Procurement Regulator: $5b in contract awards not fully competitive

IN the past year some $5 billion in contracts were not awarded by public bodies by fully competitive tender/procurement methods.

This was revealed in the first Annual Report to Parliament (2023-2024) of the Office of Procurement Regulation (OPR) laid in the House of Representatives on September 9.

This revelation came against a backdrop of many public bodies not yet being compliant with the amended Public Procurement and Disposal of Public Property Act 2015, as also stated in the report. The act came into force on April 26, 2023, along with the repeal of the Central Tenders Board Act.

While the act (section 37) said each public body must submit quarterly reports listing all contracts it had awarded for procurement, the report's executive summary said this reporting rate was "unsatisfactory" and "mediocre." It listed the overall contract reporting rate as 38 per cent (Q3 2023), 44 per cent (Q4 2023), 51 per cent (Q1 2024) and 49 per cent (Q2 2024).

Alongside this, the high absence of procurement committees in public bodies could lead to challenges from affected parties during a procurement exercise, the report warned.

The summary then listed about $5 billion in awards being made by methods other than fully competitive ones.

In Q3 2023 this was 51 per cent of awards made and totalled $0.58 billion. In Q4 2023 it was 78 per cent of awards and was worth $1.48 billion. For Q1 2024, it was 70 per cent, to a value of $0.9 billion. By Q2 2024, it was a whopping 87 per cent, valued at $1.9 billion.

"The tenet of competition reinforces the founding principles of fairness, equity, and value for money enshrined in the act."

However despite the new procurement regime advocating open bidding, the OPR observed "an excessive use of limited and non-competitive procurement methods," worsening over time.

"Single and sole-source methods were frequently used, indicating a level of resistance to the use of open bidding methods by public bodies."

However, the report also noted inadequate infrastructure and resources to support the required changes.

These inadequacies included technological, human and financial resources.

The report also noted a declining number of private contractors and suppliers completing registration in order to advance to pre-qualification at the OPR.

In Q4 2024, some 10,794 suppliers/contractors were registered, but only 1,494 had advanced to become pre-qualified to bid on contracts.

In Q1 2024, public bodies awarded $2.5 billion in contracts and in Q2 2024 the figure was $3.3 billion. The report gave a figure of $2.8 billion for Q3 2023 and Q4 2023, but then said that data was unreliable.

The report said companies had to register in the OPR's depository to encourage accountability, transparency, competition and market outreach.

"Significantly, by the end of Q2 2024, a total of 15,149 suppliers and contractors from the Caribbean, Europe, Asia, Central and South America, Australia and the Middle East commenced registration in the depository, with 2,569 being pre-qualified for 23,996 lines of business."

Regarding redress for any participant in procurement or disposal, the report noted 49 complaints made by way of whistle-blowing. Of the 49, some eight were under review, while 41 were closed owing to insufficient evidence or other reasons.

The report said the Simplified Procurement Regulations 2024 were developed to address strict pre-qualification requirements which themselves may limit competition and pose barriers to participation to certain suppliers and contractors.

"Consequently, its transition into law is expected to stimulate accelerated interest and participation thereby enhancing competition, local industry development and providing the impetus for the adoption of sustainable initiatives."

The report said the Simplified Procurement Regulations aim to streamline the conduct of lower-value procurements worth up to $1 million to ensure efficiency and continuity in the procurement process. The report advocated for small and medium enterprises (SMEs), so as to promote local industry development and sustainable initiatives.

"Accordingly, 'micro procurement' and 'small-scale procurement' were introduced to allow for greater simplification, better value for money, and flexibility of the procurement process."

The chairman's foreword by Beverley Khan said public bodies had many challenges with timely and effective reporting, which overall made problems in reconciliation and validation, to the extent that compiled data was unreliable.

"The decision was taken (by the OPR) to delay reporting (so as) to provide a fair opportunity to public bodies to improve their level of reporting, thus providing an accurate and comprehensive report to the Parliament.

"It is against this background that the office pivoted course to understand and resolve, as far as possible, the reporting and compliance challenges faced by public bodies with a view to accelerating their knowledge and understanding of the new system."

The foreword said public bodies, suppliers and contractors and the OPR itself all had "much work to be done."