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The Contractor-General has taken issue publicly with a decision by the Cabinet to exempt in limited, specified transactions and subject to particular conditions, certain public sector entities from government procurement procedures. I wish to outline the considerations that led to this decision and clarify any misunderstanding to which the public may have been subjected.
The exemptions relate to five government entities which, because of the nature of some transactions in which they engage from time to time, are required to act expeditiously or in circumstances that cannot be efficiently carried out within the government procurement procedures. These are Air Jamaica, Petrojam, the Port Authority of Jamaica, Jamaica Tourist Board and Jamaica Vacations Ltd.
Contrary to what may have been inferred from the Contractor-General’s initial statements, these entities are being exempted from normal procurement requirements only in respect of certain clearly defined transactions. For other procurement activities they will be required to comply with the established procedures.
Further, procurement activities that are to be exempted will still be subject to monitoring and investigation by the Contractor-General and, in that regard, the intensified surveillance which the Contractor-General states he intends to apply is most welcome and the government will take strong disciplinary action in any case of abuse identified by the Contractor-General or by other means.
I have attached to this statement a copy of Circular No. 34 issued by the Ministry of Finance and the Public Service which provides details of the type of transactions to, and the circumstances in which the exemption applies.
It is important to understand the types of transactions and circumstances to which the exemption relates. I offer some examples:
(1) When an Air Jamaica plane is grounded for want of a part or unscheduled maintenance, the part or services must be procured immediately from the best available source to enable the aircraft to be returned to service and to minimize the losses and disruption that result. The same compelling urgency applies where an aircraft has to be leased in an emergency to replace one that has had to be taken out of service.
(2) Under local and international regulations, certain goods and services required by Air Jamaica can only be obtained from suppliers who are certified by the relevant regulatory body.
(3) The provision of goods and services in high security areas of airports to which Air Jamaica flies is restricted to suppliers prescribed by the airport authorities.
(4) Interline and code-share agreements entered into by Air Jamaica, co-sponsorship arrangements, trade and travel shows undertaken by the Jamaica Tourist Board and JamVac and cooperative advertising carried out by all three, are driven by considerations of strategic advantages and do not lend themselves to competitive tendering
(5) The volatile movement in fuel prices and the dynamics of the petroleum market demand that Petrojam and Air Jamaica be able to negotiate with suppliers the best possible price and delivery arrangement that may present itself from time to time.
(6) Certain parts, equipment and repair and maintenance services required by the Port Authority are specific to the particular type of equipment and are not appropriate for open or limited tender and do not lend themselves to sole sourcing since the suppliers may not be registered with the NCC.
(7) Entities like Air Jamaica and the Jamaica Tourist Board operate from various locations overseas and have to procure goods and services from suppliers in the particular areas. These suppliers are unlikely to be registered with the NCC and may have no interest in being so registered. The government procurement procedures preclude the award of any contract to a supplier who is not registered with the NCC.
The Contractor General, in a submission to Cabinet dated June 16th 2008, argued that the exigencies of the cases for which exemption is being granted could be adequately addressed by expanding the circumstances in which emergency procurement can be utilized. This is not so.
The provisions for emergency procurement as set out in MFP Circular No. 3 dated January 10, 2006 stipulate that the prior written approval of the NCC through its Chairman must be obtained. The Contractor-General has recently advised the NCC that decisions can only be taken at properly convened meetings at which a quorum is present. He stated that “the law does not give any NCC Commissioner the liberty to derogate from its expressed requirements by convening and conducting meetings without a quorum and to make decisions therein and thereafter to seek to legitimize such decisions by ‘reviewing and confirming’ them in a subsequent meeting”.
The NCC is not in session 24 hours per day. Meetings have to be scheduled and, as pointed out by the Contractor-General, a quorum has to be present. In a situation where an aircraft is grounded and needs to be returned to service as quickly as possible, where the opportunity to purchase fuel at an advantageous price presents itself, or where a leaking tank at Petrojam posing serious risk to life and safety has to be repaired, compliance with this stipulation is simply not consistent with best practices.
The other remedies suggested by the Contractor-General are sole-sourcing, direct contracting, limited tendering and framework agreements. Sole-sourcing, direct contracting and limited tendering all require that the supplier be among the NCC’s list of registered contractors (See Sections 2.1.3.3 and 2.1.3.4 of Government Procurement Procedures Handbook). As I have pointed out, this would be impractical in many of the instances for which exemption has been granted since these are overseas suppliers providing goods and services to overseas locations and are not likely to be registered with the NCC. Indeed, there are only 4 overseas works contractors and 36 overseas suppliers of goods and services currently registered with the NCC.
The fact is that the Government Procurement Procedures Handbook was never designed to regulate the award of contracts by overseas suppliers to overseas locations. Section 2.7 captioned “Overseas Procurement or Foreign Purchases” contains the only such reference and is essentially concerned with procedures for the importation of goods by local suppliers. In so far as framework agreements are concerned, these are established on an annual basis for the supply of commonly used services and disposable goods and are entered into by the Ministry of Finance and the Public Service on behalf of Ministries and Departments. Other government entities are not subject to these arrangements (See Section 2.2 of Government Procurement Procedures Handbook)
I wish to reiterate that:(1) the exemption granted relates only to the transactions and circumstances that have been defined;
(2) all such transactions are subject to inspection, scrutiny and investigation by the Contractor-General;
(3) all other procurement activities must comply with the normal government procurement procedures;
(4) the details of all such transactions must be submitted to the National Contracts Commission on a quarterly basis.
In order to ensure transparency and accountability and to facilitate monitoring by the Contractor-General, the Cabinet has directed that reports of these transactions must also be submitted to him.
Further, I have directed the five named entities to submit to me within two weeks details of the procedures to be utilized in these defined circumstances including the required level of authorization and documentation. These will be referred to the Contractor-General for his evaluation and comments.
Let me state that the government fully supports the work of the Contractor-General. It was a previous JLP administration that established the Office of the Contractor-General in 1983. I, myself, chaired the Joint Select Committee which deliberated on the draft legislation.
The government is committed to strengthening the role of the Contractor-General and the oversight of government procurement activities. To that end and consistent with our election manifesto, we propose to amend the Contractor-General Act to:(a) give legal force to the procedures for the award of government contracts;(b) criminalize certain breaches of these procedures; and(c) render null and void contracts that have been awarded contrary to these procedures.
In order to facilitate this, the Draft Public Sector Procurement Regulations 2008 was completed in August and has been referred to the Contractor-General for his examination and comments. Work is proceeding on the amendments to the Contractor-General Act and it is hoped to have the amending Bill and the Regulations tabled in Parliament during the current legislative session.
There are and, from time to time, will be constitutional, legal and administrative issues that will need to be resolved in the exercise of the functions of the Contractor-General. I offer one significant example.
Recently, the Contractor-General, in response to a media report that the Minister of Transport and Works is preparing a submission to present to Cabinet for the revival of rail services across the island, demanded of the Permanent Secretary in that Ministry that he submit to him within a specified deadline information including a copy of the “referenced submission which is to be made to Cabinet”.
Cabinet submissions are confidential documents. For the Contractor-General to demand to see a Cabinet submission even before it is seen by members of the Cabinet raises fundamental questions including a possible conflict with the oath subscribed to by members of the Cabinet which states that they shall not, “except with the authority of the Cabinet and to such extent as may be required for the good management of the affairs of Jamaica, directly or indirectly reveal the business or proceedings of the Cabinet”.
These are issues that must be resolved for the good management of the affairs of Jamaica through reasoned discussion – not in acrimony or by confrontation where these can be avoided.
In this regard, it is regrettable that the Contractor-General, in a statement yesterday, chose to refer to the justification presented by the Minister of Finance and the Public Service as “a fallacious argument that is merely being used as a facade to conceal one of the real reasons that appears to be driving this issue: public officials who……. seem to be unwilling to be subjected to any form of accountability or probity in the way that they spend the taxpayers’ money”. It is an unworthy and unwarranted attack on the Minister.
This government has never been ill-disposed toward the Contractor-General and the important work he is authorized to do. Quite recently when he sought the permission of the Cabinet to investigate the purchase of ammunition by the Jamaica Constabulary Force, an investigation which he is prevented by law from conducting without Cabinet approval, the Cabinet unhesitatingly granted permission and it awaits the findings of those investigations.
I recently declared publicly that in establishing the Special Prosecutor to investigate and prosecute corruption in public administration, a matter currently being considered by a Joint Select Committee, I would wish the person to be appointed to that post to be someone with the tenacity, diligence and fearlessness of the present Contractor-General. His office is critically important in ensuring transparency and accountability in the conduct of government business.
However, it is important to recognize that the function of the Contractor-General, as set out in section 4 of the Contractor-General Act is to monitor the award and implementation of government contracts to ensure that:
(a) they are awarded impartially and on merit;
(b) the circumstances in which they are awarded or terminated do not involve impropriety or irregularity; and
(c) their implementation conforms to the terms thereof.
It is not the function of the Contractor-General to set the rules. That is the responsibility of the National Contracts Commission, the Ministry of Finance and the Public Service and the Parliament. In setting or amending those rules, although there is no requirement to consult the Contractor-General, the government considers that his views are important and must be given careful consideration. The government has sought his views on this and other matters relating to the procedures for the award of contracts. However, the final determination rests with those in whom the authority to do so is vested and who are answerable to the people of Jamaica through Parliament.