Over the last
quarter century, a global revolution of sorts has taken place in the appreciation
of the function of procurement within the public sector. No longer viewed as a transactional, back
office function, the highly strategic impact of procurement decision-making on
the sustainable growth and development of countries and regional trading blocks
is being increasingly recognized. As
well, given the specific vulnerability of the function to misuse, heightened
public awareness has placed accountability in public sector procurement in
focus in almost every jurisdiction worldwide.
The impetus for
the advancement of public procurement reform initiatives in developing states
is escalating as trade liberalisation is exhorted as a universal good. In addition to the mounting external
pressures from the globalised economic environment on developing states, the
demands for more accountable governance from an expanding enlightened citizenry
and strengthened civil society and media are causing an increasingly difficult
to ignore internal pressure for public procurement reform.
Public
Procurement reformative efforts within CARICOM member states are presently
plagued by tensions between the varied and oft-times competing objectives of
the political desire to retain “policy space” in order to pursue socio-economic
development objectives and the demands of trade liberalization and accountable
governance. Further, the existence of
deeply entrenched commercial, bureaucratic and political interests have
perennially stymied the will of successive CARICOM regimes to grapple with the
challenge of effective public procurement reform.
The public procurement system in Trinidad and
Tobago engages all of these pressures and is largely representative of the systems,
existing in some CARICOM Member States also former British colonies,
which have not yet undertaken comprehensive legislative reform. The system characterized by the interaction
of a multiplicity of disparate legal texts is in dire need of reform in the
form of a modern, comprehensive
statutory framework with clear hierarchical structures. The existing framework
is out-dated and has not kept pace with the Government’s multi-billion dollar
development agenda resulting in a systematic policy being undertaken to engage
in public contracting outside of the existing framework through the State Owned
Enterprise (SOE) sector.
This limited
coverage is however not the only weakness in the existing framework. Other
weaknesses include absence of a regulatory body having oversight over the
procurement function; absence of a formal, independent complaints and/or
dispute resolution mechanism; absence of a centralized electronic public
procurement information system; inadequate procurement reporting and collection
of statistics and data; absence of whistleblowing protection systems and
forensic skills and ongoing training and capacity challenges.
Over the last decade, the
absence of a comprehensive regulatory framework in Trinidad and Tobago has
resulted in extremely weak procurement governance, burgeoning allegations of
political corruption in public expenditure and an erosion of public confidence
in the state. This is evidenced by the
spate of general elections held between 2000-2010 arguably catalyzed by the
heightened public concern and erosion of public confidence in public sector
spending activities, as reported in the country’s media. Attempts
at reform have been reactionary and piecemeal at best and after two major
public procurement enquiries (Piarco 2003-2004) and (Uff 2009-2010) to the
chagrin of many citizens comprehensive reform is yet to materialize.
Background to the Current Public Procurement
Governance Dilemma
During the early independence
years an aggressive development agenda engendered an escalation in
public sector construction activity placing strain on the existing public
sector financial management systems. A
lack of uniformity in policy, standards and practices, and instances of
insufficient security and poor management were identified. By 1961, rationalization
was attempted through the passage of the Central Tenders Board Ordinance (CTBO).
The CTBO, established a
centralized system and the Central Tenders Board (CTB) as “the sole and
exclusive authority” for procuring public sector goods, works and services. The
principles of transparency,
accountability and efficiency underpinned the new regulatory framework
through which articles, works and services were delivered to the public using
public funds.
As the Government’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 to allow the Government to contract
on its own behalf. Following up on this amendment, new statutory corporations
were established with their own contracting capability outside the purview of
the CTB and several pre-existing statutory bodies were removed from the purview
as well.
Statutory erosion of the remit
of the CTB persisted by amendments to the CTBO in 1987, 1991 and 1993 resulting
in the vast majority of public procurement in through the SOE sector being
administered outside of the statutory framework.
Additionally, over the last
thirty years the practice of creating new hybrid bodies termed “Special Purpose
Companies” (SPCs) developed. These are
wholly owned state companies incorporated as private limited liability
companies under the Companies Act 1995 as amended in 1997. The SPCs were supposed to provide expert
personnel to speed up project implementation. Though the Ministry of Finance
issued guidelines for the SOE sector (including the SPCs) to follow, evidence
provided at the 2010 Uff Commission of Enquiry into the Construction Sector and
UDeCOTT demonstrated substantial non-compliance on the part of these entities
and limited enforcement by Central Government.
The political justification
proffered for the exclusion of these bodies from the CTBO regime had primarily
been that the bureaucratic CTBO procedures hampered commercial efficiency and
the pace of the Government’s infrastructural development agenda.
The governance dilemma
represented by the current state of affairs is that: while on the one hand SPCs
are owned by the State, utilizing public funds and operating on behalf of the
Government, they are not, at the same time, subject to the same regulatory and
accountability frameworks as other public bodies. In decentralizing the public
contracting function, there was no concomitant overarching regulatory interface
established, governing the relationship between the State and these bodies, and
in particular, their engagement with public contracting activities.
CTBO
Weaknesses
That is not to say that the
centralized system under the CTBO provides an adequate regulatory framework to
meet the requirements of modern public sector procurement realities. The weaknesses of the CTBO system have been
documented comprehensively in the White
Paper on Reform of the Public Sector Procurement Regime 2005 and other
papers and there is little need to repeat them in detail herein as they are
non-controversial and are widely recognised.
The weaknesses include, the
lack of a formal complaints and/or dispute resolution mechanism for disgruntled
bidders; the lack of a regulatory body with power to investigate and monitor
independent of the CTB; the narrow legislative focus only on the tendering
phase of the procurement cycle with little guidance on budgeting, feasibility
and contract management; the lack of technical infrastructure and development
of an electronic centralized public information system; lengthy and costly
bureaucratic procedures which are unable to keep pace with the expanding needs
of Government’s development agenda; the absence of provision for newer
procurement methodologies including eAuctions and innovative project financing
models such as Public Private Partnerships; poor data collection and reporting
and; human resource limitations in the form of a dearth of trained staff at the
CTB.
All of the above
notwithstanding, it is notable that no significant allegation of corruption has
been levied in relation to CTB awarded contracts from the date of its
establishment to present. However, the inference to be drawn from this is
unclear and may be reflective of the nature and scale of public contracts let
under the auspices of the CTB, as compared with other public entities.
Weaknesses
in the SOE Sector
Entities in the SOE sector
procure utilizing their own tender rules and procedures. It should be noted that there is no uniform
or standard process or procedure for all such bodies and there are varying
levels of oversight depending on whether the body was created by statute or
incorporated as a limited liability company under the Companies Act.
The procurement governance risks
in the SOE sector are significant and are facilitated by the lack of an
overarching regulatory framework for all public bodies and special purpose
companies; the lack of a formal complaints and/or dispute resolution system; the
lack of uniformity of rules, procedures and documentation; poor management; and
a lack of transparency. Although the
flexibility of the systems allows for the Government to escalate its
infrastructural development programmes, the present perceived vulnerability to
corruption and associated risks and the consequential strain on value for money
objectives remain significant.
Reform
Initiatives – The Last Decade 2002-2012
Despite several attempts by
the State to rationalize procurement activities in the SOE sector including:
the 2005 standard procurement guidelines issued by the Finance Ministry; the White
Paper on Reform of the Public Sector Procurement Regime 2005 which proposed a principle model for procurement
reform based on the principles of Transparency, Accountability and Value for
Money, and a 2008 SOE Performance Monitoring Manual
relating to governance, reporting lines and mechanisms, auditing and
performance indicators, there has been limited success in stemming the
perception of endemic corruption in the public sector.
Increasing
public disquiet as a result of Government inaction in enacting the much touted
public accountability statutory framework led to the establishment of the Uff
Enquiry in 2009 which report was laid in Parliament in April 2010. The report confirmed public concerns about
the lack of oversight and transparency of the contracting practices and made 91
recommendations (inclusive of criminal investigations of some public officials)
for reform. After a snap election in May
2010 and a new Government coming into power championing the anti-corruption
agenda, promised the implementation of the recommendations and comprehensive
statutory procurement reform.
In fulfillment
of this promise The Public Procurement and Disposal of Public Property Bill 2010
along with the National Tenders Board Bill 1997 was laid in parliament but
since 2010 has been before a Joint Select Parliamentary Committee with no
discernible output to date.
A Way Forward: Beyond
Statutory Regulation?
To date, despite
the current well-publicised governance gaps and loss of public confidence in
public sector procurement there is yet to be any change in the public
procurement regulatory landscape. This
coupled with regional initiatives to harmonize public procurement laws and the
signing of trade treaties like the CARIFORUM EC EPA impacting public
procurement activities suggests a governance lacuna that must surely be filled.
This
notwithstanding, in recent times, quite paradoxically and perhaps arguably as a
result of the increasing disquiet and seeming lack of political will, some of
the most innovative initiatives in public procurement reform in the region aimed
at more efficient and accountable public sector procurement outside of a
regulatory framework has found its genesis in Trinidad and Tobago including (i)
the establishment of a regional procurement professional association and institution
seeking to build professional capacity and ethical maturity in the
implementation of the function of procurement (ii) the increase in specialised
training, conferencing and capacity building interventions (iii) the adoption
with Government support of emergent technological innovations in the form of
reverse eAuctions and eBusiness applications (iv) the development of Corporate
Ethics Codes and Practices in several public sector companies including the
introduction of secure anonymous & confidential reporting hotlines
for employees, suppliers, customers and other stakeholders to report ethical
and other breaches.
In particular, the adoption of whistleblowing systems in some
state-owned bodies has been a welcome development as research demonstrates this
as one of the most effective anti-corruption mechanisms developed to date.
These initiatives are bottom up initiatives emanating from the
citizens both individual and corporate seeking to tackle the challenge of more
efficient and accountable procurement head on.
Despite the considerable perturbation at the persistent regulatory
lacuna, the lack of statutory regulation has seemed to catalyze these organic
initiatives aimed at transforming the professional and organizational cultures
with some success.
In 2012, the Petroleum Company of Trinidad and Tobago
(PETROTRIN) won one of five prizes in the global Procurement Innovation
Challenge hosted by the World Bank for using
ICT to improve effectiveness, increase transparency, reduce costs and save
trees. In a groundbreaking initiative
led by Chartered Accountant and Contracts Coordinator Mr. Steven Samlalsingh, instead
of being placed on the map as a developing country with the characteristic weak
procurement systems plagued by endemic corrupt activity, Trinidad and Tobago
was placed on the map as a world leader in procurement innovation.
What this success
demonstrates is that the need for a transformation in the ethical, professional
and organizational cultures must be recognized and bottom up strategies aimed
at this should be encouraged. Further, the
need to build critical enforcement capacity in respect of the laws already in
our books through the development of more sophisticated forensic methodologies
in the investigation of white-collar crime and in particular procurement fraud
is also critical.
Perhaps herein lies
the key to elevating the public procurement governance debate in Trinidad and
Tobago. Persistent focus on statutory reform only by leading procurement reform
advocates and organisations has ignored two critical factors. In order to
achieve effective and accountable procurement, a statutory framework alone will
not provide the solution and neither must it necessarily lead the way.
