Submissions On Proposed Public Procurement Legislative Framework in Trinidad and Tobago

Caribbean Procurement Institute Submissions on Public Procurement Reform Legislative Package 2010 1
The Republic of Trinidad and Tobago

Submissions on
the Public Procurement Reform
Legislative Package 2010

21st February 2011

On 25th June 2010 the Public Procurement and Disposal of Propertv Bill 2010 and the National Tenders
Board Bill 1997 were laid in the Parliament of Trinidad and Tobago. The bills were forwarded to the
newlv established Joint Select Committee for Public Procurement Reform and on December 6th 2010. the
said Committee issued a Call for Submissions from Stakeholders. This paper is submitted in response to
this Call and our representative will be available for oral presentation if such is deemed useful.

Prepared by
The Caribbean Procurement Institute
120 Abercromby Street
Port oI Spain
Trinidad and Tobago
www.caribbeanprocurementinstitute.com
www.cppc2010.org


Table of Contents

Table oI Contents 2

Abbreviations & Acronyms 3

Introduction 4

Features oI Current Public Procurement System 5

Tenets oI an EIIective Public Procurement System 12

Assessment oI Proposed Legislative Provisions 20

(a) Public Procurement and Disposal oI Public Property Bill 2010
(b) National Tenders Board Bill 1997

Impact oI External InIluences 32

Recommendations & Conclusions 35


Abbreviations & Acronyms

CE Covered Entity
CPPU Centralized Public Procuring Unit
CTB Central Tenders Board
CTBO Central Tenders Board Ordinance
MLO Multi-Lateral Lending Organization
NCE Non Covered Entities
NPAC National Procurement Advisory Council
OECD Organization Ior Economic Cooperation and Development
PAEC Public Accounts (Enterprises) Committee
PPP Public Private Partnerships
PFI Private Finance Initiatives
PU Procurement Unit
SA Social Accountability
SME Small and Medium sized Enterprises

1.0 Introduction

1.1 The need Ior comprehensive public procurement reIorm in Trinidad and Tobago has been
recognized as critical and identiIied Ior action by successive administrations since the late eighties.

1.2 It is uncontroverted that the current duality oI the public procurement system with some public
sector entities covered by existing legislation
1
and others operating under their own tender rules and with
ambiguous corporate governance guidance requires addressing. In addition. the lack oI an independently
resourced regulatory body with responsibility Ior monitoring the public procurement Iunction. or a Iormal
complaints and/or dispute resolution body Ior procurement disputes or a Iunctioning centralized public
procurement inIormation system represent signiIicant gaps. The Iailure to build critical institutional
capacity at both the leadership and proIessional levels is also a systemic weakness which needs
addressing.

1.3 This paper is not intended to rehash the various weaknesses. gaps and ineIIiciencies oI the present
public procurement system in Trinidad and Tobago. which in our view. have already been quite
adequately highlighted in the White Paper on Reform of the Public Sector Procurement Regime
2005
2
and the Report of the Commission of Enquiry into UDeCOTT and the Public Procurement
Practices in the Construction Sector 2010
3
. Instead the paper seeks to highlight the tenets oI an
eIIective public procurement system based on accepted best practice and assess the proposed reIorms
through such a lens. We will also analyse the current external inIluences at both the international and
regional levels and their potential impact on any meaningIul domestic reIorm initiative.

1.4 It should be noted that the proposed reIorms being considered under the Public Procurement
and Disposal of Property Bill 2010 are stated to be a part oI 'a package of relevant Bills to enable a
holistic and rational approach to the re-engineering of the public financial management svstem` which
will also include the National Audit OIIice oI Trinidad and Tobago Bill. 2006 and the Financial
Management and Accountability Bill. Not having sight oI these. we are not in a position to comment on
the alignment oI the instant proposals and those contained in the other Bills but recommend that these
Bills not be considered in isolation by the Committee. iI they are to work in tandem.

1
Central Tenders Board Ordinance No. 22 of 1961
2
Hereinafter referred to as "the White Paper"
3
Though a synopsis of the current systems of public procurement will be included in order to provide
appropriate context for the recommendations.


2.1.0 Features of the Current Public Procurement System

2.1.1 The public procurement system in Trinidad and Tobago consists oI a combination oI centralized
and decentralized processes resulting in the coexistence oI at least two distinct but parallel systems.

2.1.2 During the early independence years
4
an aggressive development agenda engendered an
escalation in public sector construction activity which strained the existing public sector Iinancial
management systems. A lack oI uniIormity in policy. standards and practices. and instances oI
insuIIicient security and poor management were identiIied
5
. By 1961. it was clear that reIorm oI the
system was necessary and a Cost Accounting Division in the MoF was established and the CTBO was
passed
6
.

2.1.3 As GoRTT`s development agenda continued to expand. the need to participate more directly in
the public procurement process was recognized and a policy decision was taken to amend the CTBO in
1979
7
to allow GoRTT to contract on its own behalI. outside oI the CTB. Following up on this
amendment. GoRTT established new statutory corporations with their own contracting capability outside
the purview oI the CTB and also began removing statutory bodies which were originally included in the
First Schedule oI the CTBO Irom the purview oI the CTB.

2.1.4 Further statutory erosion oI the remit oI the CTB continued by virtue oI amendments to the
CTBO in 1987
8
. 1991
9
and 1993
10
. resulting in the vast maiority oI public procurement in sub-central
procuring entities being administered outside oI the statutory Iramework
11
.

4
Prior to independence during 1956-1960 an extensive Development Programme was embarked upon by
the GoRTT as part of the First Five Year Development Plan.
5
These were identified in the Budget Speech delivered in Parliament by the then Hon. Prime Minister, Dr.
Eric Williams, on April 12th 1961.
6
The Central Tenders Board Ordinance 22 of 1961 was passed in 1961 but commenced on 1st January
1965.
7
Act No. 36 of 1979 included the following amendments (i) the term "company¨ was defined to include "a
firm, a partnership or a statutory corporation.¨ (ii) the reduction of powers of the CTB through the addition
of section 20A. This amendment allowed the GoRTT to act on its own behalf where - (a) "as a result of
agreement for technical or other cooperation between it and the Government of a foreign state, the latter
designates a company ... which is wholly owned or controlled by the foreign state ... to supply the articles
or to undertake the works or any services..¨ (b) "it enters into a contract with a company ..which is wholly
owned by the state for the supply of articles or for the undertaking of works or service therewith ...¨ (c) "it
enters into a contract with a company for the purchase of books for official purposes¨.
8
By virtue of Act No. 22 of 1987, the CTBO was amended further to provide for the handling of matters in
the event of an emergency without reference to the CTB.
9
By virtue of Act No. 39 of 1991, an amendment provided for a Special Ministerial Tenders Committee to
be established at the Ministry of National Security to procure arms, ammunition, and equipment for the
Defence Force and the Protective Services.


2.1.5 Over the last thirty (30) years the practice oI creating new public sector bodies termed 'Special
Purpose Companies¨ (SPCs) or Special Purpose State Enterprises (SPSEs) has developed. SPCs are
wholly owned state companies incorporated as private limited liability companies under the Companies
Act 1995 as amended in 1997. The SPCs are supposed to provide expert personnel to speed up proiect
implementation. Some SPCs
12
acting on the instructions oI Line Ministries. carry out construction
proiects and undertake not only the arrangement and placement oI contracts Ior the work. but also an
overseeing Iunction during the course oI the proiect which is generally labeled 'proiect management¨.

2.1.6 While on the one hand SPCs are owned by the State. utilizing public Iunds and operating on
behalI oI GoRTT. they are not. however. subiect to the same regulatory Iramework as other public bodies.
SigniIicant issues oI governance have arisen in connection with. what we will term. these 'hybrid
entities¨ and the operation oI these new public sector contracting models. This is so. in large part
because. in decentralizing the public contracting Iunction. there was no concomitant overarching
regulatory interIace established. governing the relationship between the State and these bodies. and in
particular. their engagement with public contracting activities.

2.1.7 The iustiIication proIIered Ior the exclusion oI these bodies Irom the CTBO regime had primarily
been that the bureaucratic CTBO procedures hampered commercial eIIiciency and the pace oI GoRTT`s
inIrastructural development agenda.

2.1.8 It has been suggested
13
that a Iurther contributor to GoRTT`s shiIt towards developing contracting
models outside oI the CTBO has been the conditions attached to MLO Iinancing oI GoRTT proiects.
Thus a perhaps unintended consequence oI MLO policy. only to Iinance proiects with a high import
content Irom donor countries. has been to Iurther diminish the ambit oI the CTB. as the CTBO would not
sanction procurement conditioned on such terms. thus leading GoRTT to adopt alternative procurement
routes.

The Centralized Svstem - Covered Entities
2.1.9 The Centralized System reIers to the procurement processes and practices which are governed by
the CTBO and Iollowed by CEs (Covered Entities`). CEs presently include Central and Municipal

10
By virtue of Act No. 3 of 1993, an amendment validated the National Ìnsurance Property Development
Company Ltd (NÌPDEC) as a procurement agency for Government outside the ambit of the CTB.
11
For a more detailed exposition of the CTB amendments and the impact of GoRTT policy on the public
procurement function between 1956 and 2005 see the White Paper on Reform of The Public Sector
Procurement Regime 2005.
12
for example NÌPDEC and UDeCOTT
13
White Paper on Reform of Public Sector Procurement Regime 2005 para 2.2.3

Government entities including Ministries. regional corporations and some statutory commissions listed in
the First Schedule to the CTBO.
14

2.2.0 The CTBO establishes the CTB which Iorms an integral part oI the public Iinancial management
system as it is the GoRTT agency responsible Ior awarding contracts as requested by GoRTT Ministries.
Departments and certain Statutory Bodies
15
.

2.2.1 The weaknesses oI the Centralized System have been documented comprehensively in the White
Paper on ReIorm oI the Public Sector Procurement Regime 2005 and there is little need to repeat them in
detail herein as they are non-controversial and widely recognised.

2.2.2 The weaknesses include (a) the lack oI a Iormal complaints and/or dispute resolution mechanism
Ior disgruntled bidders; (b) the lack oI a regulatory body with power to investigate and monitor
independent oI the CTB. (c) the narrow legislative Iocus only on the tendering phase oI the procurement
cycle with little guidance on budgeting. Ieasibility and contract management; (d) the lack oI technical
inIrastructure and development oI an electronic centralized public inIormation system. (e) lengthy and
costly bureaucratic procedures which are unable to keep pace with the expanding needs oI GoRTT`s
development agenda (I) the absence oI provision Ior newer procurement methodologies including
eAuctions and innovative proiect Iinancing models such as Public Private Partnerships (g) poor data
collection and reporting and (h) human resource limitations - there is a dearth oI trained staII at the CTB.

2.2.3 All oI the above notwithstanding. it is notable that no signiIicant allegation oI corruption has been
leveled in relation to CTB awarded contracts Irom the date oI its establishment to present. However. the
inIerence to be drawn Irom this is unclear and may be reIlective oI the nature and scale oI public contracts
which continue to be let under the auspices oI the CTB. as compared with maior implementing agencies
such as UDeCOTT and NIPDEC.

The Decentralized Svstem . Non Covered Entities (NCEs)
2.2.4 Entities outside oI the CTBO Iall within the Decentralized System and procure utilizing their own
tender rules and procedures. Broadly speaking. one can ascertain a systematic policy on the part oI the
GoRTT to deregulate entities which are engaged directly in carrying out maior inIrastructure and
development proiects. The 1able 1. below depicts the present structure oI procurement deregulation.

14
Ìt should be noted that the remaining statutory bodies presently included in the First Schedule of the
CTBO are now defunct eg., the Railway Board, the Marketing Board, the Cocoa and Coffee Ìndustry
Board, the Sugar Ìndustry Board, the Sugar Ìndustry and Labour Welfare Committee and the National
Housing Authority.
15
The composition and structure of the CTB and a description of its procurement process and thresholds
is set out in the CTB Ìnformation Booklet available on the MoF Website www.finance.gov.tt

Row 1 comprises Covered Entities. whereas Rows 2 and 3 comprise the diIIerent types oI Non Covered
Entities existing outside oI the CTBO.
1able 1.
Entity Procurement Framework
Ministries. Regional and Municipal
Corporations. THA
Covered by the CTBO
Statutory Commissions. Authorities &
Corporations
Some Entities have power to establish Tenders
Rules w/o reIerence to Parliament. others must
send Tender Rules to Parliament Ior negative
resolution (eg. Housing Development
Corporation (HDC))
Companies Incorporated under the Companies
Act 1995 as amended 1997
Entities generally have power to create their
own Tender Rules eg.. Urban Development
Companv of Trinidad and Tobago.
(UDeCOTT). Education Facilities Companv
(EFCL). However Note NIPDEC which
requires the negative resolution of Parliament.

2.2.5 It should be noted that there is no uniIorm or standard process or procedure which characterizes
the Decentralized System and accordingly such cannot be represented here. From 1able 1 it can be
observed that the procurement procedures oI some NCE`s are subiect to greater oversight than others by
virtue oI a statutory requirement Ior their tenders rules to be placed beIore Parliament Ior negative
resolution.

2.2.6 In June 2005 GoRTT. through the MoF. issued Standard Procurement Procedures for the
Acquisition of Goods. Services to be provided and Works to the undertaken and for the Disposal of
Unserviceable Items in State Enterprises/Statutory Bodies (State Agencies) (hereinaIter reIerred to as
the 'MoF SPP¨). There seems to be some ambiguity with respect to the status oI these procedures.
Whilst on the one hand. GoRTT Ministers and senior public oIIicials have made numerous statements in
public Iora
16
to the eIIect that the procedures must be Iollowed by NCEs. NCEs seem to be oI the view

16
Former Minister in the Ministry of Finance is on record at least twice as stating this (on 20th March
2008 at the Caribbean Public Procurement (Law & Practice) Conference (CPPC) held at the Hyatt
Regency, Trinidad and on 9th May 2008 at the eAuction Workshop hosted by the Ìnvestments Division,
Ministry of Finance and the statement of Bernard Sylvester, Ag Permanent Secretary in the Ministry of
Finance dated 9th January 2009 submitted to the Commission of Enquiry into the Public Procurement
Practices in the Construction Sector 2010.

that these procedures are merely guidelines. In some cases. NCEs argue that since their tenders rules had
previously been approved by the MoF there was no need Ior them to adopt or harmonize their existing
rules with the MoF SPP.
17

Oversight of NCEs
2.2.7 The Minister oI Finance as 'Corporation Sole¨
18
is charged with the responsibility Ior GoRTT`s
entire portIolio oI investments oI which the SOE sector is a maior element.

2.2.8 The Investment Division oI the MoF. as shareholder`s representative. along with Line Ministries
Ior the NCEs. share responsibility Ior management and operational oversight. The role oI the Investment
Division is to ensure management eIIiciency Ior these Iirms to meet domestic and international industry
operational standards; and to ensure the continuing capitalization to accommodate sustainable healthy
growth as a way to contribute to national economic development in a way that supports government
policy. Line Ministries are responsible Ior technical supervision and ensuring that NCEs adhere to
GoRTT sectoral policy guidelines.

2.2.9 The Investment Division oI the MoF issued the State Owned Enterprises Performance
Monitoring Manual (SOEPMM) 2008 which provides directives to NCEs relating to governance.
reporting lines and mechanisms. auditing and perIormance indicators.

2.3.0 These NCEs are required to submit audited Iinancial statements to the Investment Division oI the
Ministry oI Finance annually. NCEs employ private audit Iirms to prepare annual Iinancial audits and the
Public Accounts Enterprises Committee (PAEC). a subcommittee oI parliament. reviews all oI the
submitted Iinancial statements and can question company oIIicials on issues raised in Management
Letters. The Investment Division serves as adviser to the PAEC.

2.3.1 It should be noted that these oversight mechanisms are at best ex post facto mechanisms Ior
accountability in public contracting activities. relying only on review and audit mechanisms to achieve
accountability. The inherent weakness oI such approaches in preventing excesses and abuses during the
course oI a procurement process is readily apparent.

17
See a table submitted by UDeCOTT during its Closing Submissions to the Commission of Enquiry into
Public Sector Procurement Practices in the Construction Sector 2010 comparing the extent to which their
own tender rules and that of four other NCEs conformed to the MoF SPP. The table presents a sample of
NCE compliance with the MoF SPP which is instructive for present purposes and hereto attached and
marked ANNEX 1.
18
By virtue of the Minister of Finance Ìncorporation Act Chap. 69:03 - the Corporation Sole is a body
politic having perpetual succession constituted in a single person, who in right of some office or function
has capacity to take, purchase, hold and demise lands, tenements and hereditaments, and in some
particular instances also to take and hold property.

Caribbean Procurement Institute Submissions on Public Procurement Reform Legislative Package 2010
10
2.3.2 To varying degrees NCEs practice limited competitive procedures and routinely resort to sole
selective tendering. a practice which has under previous administrations enioyed express approval oI
GoRTT.
19

2.3.3 In addition. transparency is lacking since it is not the practice that the tenders rules and procedures
or tender notices or awards oI NCEs are routinely published online on company websites.

2.3.4 The risks in the present Decentralized System are signiIicant and are Iacilitated by (a) the lack oI
an overarching regulatory Iramework Ior NCEs; (b) the lack oI a Iormal complaints and/or dispute
resolution system; (c) the lack oI uniIormity oI rules. procedures and documentation; (d) poor
management; and (e) a lack oI transparency. Although the Ilexibility oI the systems allows Ior GoRTT
to escalate its inIrastructural development programmes. the present perceived vulnerability to corruption
and associated risks and the consequential strain on value Ior money obiectives remain signiIicant.

2.3.5 Notably. the Report oI the Commission of Enquiry into the Procurement Practices in the
Construction Sector in Trinidad and Tobago 2010 outlined the present risks in the public procurement
system being utilized by NCEs and the Report stated as Iollows:

'it is clear that the existing level of oversight is seriouslv ineffective and has not secured
the degree of transparencv which the people of Trinidad & Tobago are entitled to expect in the
expenditure of public funds.`
20

A Note on Bidders Rights

19
See statements of Minister in the Ministry of Finance at the Caribbean Public Procurement Conference
October 2008 endorsing and explaining the use of sole selective tendering by SOEs where, inter ailia, "a
contractor is already onsite or expertise is limited due to the specialized nature of the profit companies.¨
There was also evidence from GT officials at the Uff Enquiry which indicated GT's endorsement of this
practice.
20
Paragraph 28.21 ÷ UFF Report delivered on March 29
th
2010 published and laid in Parliament on April
7
th
2010

11
2.3.6 Given that there is no Iormal complaints and/or dispute resolution process in either the
centralized or decentralized systems. disgruntled bidders have only had recourse in the Supreme Court
oI Trinidad and Tobago. Traditionally. there being no contractual remedy
21
. bidders seeking to assert
their rights in respect oI a public procurement would initiate iudicial review proceedings in order to get
the Court to overturn. set aside or declare null and void a procurement decision. This approach has not
met with much success in our courts.
22
in large part because the courts have viewed the procurement
Iunction as a commercial Iunction with a limited public interest element
23
.

2.3.7 The above notwithstanding. post 1983. the common law in other iurisdictions such as
Canada
24
. UK
25
and Australia
26
now recognizes what is called the 'Contract A¨ or 'Blackpool Contract¨.
In 2004 the Privy Council
27
. in an authority binding on the courts oI Trinidad and Tobago. recognized
the 'Process Contract¨ based on the implied tender contract doctrine
28
. By virtue oI this doctrine
contracting entities in both the public and private sector will be held to the terms oI their tender call and
to certain implied duties oI Iairness in the procurement process.

2.3.8 Though there has as yet been no local case initiated by a disgruntled bidder based on this
emerging implied contract paradigm. as more lawyers and contractors become aware oI their rights
under the common law. reIormers must be cognisant oI the increasing risk oI legal action on these
grounds. Continued regulatory gaps suggest that the courts will eventually intervene to determine
bidders rights. as has been done in other iurisdictions. thereby excluding the executive`s opportunity in
this reIorm eIIort to set its own parameters Ior its obligations to bidders.

2.3.9 The current context Ior public procurement as outlined above in this section must be
appreciated by reIormers in designing the new system. mindIul oI the cultural realities and
iurisprudential context.

21
Pre-1983, contract law did not provide a remedy for persons aggrieved because of a procurement
decision. Procurement decisions were deemed pre-contractual and the courts held that there was no
intention of the parties to create binding legal relations.
22
except in the case of fraud and bad faith
23
See NH v UDeCOTT Civ. App. 95 of 2005, judgment delivered March 2006
24
R. v. Ron Engineering [1981] 1 S.C.R. 111
25
Blackpool and Fylde Aero Club v Blackpool BC [1990] 1 WLR 1195; 3 All ER 25
26
Hughes Aircraft Systems Ìnternational v Airservices Australia (1997) 146. ALR 1
27
Pratt Contractors Ltd v Transit New Zealand (2004) BLR 143 PC
28
or "two contract theory¨

12
3.1.0 Tenets of Effective Public Procurement System

3.1.1 It is important to note at the outset that the procurement Iunction and in particular the
public procurement Iunction is inextricably tied to a country`s economic. social. industrial and
environmental obiectives. Accordingly. the eIIectiveness oI a public procurement system is iudged by its
ability to meet these obiectives. The tenets oI an eIIective public procurement system thereIore depend
Iirstly on the obiectives oI the system. There is no one standard set oI obiectives oI a public procurement
system. Such obiectives are a matter oI public policy. So Ior example. iI the obiective oI the system is to
Ioster SME sustainable development. the tenets oI the system and scope oI regulation will necessarily be
diIIerent Irom one where the obiective is to Iacilitate greater competition in or access to regional
markets or one which makes environmental obiectives primary. According to Trepte
29

'..there is no one ideal form of procurement regulation. Even where procurement
regulation is expressed bv means of similar concepts and principles. the underlving obiectives of the
regulation will be reflected in and condition the precise form and scope of that regulation. Such
regulation will be appropriate onlv within the context in which it was developed.`

3.1.2 Without making a determination oI the merits or demerits oI a particular policy
obiective. it is clear that regulators must have their policy obiectives clearly determined beIore designing
a workable system which will serve them. Further. it would be wrong to assume that rules. guidelines
and best practices 'so-called¨ Irom international and supra-national bodies necessarily reIlect a system
which would produce the results required by domestic policy obiectives. It is our respectIul view that the
whole-scale adoption oI international rules. guidelines and 'best practices¨ without (a) a rigorous
examination oI the obiectives oI the international and supra-national regulators and (b) a clear
conception oI the domestic obiectives oI the public procurement system. will not serve domestic
interests.

3.1.3 Some oI the more common obiectives oI public procurement systems include

(a) maximizing economy and eIIiciency in procurement;
(b) promoting environmental and sustainability issues
(c) promoting competition among suppliers and contractors Ior the supply oI the
goods or construction to be procured;
(d) providing Ior the Iair and equitable treatment oI all suppliers and contractors;

29
Peter Trepte, Regulating Procurement, Understanding the Ends and Means of Public Procurement
Regulation, Oxford University Press pg.41

13
(e) promoting the integrity oI. and Iairness and public conIidence in. the
procurement process;
(I) achieving transparency in the procedures relating to procurement; and
(g) SME development

3.1.4 It is not our intention nor do we consider it our place to proselytise as to what the obiectives
oI the new public procurement system in Trinidad and Tobago should be. This is squarely within the
purview oI the legislature. What can be said. however. is that it is diIIicult to ignore the reality that at an
international level the ability oI a government to apply discriminatory or protectionist procurement
policies may raise trade barriers and undermine the international economic order which represent not an
insigniIicant part oI the underlying motivations oI some international rules and 'best practices¨. The
ongoing tension between domestic obiectives and regional and international obiectives must be careIully
balanced in a country`s reIorm eIIorts and the Iact that the obiectives oI domestic systems are necessarily
broader than the limited aims oI international regulatory systems must be appreciated.

3.1.5 This notwithstanding. it is possible to distill Irom the international rules and guidelines a
basic Iramework which would apply in anv eIIective public procurement system regardless oI its
obiectives. At the international level. two oI the most accepted benchmarking tools Ior public
procurement systems include the World Bank Country Procurement Assessment Reviews (CPAR) and
the OECD DAC Procurement Assessment Tool. The UN Model Law on Procurement also provides a
suggested template Ior eIIective public procurement regulation. From a consideration oI these tools and
other materials the Iollowing six (6) main components can be ascertained as being the basic building
blocks oI an eIIective system
30
:

(a) A comprehensive Iramework oI rules. regulations and policy guidelines governing all
public procurement processes
(b) An independently resourced. institutional structure empowered to guide. monitor. oversee
and enIorce the Iramework.
(c) A sophisticated cadre oI personnel responsible Ior implementing the Iramework who are
suIIiciently resourced and demonstrate appropriate levels oI proIessionalism. skill and
standards oI ethics.
(d) A Iormal complaints and/or dispute resolution mechanism capable oI providing rapid and
eIIective response/remedies to supplier/bidder`s complaints.
(e) A system oI internal management control and audit with suIIicient capacity Ior eIIective
identiIication and countering oI risk.

30
See OECD Procurement Toolbox and Building Blocks for Ìntegrity in Procurement, WB Guidelines,
UNCÌTRAL Model Law on Public Procurement

14
(I) An independent external audit with suIIicient capacity to detect irregularities involving the
waste and misuse oI public Iunds and to identiIy related weaknesses in management
controls.

3.1.6 It is important that in the context oI the proposed reIorms that these six (6) components
represent the skeleton Iramework oI the new system. These components are considered in more detail
below.

(a) A Comprehensive Framework of rules, regulations and policv guidelines governing all public
procurement processes
3.1.7 This Iramework can be in the Iorm oI (i) an overarching legislative and regulatory
Iramework or (ii) policy guidelines issued by the executive or (iii) a combination oI law. regulations and
policy. There must be clarity in the laws. regulations and guidelines hierarchically organized with
precedence clearly established. The cultural realities and iurisprudential context oI a country will dictate
what type oI system will be most eIIective to meet the policy obiectives oI the government. II Ior
example. strengthening anti-corruption and accountability eIIorts is the obiective oI the system. then a
legal and regulatory Iramework may be more applicable. On the other hand. iI the culture and standard
oI ethics and proIessionalism is high then a Ilexible system more reliant on policy guidelines may be
workable.

3.1.8 A distinction needs to be made between a Iramework which governs 'public
contracting¨ and one which governs 'public procurement¨. In the Iormer the procurement contract may
be the instrument oI regulation and in the latter the entire procurement process is the instrument oI
legislation. In regulating the procurement process which spans Irom the identiIication oI the need right
up to the disposal oI a good. maintenance oI a work and review oI a service. such a system goes beyond
the 'tip oI the iceberg¨
31
and recognizes the contracting phase (or the bidding phase right up to award oI
the contract) as iust one portion oI a ten stage process
32
. Accepted 'best practice¨ now recognizes that
an eIIicient public procurement regulatory system is no longer based on the transactional approach but
addresses the entire procurement cycle.

31
OECD Principles for Ìntegrity in Public Procurement 2009 defines the beyond the "tip of the iceberg¨
approach to procurement regulation as which addresses the entire procurement cycle. Discussions at the
2004 OECD Global Forum on Governance highlighted the need for governments to take additional
measures to prevent risks of corruption in the entire procurement cycle.
32
See Government Procurement 2nd Edition published by Lexis Nexis 2008 page 20 where author Paul
Emanuelli outlines the 10 stage process.

15
3.1.9 Although. a one size Iits all approach is not recommended. there are certain standard
provisions which ought to be included in comprehensive procurement Irameworks. These include:
deIinition oI public sector organisations that are covered under the legislation; the types oI tender
methods/or procedures available and thresholds; selection and award criteria to be used in the tender
process; exemptions Irom standard procurement procedures and clear applicable criteria Ior such
exemptions; the review and remedies system; and enIorcement mechanisms to ensure the appropriate
Iunctioning oI the public procurement system.

3.2.0 The entire Iramework inclusive oI the laws. regulations. guidelines and decrees ought to
be published and easily accessible to the public at no cost.

A Note on the Proposed Reforms

1. Both the White Paper on Reform of the Public Procurement Regime 2005 & Public
Procurement and Disposal of Property Bill 2010 provide for the establishment of a
comprehensive legal and regulatory framework for public procurement with policy
guidelines issued by the newly established Regulator requiring the negative
resolution of Parliament.

2. Both also purport to recognise the entire procurement cycle in the definition of
procurement. In the Public Procurement & Disposal of Property Bill.
notwithstanding references to the pre-tender stage by empowering the Regulator to
develop guidelines toward the determination of value for money and public
consultation on major contracts. there is persistent focus on the ~transaction¨ or
~negotiation¨ throughout the bill.

16
(b) An independentlv resourced, institutional structure empowered to guide, monitor, oversee
and enforce the framework,
3.2.1 The institutional structure may be centralized or decentralized or a mixture oI these systems.
There are diIIerent schools oI thought on the extent to which the procurement Iunction should be
centralized or decentralized and no standard model can be recommended. Developments in the last
decadee-government. the emergence oI procurement as a strategic proIession. modern Iinancial
management practices Irom the Government`s side. as well as e-commerce and new production
technologies Irom the private sector`s sidedilute the strength oI some oI the traditional arguments in
the centralisation vs. decentralisation debate.
33

3.2.2 The structure must have the roles oI public oIIicials clearly deIined. In particular. staII
roles and responsibilities with regards to speciIying requirements. giving Iinancial authority and making
purchasing commitments must be clearly delineated.

3.2.3 There ought to be established a regulatory body or bodies in which Iunctional
responsibilities Ior oversight and enIorcement oI the procurement Iramework are assigned. The
Iunctional responsibilities include the provision oI advice to contracting entities. provision oI policy and
draIting support to the Executive Ior amendments to the legislative and regulatory Iramework.
monitoring oI the public procurement Iunction. the collation and publication oI procurement inIormation.
management oI statistical databases. developing and supporting implementation oI initiatives Ior
improvements oI the public procurement system and providing implementation tools and documents to
support training and capacity development oI implementing staII.

3.2.4 Some countries have established a central public procurement organisation with
responsibility Ior developing the procurement rules and regulations. creating a government-wide
inIormation and publication system. ensuring government procuring authorities employ trained
personnel. developing a training system and maintaining general supervision oI the public procurement
system.


The Public Procurement and Disposal of Property Bill 2010 proposes a decentralized
system but with the requirement of uniformity and compliance with the Operating
Principles and Objectives. The bill also proposes the establishment of a Procurement
Regulator in whom functional responsibility for oversight and enforcement of the new
system is assigned.

33
See the arguments for centralization vs decentralization in the OECD (2000), 'Centralised and
Decentralised Public Procurement,' CCNM/SÌGMA/PUMA (2000)108, 25 October 2000, OECD
Publishing, Paris hereto attached and marked ANNEX 2.

17

(c) A sophisticated cadre of personnel responsible for implementing the framework who are
sufficientlv resourced and demonstrate appropriate levels of professionalism, skill and standards of
ethics.
3.2.5 As the appreciation Ior the strategic and critical role oI procurement increases so to does
the need to have personnel implementing the Iunction who have the necessary skill and proIessionalism
and who are recognized Ior their contribution. Procurement practitioners are now being called upon to
go beyond mere compliance to a more sophisticated and goal-oriented approach to the buying Iunction.
It is well accepted that a key component oI an eIIective procurement system is the equipping oI
proIessionals with adequate training and capacity building support in the Iorm oI well deIined curricula.
specialised knowledge. proIessional certiIications and integrity guidelines to ensure that they have the
necessary knowledge. skills and integrity to carry out their Iunctions along with the requisite
recognition. proIile and scope Ior upward mobility. Any capacity building system must be sustainable
and not sporadic or intermittent.

3.2.6 It should be noted that an emerging school oI academic thought is that given the cross-
disciplinary nature oI the procurement Iunction. it is necessary to enhance the skills oI all proIessionals
interacting with the Iunction oI procurement and not only the procurement practitioners themselves. An
eIIective public procurement policy must contemplate the strategic alignment oI the legal. Iinancial. risk
and audit Iunctions to the procurement Iunction and it is important that in the training and capacity
building eIIorts sustainable programmes are designed and implemented Ior proIessionals working in all
oI these Iields.
34


The Public Procurement and Disposal of Property Bill 2010 proposes that the
Procurement Regulator has the responsibility for this component of the system.

34
Caribbean Procurement Ìnstitute - Professionalizing Procurement :Toward an Integrated Model for
Procurement Education

18
(d) A formal complaints and/or dispute resolution mechanism capable of providing rapid and
effective response/remedies to supplier/bidder's complaints.
3.2.7 This is an essential component oI an eIIective public procurement system. This serves to
allow disgruntled bidders an avenue to challenge decisions taken by public bodies in awarding contracts.
This supports the appropriate Iunctioning oI a procurement system and builds trust with both the private
sector and the general public. The main obiective oI the complaints/review system is to enIorce the
practical application oI the legislative Iramework and thereby serve as a deterrent to breaking the law.
The system ought to be able to ascertain and distinguish quickly between anomalies. irregularities.
mistakes and deliberate acts oI Iraud or collusion and provide eIIective remedies in each situation. In so
doing this ultimately contributes to the achievement oI the obiectives oI the substantive procurement
rules.

3.2.8 It should be reiterated that Iailure to establish such a system will encourage intervention by
the courts into the public procurement Iunction. thereby causing excessive costs arising Irom litigation
and proiect delays. An eIIective response and remedies system will allow the government to set in
advance. criteria Ior raising issues and procedures and timelines Ior resolution.


The Public Procurement and Disposal of Property Bill 2010 assigns the responsibility for
this function to the Office of the Procurement Regulator and also proposes an independent
review process involving civil society at critical points of the public procurement process.

(e) A svstem of internal management control and audit with sufficient capacitv for effective
identification and countering of risk.
3.2.9 Internal control systems work to Iaciliate the achievement oI management`s obiectives and
contribute to continuous improvements in programme management. service delivery and accountability.
Internal audit spans administrative and accounting reporting on the procedures governing decision
making processes. in addition to the preparation oI reliable Iinancial records. They provide management
with an assessment oI the adequacy and Iunctioning oI an organisation`s risk management. control and
governance processes.

3.3.0 An eIIective public procurement system must align its procurement and Iinancial
management systems (including the internal audit) Iunctions and can no longer operate in silos. To be
eIIective. internal controls must be appropriate. Iunction consistently throughout the procurement cycle.
and be cost-eIIective. This is a critical part oI the risk mapping Iunction which must be introduced in an
eIIective system oI public procurement.

19


The Public Procurement and Disposal of Property Bill 2010 at present does not expressly
address the internal audit function within public bodies. It is important to reiterate that
the proposed bill is part of a tri-partite legislative agenda (including the National Audit
Office of Trinidad and Tobago Bill. 2006 and Financial Management and Accountability
Bill) to re-engineer the public financial management system in a holistic and rational
manner.

(f) An independent external audit with sufficient capacitv to detect irregularities involving the
waste and misuse of public funds and identifv related weaknesses in management controls.
3.3.1 The external audit system can be designed to conduct speciIic audits on the Iunctioning
oI the public procurement system. Audit opinions can then be given as to the degree to which the
systems are in compliance with statutory requirements and regulations.


The Public Procurement and Disposal of Property Bill 2010 establishes the post of
Procurement Regulator which functions include the conduct of periodic inspections of the
records and proceedings of the procuring and disposing practices of public bodies and also
to institute audits into specific transactions and awards. It is important to reiterate that
the proposed bill is part of a tri-partite legislative agenda (including the National Audit
Office of Trinidad and Tobago Bill. 2006 and Financial Management and Accountability
Bill) to re-engineer the public financial management system in a holistic and rational
manner.

Concluding Remarks
3.3.2 On its Iace. the new proposed regime meets all the markers Ior the design oI an eIIective
Iramework. This notwithstanding. a Iramework without the appropriate substantive and supporting
provisions can deIeat its purpose entirely and cause more damage than it is worth. Accordingly. we
have sought to examine and assess the speciIic provisions oI the proposed regime herein below.

20

4.1.0 Assessment of Proposed Legislative Provisions

(a) Public Procurement & Disposal of Property Bill 2010
35

4.1.1 This Bill purports to implement the Government policy on procurement contained in the White
Paper and proposes the repeal oI the CTBO by establishing a legal and regulatory system which places all
bodies procuring 'property and services¨ with public money within one overarching Iramework. The Bill
is said to be designed to promote the operation oI the Operating Principles oI Jalue for Monev.
Accountabilitv and Transparencv and the Iollowing Obiectives:

(i) open and eIIective competition;
(ii) ethics and Iair dealing according to the highest standard oI proIessionalism;
(iii) promotion oI national industry in a manner that conIorms with the international obligations oI
Trinidad and Tobago;
(iv) promotion oI Government policy to eIIect sustainable development

4.1.2 The Bill is divided into Iive (5) parts and our comments in respect oI each part are highlighted
below.

Part I - Preliminary

4.1.3 This Part deals with operational matters pertaining to the Bill.

Section 1(2) - commencement provision ought to be revisited since the date has already passed.

Section (2) - deIinition provision -

'agencv` - it should be considered why the concept oI a 'state controlled` enterprise has
been introduced here and not the more Iamiliar terminology oI 'state owned` and/or 'maioritv
owned`. It should be noted that a 'state controlled enterprise` is also deIined later in the same
section introducing in our respectIul view some conIusion since the word 'controlled` is
repeated within the deIinition itselI and not itselI deIined anywhere else in the Bill. It is unclear

35
hereinafter referred to as "the BiII"

21
whether the intent oI the Bill is to include enterprises other than those wholly or maiority owned
by the State. but Irom the deIinition oI a 'state controlled enterprise` it is uncertain whether any
other type oI entity would Iall therein.

'authorized purchaser` - 'means a person referred to in section 10(1) and 10(2). This
introduces a new layer oI complexity into an already established corporate governance
Iramework. The application oI this deIinition and the interpretation oI sections 10(1) and 10(2)
are considered in more detail below.

'procurement` - is deIined as 'the process of acquiring propertv or services
commencing with the identification of the need of the propertv or services and ending with the
performance of the related contract`.

(a) It should be noted that this deIinition does not accord with accepted
deIinitions oI procurement which normally reIer to procurement as 'the process
oI acquiring goods. works and services...¨.
36
Works reIers to construction proiects
and programmes. Whilst it may be contended that 'works` or 'construction
proiects` are a combination oI 'propertv or services`. one wonders at the
attempt to reinvent the wheel here. This is an argument at best. whilst a simple
inclusion oI express reIerence to construction activity or works would suIIice.
The deIinition oI 'services¨ later on. makes reIerence to 'consultancies.
professional services and activities`. One again wonders. at the inclusion oI a
term oI ambiguous meaning such as 'activities`. It should be remembered that
there is a plethora oI cross-commonwealth case law augmenting statutory
Irameworks which speciIically addresses construction contracts and/or 'works¨
and distinguishes same in application Irom the rules applied to other types oI
'services` contracts. By removing the word 'works` or 'construction` Irom the
deIinition the possibility oI iudicial ambiguity in any subsequent litigation arises.

36
According to the UN Model Law on Procurement, construction activity is expressly specified Article 2
"procurement" means the acquisition by any means, including by purchase, rental, lease or hire-
purchase, of goods or of construction, including services incidental to the supply of the goods or to the
construction if the value of those incidental services does not exceed that of the goods or construction
themselves; "Public Procurement ...is understood to mean the act of a public body purchasing or
acquiring goods, works and services from the market place" Peter Trepte, Regulating Procurement,
Oxford University Press 2004; in the CARÌFORUM EC EPA Government Procurement is defined as "any
type of procurement of goods, services or a combination thereof, including works, by procuring entities
listed in Annex VI for governmental purposes" , Article 3 (2) OECD Public Procurement Law 'public
procurement shall mean the provision of goods and services or awarding work assignments by a state
body, organization, institution or some other legal person regarded as a procuring entity pursuant to this
Law, in the manner and under the conditions prescribed by this Law;"

22
(b) Further. the deIinition purports to encapsulate the entire procurement process
but does not use the best practice deIinition oI the cycle which ends not at the
'performance of the contract` but aIter 'assessment of performance`
37
.

(c) OI note. the deIinition oI procurement itselI seems to include every type oI
transaction or process by which material or services are acquired utilizing public
money. II this is the intention oI the legislature then it ought to be noted that
arrangements and transactions which are usually excluded Irom standard
procurement regulation will be covered by this new Iramework. This would
include transactions such as :
(i) the acquisition or rental oI land. existing buildings. or other
immovable property or the rights thereon;
(ii) non-contractual agreements or any Iorm oI assistance provided by
Ioreign states or MLOs including cooperative agreements. grants. loans.
equity inIusions. guarantees. and Iiscal incentives;
(iii) the procurement or acquisition oI Iiscal agency or depositary
services. liquidation and management services Ior regulated Iinancial
institutions. or services related to the sale. redemption and distribution oI
public debt. including loans and government bonds. notes and other
securities;
(iv) public employment contracts;
(v) research and development services;
(vi) intra-governmental procurement;
(vii) procurement relating to national deIence or security interests
The issue here is not whether these types oI transactions should be subiect to
regulation but whether iI regulation is required it should be subiect to standard
procurement regulation. It may be. and has been indicated that these type oI
transactions require specialised regulation. Consideration ought to be given to
any potential overlap and/or ambiguity created in the law by virtue oI existing
rules in real property law. Iinancial regulations. employment and industrial
relations law etc.

Part II - Procurement Framework

4.1.4 This Part establishes the regulatory Iramework which will bind the State. It provides Ior the
mandatory application oI Operating Principles and Obiectives as outlined at para 4.1.1 above.

37
Paul Emanuelli, Government Procurement 2nd Edition, Lexis Nexis 2008 at page 20, The Ten Stages
of the Procurement Cycle

23

Section 4 and 5 purport to make unlawIul non-compliance with the Operating Principles and
Obiectives. However. these principles and obiectives are vague in their nature and capable oI a
plethora oI interpretations. With the exception oI section 5 (c) which states that 'a person who is
partv or seeks to be a partv to a transaction or related negotiation. shall - (c) conform to the Act.
Regulations and Guidelines` the attempt to make mandatory compliance with the general
principles oI value Ior money. accountability and transparency and with the general obiectives oI
eIIiciency. economy and eIIectiveness. ethics and Iair dealing according to the highest standards
oI probity and proIessionalism and promotion oI national industry in a manner that conIorms
with the international obligations etc. is in our view unenIorceable. In our respectIul view
section 5 (c) meets the obiective oI the section.

Section 6 (1) and (2) grants the power to the Procurement Regulator to develop the mandatory
and discretionary guidelines. While there is no obiection in principle to delegating the
responsibility Ior developing the substance oI the Iramework to the oIIice oI the Procurement
Regulator. regulators ought to be cautioned that this is the crux oI the system here and will
require substantial inputs and consideration. II the guidelines are not careIully and appropriately
draIted then the entire system is rendered ineIIective. Passage oI this legislation without an
understanding oI potential substance oI the system is dangerous. It is recommended that to
prevent the establishment oI an 'elephant¨ which does very little Ior years while developing
regulations. Members oI the Committee consider the substance oI the rules in the course oI
the present exercise. prepare draIt guidelines to be submitted to the Procurement Regulator and a
time-Irame be established aIter passage oI the Bill Ior the consideration and re-Iormulation. iI
any. by the Regulator. and submission to the Parliament Ior negative resolution. Alternatively.
the Committee should take the opportunity to regulate some material aspects oI the substance oI
the Iramework Irom the outset by setting the rules and guidelines and empowering the Regulator
to amend. iI necessary. with the ratiIication oI Parliament.

Section 6(3) provides Ior mandatory consultation by the Procurement Regulator with the National
Procurement Advisory Council established in accordance with section 22. Whilst civil society
involvement in the public procurement process is a welcome and progressive step. Care must be
taken in the creation oI bodies with whom mandatory consultation must take place and/or who
have the power to intervene or thwart a public procurement exercise. initiative or development on
the basis oI private agendas. The increased potential Ior conIlicts oI interests in a small society
as well must be careIully considered. Establishing the most appropriate model Ior civil society
involvement is no simple task and as with everything else depends on the cultural realities in a
particular country. Much research and data has begun to be collated to decipher best practice
models Ior civil society involvement and the Committee would do well to avail itselI oI some oI

24
these works
38
. Thought must be given to the intended role oI the civil society involvement. Is it
to act as an internal watchdog oI sorts or to provide technical expertise and support in the
development oI rules. policies and guidelines? This will be considered Iurther below.

Section 8 (1) provides Ior the issuance by the ChieI Executive oI an Agency oI 'an internal
administrative direction for the purpose of expediting a transaction` called 'an Agencv
Instruction`. The purpose oI this section is not readily discernible. especially in light oI the Iact
that the substantive guidelines have not yet been developed. The reIerence 'for the purpose of
expediting a transaction` seems to be contemplating an exemption Irom the standard procedures.
yet section 8 (3) makes it clear that 'an Agencv Instruction that fails to conform with the Act.
Regulations and Guidelines is void`. Further 'for the purposes of expediting a transaction`
without more can pertain to any transaction under the sun regardless oI whether exigent
circumstances apply. This section gives a very wide authority which is open to abuse since
unless the guidelines are tightly draIted. whether or not such an instruction conIorms to the
Operating Principles and Obiectives oI the Act would be open to competing interpretations.

Section 9(1) seems unnecessarily repetitive and redundant in light oI the section 5 (previously
discussed). II section 5 is to be retained. a simple amendment by including the words in italics :
'A person who is a party or seeks to be a party to a transaction or related negotiation or is
performing duties in relation to a transaction for or on behalf of an Agencv shall....¨.
Notwithstanding. the same comment arises as to how much Iurther this provision goes than
merely stating that compliance with the Act. Regulations and Guidelines is mandatory.

Section 9(2) creates concern and bears repetition here. It states '(2) A person referred to in
subsection (1) who takes an action that is inconsistent with the agencv instruction shall make a
written record for the Procurement Regulator of the reasons of the decision for so acting`. The
draIters here seem to be seeking to empower an oIIicer or agent oI the body perIorming duties in
relation to a transaction to act inconsistently with an agency instruction upon provision oI
reasons to the Procurement Regulator. This in our respectIul view. creates a governance
conundrum whereby a subordinate to a ChieI Executive can reIuse to act in accordance with an
agency instruction so long as reasons are provided to the Procurement Regulator. This cannot be
a tenable situation and one can readily see how such a situation without appropriate checks and
balances can be abused. There are no checks and balances on this power oI a subordinate to act
inconsistently with an agency instruction. no timeIrame within which reasons are to be provided
to the Regulator. no timeIrame in which a decision on any inconsistency is to be made by the
Regulator and yet. the subordinate can reIuse to comply with the instruction. It is noted that
compliance with the Act. Regulations and Guidelines is mandatory and that it is expressly
provided in section 8 (3) that an Agency instruction which Iails to so conIorm is void. The

38
referred to more comprehensively below

25
draIters may have been seeking to address a situation where a subordinate had Iormed the view
that an Agency Instruction (AI) is void Ior non-compliance with the Act. Regulations and/or
guidelines. It is our respectIul submission that this certainly is not the way to deal with such a
situation. This approach empowers the subordinate to make the Iirst determination and lawIully
act in accordance with his own determination on the lawIulness oI an Agency Instruction. It is
submitted that a better approach would be to speciIy a procedure by which iI a subordinate Iorms
the view that an AI is void. he Iirst submits reasons Ior his decision to the issuer oI the AI.
copied to the Procurement Regulator. TimeIrames ought to be given Ior action by the issuer.
Iailing which the Procurement Regulator will rule and guide the subordinate. Even so. we
are oI the view that the enabling statute is not the level at which this kind oI detailed rule should
be included and such should be leIt to Iorm part oI the comprehensive guidelines to be prepared
by the Regulator. Alternatively. iI retained. it must be a part oI a more comprehensive set oI
rules established in the enabling legislative Iramework.

Section 10 - Authorized Purchaser - It is respectIully submitted that the imposition oI this
concept oI an authorized purchaser is ill conceived and ought to be revisited. Section 10 (1)
provides that a ChieI Executive is authorised to enter into a transaction and/or negotiate on behalI
oI his agency. This provision seems unnecessary and superIluous since rules oI corporate
governance and the laws oI Trinidad and Tobago already so provide. This is standard corporate
commercial practice Ior companies incorporated under the Companies Act 1995 as amended in
1997. For statutory bodies and authorities such rules are typically speciIied in their enabling
statute. with clear statutory delineations oI actions requiring Ministerial guidance. instruction and
approval. For departments oI Government which are not separate legal entities. the Civil Service
Rules and Regulations. established signing authorities etc would apply. In respect oI sections 10
(2) that a person who enters a transaction or related negotiation without authority so to do or (3)
who wrongly represents himselI as having such authority commits an oIIence; this is covered by
the common law oIIence oI Iraud under the criminal law and the Integrity in Public LiIe Act
2000. Although section 10 (2) seems to create a strict liability oIIence
39
which is more
embracing than Iraud. one wonders what is the public policy behind such a provision. One is
hardly likely innocently to Iall into the error that one has the authority to transact on behalI oI
one`s entity since the rules governing this must be known to one. Section 10 (4) also Iurther
complicates since. in addition to the statutory rules. there are already established common law
rules with respect to the capacity oI persons having 'ostensible authority¨ to contract on behalI oI
his/her entity. binding third parties even iI the person in Iact was acting without lawIul
authority
40
. As the law stands there are certain categories oI persons which the law will hold
as having the ostensible authority to contract regardless oI the internal rules including directors

39
i.e. does not require proof of knowledge of the lack of authority
40
Royal British Bank v Turquand (1856) 6 E&B 327, and the eponymous "Rule in Turquand's Case" refer
to the rule of English law that a third party dealing with a company is entitled to presume that a person
held out by the company has the necessary authority to act on behalf of the company.

26
and CEO`s. These proposed provisions will create a new level oI complexity in governance and
in our respectIul view are unnecessary.

Section 11 For the same reasons outlined in respect oI section 10 above. this provision will serve
to cause conIusion with respect to the established rules on ostensible authority and unIairly create
too onerous a burden on suppliers and contractors to ascertain whether a person holding
themselves out to have authority to contract and appearing to have ostensible authority so to do.
actually does. II the purport oI the section is to capture and punish collusive acts by suppliers
and contractors there are criminal laws already in existence which cover this and accordingly it
seems inappropriate surely to reverse established iurisprudence on rules oI ostensible authority
Ior this reason.

Sections 12 -16 dealing with the establishment oI a Complaints/Review system will be dealt with
under the Iollowing part when considering the post oI the OIIice oI the Procurement Regulator.

Part III - The Procurement Regulator

4.1.5 The establishment oI the position oI Procurement Regulator and the OIIice oI the Procurement
Regulator is a welcome one and critical to an eIIective public procurement system. However. great care
must be taken in establishing the post with appropriate checks and balances in place. It is submitted that a
comparison ought to be made between the role. Iunctions. powers. obligations and tenure oI similar
positions in other iurisdictions
41
. The Iollowing are some comments on the post as presently proposed in
the Bill.

Appointment & Tenure

4.1.6 Section 17 (1) provides that the Procurement Regulator shall be an oIIicer oI Parliament.
appointed by the President in the exercise oI his own discretion aIter consultation with the Prime Minister
and Leader oI the Opposition on terms and conditions to be approved by the President. It is respectIully
submitted that in the creation oI a statutory post oI this nature with the expansive powers suggested in the
Bill. it would be bordering on irresponsibility and the inIringement oI the very rules oI transparency the
Bill is supposed to uphold. to not have the qualiIications required and the tenure oI appointee statutorily
determined. In respect oI the qualiIications. given the highly specialized and technical nature oI the
position. some level oI proIessional experience ought to be speciIied. In respect oI the tenure. the
circumstances and procedures by which the Regulator can be removed or other circumstances Ior

41
A comparison of the positions of Procurement Ombudsman, Canada; the Contractor General in
Jamaica and the proposed Office of the Procurement Regulator, can be prepared and forwarded to the
Committee in an subsequent Annex, if deemed useful.

27
termination ought to be speciIied. Whilst. salaries and emoluments and other ancillary matters can be
determined by a Committee or the secretariat oI the President. at the very least these two critical areas
(qualiIications and tenure) ought to be dealt with at this stage.

4.1.7 Section 17 (2) provides that the Regulator shall be appointed on a Iive (5) year contract and is
eligible Ior 're-appointment` Ior two consecutive terms. This would mean that the Regulator can in
potentiality serve approximately IiIteen (15) consecutive years. It may be that this is an unintentional
consequence oI the wording oI the section rather the deliberate intention oI the draIter. The inherent risks
oI entrenched bureaucratic relationships and/or other vested interests and lack oI innovation which such a
situation could spawn are apparent. It is recommended that the appointee be eligible Ior only one
consecutive term.

Functions

4.1.8 Section 18 outlines very expansive Iunctions oI the Regulator. The Iunctions include in
summary. the development oI all the procurement rules policies. guidelines
42
. handbooks. standardized
bidding documents. procedural Iorms etc. the harmonization oI policies. systems and practices oI all
agencies utilizing public Iunds. annual review oI procurement opportunities with a view to streamlining
and centralizing processes. the establishment oI comprehensive databases with inIormation on
procurement processes. contract awards and prices and any other inIormation oI public interest. the
development and maintenance oI related system wide databases and Iostering improvements in the use oI
technology. the maintenance oI a register oI suppliers. adopt. adapt and update common speciIication
standards. promote public understanding oI procurement and related processes. set training standards.
competence levels and certiIication requirements and proIessional development paths Ior procurement
practitioners. conduct procurement audits and inspections. investigate complaints. develop policies and
maintain an operational plan on capacity building. establish and maintain institutional linkages with other
entities and proIessional bodies. undertake research and surveys. report to Parliament and undertake any
activity which may be necessary Ior the execution oI the Iunctions oI Procurement Regulator.

4.1.9 It would seem that the draIters oI these Iunctions intended to create a sort oI 'procurement God¨
who would hold every overarching responsibility within the public procurement Iunction. except
undertake the procurement itselI. Whilst this may be a laudable intention. this will be a herculean task
and may introduce potential conIlicts oI interest which must not be underestimated. It must be
remembered that this Bill proposes the repeal oI the CTBO. There is no transitional period contemplated
or reIorm oI the CTBO while developing capacity in other areas. It is expected that the Bill will be
passed. the CTBO repealed and this Procurement Regulator established perIorming these Iunctions. It is

42
Section 6 outlines comprehensively the kinds of matters which could be contained in the guidelines
determination of Value for Money, general rules relating to procurement, public consultation on major
contracts etc.

28
submitted that this is unrealistic and several oI these Iunctions will require the commitment oI signiIicant
human. Iinancial and physical resources to implement eIIectively. Whilst this is being addressed. the
current challenges in the procurement system could be worsened instead oI being made better.

4.2.0 Issues oI potential conIlict oI interest ought as well to be considered. As the Procurement
Regulator has both the responsibility Ior developing the rules and policies and guidelines with some
degree oI speciIicity (eg. inclusive oI handbooks. standardized documents and Iorms) in addition to the
purview to deal with complaints relating to transactions. one can anticipate a situation where the
Regulator is called upon to investigate issues relating to the Iairness or lack thereoI oI procedures
developed by his OIIice. Also in the maintenance oI the Register oI Suppliers which will necessarily
include the role oI pre-qualiIying suppliers to be included in the register. one can again anticipate a
situation where a disgruntled supplier may make a complaint about the system oI or procedure Ior
registration; but this complaint will be handled by the OIIice oI the Procurement Regulator itselI.

4.2.1 The scope oI this post Iar exceeds that oI the Procurement Ombudsman in Canada
43
Ior example
whose Iunctions are (a) to review the procurement practices oI departments. to assess their Iairness.
openness and transparency and make any appropriate recommendations to the relevant department Ior the
improvement oI those practices; (b) to review complaints relating to contract awards and decisions during
the contract administration phases and to ensure an eIIective alternative dispute resolution process is
provided to parties who agree to be subiect to same
44
. Noteworthy. is that this position still Ialls under
the purview oI the executive under the portIolio oI the Ministry oI Works which submits its annual
reports to the Minister who is then statutorily enioined to lay said report beIore parliament within IiIteen
(15) days oI receipt. Further the Procurement Ombudsman is statutorily prevented Irom recommending
that a contract award be cancelled.

4.2.2 The Contractor General`s OIIice in Jamaica also has a much more limited Iunction than our
proposed Procurement Regulator but is Iar more empowered than the Procurement Ombudsman oI
Canada
45
. The Contractor General`s OIIice is established as a Commission oI Parliament and reports
thereto. Its Iunctions include a two Iold role (a) to monitor the award and the implementation oI
government contracts with a view to ensuring that. (i) such contracts are awarded impartially and on
merit; (ii) the circumstances in which each contract is awarded or. as the case may be. terminated. do not
involve impropriety or irregularity; and (iii) without preiudice to the Iunctions oI any public body in
relation to any contract. the implementation oI each such contract conIorms to the terms thereoI; and (b)

43
This post was recently established in 2007 under the new public sector finance and procurement
reforms. For insight directly from the first Procurement Ombudsman appointed under the new system,
Mr. Shahid Minto see Paper presented at the 2nd Caribbean Public Procurement Conference (CPPC)
2010 11-12 October, at Hyatt Regency Trinidad entitled The Role of the Procurement
Ombudsman: Another Cop on the Beat or a new Frontier in Procurement Oversight? hereto attached and
marked ANNEX 3.
44
Department of Public Works and Government Services Act (1996, c. 16)
45
See Contractor General Act (Acts 15 of 1983 | 17 of 1985 | 1 of 1999)

29
to monitor the grant. issue. suspension or revocation oI any prescribed licence. with a view to ensuring
that the circumstances oI such grant. issue. suspension or revocation do not involve impropriety or
irregularity and. where appropriate. to examine whether such licence is used in accordance with the terms
and conditions thereoI. Noteworthy. is that the tenure oI the Contractor General is careIully provided Ior
in the enabling statute including circumstances Ior removal and termination.

4.2.3 Some duplication exists in the description oI the Iunctions as well and thereIore some
streamlining and/or coalescing is required.
46
Also there seems to be a grammatical irregularity in section
18 (k).

Part IV - National Procurement Advisory Council

4.2.4 The establishment oI a National Procurement Advisory Council (NPAC) seems to be aimed at
mandatory civil society involvement in the public procurement process. This is not a simple issue and
requires a careIul balancing oI the executive`s power to make policy decisions in the public interest and
the concern oI citizens to be involved in that decision making process. It thereIore strikes at the heart oI
the issue oI democratization oI the public procurement Iunction and any administration contemplating
such reIorm must be mindIul oI the ramiIications. opportunities and pitIalls. Whilst it is laudable and
appropriate to seek to have greater stakeholder involvement in the public procurement process. it is
important that the executive is allowed to pursue its development agenda Ior the country.

4.2.5 The NPAC as presently conceived in the Bill has been given substantial interIace and power to
inIluence the public procurement process. This must be considered alongside the expansive powers
already reIerred to above and speciIically the powers oI the Regulator deIined in section 6 to provide
Guidelines Ior the determination oI Value Ior Money.
47
public consultation on maior contracts.
48
the
consideration oI government policies on public procurement.
49
and an independent review process
involving civil society at critical points oI the public procurement process.
50
There can be observed a
heavy bent toward greater civil society involvement in the public procurement process oI which the
present administration must be mindIul.

4.2.6 It is recommended that proper research is undertaken on the many emerging models Ior civil
society involvement in the public procurement process and our present proposed system benchmarked
against them. In 2007 the OECD and the World Bank undertook a ioint stocktaking exercise oI social
accountability (SA) initiatives in OECD member countries. The stocktaking exercise produced Iorty (40)
templates detailing social accountability initiatives in twenty-seven (27) OECD countries and the

46
eg 18 (d), (e) and (l) can be collated;
47
section 6(2) (a),
48
section 6(2) (b),
49
section 6(2) (e)
50
section 6(2)(f) - there appears to be grammatical irregularity in this sub-section

30
European Commission. Cases were selected on the basis oI their Iocus and level. and potential
transIerability oI their policy lessons and contribution to the global exchange oI policy relevant
knowledge.
51

4.2.7 Below we have outlined some oI our observations on the proposed model Ior CSO involvement.

Appointment of Aominating Organizations vs Appointment of Individuals

4.2.8 Section 22 outlines a process whereby the President in his own discretion will appoint seven (7)
nominating organizations
52
with an ex oIIicio member Irom the Ministry oI Finance Ior a period oI three
(3) years. These nominating organizations can then appoint whomsoever oI their membership they choose
to serve on the NPAC. The nominating organization can also replace its nominee merely by giving notice
to the President and the Procurement Regulator
53
.

4.2.9 Firstly. it is suggested that in a society as small as Trinidad and Tobago there are Iew competing
organizations Ior these seven (7) positions and one can readily envisage a Iuture where the same
organizations are represented every three (3) years. with the same vested interests. Secondly. iI a citizen
with appropriate experience. skill and expertise were not aligned to one oI these organizations or. even iI
so aligned. marginalized Irom the leadership Ior whatever reason. he/she will not have an opportunity to
contribute to the development oI the public procurement process. Thirdly. iI Ior some reason the
nominating organization is not happy with the conduct oI the representative on the Council he can be
unilaterally removed by mere notice to the President and the Procurement Regulator. This means that
these representatives are at the behest oI their organizations and not their proIessional codes oI conduct or
ethical standards. This seems inimical to the obiective oI greater civil society involvement and the
democratization oI public procurement Iunction. It is recommended that in order to balance the
membership oI this Council. that consideration be given to the President appointing individuals directly
aIter being satisIied oI their experience. skill. expertise and standard oI ethics. in addition to the proposed
system oI having members appointed by approved nominating organizations. Further that (a) the criteria
by which the President exercises his discretion with respect to appointing individuals and nominating
organizations be speciIied in the legislation and (b) the President retain the right to veto the nominee oI a
nominating organization on grounds speciIied in the legislation which should include its record oI
proIessional and ethical conduct.

Functions

51
The results of the study and report are hereto attached as ANNEX 4.
52
three NGOs having an interest in good governance, three organizations representing the construction,
manufacturing and retail sectors and one representing the financial institutions
53
Schedule - Operation of the National Procurement Advisory Council, Tenure of Office section 1(2)

31
4.3.0 Section 23 outlines the Iunctions oI the NPAC which include advising the Procurement Regulator
on the implementation oI the Operating Principles and Obiectives and making recommendations in the
development oI the Guidelines so as to ensure that the Guidelines conIorm to the Operating Principles and
Obiectives. Noteworthy. is that these Guidelines represent the substance oI the new Iramework. Caution
is again advised against the passage oI this Bill without the establishment or development oI these
Guidelines. To do otherwise would mean that the Executive would be setting a skeleton system in place
over which their control will be limited in terms oI the substance oI the Iramework to which they and
their public oIIicials and agents will be bound. The Bill contemplates the substance oI the Iramework
being designed by the Procurement Regulator with the assistance oI the NPAC.

Part V - Miscellaneous

4.3.1 Section 26 provides that all records or documents in relation to a transaction are to be available to
a member oI the public on request. There is no consideration here given to how this will operate in
relation to the exemptions provided Ior under the Freedom oI InIormation Act 1999 as amended. It is
suggested that the section read 'Subiect to the provisions oI the Freedom oI InIormation Act all records or
documents...¨.

4.3.2 Section 28 provides Ior relieI under the Judicial Review Act. 2000 to apply. This provision is
redundant and adds nothing to the state oI the law. Once the Bill is passed and the post oI Procurement
Regulator is established. the courts by virtue oI the Judicial Review Act would have purview over
decisions made since they are made under a statutory power. For this not to be the case. the Bill would
have to expressly so provide. It is recommended that this section be removed.

4.3.3 Section 30 provides Ior the protection oI whistleblowers and this is a critical component oI any
eIIective public procurement system and consistent with our international treaty obligations. Retention oI
this section is recommended.

4.3.4 Section 31 provides Ior the entrenchment oI the provisions oI the Bill requiring no less than a
two/thirds maiority Ior amendment. This provision ought only to be retained iI the role. Iunctions and
powers oI the Regulator and NPAC and the substance oI the Iramework to Iorm part oI the Guidelines is
careIully considered and reIined.

(b) National Tenders Board Bill 1997

4.3.5 A quick perusal oI the National Tenders Board Bill 1997 reveals that the provisions are
inconsistent with the provisions oI the Public Procurement and Disposal oI Property Bill 2010. There is
also considerable overlap and it is assumed that this Bill is at present not being Iormally considered. II

32
this assumption is incorrect we are prepared to provide comprehensive submissions on the eIIectiveness
oI the provisions in a subsequent paper.

5.1.0 Impact of External Influences

5.1.1 Over the last quarter century a global revolution has taken place in the perception oI the Iunction
oI procurement within the context oI public and private sector business. Across the board. more and
more. the highly strategic impact oI procurement decision-making on the sustainable development and
growth oI organisations. countries and regional trading blocks is being appreciated. The impetus Ior the
advancement oI public procurement reIorm initiatives in developing states is escalating as trade
liberalisation is exhorted as a universal good. Public Procurement reIormative eIIorts within CARICOM
member states are presently plagued by tensions between the varied and oIten competing obiectives oI the
political desire to retain 'policy space¨ in order to pursue socio-economic development obiectives and
the demands oI trade liberalization and accountable governance.

CARIFORUM - EC - Economic Partnership Agreement (EPA)

5.1.2 Although public procurement has traditionally been viewed as a 'behind the border¨ issue. this
approach is Iast becoming a thing oI the past. Increasingly. international treaties and conventions and Bi-
lateral Investment Treaties (BITs) are imposing conditions relating to public procurement with which the
member state must contend. Trinidad and Tobago has not signed onto the most widespread international
agreement on public procurement. the World Trade Organization (WTO) Government Procurement
Agreement (GPA)
54
but has nonetheless signed onto the CARIFORUM - EC EPA
55
which is said to have

54
as is consistent with the approach taken by most developing countries. Currently forty (40) WTO
Members are covered by the WTO Agreement on Government Procurement. These comprise Canada,
the European Community (27 member states), Hong Kong, China, Ìceland, Ìsrael, Japan, Korea
Liechtenstein, the Netherlands including Aruba, Norway, Singapore, Switzerland and the United States.
Twenty (20) other WTO Members have observer status under the Agreement: Albania, Argentina,
Australia, Cameroon, Chile, China, Columbia, Croatia, Georgia, Jordon, the Kyrgyz Republic, Moldova,
Mongolia, Oman, Panama, Saudi Arabia, Sri Lanka, Chinese Taipei and Turkey. Four intergovernmental
organisations also have GPA observer status: the Ìnternational Monetary Fund (ÌMF), the Organization for
Economic Co-operation and Development (OECD), the United Nations Conference on Trade and

33
WTO-plus conditions and is historic. in that it is the Iirst multi-lateral agreement between the developed
and the developing world 'so-called¨ which contains public procurement conditions. This was signed by
CARICOM member states notwithstanding the Iact that there is yet to be established a regional
Iramework Ior public procurement. Accordingly. at a regional level. the opportunity to drive the
CARIFORUM EC EPA negotiations upon a Ioundation oI an established regional Iramework. was lost.

5.1.3 As it now stands. undertaking a domestic public procurement reIorm initiative without reIerence
to our treaty obligations under the CARIFORUM EC EPA would be shortsighted. The CARIFORUM-
EC EPA public procurement conditions are covered under Chapter 3 oI Title IV which deals with Trade
Related Issues
56
.

5.1.4 It is suggested by CARICOM negotiators that the EPA does not provide Ior non-discrimination
and national treatment Ior Ioreign based companies. however a careIul perusal oI the provisions reIlect
that it does provide Ior non discrimination and national treatment Ior Ioreign companies operating
through a locally incorporated subsidiary
57
. Notably. covered entities are limited to Central Governmental
Authorities and the thresholds agreed are stated by the CRNM negotiators to be very high in order to
reserve 'policy space¨ Ior development obiectives.

5.1.5 It is important that the Committee consider the Chapter 3 conditions careIully. not only with a
view to ensuring alignment oI domestic provisions to treaty obligations but also with a view to proposing
amendments to the EPA in the Iuture. OI signiIicance. under Article 181 there is a mandatory review
process oI the said Chapter 3 to be undertaken every three (3) years. The EPA was signed by Trinidad
and Tobago on 15th October 2008 and so this period will expire in October 2011. The present
administration should be proactive and establish Iirm and researched policy positions on all issues relating
to this Chapter so as to propose any amendments as it sees Iit.

Draft Framework for Regional Integration of Public Procurement Policy (FRIP)

Development (UNCTAD) and the Ìnternational Trade Centre (ÌTC). At present, there are eight (8) WTO
Members which are in the process of acceding to the GPA: Albania, Georgia, Jordon, the Kyrgyz
Republic, Moldova, Oman, Panama and Chinese Taipei. Notably, no CARÌCOM or CARÌFORUM territory
has acceded to the WTO-GPA.
55
The negotiation and initialling of the CARÌFORUM-EC EPA on December 16
th
2007 is the single most
significant regional development in public procurement policy and is the next page in the complicated
relationship between the European Community and its former colonies. The EPA was finally executed by
the CARÌFORUM countries on 15
th
October 2008.
56
The full text of the Public Procurement Chapter is attached below in ANNEX 5.
57
see Article 167 which expressly states there shall be no discrimination against locally established
foreign companies and also Article 172 which limits the use of qualifying criteria relating to work
experience in the jurisdiction

34
5.1.6 National reIorm eIIorts must be considered in the context oI regional reIorm initiatives which are
currently underway to harmonize regional public procurement policy. The Revised Treaty oI
Chaguaramas provides the iustiIication Ior the establishment and implementation oI a regional Public
Procurement Regime. Article 239 oI the Revised Treaty obliges Member States to 'elaborate a Protocol
relating .to. Government Procurement`.

5.1.7 To date. the Community has undertaken and concluded a signiIicant volume oI work regarding
the establishment oI a Community Regime Ior Public Procurement
58
. The CARICOM Secretariat has
been actively engaged in Iollow up communications with Member States in pursuit oI concluding the
national consultations that are required as a key input into the Iinalisation oI the Policy Iramework and
movement towards the Protocol.
5.1.8 Notably. the proposed Community Policy. now entitled the Framework for Regional Integration
of Public Procurement Policv (FRIP) which is presently at third draIt stage. is expressed to be based in
large part on the UNCITRAL Model Law on Procurement oI Goods. Construction and Services. This is
important since the White Paper 2005 criticises this model as being highly prescriptive and proposes a
more Ilexible 'principles based¨ approach to procurement reIorm which Iorms the substance oI the
present Bill. Given that the Bill proposes a skeletal Iramework based on compliance with Principles and
Obiectives. there is no substantive inconsistency between this enabling statutory reIorm and that being
undertaken at the regional level. However. in the establishment oI Guidelines under the proposed
legislation. care will need to be taken to ensure alignment with emerging regional standards.

CANADA - CARICOM Free Trade Agreement (FTA)

5.1.9 Note should also be taken oI the ongoing Canada-Caribbean Community (CARICOM) Free
Trade Negotiations. During late 2009 into 2010 two rounds oI negotiations were held and negotiators are
said to be working assiduously to conclude an FTA shortly. It is indicated that once again public
procurement conditions are on the table to be included in the FTA. This domestic reIorm initiative must
be mindIul oI this ongoing development. in an attempt not only to inIluence the Iinal obligations oI the
FTA but also to ensure no unnecessary Iriction between the two.

58
See ANNEX 6 for findings of the of the ÌDB/CÌDA funded project on the status of national public
procurement systems within CARÌCOM

35

6.1.0 Recommendations & Conclusions

6.1.1 It is clear that there are areas in need oI Iurther consideration in the present domestic reIorm
eIIort. These issues ought not to be brushed aside in the name oI expediency and/or the dire need Ior
public procurement reIorm. The eIIective regulation and management oI the public procurement Iunction
is arguably the most critical in public sector governance. Moreover. in light oI the increasing external
pressures to adopt 'international standards¨ and 'best practice¨ so called. the GoRTT must be careIul not
to cede its sovereign power over this Iunction by implementing a system oI boiler plate provisions which
serve the interests oI the international community Iar more than the domestic good.

6.1.2 The Iollowing are a series oI recommendations based on observations oI possible weaknesses and
gaps in the proposed new public procurement regime.

(1) Recommendations relating to perceived Regulatorv Caps

6.1.3 The Bill in its present Iorm proposes the establishment oI a skeletal Iramework upon the passage
oI the legislation. The task oI developing the substantive Iramework is delegated to the newly established
oIIices oI Procurement Regulator and the National Procurement Advisory Council. We reiterate. Ior all
the reasons advanced above. that there are inherent dangers in this approach and it is diIIicult to assess
whether or not the new proposed regime will produce the eIIicient. transparent. accountable system
required in the absence oI the substantive provisions to be included in the proposed Guidelines being part
oI the package.

36
6.1.4 Further. in light oI the pressures oI the global harmonization initiatives. the present
administration should take great care in delegating important policy Iraming opportunities. The Iollowing
areas in particular are highlighted Ior inclusion in the enabling statute and/or at the very least serious
consideration by the present administration in order to develop public policy positions :

(a) Establishment of thresholds - It is noted that the Bill is silent on the issue oI Iinancial
and market access thresholds. It is well accepted that organizations and countries can set
thresholds below which statutory provisions would not apply Ior eIIiciency and/or market
access reasons. This in eIIect would mean that the provisions oI the Bill would apply to
all procurement. whether it is the acquisition oI two pens or a concession Ior
development oI railway. It may have been considered. although this is not expressly
addressed in the Bill
.
that such a threshold would be set by the Procurement Regulator.
aIter consultation with the NPAC and issued in the Guidelines. However. in the present
global environment. existing domestic thresholds are playing an increasingly important
role in the negotiation oI market access thresholds Ior multi-lateral and bi-lateral
agreements and can be a powerIul instrument in these exercises. The actual threshold
established is becoming almost as political a decision as it is an economic one. Care
must be taken by the present administration in the establishment oI thresholds. which re-
emphasizes the point that the policy dialogue on these issues must be developed now and
serve as a driver in the establishment oI the Guidelines and not the other way around.

(b) Establishment of Preference Margins - It is noted that the power to establish guidelines
on preIerence margins has been delegated to the Procurement Regulator. As above. the
establishment oI preIerence margins. even when transparently determined and
implemented. has become an alarmingly controversial and political issue. These margins
establish the extent to which SMEs or local industry or any other sector or category oI
individuals can gain preIerence within the public procurement system. The establishment
oI these margins which can be done by sector. organisation or across the board is one in
which the executive should determine whether or not it ought to have some measure oI
control or inIluence. Even iI the power to set the preIerence margin is delegated to the
Procurement Regulator and or the respective procurement entities. a policy statement as
to the lawIulness oI any such margin set or the parameters within which they may be set.
may be required at the level oI the enabling statute iI the Executive wishes to have
inIluence on this important issue. This is another reason why the Guidelines should be
Ileshed out at this stage to prevent the passage oI legislation which cannot be
implemented as a result oI disagreement/standoII between that which is proposed by the
Regulator on the one hand and Parliament on the other. when presented Ior ratiIication. It
is reiterated that care must be taken by the present administration in the establishment oI
preIerence margins. which re-emphasizes the point that the policy dialogue on these

37
issues must be developed now and serve as a driver in the establishment oI the Guidelines
and not the other way around.

(c) Establishment of a Central Electronic Public Information System - It is noted that the
Bill is silent on the establishment oI a Central Electronic Public InIormation System.
Despite empowering the Procurement Regulator to develop Guidelines relating to the
publication oI details in respect oI a transaction
59
; to establish a comprehensive database
with inIormation on procurement processes. contract awards and prices and any other
inIormation oI public interest as the Procurement Regulator determines
60
; and to
determine. develop. introduce. maintain and update related system-wide databases and
technology
61
. there is no express provision requiring the establishment oI a Central
Electronic Public InIormation System. Whilst it is not here argued that it is not within
the proposed statutory purview oI the Procurement Regulator to so establish. it is not
expressly statutorily mandated. The Procurement Regulator can act consistently with the
mandatory provisions highlighted here and quite lawIully not establish an on-line system
which provides all the material inIormation to the public. Given that this is a critical
component oI an eIIective public procurement system. it is suggested that this is
expressly mandated in the enabling statute. in addition to providing Ior the nature oI the
inIormation required to be disseminated and timeIrames Ior publication. It should also be
noted that the creation oI an on-line Iacility Ior access to public procurement inIormation
and opportunities is an express condition oI the CARIFORUM-EC EPA
62
.

(d) Regulating Public Private Partnerships (PPPs) and Private Finance Initiatives
(PFIs)
63
- Public Private Partnerships are not a new model. Collaboration between the
public and private sectors in the delivery oI large inIrastructure development proiects and
services has been with us in a variety oI Iorms Ior well over 200 years. More recently.
however. in both 'developed¨ and developing countries there has been a marked increase
in the use oI these types oI models. Although seen by some as a means oI delivering
greater eIIiciency. they are regarded by many primarily as a means oI limiting public
sector borrowing. Recent reports suggest that the true liIe time costs oI PPP structured
proiects may be excessive.
64
Their proponents argue that PPPs oIIer solutions to
government borrowing and expenditure constraints. and value Ior money beneIits by the
transIerring oI risks and costs to the private sector. However the ability to achieve such

59
section 6 (1) (b)
60
section 18 (2) (d)
61
section 18 (2) (e)
62
see Article 168
63
For PPP and PFÌ definitions and classifications see ADB, Public Private Partnership (PPP) Handbood
2008 http://www.adb.org/Documents/Handbooks/Public-private-Partnership/default.asp
64
See eg www.teIegraph.co.uk/Private-Finance-Ìnitiative-hospitals-will-bring-taxpayers-60-years-
of-pain.html

38
advantages depends heavily on whether the right PPP contractor has been procured and
whether suitable and reasonable terms can be agreed which provide a Iair balance oI
incentives Ior the private sector in exchange Ior the delivery oI service improvements and
eIIiciency gains. It should be noted that a PPP Iramework comprising policy. legal.
regulatory and institutional aspects is a key building block Ior countries engaging in these
models. In addition. an eIIective contract management and monitoring Iramework and
tools need to be developed in order to ensure that a credible perIormance evaluation
process exists. public policy obiectives are being met and the PPP proiect does indeed
provide value Ior money Ior the Government. There should also be transparent
mechanisms in place Ior the allocation. valuation and management oI contingent
liabilities that may arise Irom PPP arrangements. The Iact that most PPP contracts run Ior
around twenty-Iive (25) or thirty (30) years distinguishes them Irom most other Iorms oI
public procurement. It is thus inappropriate to include such a specialised regulatory
Iramework within the context oI the present proposed legislation as may now be caught
within the expansive deIinition oI procurement in the Bill. It is recommended that an
independent institutional Iramework including a specialised PPP Unit be established with
its speciIic regulatory mandate Ior this type oI procurement model. Work must also be
done to build critical capacity in the area oI PPP management. It should be noted that
UNCITRAL distinguishes this area Irom the Model Law on procurement by having
established the UNCITRAL Legislative Guide on Privately Financed InIrastructure
Proiects 2001
65
.

(2) Recommendations relating to perceived weaknesses and ambiguities in proposed
framework

(a) Definitions - ReIerence is here made to the observations at paragraphs 4.1.3 - 4.1.4
with particular reIerence to 'agency¨. 'authorized purchaser¨. 'procurement¨. and
'state controlled enterprise¨. Some oI these deIinitions ought to be revisited in order
to avoid ambiguity.

(b) Checks and Balances on the Post of Procurement Regulator - ReIerence is here
made to the observations at paragraphs 4.1.5 - 4.2.3. Consideration ought to be given
to the nature oI the qualiIications required. the process oI appointment. process Ior
termination and tenure oI the post. Removal oI the 're` in the word 're-
appointment` in section 17(2) oI the Bill is recommended to prevent the consequence

65
UNCÌTRAL Legislative Guide on Privately Financed Ìnfrastructure Projects version 2001 was
considered to be prepared in 1996 in the light of a note by the Secretariat on Build- Operate- Transfer
(BOT) project in order to assist in the establishment of a legislative framework favorable to privately
financed infrastructure projects. This Legislative Guide was adopted by the resolution of UNCÌTRAL on 7
July 2000 subject to editorial modification of the Secretariat of BOT Project.

39
an individual holding the post oI Procurement Regulator Ior as long as IiIteen (15)
years.

(c) Civil Society Involvement : APAC - ReIerence is here made to the observations at
paragraphs 4.2.4 - 4.3.0. More consideration ought to be given to the purpose oI such
a model Ior civil society involvement and whether in its present Iorm it strikes the
appropriate balance between goals oI eIIiciency (the need Ior the executive to achieve
its development agenda) and accountability (the need Ior transparency and
stakeholder involvement in the Iunction). It is suggested that one can achieve the goal
oI greater eIIiciency and having the beneIit oI stakeholder involvement without the
establishment oI an autonomous civil society council over which the Executive has
limited control. We are unaware oI any model oI the type proposed in other
iurisdictions. Models observed in New Zealand. US and Canada all involve
consultative bodies set up with civil society representation. but with a reporting line
to a Ministry oI Government.

(d) Establishment of Procurement Units (PUs) - It is noted that the Bill proposed a
decentralized public procurement system where the individual public entities have
responsibility Ior their procurement Iunction. Two recommendations are made here.
Firstly. consideration should be given to the creation oI a hybrid system comprising
both centralized and decentralized elements. The Iormer to be utilized Ior standard
goods and services being procured across the entire public sector. eg. stationary. etc
Irom which the state could beneIit greatly Irom discounts arising Irom supplier
economies oI scale and savings Irom use oI eCommerce and eAuction technologies.
There should be established a centralized public procurement unit which would have
responsibility Ior ascertaining the needs oI public entities and receiving requests and
conducting the procurement on behalI oI the public entities. Consideration should be
given as to whether or not the CTB could be retained to IulIill such a role in the new
system. Secondly. consideration should be given to the establishment oI Procurement
Units (PUs) within each public procuring entity. Within the PU Iormal positions
should be established whereby the Iunctions oI procurement. legal. risk. Iinance and
proiect management are aligned and interact with their counterpart in the wider
organisation. This approach is consistent with the cross-disciplinary approach to the
procurement Iunction advocated by our Institute and accepted as best practice. This
will serve to encourage greater specialization and proIile Ior procurement
proIessionals. The head oI the PU should be appropriately qualiIied and report
directly to the CEO. The PU should be responsible Ior the collation oI procurement
inIormation and statistics. dissemination oI opportunities to the public. compliance
with domestic and regional procurement regulatory requirements and annual

40
procurement planning and reporting. It is noted that although the system proposed in
the Bill is a decentralized one. these responsibilities remain with the Procurement
Regulator. In our respectIul view this will neither create the most eIIicient system
nor one which will serve the ends oI quickly identiIying non-compliant institutions.
that is to say. accountability.

(e) Establishment of CPPU and Retention of CTB - It is suggested that consideration
be given to the retention oI the present CTB albeit under a diIIerent mandate. The
human resource and inIrastructure oI the CTB can be utilized Iar more eIIiciently to
continue undertaking the procurement oI standard goods and services which are
common throughout the public sector and also be responsible Ior running eAuctions
Ior the entire public sector. At present there exists an eAuction Task Force which
operates under the auspices oI the Ministry oI Finance already perIorming such
auctions Ior several public sector entities simultaneously with reports oI savings oI
over 25° or more on the goods and services acquired. Such a unit can be absorbed
into a Centralized Public Procuring Unit (CPPU) utilizing the resources oI the old
CTB and can contribute to much greater eIIiciency than in a completely decentralized
system. This new CPPU can also be made responsible Ior the collation oI
procurement inIormation and statistics; dissemination oI opportunities to the public.
compliance with domestic and regional procurement regulatory systems and annual
procurement planning and reporting. The CPPU and the PUs. as proposed in (d) can
then be responsible Ior reporting to a Procurement Regulator on a quarterly. biannual
or annual basis.

(f) Procurement Planning - An eIIicient public procurement Iramework must have a
robust approach to procurement planning. Gone are the days when the perennial
excuse oI 'its an emergency¨ will hold. when the evidence suggests that proper
planning would have averted the situation. Best practice requires the preparation and
publication oI annual procurement plans and then an annual report on whether or not
the plans were in Iact successIully carried out with subsequent updates and progress.
Such a mandatory requirement Iorces procuring units to invest in more eIIicient
organizational approaches Ior the carrying out oI the procurement Iunction.

(g) Potential FOIA overlap - ReIerence is made to paragraph 4.3.1.

(h) Whistleblower Protection - ReIerence is made to paragraph 4.3.3. This protection
should remain. However. care should be taken in the draIting to protect against 'bad

41
whistleblowing¨
66
i.e. the unwitting empowerment oI a disgruntled or unsuccessIul
corrupt actor against a blameless public oIIicer or bidder.

(3) Recommendations relating to proposed substantive Guidelines

(a) UN Model Law - In 1994. the United Nations Commission on International Trade
Law (UNCITRAL) adopted the UNCITRAL Model Law on Procurement oI
Goods. Construction and Services at its twenty-seventh session. The Model law
oIIers a potential regulatory Iramework Ior all procurement and its provisions deal
with scope (Articles 1-3). qualiIications (Articles 6-8). speciIications (Article 16).
procurement methods and their operation (Articles 18-51) and review (Article 52-
57)
67
. It should be noted that the FRIP is said to be based in large part on the Model
Law. while the White Paper 2005 criticizes the Model Law Ior being too
prescriptive and merely 'a more sophisticated version oI the CTBO¨. OI Iurther
note. the Model Law covers only the process oI acquiring a supplier or service
provider and does not deal with the pre-acquisition stage including planning.
Ieasibility and budgeting or the post-award phase including contract administration
and implementation. Both oI these phases are signiIicant since compromises or
weaknesses therein contribute to severely undermining the obiectives oI
transparency. accountability and value Ior money in the procurement process.
Further limitations oI the UNCITRAL Model Law are that it does not yet expressly
provide Ior some oI the more recent methodologies being employed in the Iunction
oI procurement e.g. electronic reverse auctions. supplier lists. and Iramework
agreements
68
. Despite these express limitations oI the Model Law there is much to
recommend it as a guiding template Ior public procurement reIorm. Its inherent
Ilexibility through the broad range oI procurement Iormats Irom which to choose
gives the reIormer suIIicient space to adapt the Model Law to suit the speciIic
needs oI a territory. Typical substantive provisions include those relating to
transparency and publication. methods oI procurement. criteria Ior use oI selective
or limited tendering methods. speciIications. qualiIication oI suppliers. competitive
negotiated methods. opening oI tenders. inIormation on contract awards. bid
challenge procedures. Time requirements. eAuctions. Framework Agreements.

66
Economics of Corruption 2009 Professor Johann Lambsdorff
67
The Iull text oI the UNCITRAL Model Law on Procurement oI Goods. Construction and Services can be
downloaded at www.uncitral.org and hereto attached and marked ANNEX 7
68
Work is said to be presently underway to produce a revised UNCÌTRAL on Procurement which covers
these newer areas later this year. The area of regulating PPPs is covered under a separate existing UN
Model Law.

42
Supplier Lists. PPPs and all should be considered within the context oI this
reIormative eIIort.

(b) Code of Ethics - Recognizing the sensitive role that procurement practices can
play in the public's trust in public sector decision-making. it is recommended that a
comprehensive Code oI Ethics be established in the Iramework Ior those involved
in the Iunction oI procurement and in particular. purchasing. supplies. logistics and
materials management. It is recommended as well that other proIessionals who are
Iunctioning in established PUs (eg. lawyers. Iinance. risk. proiect management and
construction proIessionals) be also required to adhere to the Code. Standard
provisions should include conIlicts oI interest. responsibilities to employers.
relationship with suppliers. giIt and conIidentiality policies.

6.1.5 In conclusion. this public procurement reIorm eIIort must be commended and it is urged that the
opportunity to re-deIine the arrangements in this most critical area oI public sector governance is not lost.
Our summarized recommendations in general terms are :

(a) Consideration ought to be given to a hybrid public sector procurement system which
beneIits Irom the economic advantages and eIIiciencies to be derived Irom a
combination oI centralized and decentralized processes.
(b) The establishment oI an independent regulatory body in the Iorm oI the Procurement
Regulator with responsibility Ior monitoring and enIorcing the public procurement
policy and regulation is a critical component oI an eIIicient procurement system. but
checks and balances ought to be put in place to ensure that this position does not
become vulnerable to conIlicts relating to bureaucratic. commercial or other vested
interests.
(c) Civil society involvement in the procurement process is a welcome inclusion and
certainly consistent with emerging best practice. However. great care must be taken in
the model Ior civil society or stakeholder involvement established. The practical
implications oI the model in respect oI its capacity to stymie the Executive`s
development agenda must be considered.
(d) Opportunities to develop robust economic policy positions on areas (eg thresholds
and preIerence margins) which have been seen to have an increasingly powerIul
impact on the negotiation oI our external arrangements should not be lost and/or
delegated by the Executive.
(e) The substance oI the Iramework ought to be developed now and some areas ought to
be included in the enabling statute and others in the Guidelines. Even in the case oI
the latter. these should be discussed and developed now and not aIter the passage oI
the proposed legislation.

43
(I) Attention must be paid to our existing and potential international and multi-lateral
obligations in the deIining oI our domestic reIorm eIIort. mindIul oI the ongoing
regional public procurement reIorm eIIort (FRIP conditions) the CARIFORUM - EC
EPA conditions and the current negotiation oI the CANADA-CARICOM conditions.
(g) Greater care must be taken in the draIting oI deIinitions to ensure consistency with
best practice.

MARGARET ROSE
EXECUTIVE DIRECTOR
CARIBBEAN PROCUREMENT INSTITUTE LTD

44
ANNEXURES

Annex 1 NCE Compliance Comparative Table

Annex 2 Centralised and Decentralised Public Procurement (2000)

Annex 3 Shahid Minto. Procurement Ombudsman Canada CPPC 2010

Annex 4 Stocktaking of Social Accountability in OECD countries 2007

Annex 5 CARIFORUM EC EPA Chapter 3 Title IV

Annex 6 IDB/CIDA Funded CARICOM Project Findings 2003

Annex 7 UNCITRAL Model Law on Procurement

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