Government contract awards: less waste and fraud, more social justice

Dec 18, 2011 APNU Column, Features / Columnists

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It comes as no surprise that many persons in recent weeks have already placed the Government contracts award system (the Public Procurement system) on the top of the list for a major overhaul by the new Parliament. Public Procurement has long remained a source of open political friction, coupled with the fact that the system is riddled with colossal waste and fraud.
Between 2007 and 2010, the government awarded over $170 billion in contracts. From the 2011 national capital budget alone, the government is expected to spend over $62 billion on procuring goods, services and on construction works. All of this money is awarded through the tender boards to bidders in a manner that has served the country badly.
The Public Procurement system must be urgently overhauled to achieve three major improvements and thereby deliver more benefits to a wider cross-section of Guyanese citizens and communities. These improvements are: (i) the minimization of waste, irregularities and outright corruption, (ii) increased transparency and public access to information on contract awards, and (iii) very important, the use of public procurement as a vehicle to promote equality and social justice.
Firstly, assessments by the country’s Auditor General and the World Bank repeatedly confirm that public procurement in Guyana remains a model of waste, irregularities and fraud.  One major problem concerns the number of cases where only one or two persons within Ministries and regional administrations (instead of the statutory bid evaluation committees) decide which bidder gets a contract. Minutes of their meetings are rarely kept.
Another complaint involves the large volume of single source or direct contracts being awarded despite the fact that the law makes competitive tendering obligatory. In this particular regard, the World Bank reports that between May and December 2006, a total of 261 contracts out of 803 (32.6%) were single-source (Guyana Integrated Fiduciary Assessment, 2007. Volume III: Procurement System Assessment Report. p8).
It is reported, also, that a number of contract awards deliberately bypass the supervision of the national tender board either through contract splitting or outright disregard. All told, we are witnessing a serious breakdown in the management of critical public funds.
Secondly, the Public Procurement system is devoid of the transparency and public access to information that the law explicitly mandates. The 2003 Public Procurement legislation requires the Government to publish on a website information on all contracts above $200,000 awarded by the Central and Regional Governments.
By law, therefore, citizens are entitled to know details such as the names of awardees, the dollar value of awards, the nature of the goods, services or works procured, and the names and number of bidders. Since 2006, the Central Government (mainly Ministries) alone has awarded over 12,000 contracts.
Only 280 of these are available for public scrutiny on the website of the National Procurement and Tender Administration (NPTA), the central procurement authority in Guyana. In monetary terms, this amounts to just 10 per cent of the over $170 billion the Government spent from its capital budget between 2007 and 2010.
The thousands of contracts awarded annually by the ten regional administrations are also required by law to be publicly disclosed, but absolutely none is available for such scrutiny.
The above-mentioned 2007 World Bank study had cause to lament that “In addition to logistical restrictions to disseminate information to the general public, it has also been noted that no priority attention is paid by the higher management of the GOG in disseminating procurement-related information. Although the Ministry of Local Government concurred to make the minutes of bid opening and the awarded contract records available for the purposes of this exercise, it required the approval of the MOF, which was not granted. The same situation existed with some of the ministerial tender boards.”
Thirdly, if one examines procurement as a vehicle to promote equality and social justice, one sees no inclination by government towards this approach. It is now, however, a well-established practice by governments worldwide to use their power as the largest purchaser in the market to advance a variety of socio-economic outcomes.
Public Procurement has become much more complex than “the purchase of pens and paper clips”. The US has long led the way in using contract awards to advance social goals. Under its affirmative action policy, for example, minority groups bid for contracts that are set aside only for them. Canada, Malaysia, South Africa and Northern Ireland are among a host of countries that likewise use public procurement to achieve more social equality through targeted approaches.  Guyana must adopt this practice.
In Guyana, several important social goals recommend themselves. First, of course, is the promotion of equality of opportunity in business and employment for all racial groups including Amerindians. A second and closely-linked goal is to help spur development in depressed communities.
Thirdly, we can use procurement to develop women-owned businesses or businesses that employ a large number of women.  Procurement can also be used as a mechanism to help people with special needs as well as laid-off sugar and bauxite workers.
We reiterate, therefore, that given Guyana’s social, political and economic makeup, the Public Procurement system must not only be firmly rooted in good administrative and financial management, it must also be designed to contribute to achieving a fair and just society.
A new and enlightened policy must reduce already-existing negative consequences (such as the huge racial, gender and community imbalance in the distribution of public contracts) as well as create fresh positive outcomes (such as the creation of employment and small businesses in needy areas).
The new majority opposition Parliament will have to use its clout to bring about a total revamp of the public procurement system for the benefit of citizens of all groups, statuses and communities.

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