Changes coming for government spending

The Cayman Islands government spent more than $95 million last year buying various goods and services from vendors.

The process for buying items – whether pens and paperclips, cars, boats or new buildings – is about to undergo a major change, with a new Central Procurement Office and a law in the works to change how government makes purchases.

The new procurement law, currently in draft form, will likely change the thresholds for how much ministries can spend, with or without a bidding process. The proposed law would also mean the replacement of the Central Tenders Committee with a new procurement group to oversee the biggest purchases, said Peter Gough, a special adviser in the deputy governor’s office.

Mr. Gough and Craig Milley, director for the Central Procurement Office, presented on the upcoming changes at the joint public-private Professional Development Week Friday.

Following two highly critical Auditor General reports in 2011, government began to look into changing how the procurement process worked, establishing a committee, setting up the Central Procurement Office and tasking the group with developing the new law. Mr. Milley took up his post in February, heading the newly created office and helping develop the new law.

Mr. Milley said during the presentation last week that he has collected as much data as he could get his hands on about government spending. He said he found more than $96 million in what he called “total trade spend” during the last fiscal year, meaning spending on goods and services by government, from almost 2,400 different suppliers.

The auditor’s reports four years ago faulted government for a lack of transparency, allowing politics to interfere with procurement, and not getting enough value for the money it spent.

Most spending for the year, Mr. Milley said, came from construction, and IT amounted to the second largest. But he homed in on a little more than $2.1 million government spent on office supplies for the year as an example of where ministries and portfolios can save money.

Core government, he said, spent almost 2 percent of its budget on things like pens, paper and staples, compared to a little more than half of one percent for average governments in the United States.

“Government spends a lot of money on pens,” Mr. Gough said. “Why don’t we buy in bulk?” he asked.

“Well, it’s a nice little trip out to buy pens,” he said, to nods and murmurs of agreement.

Government, Mr. Milley said, has to “move from the siloed procurement approach” to a more organized system. Mr. Gough gave an example of buying pens from an office supply store. Each ministry and portfolio goes out and buys their own pens instead of government working together to get a better deal and negotiate a better price for pens, pencils, printer paper and other supplies that every civil servant needs.

The draft procurement law, as it’s currently written, leaves projects and purchases under $250,000 with the ministry, portfolio or statutory authority, and the department will have to produce a written business case for anything $50,000 or more. Each government entity will have to have its own procurement committee to oversee purchasing.

Any projects of $250,000 or more will have to submit a business case to the Central Procurement Office.

Ministries and portfolios will still be able to give no-bid contracts, but they will have to give public notification and get approval for contracts of between $10,000 and $40,000 from their internal procurement committee. For no-bid purchases of more than $40,000, a central procurement committee will have to approve the contract.

Mr. Milley, the new head of procurement for government, said he hopes to get more people in the civil service trained in procurement processes. Personnel costs, he said, account for about half of government spending. Procurement accounts for more than a quarter of spending. But, he said, “How many HR experts are in government versus procurement?”

“It’s no wonder we’re not doing it well,” he said.


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