Weak procurement processes lead to US$140M loss annually - Goolsarran

Weak procurement processes lead to US$140M loss annually – Goolsarran

Jun 07, 2015 News

By Kiana Wilburg
Chartered Accountant, Anand Goolsarran, contends that the weak systems of the National Procurement

Chartered Accountant, Anand Goolsarran

and Tender Administration Board (NPTAB) need to be addressed by the new administration once and for all as they are costing the country approximately $28B annually.
Goolsarran said that it is critical for the Ministry of Finance to review the operations of NPTAB given the fact that the agency has been cited by the Auditor General for numerous cases of financial discrepancies.
He emphasized that about 70 percent of the national budget relates to public procurement and this translates to approximately $140 million.
The former Auditor General then pointed to credible allegations of corrupt behaviour in public procurement. These included sole sourcing of drug contracts to Dr. Ranjisinghi ‘Bobby’ Ramroop, the best friend of former President Bharrat Jagdeo, contract splitting, inflated engineer’s estimates, evaluation bias on behalf of favoured contractors, the use of inexperienced contractors, the absence of competitive bidding in some cases and overpayment to contractors.
Goolsarran said that at least, some $28 billion or US$140M is lost annually by looking at those areas. His estimation was garnered from an overview of the Auditor General’s reports on the country’s accounts over the past few years.
He also highlighted some of the glaring shortcomings of the NPTAB among them the absence of District Tender Boards for Neighbourhood Democratic Councils; the failure to publish in NPTAB’s website the award of all contracts between $200,000 and $15 million, the failure of members of the various tender boards to file financial returns with the Integrity Commission; the non-establishment of a formal Bid Protest Committee and the failure to exercise due diligence in ensuring that evaluators had the requisite expertise.
He said, too, that there are certain parts of the Procurement Act which have not been adhered to since the Act came into effect on 1 January 2004.
These include ensuring the criteria used for selection are such that they do not discriminate against particular contractors and suppliers; award of contracts based on the lowest evaluated bid as opposed to the lowest bid, taking into account previous experience, capacity, facilities and equipment, and other associated factors; communicating with unsuccessful bidders the basis of the award and why they were not selected; ensuring valid and adequate performance bonds are obtained as a guarantee for satisfactory completion of works and the supply of goods and services; and sanctioning contractors and suppliers for consistent failure to perform to expected standards.
Failing to look at these, he opined, has also proven to be very costly to the country.
The former Auditor General said that the solution to the problems relating to the operations of the NPTAB is the activation of the Public Procurement Commission. For the Commission to be established Parliament has to first convene and members of the Public Accounts Committee (PAC) have to be appointed.
The PAC then has to select the five-member Commission, and appointments have to be ratified by a two-thirds majority of members of the National Assembly.
Goolsarran said that this could be a long drawn out procedure, considering that the People’s Progressive Party is yet to confirm whether it is going to take up its seats in the National Assembly.
The Chartered Accountant said that an interim solution to the problem is to reconfigure the NPTAB in such a way that it mirrors the composition of the Procurement Commission and is seen to be independent of the Administration.
He said that the Procurement Act does provide for a transitional arrangement whereby, pending the establishment of the Procurement Commission, the NPTAB will assume all the functions of the Commission.
As a starting point, therefore, Goolsarran said that the present members of the NPTAB need to be replaced with independent and professionally and technically competent persons.
“It is not publicly known when last the members of the NPTAB have been rotated, contrary to established practices,” the Chartered Accountant said.
As regards the alleged failure of the members of the NPTAB to file annual financial returns to the Integrity Commission, he said that this is a matter for the Commission.
However, no Chairman has been appointed since the resignation of Bishop Randolph George in 2006. Since then, there have been no sittings of the Commission.
The Integrity Commission Act provides for the recruitment of experts to assist in the scrutiny of the financial declarations by Ministers, Members of Parliament and senior public servants. However, no such persons have been recruited.