Five years after an audit revealed Cayman was “wasting millions of dollars” each year on the purchase of goods and services, the territory has rewritten its rules for public procurement in a bill that could come before the Legislative Assembly this month.
The Procurement Bill (2016) sets up an entirely new process for public bids for anything from purchasing supplies to the construction of public buildings, focusing on a tendering process at the “department level” – meaning a lower-level committee process will first review the proposals. Those committee reviews will then be passed on to a new entity called the Public Procurement Committee for a secondary review.
Although the local political leadership and Cayman’s deputy governor will have a hand in appointing members of the new Public Procurement Committee, the bill seeks to place layers between their direct involvement in public bids by having senior civil servants appoint members of the initial bid committee. The three-person “departmental” bid committee will review offers for any project and then pass its recommendations to the procurement committee, which will review it and either concur or disagree with the initial decision.
The issue of political control in the procurement process arose after former Auditor General Alastair Swarbrick noted in 2011 that certain elected officials appeared to be interfering in public tendering.
“We found evidence that some politicians are not complying with the procurement rules that have been established … and, in some cases, contravening the laws and regulations [of the bid process],” Mr. Swarbrick stated. “In other countries, the practice of politicians being involved in the administration of government’s transactions has resulted in cases of corruption and abuse.”
The government’s director of procurement, who has already been hired, will make rules to prevent the appointment of individuals on department committees who may have personal or financial conflicts on the projects they are overseeing, according to the legislation.
A code of conduct for procurement principles included in the bill states: “There shall be no corruption or collusion with suppliers or other persons involved in a procurement project.”
In addition, the government entity handling the project bids is forbidden from “splitting” the project to avoid minimum bid amount requirements set under the legislation, unless it can show there is a proper business case for doing so.
“[The government] entity shall not split or subdivide a contract to acquire goods, services or works in order to limit competition or to avoid requirements under this law,” the bill states.
Certain government purchases are exempt from the provisions of the new Procurement Bill, such as purchasing artworks, remittances for pension or insurance premiums, purchases from regulated public entities or utilities and purchases from community groups supplying services to the public sector. However, all those purchases would still have to provide “value for money” as defined in the bill.
The Public Procurement Committee will be made up of eight members, if the legislation supporting it is passed and assented to by the governor. Four of the members – including the chairman – will be appointed from the private sector upon the advice of Cayman’s premier. One will be appointed on the advice of the territory’s opposition leader and three will be civil servants appointed by the deputy governor.
Changes proposed in the Procurement Bill (2016) are largely in line with what the auditor’s office recommended five years ago. The 2011 audit covered only instances where more than $250,000 was spent. Those purchases are required to go to the Central Tenders Committee for final recommendation.
Auditors recommended, among other things, that government create a “chief procurement officer” position and said entities might reconsider the use of departmental tenders committees. Those are small groups of civil servants and, in some cases, private sector representatives who assist in evaluating bids.
The departmental tenders committees, to the extent that they did exist at the time, did not have any rules regarding conflicts of interest with companies that might bid on various government projects or procurements. Auditors said this problem was compounded by the fact that most government managers do not file registers of interest forms as is required of elected members of the Legislative Assembly and certain other top public officials.