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Article 59 – Public Procurement – An Effective Vanguard of The Public’s Interest or a Paper Tiger

Martin George & Company > DAILY LEGAL LESSONS  > Article 59 – Public Procurement – An Effective Vanguard of The Public’s Interest or a Paper Tiger

Article 59 – Public Procurement – An Effective Vanguard of The Public’s Interest or a Paper Tiger

Public Procurement – An Effective Vanguard of The Public’s Interest or a Paper Tiger

Attorney at Law
Martin George
Trinidad and Tobago

Attorney-at-law
Martin Anthony George & Co.
Attorneys-at-law

(Research Assistance provided by
Darrell Bartholomew, Attorney at Law)

MAGCO DAILY LEGAL LESSONS

DISCLAIMER: Please note this does NOT constitute LEGAL ADVICE or LEGAL CONSULTATION, which you should get from your own Attorneys and this is being shared with the general public for the purposes of information and discussion ONLY.

INTRODUCTION

Procurement refers to the process by which an entity purchases goods and services, normally in the context of a business, company, government organisation or non-governmental organisation. Generally speaking, and whether the procurement is being undertaken by a public sector or private sector organisation, there are likely to be established policies, procedures, rules and regulations in place, which set out how goods and services are to be acquired, and these are normally in place to minimize or eliminate altogether, the risk of corruption, collusion, nepotism, and misconduct, among other things.

So, for example, in the private sector, a business or a company may formulate its own set of internal rules and regulations with respect to how the procuring of desired goods and services is to take place. This may take the form of a Procurement Department, with dedicated individuals on board to manage the different steps in the process, such as collating the procurement needs of the business or company, liaising with suppliers and service providers, following up on orders, ensuring that timelines for deliveries are made, and once goods and services have been received, making sure that suppliers and service providers are paid. In the public sector, the management and execution of procurement-related activities may also take the form of a Procurement Department or Unit, with staff performing roles such as Procurement Manager, Procurement Supervisor, and Procurement Specialist. They are responsible for the same activities as highlighted in the private sector, with the major difference being that the rules and regulations which guide their operations are derived from legislation made by the Parliament and Orders made by the relevant Government Minister as the case may be. In the public sector sphere, this interplay between the various pieces of legislation, regulations, Orders, and personnel may be loosely referred to as Public Procurement.

LAW

Here in Trinidad and Tobago, the Public Procurement and Disposal of Property Act Chapter No. 1 of 2015, which was fully proclaimed in April 2023, overhauled the existing legislative framework as it relates to public procurement. Prior to this Act, the Central Tenders Board Act Chapter 71:91 contained the legislative provisions applicable to public procurement.

The preamble to the Public Procurement and Disposal of Property Act Chapter No. 1 of 2015 states that it is “An Act to provide for public procurement, and for the retention and disposal of public property, in accordance with the principles of good governance, namely accountability, transparency, integrity, and value for money, the establishment of the Office of Procurement Regulation, the repeal of the Central Tenders Board Act, Chap. 71:91, and related matters”.

Public procurement is defined in Section 4 of the Act as:

“the acquisition of goods, works or services involving the use of public money.”

The Act applies to public bodies and to public-private partnership arrangements. A public body is defined in Section 4 of the Act which provides a list of public bodies as follows:

“(a) the Office of the President;
(b) the Parliament;
(c) the Judiciary;
(d) a Ministry or a department or division of a Ministry;
(e) the Tobago House of Assembly, or a division of the Tobago House of Assembly;
(f) a Municipal Corporation established under the Municipal Corporations Act;
(g) a Regional Health Authority established under the Regional Health Authorities Act;
(h) a statutory body, responsibility for which is assigned to a Minister of government;
(i) a State-controlled enterprise;
(j) a Service Commission established under the Constitution or other written law; or
(k) a body corporate or unincorporated entity–
(i) in relation to any function which it exercises on behalf of the State; or
(ii) which is established by virtue of the President’s prerogative, by a Minister of Government in his capacity as such or by another public authority; or
(l) a body corporate or unincorporated entity in relation to any function, project, scheme or arrangement which involves the use by it, of public money;

As a general guide to its operations, Section 5 (2) mandates that public bodies are to carry out public procurement and the disposal of public property in a manner consistent with the Act. Further to that, Section 6 (1) provides that:

“6. Subject to subsection (2), any procurement of goods, works or services or retention or disposal of public property that is not done in accordance with this Act and any procurement contract or agreement that is not entered into in accordance with this Act shall be void and illegal.”

Section 7 of the Act, inserted by the Public Procurement and Disposal of Property (Amendment) Act 2020, set out some exclusions in terms of the Act not applying to certain services. The relevant parts of Section 7 are as follows:

“7. (6) This Act shall not apply to the following services provided to public bodies or State-controlled enterprises–
(a) legal services;
(b) debt financing services for the national budget;
(c) accounting and auditing services;
(d) medical emergency or other scheduled medical services; or
(e) such other services as the Minister may, by Order, determine.
(7) An Order under subsection (5) shall be subject to affirmative resolution of the Parliament.”

Section 7 (6) of the Act is a very important provision, as it gives the Minister the authority to determine additional services which may be exempt from the rigours of the Act, and the affirmative resolution referred to in Section 7 (7) means that any such Order made by the Minister requires Parliamentary approval before it becomes binding law.
Section 9 of the Act established the Office of Procurement Regulation (OPR), and Section 13 of the Act sets out in detail the functions of the OPR. Some of those functions are to:


(a) establish a comprehensive database of information on public procurement, including information on tenders received, the award and value of contracts, and such other information of public interest as the Office thinks fit;
(b) set training standards, competence levels and certification requirements to promote best practices in procurement;
(c) issue and review guidelines in relation to public procurement and the retention and disposal of public property, including model guidelines for special guidelines under sections 30(1)(b) and 54(1)(b);
(d) prepare, update and issue model handbooks, incorporating standardized bidding documents, procedural forms and relevant documents for use in public procurement and the retention and disposal of public property;
(e) approve, in respect of each procuring entity, special guidelines and handbooks in relation to public procurement and the retention and disposal of public property;
(f) promote the use of technology in public procurement and the retention and disposal of public property;
…”

RECENT AMENDMENTS TO THE LAW

In July of this year, amendments to the Act by virtue of the Public Procurement and Disposal of Public Property (Amendment and Validation) Act 2023 were passed in the House of Representatives and in the Senate, which were then assented to by the President on 26th July 2023. Section 7 of the Act was amended so that Section 7 (6) (e) now provides that:

“7. (6) (e) such other services as the Minister may, on the recommendation of the Office or upon the initiative of the Minister with the agreement of the Office, by Order, determine.”

In addition to the above, Section 7 (7) of the Act was also amended (partially due to an alleged drafting error), and resulted in the affirmative resolution requirement being removed, so that the provision now reads as:

“7. (7) An Order under subsection (6) shall be subject to negative resolution of the Parliament.”

In stark contrast to the position before this amendment, Section 7 (7) of the Act means that Orders made by the Minister pursuant to Section 7 (6) (e) of the Act automatically become law, and do not require any additional approval or debate from Parliament.

However, in what is possibly the most talked about amendment to the substantive Act, a new provision was inserted into the Act in the form of Section 58A, which provides that:

“58A. Subject to regulations made under section 63, the procurement of goods and services up to one million dollars are exempt from the procurement requirements under this Act.”

Essentially, what this amendment means is that the procurement by a public body or a public-private partnership arrangement of any goods and services which fall below the newly introduced threshold of One Million Dollars ($1,000,000.00) is not within the purview of the Act.

PRACTICAL EFFECT OF THE 2023 AMENDMENTS

What does the addition of the One Million Dollars ($1,000,000.00) threshold really mean for public procurement and the effectiveness of the Act moving forward? It is arguable that instead of all procurement being subject to abiding by the processes stipulated in the Act, the Act now seems to be geared towards large expenditures. However, this raises the possibility of large work packages being broken down into smaller work packages of just under One Million Dollars ($1,000,000.00) each, which would now make them each insufficient to meet the threshold to invoke the oversight of the Procurement Regulator and of the Procurement Act. In terms of the provision of services such as legal, accounting, auditing, and medical services, these have been made exempt from the Act and it is very interesting to see what additional exemption the Minister may add in the future.

Regarding the former affirmative resolution requirement, had this not been amended, it would have meant that each time the Minister sought to exempt the provision of some service from falling within the boundaries of the Act, any such proposed exemption of services would have to face extra scrutiny from Parliament, be the subject of likely rigorous debate, followed by active approval from both Houses of Parliament. This tighter control is likely what the Act in its original form had envisaged. However, with any prospective Ministerial Orders now being subject to negative resolution by virtue of the 2023 amendment, any exemption proposed by the Minister via an Order automatically becomes law on the day the Minister signs off on it, and for this to be undone, Parliamentary approval must be obtained. This removes the hurdles of extra scrutiny, inquiry and debate, and may effectively mean that the Minister is free to exempt any service in future from having to conform to the Act.

Quite simply put, the 2023 amendments to the Act, particularly that of the One Million Dollars ($1,000,000.00) threshold and the introduction of the negative resolution procedure instead of the pre-existing affirmative resolution procedure, beg the question of what consequences, if any, does the Act now hold for public procurement, given that there are now potential workarounds in place, effectively changing it from being a vanguard of the public’s interest to essentially a paper tiger.

© 2023 MARTIN ANTHONY GEORGE & CO

MAGCO DAILY LEGAL LESSONS

Public Procurement – An Effective Vanguard of The Public’s Interest or a Paper Tiger

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