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PRINCIPAL CHALLENGES TO THE DEVELOPMENT OF EFFICIENT PROCUREMENT PROCESSES IN THE PUBLIC SECTOR IN TRINIDAD AND TOBAGO
PRMG6007 – PROCUREMENT MANAGEMENT, LOGISTICS & CONTRACTING
Professor Winston H. E. Suite
FACULTY OF ENGINEERING
SEON CHARLES 04707759 2010
Public procurement is the process of acquiring property and services using public money to accomplish specified public purposes. The current legal and regulatory framework embodied in the Central Tenders Board Ordinance, 1961, (The Ordinance) applies mainly to Government ministries and departments and some statutory authorities. There are other agencies using public funds, including State-owned enterprises, statutory authorities and civil society whose procurement practices fall outside the ambit of the Ordinance. The current public procurement system in Trinidad and Tobago is faced with numerous challenges which hinder the development of an efficient system to guide the spending of public funds. This report attempts to highlight and discuss the effects of these principal challenges on the public sector procurement system. The report also provides recommendations, suggestions and strategies for mitigating the effects of these challenges.
Table of Contents
Abstract.............................................................................................................................ii List of Figures...................................................................................................................v List of Tables...................................................................................................................vi Chapter 1 - Introduction...................................................................................................vii Chapter 2 - Literature Review..........................................................................................ix 2.1 Overview of the Current Public Procurement Process...........................................ix 2.1.1 Definition of Public Procurement....................................................................ix 2.1.2 The Evolution of the Legislative and Regulatory Framework..........................x 2.1.3 Current Procurement Practice observed by the Central Tenders Board.......xiii Chapter 3 - Discussion of the Principal Challenges to the Development of Efficient Procurement Processes in the Public Sector in Trinidad and Tobago...........................xvii 3.1 Design and Build Procurement System...............................................................xvii 3.1.1 Challenges Faced by the Adoption of a Design and Build Procurement System......................................................................................................................xx 3.1.2 Recommendations to Combat Challenges of Design/Build Approach..........xxi 3.1.3 Performance Based Contracts ......................................................................xxii 3.1.4 External Consultancy Services....................................................................xxiii 3.2 Alleged Corruption in All Stages of the Procurement Process..........................xxiii 3.2.1 How corruption operates in the Public Procurement Process.......................xxv 3.2.2 Mitigation Strategies for Corruption in Public Procurement.....................xxviii 3.3 Presence of Foreign Contractors.....................................................................xxxviii 3.3.1 Chinese Experience in Trinidad and Tobago...........................................xxxviii 3.3.2 Local Contractor Praised................................................................................xli 3.3.3 Recommendations...........................................................................................xli 3.4 Public Sector Procurement Process......................................................................xlv 3.4.1 Deficiencies in the Legal and Regulatory Framework..................................xlv 3.4.2 Absence of Uniformity in the Tendering Process.........................................xlvi 3.4.3 Human Resource Limitations......................................................................xlvii
.4............................................4.............................8 Concerns of Local Suppliers.......xlix 3........................................xlviii 3......................xlix 3.............................6...........lviii 3........lxiv 3...9 Poor Data Collection and Reporting..1 Registration..... Management......................6 Weakness of Local Contractors’ Organization.................................................lxv Chapter 4 ..........................................1 Recommendations.........lxii 3................................................................lxi 3....................4.................................5 Recommendations ....4....................l 3............xlviii 3.....lv 3..........................lxiii 3................................................5...............................................................................................2 Management.....................................................lxiv 3..xlix 3........................................................................1 Operating Principles for Best Procurement Practice...........6 Lack of National Registry.5 Absence of a Complaints Mechanism and Dispute Resolution........................ Labour............ Registration.....4...iv 3.....................5 Funding .............lxvii ......................................................... Skill..................................10 Current Best Practices...................3 Labour......2 Legislative Models Effecting Current Best Practice....................4......................................3 The Preferred Procurement Model......lxvi References...........4...............................................................6.............................................................lxiii 3..................4......................... Familiarity with New Technology Required for Mega Projects.......4....................................................................Conclusion...xlviii 3...........................7 Lack of an Electronic Public Information System..................6......................................4 Skill and Familiarity with Mega Projects.......................6....................l 3..4 Lack of Regulatory Oversight..6............................4..lxiv 3..........
.......2: Design and Build Procurement System.....................................xix .......................v List of Figures Figure 2...............................................1: Procurement Cycle ........xiii Figure 3.......................
.xxv ....1: Corruption Related Risks at each stage of the Procurement Process....vi List of Tables Table 3....
Conditionalities of the International Lending Agencies . Public contracting occurs at different governmental levels: in municipalities. this is not the situation in today’s public procurement system within Trinidad and Tobago. such as the contracting out of consultancy services to redesign the customs agency. The term procurement is often used in this field. the region of Trinidad and Tobago is faced with numerous challenges which hinder and stifle the development efficient procurement processes in the public sector. Currently. While national level procurement can be bigger in terms of value per contract. local government contracting is significant in terms of the number of processes and their impact. An efficient public procurement process is one that always seeks to deliver value for money. These challenges include but not limited to the following: 1. accountability and transparency to the client. Procurement refers to the acquisition of goods and services by any individual or organization (public. Others benefits citizens indirectly. Examples include the purchase of office supplies for a governmental office and the contracting for the design of a complex concession system for an airport. for example the construction of a road or a sewage system. A contract is a binding agreement or business arrangement for the supply of goods or services. These contracts are meant to buy or produce goods or services that benefit citizens directly. private and international). However.vii Chapter 1 . provinces or states and in national governments.Introduction Public contracting is the main way a government operates and public money is spent.
Legislative framework – HSE legislation and regulation • Public Sector Procurement Process This report discusses the principal challenges and attempts to provide solutions.4. Alleged corruption in all stages of the procurement process 10. 3.viii 2. Presence of Foreign Contractors 5. recommendations and strategies to combat these challenges. Level of procurement experience and expertise in local actors 8. These were considered to be principal challenges because these issues are currently plaguing society and most prevalent in Trinidad and Tobago’ public procurement system. 2. . Weakness of local contractors’ organization. skill and familiarity with new technology required for mega-projects 3. labour. The challenges that were considered to be of utter importance included nos.5. The construction sector of Trinidad and Tobago can be considered as the most severe pathogen to these hosts of public procurement challenges. Productivity level vs International operators 9. Funding 4. Bi-lateral financing with foreign labour 7. management. registration.7 and 9 from the listed previously stated. Design and Build Procurement System 6.
publicity.1. it also describes the legislative and regulatory framework behind public procurement in Trinidad and Tobago and provide a synopsis of the procurement cycle observed by the Central Tenders Board.1 Overview of the Current Public Procurement Process 2.1 Definition of Public Procurement Procurement can be defined as the acquisition of goods and services including the undertaking of works and consultancy services for use by the client organization. receiving. opening and evaluation of offers.ix Chapter 2 . Procurement is therefore a comprehensive process that includes inter-alia design. products or services identified. service and maintenance (Central Tenders Board n. contractual arrangements entered into and works or services performed. form of delivery and methodology for making contractual choices determined. tendering. 2. The utilization of public money also demands that such utilization . Public procurement distinguishes itself from private procurement through the utilization of public money and as a result is subject to a greater degree of transparency and accountability than obtains in the private sector. scope of works. award and signing of contract. testing and start up operation.). Public procurement involves the utilization of public money in a complex of processes and choices in which needs are evaluated.d. The utilization of public money imposes on all agents a duty of care in the public interest and a duty to safeguard and ensure the attainment of value for money. installation. guarantees.Literature Review This chapter attempts to define the public procurement process.
The Central Tenders Board was therefore established by Act No. This led in 1961 to the establishment of a legislative and regulatory framework known as The Central Tenders Board Ordinance No. the public interest must be paramount (Ministry of Finance of Trinidad and TObago 2005). or the procurement of works and services. State-owned enterprises (SOEs) and civil society bodies. This means that the legal framework will apply not only to Government ministries and departments but also to statutory authorities. The majority of this expenditure involves the procurement of goods and services. 22 of 1961 to ensure that the proper procedures are followed to obtain the most suitable supplies and services from .x will be undertaken only for the purposes intended and authorized. ii. maintenance and disposal of property. Public procurement occurs wherever public money is spent on the acquisition. there was a significant increase in Public Sector in-house construction activity which gave rise to a number of financial management problems. 22 of 1961 which incorporated the development of the following: i.2 The Evolution of the Legislative and Regulatory Framework During the period 1956 to 1960.1. 2. A Cost Accounting Division in the Ministry of Finance The Central Tenders Board (CTB) The Cost Accounting Division in the Ministry of Finance was the agency charged with the responsibility of spending public funds and is therefore accountable to the population for such expenditure. Approximately 75% of the Budget allowances for this procurement are through the Tendering Process. Wherever and whenever public money is being spent.
to the management of public procurement.xi available resources. the Ordinance was amended to allow the Government to act on its own behalf. Over the years. Departments and certain Statutory Bodies. In 1987. and to dispose of surplus or unserviceable articles belonging to the Government or any statutory bodies.” These measures applied the principles of efficiency. The Central Tenders Board (CTB) was instated to be “…the sole and exclusive authority in inviting. the Ordinance was amended further to provide for the handling of matters in the event of an emergency without reference to the CTB. This reflected a major shift in policy on the role of the CTB as Government’s sole procuring agency. The amendment also increased the powers of the CTB to contract consultants. transparency and accountability. an amendment provided for a Special Ministerial Tenders Committee to be established at the Ministry of National Security to procure . the Government of the Republic of Trinidad and Tobago has played an increasingly influential role in the public procurement system. considering and accepting or rejecting offers for the supply of articles or for the undertaking of works or any services necessary for carrying out the functions of Government or any statutory bodies. as understood at that time. In 1991. In 1979. The Central Tenders Board forms an integral part of the Financial Regulations as it is the Government Agency responsible for awarding contracts as requested by Government Ministries.
. ammunition. an amendment validated the National Insurance Property Development Company Ltd (NIPDEC) as a procurement agency for Government outside the ambit of the CTB. and equipment for the Defense Force and the Protective Services. In 1993. Further decentralization of the procurement regime was also effected from 1979 onwards by the establishment of new statutory corporations and the removal of some earlier established statutory bodies from the purview of the CTB.xii arms. The CTB now has an exceedingly diminished role as compared to 1961.
14." In Central tenders Board of Trinidad and Tobago Information Booklet.3 Current Procurement Practice observed by the Central Tenders Board Note: The text highlighted in red for steps 5 & 6 indicates the alteration to the Procurement cycle to represent Selective Tendering Figure 2.d. 2008 The following is a synopsis of the Procurement Method observed by the Central Tenders Board (Central Tenders Board n.xiii 2.1.1: Procurement Cycle Source: Central Tenders Board.): . "Procurement Cycle.
• Letters of Acceptance are issued to successful bidders by the Central Tenders Board Division. consultants and firms that have all undergone a prequalification exercise.xiv • The Client Ministry or Department conducts a needs assessment. the Central Tenders Board invites bids/tenders publicly or selectively. A Bid Package is subsequently prepared and submitted to the Central Tenders Board Division. in the press and in at least two (2) newspapers of wide circulation. • Tenders received are opened publicly on the closing date of the tender and are forwarded to an evaluation team approved by the Board. • Once all documentation received from the Client Ministry is reviewed and found to be within the proper procedures. In the case of consultancies. The evaluation team may also be required to provide explanations of aspects of their report. the two-envelope system is used. . in reputable Journals and the Development Business Forum. the Central Tenders Board reviews the documents and ensures that they conform to the Central Tenders Board Regulations and Procedures. • The Central Tenders Board then reviews the evaluation reports prepared by the team. Tenders are also published on the Central Tenders Board’s Website. • Tenders are invited publicly by advertising tender notices locally. and internationally. • Upon receipt of the bid package. • Tenders are invited selectively from a shortlist of registered contractors. reconciling its needs with available funding. • The Award of Contract is subsequently decided upon by the Central Tenders Board.
• All Contracts awarded are published monthly by the Central Tenders Board in the Trinidad and Tobago Gazette and on the organization’s website. • A report is submitted to the Central Tenders Board. Such committees are chaired by representatives of the Central Tenders Board and follow the procedures of the Division. • Most statutory bodies. Agencies/Bodies outside of the governance of the .xv • In the case of major projects. • Tender committees within the Client Ministries or Departments may act for the Central Tenders Board within limits. However. upon completion of the contract. • The Client Ministry or Department is responsible for administering the contract. the committee has the ability to award the contract. as provided by the Central Tenders Board Ordinance (No. all State-owned enterprises and NIPDEC are fully responsible for their own procurement procedures. Copies of the Contracts awarded are also submitted to the Auditor General. In cases where the value of the acquisition is below a certain limit. as amended). The Auditor General is responsible for financial audits. Rules and Procedures of the Central Tenders Board. 22-1961. the Central Tenders Board may become involved in this stage of the process only if called upon to resolve a dispute or approve a variation to the contract outside of the client’s jurisdiction. All financial limits are defined in the Regulations. • Permanent Secretaries and Departmental Heads can also procure goods and services below a certain financial limit. the form of contract Agreement is prepared by the Chief State Solicitor’s Office who formally arranges the execution of the contract Agreement by parties to the contract. which in turn authorizes the release of performance bonds and the refund of deposits.
xvi Central Tenders Board may be engaged by government ministries as contractors for major capital works. • State enterprises are required to invite a representative of the Central Tenders Board to sit on panels considering Tenders above a certain level. The award of contracts by these agencies is subject to monitoring by a Central Audit Committee. established within the Ministry of Finance. .
the professional class of architects and engineers replaced the master carpenter or master-builder of earlier times. They prepare a preliminary design and cost estimates in accordance with the client’s brief and instructions. The architect eventually became the client representative taking charge of projects from conception to completion including the outfitting of most projects with requisite furnishing. which is the system of design/ bid/ build or client design and tender where the latter process involves the client hiring the architect and the architect assembles the design team of engineers and quantity surveyors together. Recommendations for overcoming these challenges are provided where possible. .Discussion of the Principal Challenges to the Development of Efficient Procurement Processes in the Public Sector in Trinidad and Tobago This chapter presents discussions of the principal challenges to the development of efficient processes in the public sector in Trinidad and Tobago. 3. and contractors are then invited to tender. This method challenges what we have come to accept as the norm.1 Design and Build Procurement System Currently there is battle looming in the industry over the concept of design/build as the preferred building construction delivery method. The system of client design-tender then took root as the preferred method of delivery. around the eighteenth century. This method of delivery for construction projects has been around since the 1500s with the master carpenter/master-builder having full responsibility for the design and construction of building projects. However.xvii Chapter 3 .
The design/build method as we know it today was reintroduced to reduce the adversarial relationship and increase the efficiency and cost effectiveness of construction project delivery by having a single entity take responsibility for the entire project. This system is also referred to as a turnkey system or package deal (see Figure 3. vi. both in scope and specifications. These failures were due to a number of factors. This procurement system is one where a single contract is awarded for the design and construction of the work to be performed. resulting in completed work having to be demolished and rebuilt or materials already procured having to be replaced. originates from a lack of meaningful communication between the client. Client change orders during the construction stage. Incomplete design at the tender stage. designer and contractor . v. the main ones being: i. .with much time and money being spent on litigation and or the avoidance of litigation when projects failed to meet budgetary and completion schedules (Joseph 2008). from the preliminary tender documents. Adversarial relationships between all parties resulting from some or all of the above. This is actually nothing new to the construction sector here in Trinidad and Tobago. iii. The inability of the architect and quantity surveyor to keep current with construction cost.xviii However. this process became very adversarial and confrontational between the owner. This problem. iv. the architect and the contractor. Lengthy delays in decision making and providing information to the contractor. Proper communication would allow for value engineering during the process of construction or even at the time of tender. resulting in final construction drawings that varied greatly. It suggests that the client enters into contract with one agency for the complete delivery of the project. ii.2). Improper allocations of risks.
xix Design Client Construct Design and Build – Joint Venture Design Client Construct Design and Build – Separate Departments Figure 3. ii. iv. It removes the adversarial relationship which could arise in the traditional procurement system. . This system is highly economic hence this leads to greater savings and a lower contract price. iii.2: Design and Build Procurement System This approach offers the following advantages (Suite n. It allows the design process to be carried out just ahead of the construction process and therefore result in less time for the project.) i.d. It facilitates late changes in the design when they do arise. It facilitates greater unity between the two functions.
. financing. quality. experience and financial resources that can be easily manipulated under the guise of a supposedly transparent process to achieve any desired result.1 Prohibition of Local Firm from acting as Main Contractor The design and build approach is usually adopted by the government for the procurement of large projects.1. The selection process of a design-builder is itself an opportunity for corruption. It is often referred to as a ‘beauty parade’ because there is a variety of criteria such as design.1 Challenges Faced by the Adoption of a Design and Build Procurement System 3. the project stages such as pre-design. is less transparent with fewer opportunities for oversight by independent supervisors. or even less.1. Whereas in the traditional methods. the occurrence of corruption is likely to increase because the entire process.1. As evidence suggests. thereby reducing transparency and making it more difficult to supervise/oversee and to detect the possibility of corruption. 3.1. the local firms and enterprises are used as subcontractors to subcontract sections of the work or to procure supplies. In most cases when this occurs. design. cost.2 Corruption In the case of the design-build procurement method. planning and construction are supervised/overseen by a variety of independent agencies and interests. schedule. this leads to improved project outcomes but it prohibits an experienced local firm from acting as the main contractor due to capacity constraints (mainly financial) and an inability to carry the additional risks. in design-build the project stages are reduced from five to three. The widespread subcontracting of local firms has a negative impact on the development of an efficient procurement system within the public sector (Wells and Hawkins 2008). as compared with that of the more traditional methods.1.xx 3.
While it does appear that the contractor should be liable for the design and construction.1 Joint Venture Design and Build Approach In the case where local firms may be prohibited from acting as the main contractor as seen in the design and build approach. It raises curiosity towards the integrity and quality of the design.1. 3. a modification to this system can utilized as another innovative way of creating opportunities for small contractors on a sizeable project.). 3. particularly when these faults are not immediately apparent. An example of this system exists where the foreign firm is . Another area of concern deals with the liability of the design and build contractor.2 Recommendations to Combat Challenges of Design/Build Approach This section attempts to describe possible solutions to the problems encountered by the design and build approach currently used by the Government of Trinidad and Tobago for the public procurement process.1. 3.2) between foreign contractors and local contractors.1.2. the selection and use of materials and the general quality of the works. the question rests with how will the client establish what is the nature and extent of the damage or fault and hence the liability.1. The concealing of faults and poor quality designs originating from the utilization of the design and build approach in public procurement certainly affects the efficiency of the process (Suite n.3 Integrity and Quality of Design The fact there is an absence of independent scrutiny and supervision on the contractor within a design and build system creates a source of concern.d.xxi Corruption is another factor that contributes to the degradation of an efficient public procurement process (Archibald 2009). This modification involves the formation of a joint venture (see Figure 3.
xxii employed as the management contractor and the local firm as the labour contractor.000/km (Wells and Hawkins 2008). the company signed a consultancy and training agreement with WASA. with supervision assistance form the district councils. and (3) stipulate formal and measurable performance standards. A total of 47 labour based contractors were employed on the project and together they built 700km of gravel roads in five years at a cost of around $7. The work includes a project to improve the drinking water supply system.1. and in November an agreement was signed for developing water management and carrier infrastructures (Barkat 2010). (2) place the responsibility for quality performance on the contractor. Last September. and upgrading water treatment plants. This joint venture system is also depicted in the water projects in Trinidad and Tobago where Mekorot Development and Enterprise Ltd. From Israel will work with the Water and Sewerage Authority of Trinidad and Tobago to develop. . the overall supply management.3 Performance Based Contracts Performance-based contracts (1) describe the work in terms of what is to be the required output rather than how the work is to be accomplished. This example is demonstrated in Zambia for the delivery of access roads. including surveillance plans. Mekorot Development and Enterprise is already active in Trinidad. plan and build projects worth $100 million. 3. The IEF signed a contract for the works with the tender board and then contracted small scale labour-based contractors to carry out the work. A hybrid consultant/management contractor called an ‘Implementing Engineering Firm’ (IEF) was appointed to execute and supervise the work.
4 External Consultancy Services In order to reduce the occurrence of flaws in publicly procured projects. thus perpetuating poverty. is not good business.2 Alleged Corruption in All Stages of the Procurement Process Experts identify procurement as one of the areas most prone to corruption in the construction. Corruption in public procurement: • • affects the efficiency of public spending and donors' resources. harms companies that produce goods and services as it increases operation costs. improved financial accountability. 3. However. this option involves the client paying additional fees. the client i. the waste of scare resources and the neglect of basic needs. the relevant Ministry. in the extreme. 3.e. in the medium term.xxiii Performance based contracts is another way of promoting involvement of local actors in the public procurement process as they expand the range of acceptable solutions and permit the inclusion of indigenous technologies. • leads to a distortion of fair competition. reduces competitiveness and. and . and effective use of sub-contractors where quality and cost-savings can be enhanced. They are also seen as having potential to reduce corruption (Wells and Hawkins 2008). Incentives should be included for cost-savings. Government Department or Statutory Authority should source independent advice from a consultancy agency to vet the design and monitor the construction phase. health and education sectors. lead to the destruction of development opportunities.1. • can give rise to massive market inefficiencies and.
A significant portion of construction. Therefore. This is because we enjoy a per capita income of US$14. Trinidad and Tobago is described as a developing country but we are not typical because we rely less on aid than most other developing countries.000. therefore. Our procurement rules. Preventing and controlling corruption in procurement is. mainly due to the income derived from our hydrocarbon resources. we rely . In this sense.00. the highest in the region. have been developed over the years more from self regulation than from impositions from external agencies as is the case with most developing countries. Contracting is the main way a government operates and public money is spent. The Construction Sector in Trinidad and Tobago The construction sector is the primary vehicle used by governments and aid agencies to achieve physical development in developing countries and is the conduit through which billions of dollars enter the national economy. health and education expenditure goes to procurement or contracts for goods and services. Nonetheless. in common with other developing countries. contracts are the vehicles for implementing public policy. a determining factor in policy and project efficiency (Trinidad and Tobago Transparency Institute 2008). therefore.xxiv • can add 20-25% to the costs of government procurement and frequently result in inferior quality goods and services and unnecessary purchases. it is no surprise that construction procurement acts as a magnet for persons wishing to illegally line their pockets.
d. Underperformance. Main risks (examples) The decision does not follow a policy rational or an existing need but rather the desire to channel benefits to an individual or and organisation. extortion.). But the risks are not limited to this phase. over-billing. There is also room for abuse once the contracting process has finished and the contractor has been selected. For example. when decisions are taken about what to contract. It is generally believed that the risk of corruption is especially high during the evaluation phase of a contracting process. change orders. 3. contract renegotiation.xxv very heavily on the construction industry as the main vehicle in our development thrust. and non compliance are just some of the forms of abuse (U4 Anti-Corruption Resource Center n. demand is created for a good no one buys simply to benefit the company's owner. the record shows that construction procurement has been one of the more fertile grounds for corruption locally (Hart 2008). As a consequence. when offers are studied in order to select the contractor. The table below synthesizes some of the corruption related risks at each stage of the process: Table 3. or to outsource the management of a unit.2. Most contracting processes broadly follow the same steps. deception (fraud) or simple abuse. Stage B: Identification/definition of contract characteristics (technical requirements.1: Corruption Related Risks at each stage of the Procurement Process Stage A: Decision to contract ( identification of need) Description The government decides to purchase or sell goods or services. The risks of corruption in public contracting can be more easily understood in relation to each stage of a contracting process.1 How corruption operates in the Public Procurement Process Corruption in public procurement can take the form of bribery. characteristics of . Corruption can occur even before a contracting process starts. Some projects start off ear-marked for award to a particular party.
Stage D: Contract award Description Contract process ends and a decision is made in order to select the winning bidder (in open bids) or the contractor (in single-source processes). It should take place according to what method the law determines be used to receive proposals (e. Contract awards are not publicised (nor the grounds for the decision). thereby making them prone to abuse Stage C: Contracting process Description A contracting process opens. Stage E: Contract implementation and supervision Description Main risks (examples) . In single-source processes. When short-lists are used. leading to single source processes). agency responsible. Evaluation criteria are not set from the start or are not objective. or not presenting offers. thereby restricting the number of bidders that participate. companies bribe to be included or to gain access to them. Exceptions to an open bidding process are abused. etc) Main risks (examples) Characteristics (technical or not) are made to favour a special supplier or contractor and not to properly address the need identified. Participation of relevant stakeholders is limited. single source) Main risks (examples) Invitation to tender (an open bid) is not publicised. specific characteristics) and how it will go about it (contracting method. Bidders or contractors collude to influence prices or to share the market by artificially losing bids. making it difficult for bidders without prior knowledge of the contract to present bids.xxvi goods and services. lack of publicity or transparency leads to unjustifiable decisions. etc. Invitation to tender is publicised but very little time is given to present offers.) Description The government determines what it needs to buy or sell or privatize (technical requirements. leaving no grounds to justify the decision. Main risks (examples) Evaluation criteria are not clearly stated in tender documents. open bidding system) or evaluate contractors (e. making it difficult to assess the need and relevance of the characteristics as they are being defined. Evaluation of bids is subjective or leaves room for manipulation and biased assessments.g. Abuse of confidentiality or lack of publicity creates unequal playing field for bidders.g.
In some cases. donor and credit agencies require their procurement procedures to be used instead of national procedures. Subcontractors and partners are chosen in a non-transparent way. In this case. or seemingly involved. Mystification The more high technology involved.the following factors: Size Bribes are often calculated as percentages of the total sum. for example. this has been helpful. requirements for transparency are higher under national legislation. but in others. the more attractive the project will be to the potential beneficiaries. performance. the more money involved the more reason to demand a bribe. Contractor's claims are false or inaccurate and are protected by those in charge of revising them. are unaccountable or are used to channel bribes. or if it has to simultaneously handle several processes under different regulations. This kind of "mystification" reduces the risk of . Hence. In some cases. Research has told us that corruption in procurement takes place because of . an important tool to prevent corruption is lost. representing a proportional relationship.xxvii The contract is signed with the selected bidder or contractor Contract changes and renegotiations after the award are of a nature that changes the substance of the contract itself. An additional burden is created if the local implementation agency is not familiarized with the donor or credit agency's guidelines. equipment and characteristics go unnoticed. Additional Risks Additional risks are created by confusing or contradictory legislation.and is worsened by . Supervising agencies/individuals are unduly influenced to alter the contents of their reports so changes in quality.
. donors and credit agencies and civil society organizations around the world.2. or at least a very substantial deposit. From this it follows that the most attractive projects are those in which the full purchase price.xxviii being criticized for paying too much. Discretionary power is at its greatest when the public demand and the public preferences are delegated to the public agent and defined during a bilateral bargaining process. Then the civil servant is choosing the private part. The discretionary authority includes • • • • • • The power of invitation The power of short-listing or pre-qualification The choice of technology Confidential information Modifications of the contract Bilateral negotiation of governmental contracts 3. while price and other contract conditions are the result of the negotiation process. is payable at an early stage. but also to officials.2 Mitigation Strategies for Corruption in Public Procurement It is possible to combat and prevent corruption in public contracting. governments. There is now a global consensus on the need to curb corruption that encompasses companies. Discretion The discretionary authority of public officials often represents a golden opportunity to obtain bribes. (For example: How many people can say whether a particular fighter aircraft should have cost $21million rather than $23million?) Immediacy The term of office may be brief to many politicians.
pre-selection of suppliers and adjudication on suppliers) are divided among . They should also establish administrative review systems.1 Good Rules. While this is clearly necessary. 3. transparency and monitoring are three elements that help to prevent corruption. Moreover. evaluations and awards are publicly and timely available. it is important to realize that there is no single solution to the problem. and make sure bidding documents.d. It is also important to have clear and publicly available procedures and to have regular audits by external parties (U4 Anti-Corruption Resource Center n. procedures. quantification.2. • In the case of absent rules or rules which can be manipulated to one's advantage. Supervision and control play a key role since good rules are necessary but not always enough to curb corruption.2. Contracting processes need to be permanently monitored. foster objective evaluation criteria and provide structures for it. it often comes too late. it was believed that the only way to fight corruption in public contracting was through law enforcement and control. donors should assist governments in elaborating and enforcing procurement laws and procedural guidelines which comply with international standards. Transparency and Monitoring Good rules. state open bidding from pre-qualified suppliers as a principle. corrupt behaviour should be prevented by giving those involved in contracting the opportunity to avoid it and the pressure to do so. product specification. These rules should ensure that the different procurement functions and responsibilities (selection.xxix For many years. • These procurement rules should at least minimize confidentiality. after the damage has been caused. guarantee access to information. More importantly.).
using explicit criteria to award contracts. however. through information campaigns for small and medium sized businesses. Monitoring by local experts and independent oversight agencies can help make existing norms effective. It is the latter who lose out in corrupt . each with the appropriate expertise and resources for the specific function. and brings legitimacy to governmental decisions. committees and individuals. complainants and the general public. e. facilitates oversight and citizen participation. Civil society also has an important role to play in monitoring. and law enforcement mechanisms are often weak. It promotes transparency and accountability. Rules that follow these principles also provide a good basis to prevent corruption. • Written procurement procedures should outline the whole process.g. • Donors can also promote integrity in the private sector. Monitoring should also include an annual external audit. • Efficient management is one of the most effective preventive mechanisms.xxx different offices. Transparency International has developed and implemented a number of monitoring tools to increase transparency and access to information that involve cooperation between governments. • Rules are not enough. donors and civil society. Tools for improving electronic procurement systems are supported by the World Bank and other donors. • Access to information can be provided through documentation and communication systems. including online systems. where information can be shared with auditors. companies.
namely. may introduce unnecessary delays.2 Competitive Bidding Competitive bidding includes a good public procurement system that can ensure fair competition and best value for money. Systems usually plan punishment for 'bad behaviour'. Some tools that help to correct these inefficiencies may also prevent corruption and vice versa. are key in fighting corruption. Adequate training of procurement officers. but experience proves that rewards for good behaviour can motivate individuals.xxxi procurement deals as larger firms can more easily afford to position themselves vis-à-vis decision-makers.2. and give the criteria for choosing the winner . This means that a careful consideration of impact and implementation should be performed. it should feature: • • Public notification of bidding opportunities Documents that clearly set out the needs. speeding up the procurement process may increase the risks of corruption if transparency and accountability are not assured. 3. The development of codes of conduct for staff is also extremely important.2. if not implemented appropriately. Incentives promoting 'good behaviour' for individuals are also needed. Some contracting or procurement problems stem from inefficiencies in the contracting system. a strategy to prevent corruption. There is also broad agreement about the main elements in a competitive bidding process. describe the bidding process and contract terms and conditions. But this is not always the case. Conversely. the establishment of multidisciplinary and multi-party evaluation committees. For example. such as the performance-based staff incentive structures. rotation principles for procurement officials and the establishment of accountability and report procedures.
. Accordingly.2. to extend the obligation to keep accounts.2. to establish external monitoring systems and to improve public access to bureaucratic and political information. political commitment is a necessary condition for successful procurement reform.xxxii • Submission of secret sealed bids that are opened in the presence of the bidders at a specified time and place • Impartial evaluation and comparison of bids by competent evaluators without influence or interference by bidders or other parties • Award of the contract to the bidder complying with all requirements and offering the best bid. 3. secret connections.3 Political Commitment Research has demonstrated that the fight against corruption must start with an explicit commitment by the prime leadership of the country. Ending the pettier forms of corruption in the bureaucracy is almost impossible if grand political corruption persists.4 Uprooting of Corrupt Relationships Because the challenge in the arrangement of corrupt agreements is often the search for a proper counterpart. as defined by the published selection criteria. 3. An anti-corruption reform of the public procurement system depends on the political will to disclose the state budgets. Rotation of public officials responsible for procurement is one possibility. and further increase the transaction costs of corruption.2. an important anti-corruption strategy is to disturb these established.2.
2. And what is the definition of supplementary work? These questions should be clearly answered in the procurement contract. The state administration should apply private market prices as benchmarks and specify their requirements in terms of standard off-the-shelf items. tend to become much more expensive than envisaged in the first plans.5 Simplification of Rules It is important to make the underlying rules as clear and simple as possible. Does such kind of work have to go through a new procurement procedure? Or is it supposed to be carried out by the same enterprise? The latter might end up in a monopoly price if not prices of supplementary work are determined in advance.7 Supplementary Work In particular construction. the way additional work is specified in the contract is important.6 Bench-marking and off-the-shelf items The goods procured should be "simplified". This is a global problem. so that people know what an honest system is supposed to produce. Uncertain and variable rules tend to create opportunities for corruption. Anti-corruption benefits are just one of several economic reasons to prefer standardized products to more specialized custom-made or "state-of-the-art" products.xxxiii 3.2. but to a certain extent also procurement. . Information about areas of responsibility and degrees of discretionary authority among public officials should for instance also be made accessible to ordinary people.2. while decisions to change or supplement the project should be monitored with caution by officials external to the centre in charge of the contract award.2. This would reduce both the cost of procurement as well as the risk of corruption.2. 3.2. 3. Accordingly.
2. For discretional procurement decisions this represents a certain challenge. they should not just remain on the paper. Also to enable inspection of these judgments. an idea could be to establish other public offices with the same . specific objectives are the solution.9 Codes of conduct and rules of disqualification Rules to ensure integrity make it easier for public officials to renounce corruption. and not just one official. what to do when fraud or corruption is discovered among colleagues. In a given example where the office issuing drivers licenses frequently demands bribes. Monopoly suppliers are one element.xxxiv 3.2.2. 3. forms of communication and association with external agents involved in administrative cases. A step in that direction would be to include ethical standards in the legal framework.10 Competition Competition is usually efficient to curb corruption in procurement. Codes of conduct are a "compulsory" part of any procuring institution. a committee should respond. When significant problems arise during execution.2. but characterize all forms of bureaucratic activity. However.2. there will often remain an aspect of evaluation that is clearly individual. 3. times of execution. even when you have all papers in perfect order. costs of utilization to some extent can be monitored objectively. While elements like technical value. and what to do when uncertainty about these issues arises. Important elements are the way gifts and personal benefits should be treated. Codes of conduct are supposed to serve as an obstacle for private interests to interfere with those of the government. but also monopoly providers of public services can be problematic.2.8 Inspection All kinds of procurement decisions have to be monitored in some way.
Competition in the provision of public services has in some cases been forwarded as a possible solution.xxxv authority. governments are able to reduce the high cost of corruption in procurement. Successful implementation of the IP on a major project can go a long way to restoring public confidence in a country’s public procurement processes. So far. Obviously. The IP also introduces a monitoring system that provides for independent oversight and accountability. offer. privatization and licensing arrangements. the legal requirement will vary from country to country and that would need to be examined locally. or engage in such abuses while carrying out the contract. Through the use of the IP. collude with competitors to obtain the contract.Transparency International (Trinidad and Tobago Transparency Institute 2008) Integrity Pact The Integrity Pact (IP) is aimed at preventing corruption in public contracting. It contains rights and obligations to the effect that neither side will: pay.2. That way you could address the office which doesn't add the extra price the bribe money incurs.2. national or local level) and all prequalified bidders for a public contract. The IP has shown itself to be adaptable to many legal settings and flexible in its application. In the case of Trinidad and Tobago. 3. It consists of a process that includes an agreement (entered into before bids are invited) between a government or a government department (at the federal. demand or accept bribes. the IP has been successfully introduced in about 20 . no new legislation is required for its introduction.11 Anti-Corruption Tools Developed by Transparency International The following three anti-corruption tools have been developed by – or their development facilitated by.
000 UK companies and 200. and companies working in these sectors cooperate in the development and implementation of effective anti-corruption actions. The forum agrees and promotes anti-corruption actions in the infrastructure sector and liaises as necessary with government and other national bodies. Anti-Corruption Forums Another tool promoted by TI is the infrastructure anti-corruption forum. It uses a variety of measures . professional institutions and companies with interests in the domestic and international infrastructure. It is an alliance of TI’s UK chapter with business associations. The Project Anti-Corruption System (PACS) The Project Anti-Corruption System is an integrated and comprehensive system designed to assist in the prevention of corruption on construction projects. Over 1. business and professional associations. The members believe that corruption can only be eliminated if governments. despite lobbying by TTTI. The purpose of the UK ACF is to promote industry-led actions which can help eliminate corruption.xxxvi countries around the world with some major success reported. financiers. construction and engineering sectors. the government of Trinidad and Tobago is yet to use the IP on any of its projects. This is a private sector anti-corruption alliance between the infrastructure industry (represented by business and professional associations and companies) and civil society (represented by TI and other organisations with particular interest in the infrastructure sector). Regrettably.000 engineers and construction managers are represented on the Forum. In the UK an Anti-Corruption Forum (ACF) was successfully established in 2004.
b) modify its existing measures in accordance with the PACS Standards. In each project phase. It may occur at any level of the contractual structure. on all major participants and at a number of contractual levels. tender.xxxvii which impact on all project phases. execution. planning. It can take place during any phase of a project. PACS is modular system comprising: • standards that recommend anti-corruption measures which should be used on construction projects. sub-contractors. A government. and agents. suppliers. or a funder can: a) assess its existing project anti-corruption measures against the PACS Standards. corruption may involve any one or more of the participants i. financing. The developers of PACS have started from the premise that corruption on construction projects is a complex problem. design. financiers. operation and maintenance. extortion. It may occur in the form of bribery. project-owner. in order to implement its anti-corruption measures. government. a public or private sector project owner. appropriately customised. including project identification. state enterprises. joint venture partners. consultants. contractors. . and • templates that provide the tools by which the measures recommended in the PACS Standards may be implemented. fraud or collusion.e. and/or c) use some or all of the PACS Templates.
In some cases. regional firms must receive support politically and economically from the Governments of the region. The sheer size of the market in construction presents significant opportunities for competent firms and individuals no matter where they are based or their size. However a significant number of professionals in the region are of the opinion this may not always have to do with elements of industry efficiency per se and that the support. Construction is a major consumer of products from the primary sector as well as the manufacturing sector. The construction sector provides critical backward and forward linkages. provided they have the necessary interest. 3. Their presence was evident with the design and construction of the sporting facilities for the hosting of the Cricket World Cup matches. It is claimed that firms within the Caribbean Community (CARICOM) are not as competitive as they should be against firms from other parts of the world. The Chinese construction company – Shanghai Construction. Developed countries can also derive the benefits of the construction industry. was introduced to Trinidad and Tobago with the design and construction of the Prime Minister’s residence and diplomatic centre at cost of nearly TT$150 million.xxxviii 3. subsidies and incentives (albeit often hidden) available to foreign firms create unfair terms of trade and are largely responsible for the imbalances in ‘competitiveness’ as measured by winning international competitively bid contracts. It has since expanded further locally with the design and construction of cultural centres in Port of Spain and San Fernando and government office buildings and even houses in Tobago. opportunity and support. like in other countries. . the Government of China has financed these projects at concessionary terms. The region is also faced with the phenomenon of cheap labour from countries such as China and questionable working conditions.1 Chinese Experience in Trinidad and Tobago The Chinese presence began elsewhere in the region. However.3 Presence of Foreign Contractors In most developing countries the construction sector plays an important role in the developmental process.3.
the use of materials that may not satisfy local construction codes. no stakeholder consultation took place. there has been no consultation by government on the proposed plans. The designs of the Cultural Centres in T&T have been finalized without design inputs from the facilities intended users. after the fact. very limited consultation took place.d. In the case of the Prime Minister’s Residence and Diplomatic Centre. After much lobbying. the absence of independent supervision and certification of the designs and construction works. that the Chinese are supposed to be delivering projects much faster and more economically than local contractors (Lewis and Imbert n. Issues that relate to the importation of a foreign design style and culture. of the contract terms. Lack of Accountability The Chinese projects fail the ‘accountability’ test because there is no overseeing of the contractor’s work by independent competent local professionals.).xxxix There has been at least one report in the local press that a private developer was also using ‘Chinese labour’. the displacement of local consultants. and resulted in delays to the projects because of the resulting need to go back to the drawing board. or to Parliament. Lack of Transparency The Chinese projects fail the ‘transparency’ test because the details of the contractual arrangements between government and the Chinese contractors are being treated like state secrets. the importation of materials that are usually available locally. contractors and labour. Several issues arise from this development in the region. Generally. In the case of the the Prime . There has been no disclosure to the public.
when the Chinese labourers depart. therefore. simply due to the lack of information. • Secondly. The international norm is that competitive tendering is a prerequisite for ensuring value for money and every credible funding agency such as the World Bank etc. the Chinese contractors are not made to tender in competition with local or regional contractors. There was a failure in the appointment of local understudies on any of these projects.xl Minister’s Residence and Diplomatic Centre. . insist on it but for exceptional circumstances. maintenance of the buildings will require the sourcing of materials and equipment that are not readily available in the local market. Therefore. This conclusion can be drawn from the following observations: • Firstly. Trinidad and Tobago may be left in a situation where we may experience difficulty in maintaining buildings due to the lack of sharing of first-hand knowledge with the locals. Further. the tour by media and special guests. Further. there was an electricity outage during the first function. an important part of the ‘value for money’ equation which has not been met is the transfer of technology from the foreigners to locals. Value for money It is impossible to determine whether Trinidad and Tobago is receiving value for money from the Chinese awarded projects. no one is sure if contracts are awarded for the best price. If press reports are correct. the Electrical Stand-by Generator is reported to have failed to operate as intended because of design faults. It can be deemed that they fail to deliver value for money. in most cases. the outage was the result of the electrical design and installation not meeting the standards of local codes.
It can be concluded that the high influx of foreign contractors stifles the expansion of local content. This means that it reduces the chances for local people to earn income through employment on the construction site or in the supply industries.). . This gesture by the Government indicates the extent at which the potential of local contractors is viewed by the public. a local contractor Sharoz Enterprises Lrd. 3. According to the article “Local contractor praised” dated 22nd September 2009. will generate income locally and make a substantial contribution to economic growth.3 Recommendations Leveling the Playing Field The following describes recommendations and alternatives that should be introduced into the public sector (Lewis and Imbert n.2 Local Contractor Praised The reputation of local contractors in Trinidad and Tobago is at such a deplorable state that when a local contractor succeeds to deliver a project on time. Procuring services and goods from local contractors and suppliers and using techniques adapted to the local resource endowment. was commended by the Minister of Legal Affairs for delivering of St.xli These two issues have raised concern as to whether the Chinese contractors are receiving preferential treatment not enjoyed by local contractors (Trinidad and Tobago Transparency Institute 2008).3. It also reduces the opportunities for local businesses as contractors. their performance is well recognized and appraised. producers or suppliers of material and equipment and increased local knowledge and skills.3. 3. subcontractors. Mary’s Primary School on time and within budget despite Government’s preference for foreign contractors (Bethel 2009).d.
Institutional Strengthening • Local associations need institutional support for the further development of the professional bodies (e. • Review pre-qualification criteria. construction and installation works as in major turnkey contracts. with other firms to gain size and financial strength to compete for larger contracts. Restrict the right to Commercial Presence by a foreign firm when this can be shown to be detrimental to local firms. as consortia or joint ventures where appropriate. • • Address the issue of unfair tax concessions for foreign consultants and contractors. financing. which make them too big for local firms.g. tax-free status as a charitable body). Local firms need to collaborate. particularly the weighting given to ‘local experience’. • Facilitate access by local firms to funds to enable interest rate equalization and in the provision of insurance and bonds to alleviate disadvantages of the small size of the economy and firms. for example. • Government regulatory/approval agencies need strengthening with adequate professional resources. . Legislation is needed to codify building codes and expeditious approval of plans. Disaggregate very large projects into multiple contracts where feasible so that • Established protocols for consortia of local firms and joint ventures between local and foreign firms for adequate technology transfer and equitable sharing of risk. • Professional associations should have institutional representation on Boards of Directors of engineering related public sector institutions. Training and Recognition of Qualifications • Strengthen technical and technology-based training in the region.xlii • Avoid combination/multi-stage contracts. • Promote the use of uniform standards and specifications relevant to the region. responsibility and profits. which should be significant.
Information Flow and Access Both Governments and the private sector organizations have a responsibility: • To facilitate and encourage information flow through the local sector. • To establish and maintain an up-to-date website on the Caribbean Single Market and Economy and trade negotiations and agreements and their implications for the regional industry. proposals and tenders. This is the responsibility of the Caribbean Association of National Training Agencies (CANTA). • For regional equivalency and reciprocity. it is necessary that similar registration legislation be enacted in each country. educational and training programmes and human resources in the various categories of skills. tradesmen and craftsmen. • Limit foreign personnel to professional and senior supervisory staff. • The Caribbean Accreditation Council for Engineering and Technology (CACET) should be established as soon as possible and become a member of the Washington Accord. There is a need for an agreed standard for accrediting skilled artisans. Modified Procurement Strategies . • There should be mandatory local registration of all professionals and firms as a precondition for offering construction and installation services in the region. developmental and lending agencies would provide information on development plans.xliii • • Promote standardization of technical and technology-based training in the region. especially documentation and access to project proposals and data. • To carry out further studies into the performance of the construction sector for baseline data on construction costs. • To initiate a process whereby Governments. • There is a need for a system for reciprocal recognition of similarly registered and licensed professionals from other countries or regions.
This strategy involved a delay in the process of approximately six months to allow local contractors to participate in the project by entering into joint ventures with their foreign counterparts.xliv The Government of Trinidad and Tobago adopted a meticulous tendering process for the procurement of the Interchange Project along the Uriah Butler Highway. this strategy can be adopted for future projects as a method for improving the efficiency of public procurement (Tack Chan 2009). . Although this attempt was not successful. After considerable due diligence and independent verification a contract was signed with foreign contractor Vinci. This effort to include the local content into the project proved useless because not a single local contractor submitted a bid.
Weaknesses in this process include (Ministry of Finance of Trinidad and TObago 2005): 3. nor the preparation of Requests For Proposal (RFPs). These decisions permeate the process and affect the award of the contract. after the award of a contract.4 Public Sector Procurement Process Since as early as 1987 there have been several attempts to reform the current public procurement process. the CTB has no direct involvement in the design of the Terms of Reference (TOR). while at the same time limiting its activities mainly to the tendering stage. as prescribed particularly in relation to the award of contracts. The processes.4. the CTB in many cases refers the documents back to the client Ministry/Department as a consequence of . The underlying principle of accountability in the CTB Ordinance was compromised by prescribing the CTB as the procuring agency of the State.xlv 3. In law.1 Deficiencies in the Legal and Regulatory Framework The existing procurement legislation is considered archaic by all stakeholders and in need of major reform if it is to meet current needs and to conform to current best practice.1) The critical decisions involved in spending public money for property and services are made at step 1 of the procurement cycle. nor the monitoring or the execution of the contract. Even within its realm of responsibility. (see Figure 2. Further. do not reflect involvement in the full procurement cycle. all matters that are dealt with fall within the domain of contract law to which the CTB cannot be a party.
These limitations effectively put the procurement activity of these projects outside the ambit of the CTB. which appear to predispose a particular outcome in contradiction to the principle of fair competition. suppliers and consultants share the view that there are too many stages in the procurement process. The Ordinance does not apply to tendering on financial matters and as a result does not accommodate these systems. different forms of project delivery systems such as Design Finance Construct (DFC). As a consequence.2 Absence of Uniformity in the Tendering Process State-owned enterprises and NIPDEC are fully responsible for their own procurement activities. They argue that the resultant delays affect tender prices and more often than not justify price increases since the validity period of three months expires before a contract is awarded. especially where it is necessary to go back and forth from CTB to client.4. 3. In addition. the process is often delayed. Some contractors.xlvi obvious faults. amendments to the CTB Ordinance have led to the use of off-budget arrangements and the proliferation of procurement activities not covered by the legal and regulatory framework. These procuring entities tend to use their own . and compromises the integrity of the procurement process. Build Own Lease Transfer (BOLT) and Build Own Operate Transfer (BOOT) are used to shorten the procurement cycle. Because of concerns that the procurement procedures are outdated.
works and services areas. The organization is restricted also in its ability to be current with present practices in a rapidly changing technological environment. . procurement is not looked upon as a professional discipline in its own right. Currently. Many State-owned enterprises. The net result is a complete lack of standardization at all levels of the procurement cycle. However.3 Human Resource Limitations The current staffing and training of the CTB’s personnel constrains the organization’s ability to adequately service ministries and departments. also lack staff properly trained in procurement. in practice this uniformity has not been achieved. This contributes to delays in the preparation and execution of contracts and is a major deficiency in the system. 3. thereby creating unnecessary parallel systems.4. NIPDEC and Statutory Bodies. While the CTB has striven for uniformity in the tendering process. In fact.xlvii standard bidding documents (SBD’s) and procedures. it is neither staffed nor structured to deal efficiently with the volume and complexity of the work involved or with rapid changes in technology contracts. and particularly so in the standardization of bidding documents. the office of the Chief State Solicitor prepares all major contracts in the goods. Standardization is an essential prerequisite for the utilization of digital technology and the modernization of organizational processes.
6 Lack of National Registry Each procurement agency keeps its own register for inviting bids. However.4 Lack of Regulatory Oversight The partially decentralized nature of the current system extends the contracting authority among the various players without providing adequate monitoring. under the Constitution.4. 3. There is no national . 3. The CTB does not have the authority to regulate. there is no formal independent complaint and dispute resolution mechanism in place. and uses its own procedures for prequalification registration. Cabinet has authority to direct Ministries/Departments to use selected State-owned enterprises under Section 20A (1) (c) of the Ordinance thereby bypassing the regulatory oversight of the CTB.5 Absence of a Complaints Mechanism and Dispute Resolution Although the CTB receives and acts upon supplier complaints with respect to the procurement process.4. In most cases. the Auditor General is responsible for auditing and reporting annually on public expenditure matters.4. these companies lack the technical capability to conduct the activities under contract and award sub-contracts using their own procurement rules and procedures. The regulatory procurement framework lacks the authority to audit the procurement system and ensure compliance with the rules and procedures for the award and implementation of contracts.xlviii 3.
or the progress of major projects.xlix registry of contractors.4. 3. The absence of such a registry creates additional work for consultants and contractors by having to register with the various agencies. . up-to-date and electronically accessible information on tender opportunities. on the contents of such records and the maintenance period that is applicable to all procuring entities.4. 3. Furthermore.8 Concerns of Local Suppliers Notwithstanding the Government’s stated objective of supporting the development of local industry. the publication and status of bids and awards. consultants and suppliers. consultants and other suppliers do not believe that they are being fairly considered in the tendering process.9 Poor Data Collection and Reporting Procurement records are maintained by both CTB and State-owned Companies. There are concerns that some SOEs negate fair competition by the use of the selective tendering process without due regard to the prequalification or registration criteria. There is no minimum requirement. The Ordinance does not stipulate any guidelines or restrictions limiting the use of this method of procurement.7 Lack of an Electronic Public Information System There is no system in place to provide suppliers or the public at large with full. however. there is no adequate centralized reporting of the awards of government contracts.4. local contractors. 3.
open and above reproach. respect and integrity. and those in operation by multilateral financial institutions. be publicly acknowledged as fair.l 3.1 Operating Principles for Best Procurement Practice Based on a survey of a number of reformed procurement systems in the Commonwealth. These principles are . These efforts are leading to general agreement on what constitutes good public procurement practice. and be alert to the impact of technology in the marketplace and avoid bureaucratic red tape. some core operating principles which characterize these systems have been identified. including Jamaica and Australia. clearly identify relevant decision-makers. involve civil society as a check and balance to ensure transparent practices. promote the competitiveness of local business.10 Current Best Practices In response to the evolving complexities of the global marketplace. • • • • promote competition and not discriminate. An analysis of these reform efforts suggests that any system of public procurement should: • • • be efficient and reflect best business practice.4. 3. • be ethical: the conduct of all parties must be that of mutual trust. many countries are reforming their governmental procurement systems.4.
How these principles are implemented in best practice is outlined below.4. It is the best combination of price and quality to meet the particular need. It does not necessarily result in the lowest priced goods available or the absolute highest quality available. identify with the public interest. Transparency and Accountability. • the cost of maintenance support. They redefine the economic concerns. 3. and • the anticipated price on disposal.1 Value for Money Value for Money in the context of current best practice in procurement means the attainment of the best combination of price and quality to meet the particular need in the shortest possible time.li primarily Value for Money. . It is essential that procurement attains the best quality of property and services for the price that is paid.1. • financial considerations including the source and cost of funds. and impact the procurement process. quantitatively and qualitatively. but also: • the performance of the suppliers in meeting their contractual obligations. An assessment of Value for Money must take into account not only the immediate cost of property and services procured. or the lowest price for the acceptable quality of property and services.
Measures which might be employed to effect Value for Money include: • Undertaking of value analyses for contracts over a specified limit. 3. • A registration system of endorsed suppliers. contractors and consultants who get preferential consideration for contracts by virtue of that registration after a thorough prequalification or evaluation exercise. • The use of measurable criteria to determine the best combination of price and quality.4. • Greater use of standard clauses in Conditions of Contract. • Public consultation on the rationale and elements of major projects during the design phase before the bidding documents are finalized.2 Transparency Transparency through internal and external scrutiny is an essential element of accountability and should be an inherent characteristic of all processes and procedures. life cycle costing must be done as part of the evaluation process leading to the recommendation for award. • Monitoring of the execution of large contracts by civil society. • Prompt payment of suppliers. • Coordinated purchasing by Government departments to take advantage of volume discounts (bulk purchasing). contractors and consultants by Government agencies and the introduction of penalty interest in the event of late payment. actions or decisions relating to .lii In other words.1. plans.
• • • oral debriefing of all unsuccessful bidders by the awarding agency. Some measures employed in other jurisdictions to incorporate the principle of Transparency into the procurement process are: • public reporting. incorporation of the draft Agreement and/or Contract in the tender documents. it is a generally stated imperative of reform that procurement systems be transparent. The potential suppliers of property and services must have full access to information on procurement requirements. and reasons for selection of the supplier. agreements. Bids are opened publicly and all decisions are fully recorded and published. Best procurement practice requires that all information regarding the process be in the public domain. reporting of details of awards. public access to details of different tendering procedures. Given that procurement systems are a key indicator of the prevailing culture of governance. and the Internet. for example a Procurement and Disposal Gazette. rules and decision-making criteria. particularly with respect to details of bids and awards. • • greater use of e-procurement. of all business opportunities in an adequate and timely fashion and in a separate gazette. . The public is therefore able to debate the rationale of projects. particularly the large ticket items or those of strategic importance. contractor or consultant.liii procurement. and to monitor the implementation of contracts awarded.
liv • • publication of bids and awards with price; incorporation of specified ethical standards and codes of conduct into the Terms of Reference, Requests for Proposal, tender notices and letters of invitation
In the context of current best practice in public procurement, officials of buying agencies are not only clearly identified but are held directly accountable within the framework of ministerial responsibility to
Government, Parliament and the public. In conducting their duties, they are protected from the undue influence of the Executive. They are obliged by law to ensure that their procurement practices reflect the policies and principles that are specified. In addition, they are subject to heavy penalties and personal liability if the policies and principles laid down are not manifested in transactions involving public money. Some measures in current best practice to incorporate the principle of Accountability in procurement are: • all interested parties are required to sign a joint undertaking guaranteeing the integrity of the process and accepting sanctions in the event there is a lapse, arbitration in the event of disputes, and monitoring by a third party such as a civil society body; • identification of contact persons and relevant decision-makers together with details of the extent of their authority and contact information;
lv • keeping of proper auditable records, which can be scrutinized at any point of the process; and • instituting and enforcing heavy penalties for parties in transgression as well as adverse publicity and debarment from future consideration both in their corporate and individual personas.
3.4.2 Legislative Models Effecting Current Best Practice
The Prescriptive Model The UNCITRAL model law typifies this model. It prescribes in detail for the purchaser as decision maker a range of procedures for different types of transactions that reflect the principles of value for money and good governance. Some consider this model to be a more relevant and sophisticated version of the current model of the CTB Ordinance. Like the Ordinance, it does not address the contract implementation phase. Modification of any of its provisions requires Parliamentary approval. This results in some operational rigidity making it less suitable for a rapidly changing environment. Generally the provisions in the UNCITRAL Model Law treat in detail with the process of solicitation, pre-qualification proceedings, submission of tenders, evaluation of tenders, principal methods of procurement, and alternative methods of procurement such as two-stage tendering,
competitive negotiations and single service procurement. The Institutional Model
lvi This model, reflected in the Contractor General Act of Jamaica, concentrates on establishing the institutions involved in managing
Government contracts together with their reporting relationships. The Jamaican law establishes the office of Contractor General as a Commission of Parliament to ensure that the award and implementation of Government contracts do not involve impropriety or irregularity. It constitutes the National Contracts Commission to promote efficiency in the award and implementation of contracts. Specification of procedures and monitoring are the responsibility of these institutions. The law does not explicitly adopt the core principles of value for money, transparency and accountability nor does it explicitly draw the link between procurement and policy objectives. The emphasis is on investigation and sanctions. The Principle Model The conceptual basis of the legal framework of this model is the ethical use of public money and public property by an agency within the prescribed principles of Value for Money, Accountability and Transparency. The legislation, in addition to prescribing the principles, also establishes the broad parameters that promote best procurement practices. This is achieved by the development and implementation of mandatory guidelines which are amplifications of the operating principles, and address issues such as: • the requirement that procurement specifications are rendered in functional and performance terms;
achievement of good governance. open and effective competition which would include public notification of opportunities and of evaluation criteria to be used in the bid process.lvii • means of improving the cycles of competitive tendering and contracting. • • preferential treatment afforded to local suppliers. • a joint undertaking by all parties to comply with an agreed code of ethics. . bonded suppliers in the case where the prime responsibility for procurement resides with individual buying agencies. • • • determination of Value for Money. • • • publication of details of contracts. review of the procurement process at critical points of the procurement cycle. and the impact of other policies. • • public consultation on major contracts. an endorsed supplier system. such as those pertaining to national competitiveness and industry development. on the procurement process.
greater public accountability. increasing decentralization of Government functions.4.4.3. statutory bodies and private organizations. the disparate objectives of public procurement. the trend increasingly is towards the achievement of public objectives through contractual arrangements with State-owned enterprises. consistency with and support of government policies. greater discretionary powers of public officials.lviii 3. and the weaknesses of the current system have led to the need to regulate procurement in new ways. The framework must reflect the various objectives and the relative weights given to these objectives. While the attainment the of Government’s of policy objective Ministries is and conventionally through operation Government Departments. these objectives must include: • • • • value for money in public spending. Any discussion for a preferred procurement model for Trinidad and Tobago must therefore acknowledge the increasing use of these bodies and agencies as a common means of achieving Governmental objectives. incorporated and unincorporated.3 The Preferred Procurement Model 3.1 Introduction The emergence of the global economy. promotion of greater transparency in public procurement. . In the context of Trinidad and Tobago. The success of the procurement system depends on a clear articulation and understanding of what the legal and regulatory framework seeks to achieve.
all money received by a non-public body. Critical to the new procurement regime is therefore a clear understanding of “public money” which. as articulated in legal models reflecting current best procurement practice and effective accountability. It is the use of “public money” that determines the degree of public accountability for expenditure – not the institutional or organizational framework of the spender. • and efficiency. A regulatory framework that accommodates the demands of these objectives is the Principle Model. and a trade-off between control. regardless of source. flexibility.lix • • effective and efficient contract performance. all money received by a public body. appropriately modified to take into account the domestic environment. judgment and innovation on the other. The legal framework will embrace expenditure by – . encompasses: a. rules. The underlying philosophy of the Principle Model is that once a body is spending public money there follows an obligation on that body to account for Value for Money – which by definition encompasses efficient and effective delivery of the property and services for which public money is spent. regulations and accountability on the one hand. balance between a commitment to develop local businesses and the need to • • provide a level playing field. from a public body. and b.
3. The proposed new procurement regime must deal therefore with all components of the public procurement cycle and affect all involved in public procurement without fear or favour. It provides an overarching framework for all agencies involved in procurement using public money with immutable parameters in which the operating principles and guidelines are not negotiable.4. public accountability may exist for private money where that money is used for a public purpose even though the spender may be a private organization generally raising funds independently of the State. appropriately adapted to the economic.2 The Preferred Model Government’s policy. but whether or not it can be reasonably inferred that the ultimate financial responsibility is to be borne by the State. as articulated in Vision 2020. the Principle Model. In addition. The test lies not with the mode of incorporation or even the extent of public control or funding.3.lx a. a private organization for a public purpose regardless of the source or type of funding where it can be reasonably inferred that the State is ultimately liable. or b. and best practice in public procurement. a public organization for a public or private purpose. From this perspective. is for greater transparency and accountability in public sector decision-making. This Model addresses many of the weaknesses with the current system: . social and political environment of Trinidad and Tobago is the preferred model.
3. The most critical constraint to local construction firms winning contracts is lack of access to capital. Ghana contractors complained of having to pay import duties and VAT on metal framework imported from Spain. while foreign contractors can bring in such . • It provides a specific dispute resolution mechanism and proposes clear sanctions in the event of breach. the policy of bundling contracts which favours large firms and financial constraints. particularly working capital. particularly in construction. thereby enabling greater scrutiny by the public. • It enables greater monitoring of contract execution. • It enables stakeholder participation in the development of policies and guidelines. One of the key advantages of Chinese contractors in construction markets is their ready access to cheap finance from state owned banks. • It removes ambiguities in the reporting relationships and strengthens Parliamentary oversight of public expenditure in procurement. concessions which are denied to domestic contractors. • It enables flexibility to accommodate technological change. These include the high fixed costs of access (regulation and prequalification costs).lxi • It recognizes the validity of the tendering process of agencies while providing an overarching uniform system which affects all transactions. the high costs of tender information. • It increases openness and accountability.5 Funding Funding is one of the difficulties encountered by local enterprises (many of which are small) in accessing the public procurement market. In a recent study. Foreign contractors often get tax concessions on imported materials and equipment.
requires strict controls on the purchasing. The above factors combine to ensure that providers of construction services from the least developed countries are often unable to compete for projects in their own home markets. While supply side assistance is also needed. storing and issuing of materials.5. It would open up the public procurement market to the large number of labour contractors who do not have the capital and are not willing to take the risk of supplying materials. This approach. . • • Waiving or lowering the requirement for performance bonds Lowering the cost of accessing tender information by either charging for the cost of reproducing the documents or supplying the documents free of charge • • Introducing a prompt payment regime Providing cash advances Government should also consider separating the purchase of materials from the provision of labour services as this may give better outcomes in terms of utilizing local contractors and suppliers. 3.lxii items duty free (Wells and Hawkins 2008).1 Recommendations The following list includes solutions that Government can adopt in order to get more local contractors involved in the public procurement processes. the fact remains that lack of access to the market is the most critical factor inhibiting the development and growth of many small local producers. however. At the same time it would give the client greater control over the source and quality of materials.
Labour.1 Registration A possibility exists that the local contractors are not familiar with the registration process which .6. . and familiarity with new technology required for Mega projects is as a result of the level of procurement experience and expertise in local actors. Skill. registration.may discourage local contractors and suppliers from tendering for public projects. Registration. Management. This dilemma is due to the absence of a system to efficiently provide suppliers of property and services and the public with all the relevant. labour. • Limited utilization of project management best practices • Lack of expertise in certain specialized fields e. smart buildings • Greater affinity to “good enough” than “excellent” • Lack of consequence and project recovery 3. management. hotel renovations. Familiarity with New Technology Required for Mega Projects Incompetency in local contractors’ organization.lxiii 3. skilled and unskilled labour moving from company to company) and low investment in systems and skills development by consultants/contractors to increase capacity. Local contractors in Trinidad and Tobago currently exhibit the following features which prove to be a hindrance to the development of efficient public procurement processes. skill. A quick review of Trinidad and Tobago’s current local environment reveals that in this very heated construction industry with demand exceeding supply for construction services there exists a high mobility of critical resources (professionals.g.6 Weakness of Local Contractors’ Organization.
Misuse or failure to implement project management strategies can result in poor and inefficient public procurement processes. Some recent mega-projects that were awarded to foreign contractors include (Gumbs-Sandiford and Anika 2010): • Shanghai Construction Co: 1.2 Management A failure of local contractors to adopt project management best practices can result in foreign contractors being favoured by the Government. Carnival Entertainment Centre – $450 million .4 Skill and Familiarity with Mega Projects Britain’s Major Projects Association (MPA) defines major projects as “those which require knowledge.6. their resources are stretched and they fail to keep project delivery schedules and cost overruns.lxiv 3.6. NAPA (north) $480 million and south $600 million 2.3 Labour Mainly in the construction sector there is a shortage of labour. 3. skills or resources that exceed what is readily or conventionally available to the key participants” (major Projects Association 2008). Outdoor stage at the St Ann’s residence of the prime minister – $10 million 3.6. 3. There practices mainly focus on efficient resource and time management. It is known that local contractors in Trinidad and Tobago are always busy. It is with this stipulation that the Government is forced to procure mega-projects to foreign contractors since local contractors fail to posses the required set of skills and knowledge for handling this type of project. this problem poses a disadvantageous situation to local contractors in that they stand the chance of being offered a sub-contractor role to the foreign contractors.
what failed and why. Port-of-Spain International Waterfront – $18 million 3. what worked. Completion of the Scarborough Hospital – $241.6.7 million. Interchange along the Uriah Butler Highway – $166. • Government can devise a plan for the transfer of technology and building skills from the foreign contractors to the local contractors • Benchmarking – In cases where a similar project exists in the world. the Government can find out about the experience of those that have done it before.lxv • Vinci Construction: 1. • China Railway Construction Corp: 1.5 Recommendations The following include strategies that can be adopted to improve the skills and competence of the local contractors.3 million • Genivar: 1. • Investigations on a contractors’ workload and resource availability should be made prior to tender invitation • Implementation of a system to efficiently inform contractors on the required registration process • Establishment of programmes that enforce the use of project management best practices and training in these areas should be offered to local contractors .
It was noticed that there is a high level of integration and overlapping of the challenges and the recommendations for one particular challenge may in fact eliminate the occurrence of another. . a solution to the funding issue will reduce the need for foreign contractors which can further lead to a boost in the local content of Trinidad and Tobago and the entire public procurement system. the presence of foreign contractors is highly related to the fact that local contractors are unable to fund projects. For instance. Therefore.Conclusion The analysis of the challenges faced by the current public procurement system in Trinidad and Tobago revealed its weaknesses and it also addressed possible outcomes.lxvi Chapter 4 .
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. and John Hawkins. 2008. Wells. http://www. Briefing note. 2010). Increasing local content in the procurement of infrastructure projects in low income countries.lxviii U4 Anti-Corruption Resource Center.u4.no/themes/procurement/procurementintro. Jill.cfm (accessed April 20. Institute of Civil Engineers. Corruption in public procurement.
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