Contracts and COVID

A state of emergency enables government to do what it would be unable to do during ordinary times.

With respect to The Bahamas’ emergency regulations, one such ability is that of waving current rules and law mandating how government contracts are to be issued.

Regulation 12(1) of the governor general’s current emergency regulations grants the prime minister as competent authority, the power to waive public procurement rules and states: “In the interest of protecting the public safety and health, the competent authority, in consultation with the minister of finance, may waive the application of any rules or law governing the procurement of goods and services.

Regulation 12(2) states: “The minister of finance shall within six weeks of the expiration of the proclamation of emergency, lay a report before the House of Assembly detailing the total expenditure of the goods and services procured; the suppliers of the goods and services; the reasons for the use of the suppliers of the goods and the providers of the services.”

The question of such reports not being laid on the two occasions when the governor general’s proclamations have expired, was raised by Opposition Leader Philip Brave Davis in Parliament last week, and echoed by other Progressive Liberal Party (PLP) officials.

Their arguments with respect to the reports on Saturday drew a response from the Office of the Attorney General, which asserted that the regulation governing the waiving of procurement rules calls for an order by the competent authority to be made, and since the competent authority has not issued an order to waive procurement rules, he had no legal obligation to lay the report called for by the regulation.

While the AG’s statement may have seemingly answered a procedural question, it does not answer the larger question of whether contracts have been issued since last March without adherence to procurement rules.

Yes, the regulation says an order should be issued to waive those rules, but failure to issue that order does not, in and of itself, stop the competent authority from bypassing procurement rules in the grant or authorization of contracts during the ongoing emergency period.

Whether or not he has done so is what the AG’s office does not make clear, and when the matter was raised in Parliament where the prime minister had the opportunity to refute opposition assertions or to otherwise set the record straight, he did not.

Since the start of the pandemic, multi-million-dollar procurements and public/private partnerships have been announced by government, none of which are publicly known to have satisfied existing procurement rules.

Irrespective of politics, the core issue at hand is that of transparency.

The regulation follows a recognition that emergencies necessitate quick responses, and that the waiving of procurement rules eliminates safeguards intended to protect the public purse.

Hence, what the regulation at its essence is calling for is transparency in the public procurement process during the emergency periods.

On the occasion of the initial emergency proclamation in March, Prime Minister Dr. Hubert Minnis said of this regulation: “This gives the prime minister the power to select a particular contractor to commence immediately, to select and appoint whatever is necessary to commence immediately without going through the bureaucracy and delay. However, it’s essential that the prime minister at a given point in time, report that selection and process to Parliament.”

Notwithstanding the AG’s argument that in the absence of an order, no parliamentary report is lawfully required, what government ought to have recognized is the bigger picture for the Bahamian people – which is that whether or not an order was issued, the competent authority should disclose to the people through Parliament, full details of all public procurements during the emergency period, the process used, the beneficiaries thereof, and why contracted providers were chosen.

Transparency is not optional, nor does the emergency regulation envision it to be conditional.

Since states of emergency enable government to bypass laws and rules in its response to an emergent threat, the obligation of transparency and accountability is even higher than in ordinary times where the eyes of existing legislative frameworks would be focused on ensuring that regular rules of engagement are followed.

Moreover, with the COVID-19 pandemic meshing with the country’s campaign season, a focus on the awarding of government contracts in the run up to an election — a classically controversial issue in The Bahamas — is especially pertinent.

A global focus

International organizations are honing in on the need to shore up the public procurement process of countries during the pandemic.

COVID-19 has presented a public health crisis wherein governments are seeking to secure goods and services at speeds that cannot be facilitated by procurement laws such as they exist.

Against this backdrop, International Monetary Fund (IMF) Director Kristalina Georgieva told governments at the outset of the pandemic, “Spend what you can, but keep the receipts.”

The fallout of COVID-19 restrictions has prompted governments to direct significant sums of public money to social and business support.

The IMF’s special series “Keeping the Receipts: Transparency, Accountability and Legitimacy in Emergency Responses”, noted, “Notwithstanding the need for speed and flexibility, the design of the support package should follow standards of transparency. This is needed to maintain public support and build institutional legitimacy, ensure the effectiveness of the package, and avoid any misappropriation of funds disbursed in an emergency situation.”

The World Health Organization’s (WHO) declaration of COVID-19 as a pandemic “triggered an unprecedented shopping spree in which governments procured personal protective equipment, medical devices and other goods”, according to Transparency International, which acknowledged last September that with emergency comes risk, and previously indicated that governments have purchased goods during the pandemic at as much as 25 times the original price.

The International Federation of Accountants (IFAC) said of its findings from a recent report, “regular procurement processes have been bypassed and we are already seeing the implications of this relaxation.

“Specifically, evidence of fraud, corruption and mismanaged public money at a time when public resources are increasingly scarce. However, as the report emphasizes – there are practical steps governments can take to prevent the problem worsening, and to better prepare for crises in the future.”

One such step, according to the IFAC, is that emergency contracting must be done on a case-by-case basis and procurement contract managers should be trained to know when to employ these emergency measures, and must ensure all aspects of the process are documented so swift auditing can occur to help detect and prevent corruption and mismanagement.

A second IFAC recommendation is that all procurement activity should be transparent and available to finance professionals and auditors in real time, so they can monitor spending to prevent cost inefficiencies and corruption.

Transparency International stressed that, “through embracing clean contracting, governments can save lives and prevent the misuse of public money. Most crucially, this requires ensuring transparency and spaces for independent oversight throughout the entire procurement process.

“Crucially important is to oversee COVID-19 public procurement procedures as they happen.”

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