Putting It In Context - Commonwealth Caribbean Procurement Law
Governing Principles & Common Themes CARICOM Perspective ‘Putting it in Context’ MARGARET ROSE Executive Director Caribbean Procurement Institute
Presentation Summary Sources of Procurement Law Hard & Soft Law Preventative & Punitive Law Public & Private Law International Treaties & Conventions Multi-lateral and Bilateral Investment Treaties (BITS) CARIFORUM EC EPA – Chapter III CARICOM Draft Framework for Integration of Public Procurement Policy (FRIP) National Procurement Frameworks
. Materials included in Conference Package – CD ROMTopic will be dealt with in greater detail over the course of the next five days
Defining Procurement Law ….Procurement Law is the composite of the rules, regulations,guidelines and policies emanating from international, multilateraland bilateral agreements, statutes, administrative guidelines andcodes governing the process by which goods, works and servicesare acquired.
Putting it in Context.. Identifying the nature, scope and application of the rules, regulations, guidelines, codes and best practices Identifying regional and national relevance
Distinguishing Soft Law and Hard Law..SOFT LAW – Rules, guidelines, commitments andcommitments which are not legally binding HARD LAW- Binding Laws - To constitute law, a rule, instrument ordecision decision must be authoritative and prescriptive.
Soft Law .. Some UN General Assembly Resolutions andDeclarations Policy statements, principles, objectives, Guidelines, standards, Some administrative codes Action plans Some Case Law
Hard Law .. Treaties & BITs (also known as conventions or international agreements) UN Security Council Resolutions Customary international rules Statutes Regulations Some Case Law
Soft Procurement Law.. UN Model Law on Procurement of Goods, Works and Services (UNCITRAL) World Bank, IDB Procurement Rules & Guidelinesin non-WB/IDB funded projects National Procurement Policies & Guidelines Internal Corporate Procurement Policies &Guidelines Some „best practices‟ e.g. – three quote rule
Hard Procurement Law .. World Trade Oganization - Government Procurement Agreement (WTO-GPA) for signatory countries Procurement Rules in BITs WB/IDB Rules on WB/IDB Funded Projects Procurement Statutes Procurement Regulations Commonwealth Case Law
Distinguishing Preventative & Punitive Law..Preventative Law – Rules governing the processi.e. the manner in which something is done Punitive Law Rules imposing sanctions for conduct
Preventative Procurement Law.. Institutional & Process Rules (how anorganization buys) Discretion limiting Requirements(Demand side only) Codes of Conduct & Ethics Programmes Transparency Requirements
Preventative Procurement Law..Institutional & Process RulesThis approach is based on the rationale that where procurementpersonnel have too much leeway in performing their tasks andmaking decisions the opportunity is created for corrupt acts.Some of the approaches here include: staff rotation, separation of functions, standardization of rules and procedures, internal and external audits four eye principle.
Preventative Procurement Law..Discretion Limiting RequirementsThis is characterized by the limiting of subjective criteria (eg, use ofpast performance of contractors). Fears that performance evaluationsmight be subjective and therefore less susceptible to review make iteasier to make improper decisions. It should be noted that this couldhave negative effects on quality since(1) one cannot take advantage of sometimes very useful knowledge of the performance of one contractor vs. another and(2) it can even operate as a disincentive for good performance since contractors will have limited interest in achieving same if they know it will not be taken into consideration in the future.
Preventative Procurement Law..Codes of Conduct & Ethics Programmes Creation of integrity systems which establish values and provide guidance where rules are lacking. Ethics training can help in communicating conflicts ofinterests unique to specific industries, countries and cultures. It fosters anatmosphere of transparency and stewardship among an institution‟s employees. Compliance industry has escalated in the last decade spawningcompanies and consultants charging high fees to assist organizations inestablishing an ethical culture. In addition professional associations have established integrity systemsand codes of ethics for their members (for example see the FIDIC Business Integrity ManagementSystem (BIMS), CAPP Code of Conduct).
Preventative Procurement Law..Codes of Conduct & Ethics Programmes Statutory Codes of Conduct/Integrity Legislation Too early to measure the effectiveness of these responses –see the example of ENRON which scored high for its ethicsmanagement prior to its collapse (EIRIS 2005). Note as well the paradoxical effect of ethics training andanti-corruption codes on corporate criminal liability
Preventative Procurement Law..Access RegimesFreedom of Information (FOI) and Access To Information (ATI)Legislation also called “right to know” legislation.Provisions based on: principles of disclosure promoting a culture of openness limited exemptions records management and a right of review
Preventative Procurement Law..Access RegimesCARICOM member States which have implementedaccess regimes: Belize – Freedom of Information Act 1994 Trinidad and Tobago – Freedom of Information Act 1999 Jamaica – Access to Information Act 2002 Antigua & Barbuda – Freedom of Information Act 2004 Guyana – Access to Information 2011 (17th September)See also US FOIA1966 & Electronic FOIA1996; Australia ATI1982; Canada ATI1983; UKFOI2000
Punitive Procurement Law.. This is the primary approach to anti-corruption reform and is based on the increasing of rules, penalties for wrongdoing and strengthening detection methods and enforcement mechanisms.
Punitive Procurement Law.. The philosophy behind this approach is that corrupt actors are fully rational and opt for criminal behaviour when the expected benefit exceeds the sanction multiplied by the probability of being convicted. It is argued that even if this formula is imperfect it promises to capture the incentives motivating the vast majority of corrupt actors.
Punitive Procurement Law.. When : Sanction x Probability of Detection < Benefit = Corruption
Punitive Procurement Law.. When one considers the high degree of sophistication, skills and long term planning necessary to engage in bribery, fraud and embezzlement, it seems supportive of the contention that the offences are more rational than emotional or passionate.
Punitive Procurement Law.. Criminal Offences – Bribery, Extortion, Collusion, Bid-rigging, Fraud, Embezzlement, Money Laundering All Commonwealth Caribbean territories criminalize theseoffences either through the application of UK Common Law or Statute
Punitive Procurement Law.. Major International Anti-Corruption Treaties and ConventionsThe Inter-American Convention against Corruption (IACAC), Organisation of American States, March 1997Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, OECD, February 1999Criminal Law Convention on Corruption, Council of Europe (COE) July 2002Convention Against Corruption (UNCAC), UN, December 2005;Convention on Preventing and Combating Corruption, African Union (AU), August 2006
Punitive Procurement Law.. Major International Anti-Corruption Treaties and ConventionsAll CARICOM nations are members of the Organization of American States (OAS) and of the United Nations (UN) The Inter-American Convention against Corruption (IACAC), Organization of American States, March 1997 Most have signed and ratified IACAC Convention Against Corruption (UNCAC), UN, December 2005 Few CARICOM members have joined. In fact, as of May 2007, only Barbados, Haiti, Jamaica and Trinidad & Tobago had signed the UNCAC and only Trinidad & Tobago and Jamaica had ratified it.
Distinguishing Public Law and Private LawPublic Law – Rules governing relationshipbetween the private citizen and the State Private Law Rules governing relationships between private citizens
Public Procurement Law... Public International Law (Treaty Obligations & Commitments) National Procurement/Corruption/Access legislation Judicial Review Constitutional Law
Private Procurement Law... Common Law of Competitive Bidding Contract Implied Tender Contract Doctrine Tort Negligent Misrepresentation Misfeasance in Public Office Deceit Conspiracy Protection of Reliance Interests Estoppel Good Faith Bargaining
Public Procurement Law... Public International Law WTO – GPA UN Model Law on the Procurement of Goods, Works & Services (UNCITRAL) CARIFORUM EC EPA CARICOM Draft FRIP
Public Procurement Law... National Procurement Law Trinidad and Tobago, Barbados & OECS Guyana Jamaica & Belize
Public Procurement Law... Constitutional Law Right to Equality before the Law – Non Discrimination Note alternatively Equal Opportunities legislation and duty of non-discrimination on the grounds of race, religion, gender etc. Note as well the interplay between UK Race Equality Act 2000 and Public Procurement Policy. Right to Equality of Treatment from a Public Authority See sections 4(b) and (d) of the Republican Constitution of Trinidad and Tobago 1976 Note all Commonwealth Caribbean territories have similar constitutional provisions
Public Procurement Law...Constitutional Law – Equality of Treatment The principle of equality of treatment requires that publicauthorities take all the measures necessary to ensure that alltenderers are treated in an equal manner. This requires that similar situations shall not be treated differentlyunless differentiation is objectively justified. Specialists Compatibility Incumbency Public Contracting authorities are therefore bound to ensure that allapplicants in a tendering procedure are aware of the rules in advance and areobliged to apply the rules to each applicant in the same way. No Commonwealth Caribbean jurisprudence yet on the point The ECJ (European Court of Justice) has held that the duty to observe the principle of equal treatment of tenderers is fundamental to the public procurement rules. The ECJ has also held that the principle of equality of treatment and the transparency of the procurement procedure is breached when an awarding entity takes account of changes to the initial offers of one tenderer who thereby obtains an advantage over his competitors.
Public Procurement Law...Public International LawTwo Modalities for PP Policy in InternationalAgreements Transparency Non-Discrimination/National Treatment
Public Procurement Law...WTO – GPA The WTO Agreement on Government Procurement (WTO-GPA) came into force at the conclusion of the Uruguay Round of multilateral trade negotiations in 1994 and seeks to provide an international legal framework for the liberalization and governance of public procurement markets. Full Text Available for Download at www.wto.org
Public Procurement Law...WTO – GPA Main ElementsDeals with both modalities : Guarantees of National Treatment and Non-Discriminationfor the suppliers of Parties to the Agreement with respect toprocurement of covered goods, services and constructionservices as set out in each Party‟s schedules and subject to various exceptions andexclusions noted therein; Detailed requirements regarding Transparency and procedural aspects of the procurement process, in general, designed to ensure that covered procurement under the Agreement is carried out in a transparent and competitive manner that does not discriminate against the goods, services or suppliers of other Parties;
Public Procurement Law...WTO – GPA Main Elements Additional requirements regarding transparency ofprocurement-related information; Provisions regarding modifications and rectifications ofParties‟ coverage commitments; Requirements regarding the availability and nature ofdomestic review procedures for supplier challenges whichmust be put in place by all Parties to the Agreement; Provisions regarding the application of the WTO Dispute Settlement Understanding in this area Provisions regarding accession to the Agreement and the availability of Special and Differential Treatment for Developing and Least Developed Countries; and A “built-in-agenda” for improvement of the Agreement, extension of coverage and elimination of remaining discriminatory measures through further negotiations
Public Procurement Law...WTO – GPA Main Elements Currently forty (40) WTO Members are covered. Thesecomprise Canada, the European Community (27 member states),Hong Kong, China, Iceland, Israel, Japan, Korea Liechtenstein,the Netherlands including Aruba, Norway, Singapore, Switzerlandand the United States. Twenty (20) other WTO Members have observer status :Albania, Argentina, Australia, Cameroon, Chile, China, Columbia,Croatia, Georgia, Jordon, the Kyrgyz Republic, Moldova, Mongolia,Oman, Panama, Saudi Arabia, Sri Lanka, Chinese Taipei and Turkey. Four (4) intergovernmental organisations also have observer status: the International Monetary Fund (IMF), the Organization for Economic Co-operation and Development (OECD), the United Nations Conference on Trade and Development (UNCTAD) and the International Trade Centre (ITC). At present, there are eight (8) WTO Members which are in the process of acceding to the GPA: Albania, Georgia, Jordon, the Kyrgyz Republic, Moldova, Oman, Panama and Chinese Taipei. Note Limited execution by ACP Developing States
Public Procurement Law...UN Model Law on Procurement - Main Elements Provides a Model regulatory framework for PublicProcurement which states can elect to adopt Covers scope (Articles 1-3), qualifications (Articles 6-8),specifications (Article 16), procurement methods and theiroperation (Articles 18-51), and review (Articles 52-57) Does not deal with planning, feasibility and budgeting phase OR post award phase, contract administration or implementation 1994 Model Law did not expressly provide for electronic reverse auctions, supplier lists, framework agreements, competitive dialogue
Public Procurement Law...UN Model Law on Procurement - Main ElementsThe 2011 Model Law replaces the 1994 UNCITRAL ModelLaw on Procurement of Goods, Construction and Services.While the 1994 text was recognized as an importantinternational benchmark in procurement law reform, in 2004,the Commission agreed that the 1994 Model Law wouldbenefit from being updated to reflect new practices, in particular those resulting from theuse of electronic communications in public procurement, and the experience gained inthe use of that Model Law as a basis for law reform. Nonetheless, the principles andmain procedures from the 1994 text, the foundation of its success, have not beenchanged. - Both the 1994 and 2011 Full Texts included in CD Rom Materials
Public Procurement Law...Public Procurement Frameworks Based onUN Model Law Central and Eastern European Countries : Poland, Albania,the Slovak Republic, Kosovo; Former Soviet Union countries: Russia, Estonia, Georgia,Azerbaijan, Lativia, Kazakhstan, the Kyrgyz Republic; African States : Uganda, Kenya, Tanzania, Nigeria, Ghana, Malawi, Ethiopia; Caribbean : Guyana Draft FRIP is expressed to be based in part on the UNCITRAL Model Law 1994 NOTE: NO DEVELOPED COUNTRIES – only developing and transition economies
Public Procurement Law...CARIFORUM EC EPA 2008Title IV Chapter III Public Procurement Landmark Treaty in the history of Euro-ACPRelations. First Euro-ACP Multi-Lateral Agreementdealing with public procurement CRNM asserts that the provisions are Transparency provisions only and do not allow for National Treatment and Non-Discrimination (Argument – to be used as a driver for national reform initiatives). However see Article 167.1.2 which obliges parties not to discriminate against foreign companies that have a commercial presence in a CARIFORUM State and as such qualify as a domestic company for public procurement bids.
Public Procurement Law...CARIFORUM EC EPA 2008Title IV Chapter III Public ProcurementTransparency Provisions Article 168 : Member States to publish any law, regulation, judicialdecision and administrative ruling, and procedures regarding procurement Covered Procuring Entities to disseminate effectively all covered tendering opportunities, providing all eligible suppliers with all necessary information required to take part in such procurement
Public Procurement Law...CARIFORUM EC EPA 2008Title IV Chapter III Public ProcurementTransparency Provisions Article 168 : Covered entities are required to publish Notice of IntendedProcurement. Each notice must be accessible during the entire time period established fortendering for the relevant procurement Procuring entities encouraged to publish as early as possible in each fiscal year a notice regarding their future procurement plans. Notice should include the subject matter of the procurement and the planned date of the publication of the Notice of intended procurement Utilities can rely on the publishing of the annual Notice as a Notice of Intended Procurement provided that it includes all the relevant information
Public Procurement Law...CARIFORUM EC EPA 2008Title IV Chapter III Public ProcurementOther Relevant Provisions: Does not regulate choice of procurement method - Article 169 Allows selective tendering Article 170 and limited/sole select tendering Article 171 Provides for technical specifications Article 173 Guidance on Qualification of Suppliers, allows multi use and supplier lists Article 174
Public Procurement Law...CARIFORUM EC EPA 2008Title IV Chapter III Public ProcurementOther Relevant Provisions: Allows negotiated procurement formats - Article 175 Provides for award of tender to the supplier who has been determined on the basis of the information presented to be fully capable of undertaking the contract and whose tender is either the lowest tender or the tender which in terms of the specific evaluation criteria set forth in the notice or tender documentation is determined to be the “most advantageous”. Allows for non award in the public interest but awards “shall” be made in accordance with the criteria and essential requirements specified in the notice of intended procurement or in the tender documentation. Article 176 - Note alignment with contract a modality. Provides for the establishment of a bid review process. - Article 179
Public Procurement Law...CARIFORUM EC EPA 2008Title IV Chapter III Public ProcurementNote Limitations : Coverage ThresholdsInternational and regional frameworks for public procurement reform will not necessarilyfoster greater accountability and good governance in public procurement.
Public Procurement Law...CARICOM DRAFT FRAMEWORK for theINTEGRATION OF PUBLIC PROCUREMENTPOLICY – Legal Basis : Article 239 of the Revised Treaty of Chaguaramas establishingthe Caribbean Community and Caribbean Single Market and Economy(CSME) 2001 provides the justification for the establishment of theregional procurement protocol. The Article obliges Member States “to elaborate….. aGovernment Procurement Protocol”. That this is essential for the objectives of the CSME to be achieved is unquestioned.
Public Procurement Law...IDB/CIDA/CARICOM Procurement Reform Project In 2003 the CARICOM Secretariat commissioned a Project with agrant from the IDB and CIDA to support CARICOM in its efforts (i) to establish an effective regional regime for PublicProcurement which would facilitate the full implementation of the CSME and (ii) to participate effectively in external trade negotiations relating to Public Procurement.
Public Procurement Law...Project Components There were three main components of the projectidentified Component 1 National Government ProcurementFrameworks: Analysis, Comparison and Recommended Improvements Component 2 Collection and Analysis of Government Procurement Statistics; and Component 3 Recommendations for a Regional Best-practice Regime for Government Procurement.
Public Procurement Law...Project Findings Competitive public procurement regimes in the CARICOM MemberStates are in a disarray and dysfunctional Public Procurement accounts for a significant percentage of public expenditure In 2003, 14 of the 15 CARICOM Member States ranked in the top 30 of the World‟s highly indebted emerging market economies (Guyana, St. Kitts & Nevis, Jamaica, Antigua and Barbuda, Dominica, Grenada and Belize were in the top ten). In 2010, Bahamas, Barbados and Trinidad and Tobago were the only ones exempt.
Public Procurement Law...Project Findings The current legislation governing procurement in CARICOM MemberStates is made up of poorly coordinated and outdated enactments,regulations and decrees – (Trinidad and Tobago and OECS territoriescontrast Jamaica, Belize and Guyana) The weakness of legislation and/or their enforcement breeds many abusive and manipulative practices in public procurement Enforcement of procurement rules is extremely weak and sometimes non-existent due to the absence of a single regulatory authority
Public Procurement Law...Project Findings The rights of bidders are not adequately protected Capacity to conduct procurement is extremely weak Internal and external procurement controls are inadequate Procurement related corruption is a major problem Due to small size of individual economies, the private sector actively seeks public procurement opportunities, albeit with little or no confidence in the integrity of the public procurement system Public Procurement is severely under-developed and rated as high risk The general conclusion was that the present procurement regimes are counter productive towards the efforts of CSME
Public Procurement Law...Draft FRIP In 2005 the First Draft of the Regional Protocol was concluded anddisseminated to Member States After consultation with Member States in 2006 the Second Draft of the Regional Protocol was concluded at we are presently now at the stage of the Third Draft The Draft Protocol is primarily based on the 1994 UNCITRAL Model Law and the Policy recommends that all CARICOM Member States consider enacting national public procurement laws/Acts based on the UNCITRAL Model Law In 2010 the Fourth Draft was concluded, negotiations ongoing on the issue of thresholds
Public Procurement Law…National Procurement Frameworks inCommonwealth CaribbeanTrinidad and Tobago, Barbados & OECS Multiplicity of legal texts, outdated Central Tenders Board Frameworks, Finance & Audit Acts Many Public Entities operating outside statutory frameworks (Note in TT in particular) Reform Efforts underway
National Procurement Frameworks inCommonwealth CaribbeanTrinidad and Tobago, Barbados & OECS – Reform Efforts Antigua and Barbuda – procurement bill before Parliament 2011; Barbados – Draft legislation and standard bid documents; Dominica- Draft legislation before cabinet since 2007; 2010, 2011 Grenada- Draft legislation taken to Cabinet on multiple occasions. It is currently being revised; Saint Lucia – Procurement Strategic Plan in place – 2007, 2011 Procurement bill revised and before cabinet; St. Kitts and Nevis – Procurement Act in Draft Montserrat - New draft Procurement Act Trinidad and Tobago – Public Procurement & Disposal of Property Bill 2010 and National Tenders Board Bill 1997 currently before Joint Select Parliamentary Committee. Note PP & DP Based on the White Paper on Reform of Public Sector Procurement 2004 – Principle Model. Note eProcurement and use of P3 models fairly well established in public sector. Note OECS PPS and OECS EGRIP Programmes
National Procurement Frameworks inCommonwealth CaribbeanJamaica & Belize Institutional Reform Model (eschewed in the White Paper 2004) Establishment of Contractor General Office – Independent Commission reporting to Parliament (not Cabinet). Jamaica Contractor General Act 1983 (For full text See http://www.ocg.gov.jm/ocg/contractor_general_act.php ; Belize Contractor General Act 2000. Powers to monitor, have access to records, investigate and suspend processes. Note New Public Procurement Regulations passed in Jamaica 2008 Note Jamaica developing eProcurement and professional qualification for staff.
National Procurement Frameworks inCommonwealth CaribbeanGuyana Guyana Constitution was amended in 2000 to provide for aPublic Procurement Commission. The Procurement Act 2003 followed. The Commission is tasked with a number of functions, including investigating complaints from both bidders and public entities, proposing remedial action in this connection and enforcing remedies using powers to be invested by Parliament. The regime includes a Public Procurement Commission Tribunal created to hear appeals against decisions of the Commission. Further appeals lie to the Court of Appeal. There is a secretariat to help carry out its functions.