.
“Since the launch of the platform last November, 1,490 vendors have been registered. Two hundred and ninety-nine opportunities have been contracted during this period and the estimated savings from the use of the platform is $2.6m. This number is expected to grow as more agencies move their procurement processes online.”
Arguing that the current Act, passed under the former Minnis administration and brought into effect just weeks before the general election on September 1, 2021, had produced “unintended public policy consequences that we are keen to avoid”, the Prime Minister said one impact had been to favour large companies in the award of government contracts.
While not naming the company or group involved, he identified food supplies as one area where this had occurred. “One of the worst examples of this is seen in the unequal granting of contracts. The processes put in place created an environment in which large vendors are able to dominate the competition,” Mr Davis asserted.
“For example, in the procurement of food, one vendor by virtue of its size and corporate relations, dominated the procurement of food on behalf of the Government. Under the current Act, this dominance is allowed. In fact, it is an outcome that the Act, as written, intentionally brings about.
“However, common sense would tell you that the Government nor the Bahamian people want to exist in a reality where only the largest, richest companies with the most resources get every contract. We can all agree that the role of government should be to broaden opportunities for a diverse range of Bahamians. Our small and medium-sized businesses deserve opportunities too. The Bill before us today allows for that possibility.”
Public procurement, if used correctly, and in a fair, transparent and accountable manner with open, competitive bidding for government contracts can be an important tool of national development by facilitating the growth of small and medium-sized businesses. It can also ensure taxpayers receive value for money, and eliminate waste, inefficiencies and other unnecessary expenses and loss in the tender process.
“The new Bill does the opposite of what the current Act does by allowing for the preferential treatment of specific groups,” the Prime Minister added. “We will introduce preferences for micro, small and medium-sized enterprises, women-owned business, Family Island businesses and youth-owned businesses. These are high priority areas we are targeting as a government to diversify opportunities in The Bahamas.
I think this point bears repeating. Under the current Act, the most well-established, well-resourced businesses were able to dominate government contracts under the guise of them being the best fit for the job. This sounds good on paper but ignores the reality on the ground.”
The Government spent some $274m on goods and services during the six months to end-December 2022, according to mid-year Budget data, which represented a year-over-year rise of $24.1m. This gives an insight into the size of the role that the public sector plays in the Bahamian economy, as well as the scale of the opportunity available to local companies and entrepreneurs to gain a share of this business.
“Contracts below a certain threshold will now automatically be reserved for national bidders,” Mr Davis promised. “Special permission will have to be granted for these procurement processes to allow for international bidding. Specific justifications must be given for approval of this request.
“For example, it could be for a good or service that is not available in The Bahamas. In all other cases, any contract amount below that. In all other cases, any contract amount below that threshold will be reserved and granted to local companies. We are preserving opportunities for Bahamian business owners.”
The Prime Minister did not specify that threshold in his address. However, the Bill, which passed its second reading in the House of Assembly last night, reduces the threshold above which a government ministry, agency or department’s tenders committee must review a contract award from $50,000 to $25,000.
This, the Bill states, is designed “provide an effective control mechanism” on the award. Contracts valued between $25,000 and $40,000 can be awarded on the recommendation of a public entity’s tenders committee, subject to approval from the relevant minister, while those valued between $400,000 and $2.5m will see the recommended winner forwarded to the central Tenders Board. Contracts over the latter sum will have to be approved by Cabinet.
“Under the new Bill, bidders who attempt to influence or induce the award of a contract by offer of employment, gratuity or any other offer of value will be disqualified. This is yet another area that will be strengthened,” Mr Davis promised.
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