Procurement Regulator: $26B spent on goods, services annually
Trinidad and Tobago
Every year, $26 billion is spent on goods, works and services annually.
When the Public Procurement and Disposal of Public Property Act is proclaimed it could help the country save some of this money from waste and corruption.
Out of this sum, more than $5 billion can be saved annually, according to the chairman of the Office of the Procurement Regulation (OPR) Moonilal Lalchan.
“Based on calculations, out of the roughly $52 billion national budget, we estimate that $26 billion is probably spent on goods, works and services annually. It’s not only from the budget but from those organisations that are self-sufficient like the First Citizens Bank, Caribbean Airlines, Heritage Petroleum Company and others who are not necessarily dependent on the Treasury. But they are public bodies and spend substantial money. For example, Heritage Petroleum, which spends on exploration or National Gas Company on gas pipelines,” he said.
Speaking at the T&T Transparency Institute’s (TTTI) Annual General Meeting last Wednesday, Lalchan said between 10 and 30 per cent of the money spent on public procurement could be saved.
The OPR was established in 2018 to be the watchdog of procurement for public bodies with the processes like tenders, contract management and supply of goods, works and services. It is also required to investigate any wrongdoing and to take the necessary steps to nullify contracts.
Lalchan said the main aim is to clamp down on bad practices in procurement and disposal of public property.
The OPR has met with more than 300 organisations. Lalchan said any organisation that receives public funding is required to follow the requirements of the legislation.
Allegations of corruption and the call for procurement legislation go back decades.
It has been 40 years since the George Chambers administration appointed a committee to conduct a comprehensive review of government-to-government arrangements for projects like the Mt Hope Medical Complex and the Hall of Justice. Its findings were documented in what came to be known as the Ballah Report as the committee was chaired by then Permanent Secretary in the Foreign Affairs Ministry, Lennox Ballah.
Chartered surveyor and social activist Afra Raymond recalled in his blog how Chambers had told a shocked country that two out of every three dollars from the then oil boom had been stolen or wasted.
In more recent times, there was the Piarco Airport construction scandal where there were allegations of bid-rigging and fraud in the award of contracts for the $1.4 billion project.
In June 2020, when the Curepe Interchange was inaugurated, Prime Minister Dr Keith Rowley said even improved and amended procurement legislation would not have helped the Government save over $200 million on the project, as there were ways for corrupt politicians to use more taxpayers’ money. The project came in at a final cost of $221 million.
Rowley also referred to the OAS Constutora, the original contractor on the Point Fortin Highway Project. For some reason, the former People’s Partnership administration removed the clause in the contract that held OAS Constutora, which eventually went bankrupt, liable and ensured that they forfeited their multi-million bond. He said removing that clause gave the bankrupted company a $921 million gift. In 2016, the Government took OAS Constutora to court and recovered that money.
At a press conference last Monday, Rowley said he is anxious to have the Public Procurement and Disposal of Public Property Act proclaimed, and expressed disappointment at the delay in full implementation.
Procurement officers
Stakeholders have complained that after being assented to seven years ago, the legislation still has not been fully proclaimed and is still not functional. Lalchan said the main holdup is that some public companies are yet to appoint procurement officers.
Once the law is proclaimed, it will take three months before it replaces the Central Tenders Board which was set up in 1961.
“It depends on what needs to be put in place once we assess the various requirements of the public bodies. We are working with the Attorney General and his team to put together a timeline. The main reason why some of the public bodies are not ready as they have not appointed their main procurement officer which is required under the Act to be appointed. That officer is now responsible for procurement and disposal activities,” he said.
Lalchan said out of 415 public bodies, only 130 have appointed procurement officers. Among them are the National Gas Company (NGC), the T&T Electricity Commission (T&TEC), Water and Sewerage Authority (WASA), and Plipdeco.
“Once procurement officers are appointed that puts us in a good position to give effect to the full proclamation. We don’t expect all 415 to be appointed immediately. So far we have had 1,000 requests for assistance from public bodies, so there’s a wide usage of the Act although it is not fully proclaimed. It’s not like everything is at a dead stop.”
Negative effects
Lalchan called for an end to bad practices within public bodies.
“Look at the regional health authorities and regional corporations. We have put in place handbooks that guide the practices of these different entities, for example, how they go about engaging suppliers and contractors in terms of competitive tenders. There are now a number of tenders being published in the newspapers. That gives an idea of the new transparency,” he said.
Using the example of National Insurance Property Development Company (Nipded) and expired medicine he explained: “There is about $87 million in expired drugs to be disposed of. In terms of value for money is whether we are coordinating the activities by the regional health authorities and Nipdec which is responsible for purchasing these and storing them. One of the things about procurement is when you procure and put down these expansive buildings, do you look at maintenance or do you leave it to run down?
“Do they have maintenance contracts associated with them or do they just buy and put them in a case? So the whole value for money proposition centres around the maintenance of our assets. What we have done is include in regulations and our handbooks how they go about extracting best value for money in terms of procurement, maintenance and then disposal.”
Before the last Local Government elections, Lalchan met the line minister and all the regional corporations’ chairpersons and CEOs.
“Subsequent to that there was an election and new individuals came in. Some of the concerns that are being raised at the regional corporations are that we all know what happened in terms of the operations of criminal elements within some of those regional corporations and how they try to go about manipulating the process. That’s one of the advantages of getting this done as quickly as possible to get rid of some of those behaviours.
“There are temporary clerical employees in charge of complex procurement activities. This cannot continue if we want to get value for money.”
Lalchan added: “One of the main ingredients is to have one database of contractors and suppliers that are pre-qualified. So far we have had over 1,000 of them, so public bodies can only use pre-qualified contractors going forward from that list. Public bodies cannot go about just pre-qualifying anybody. There’s now a structured way. If a company has not paid their taxes and they have not paid NIS and Health Surcharge, they will not be pre-qualified and taking part in state-controlled public tendering.”
Lalchan said three outstanding sections of the Procurement Act that need to be completed and acted upon are Sections 7.8, s57 (a) and 61.
Under Section 7, the Ministry of Finance has to prepare the terms of guidelines for the circumstances in which certain exempt services could be procured.
“Under Section 7.6, which is an amendment to the Act, it says that the Act shall not apply to the following services provided to public bodies or state-controlled enterprises which are legal services, debt financing services, medical emergencies, and such other services as the Minister may by order determine. The Minister shall submit to the Office its guidelines which outline the circumstances under which exempt services may be procured. So that’s one of the things the Minister has to prepare in terms of guidelines as under what circumstances these exempt services could be procured,” he explained.
Section 57 (a) of the Act states that notwithstanding the State Lands Act and other written law to the contrary, the Minister may make regulations in respect of the disposal of state lands, real property owned by the Government, real property owned by state-controlled enterprises; and real property owned by a statutory body, responsibility for which is assigned to a Minister of Government.
The Minister of Finance has to complete this part, he said.
The most urgent action needed falls under Section 61 which refers to the need for procurement officers in all public bodies. The Procurement Review Board which will review decisions made by the OPR is still to be operationalised.
Stakeholders
CEO of the T&T Chamber of Industry and Commerce Ian de Souza told the Sunday Guardian the business community is concerned about the slow progress in having the legislation proclaimed.
“The Act has been partially proclaimed and the regulations have been approved. As it is understood, however, the training of public officers is being undertaken to ensure that public agencies are in a state of readiness to be able to comply with the provisions of the Act and therefore allow for full proclamation. It is hoped that this training and all other attendant issues that would provide for full proclamation of the Act would be expedited,” he said.
Derek Outridge, a consultant in the construction industry, said he blames the Government for inaction on the legislation.
“They have been the ones delaying the whole aspect of procurement by not preparing watertight legislation from the beginning, coming to the Parliament every time the industry calls for its implementation with piecemeal amendments. This has now culminated into a view that the legislation is now unworkable unless a major overhaul has been done.”
Outridge called for legislation to set up a commercial court to deal with cases that come out of the construction industry.
“The judiciary has not been given the resources to set up a proper procurement agency. The judiciary does not have a technical and commercial court similar to what was set up in the United Kingdom to deal with matters of construction. As the bulk of that will end up in the courts.”
He is calling for the Government to go back to the construction industry for more consultations before the legislation is proclaimed as they are among the stakeholders who will be affected.
“The legislation right now is impotent,” he said.
Joint Consultative Council For the Construction Industry’s (JCC) Fazir Khan blamed the Government for the slow process of getting the legislation proclaimed.
“The OPR was set up and they have done everything they have to do. They are fully ready. Only last week the Attorney General met with the regulator and this seems to be a backward and reactive move. It is for them to go to Cabinet and have the regulations proclaimed and then have the President do her part to make it law. The Act was passed in the two houses of Parliament. The regulations were passed in January 2022 and in 2021 the Act was passed. There were also three amendments.”
He said that if the legislation is not functional it will simply lead to more corruption.
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