THE UNIVERSITY OF THE WEST INDIES

ST. AUGUSTINE

PRINCIPAL CHALLENGES TO THE DEVELOPMENT OF

EFFICIENT PROCUREMENT PROCESSES IN THE PUBLIC
SECTOR IN TRINIDAD AND TOBAGO

PRMG6007 – PROCUREMENT MANAGEMENT, LOGISTICS &

CONTRACTING

Professor Winston H. E. Suite

FACULTY OF SEON CHARLES

ENGINEERING 04707759

2010
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Abstract

Public procurement is the process of acquiring property and services

using public money to accomplish specified public purposes. The
current legal and regulatory framework embodied in the Central
Tenders Board Ordinance, 1961, (The Ordinance) applies mainly to
Government ministries and departments and some statutory
authorities. There are other agencies using public funds, including
State-owned enterprises, statutory authorities and civil society whose
procurement practices fall outside the ambit of the Ordinance. The
current public procurement system in Trinidad and Tobago is faced
with numerous challenges which hinder the development of an
efficient system to guide the spending of public funds. This report
attempts to highlight and discuss the effects of these principal
challenges on the public sector procurement system. The report also
provides recommendations, suggestions and strategies for mitigating
the effects of these challenges.
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Table of Contents
Abstract.............................................................................................................................ii
List of Figures...................................................................................................................v
List of Tables...................................................................................................................vi
Chapter 1 - Introduction...................................................................................................vii
Chapter 2 - Literature Review..........................................................................................ix
2.1 Overview of the Current Public Procurement Process...........................................ix
2.1.1 Definition of Public Procurement....................................................................ix
2.1.2 The Evolution of the Legislative and Regulatory Framework..........................x
2.1.3 Current Procurement Practice observed by the Central Tenders Board.......xiii
Chapter 3 - Discussion of the Principal Challenges to the Development of Efficient
Procurement Processes in the Public Sector in Trinidad and Tobago...........................xvii
3.1 Design and Build Procurement System...............................................................xvii
3.1.1 Challenges Faced by the Adoption of a Design and Build Procurement
System......................................................................................................................xx
3.1.2 Recommendations to Combat Challenges of Design/Build Approach..........xxi
3.1.3 Performance Based Contracts ......................................................................xxii
3.1.4 External Consultancy Services....................................................................xxiii
3.2 Alleged Corruption in All Stages of the Procurement Process..........................xxiii
3.2.1 How corruption operates in the Public Procurement Process.......................xxv
3.2.2 Mitigation Strategies for Corruption in Public Procurement.....................xxviii
3.3 Presence of Foreign Contractors.....................................................................xxxviii
3.3.1 Chinese Experience in Trinidad and Tobago...........................................xxxviii
3.3.2 Local Contractor Praised................................................................................xli
3.3.3 Recommendations...........................................................................................xli
3.4 Public Sector Procurement Process......................................................................xlv
3.4.1 Deficiencies in the Legal and Regulatory Framework..................................xlv
3.4.2 Absence of Uniformity in the Tendering Process.........................................xlvi
3.4.3 Human Resource Limitations......................................................................xlvii
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3.4.4 Lack of Regulatory Oversight....................................................................xlviii

3.4.5 Absence of a Complaints Mechanism and Dispute Resolution..................xlviii
3.4.6 Lack of National Registry..........................................................................xlviii
3.4.7 Lack of an Electronic Public Information System........................................xlix
3.4.8 Concerns of Local Suppliers.........................................................................xlix
3.4.9 Poor Data Collection and Reporting.............................................................xlix
3.4.10 Current Best Practices......................................................................................l
3.4.1 Operating Principles for Best Procurement Practice.........................................l
3.4.2 Legislative Models Effecting Current Best Practice........................................lv
3.4.3 The Preferred Procurement Model...............................................................lviii
3.5 Funding .................................................................................................................lxi
3.5.1 Recommendations.........................................................................................lxii
3.6 Weakness of Local Contractors’ Organization, Registration, Management,
Labour, Skill, Familiarity with New Technology Required for Mega Projects........lxiii
3.6.1 Registration...................................................................................................lxiii
3.6.2 Management.................................................................................................lxiv
3.6.3 Labour...........................................................................................................lxiv
3.6.4 Skill and Familiarity with Mega Projects.....................................................lxiv
3.6.5 Recommendations .........................................................................................lxv
Chapter 4 - Conclusion..................................................................................................lxvi
References...................................................................................................................lxvii
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List of Figures

Figure 2.1: Procurement Cycle ......................................................................................xiii

Figure 3.2: Design and Build Procurement System........................................................xix
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List of Tables

Table 3.1: Corruption Related Risks at each stage of the Procurement Process...........xxv
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Chapter 1 - Introduction

Public contracting is the main way a government operates and public money is spent. A

contract is a binding agreement or business arrangement for the supply of goods or services.

Examples include the purchase of office supplies for a governmental office and the contracting

for the design of a complex concession system for an airport. These contracts are meant to buy or

produce goods or services that benefit citizens directly, for example the construction of a road or

a sewage system. Others benefits citizens indirectly, such as the contracting out of consultancy

services to redesign the customs agency.

Public contracting occurs at different governmental levels: in municipalities, provinces or

states and in national governments. While national level procurement can be bigger in terms of

value per contract, local government contracting is significant in terms of the number of

processes and their impact. The term procurement is often used in this field. Procurement refers

to the acquisition of goods and services by any individual or organization (public, private and

international).

An efficient public procurement process is one that always seeks to deliver value for money,

accountability and transparency to the client. However, this is not the situation in today’s public

procurement system within Trinidad and Tobago. Currently, the region of Trinidad and Tobago

is faced with numerous challenges which hinder and stifle the development efficient procurement

processes in the public sector. These challenges include but not limited to the following:

1. Conditionalities of the International Lending Agencies

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2. Weakness of local contractors’ organization, registration, management, labour, skill and

familiarity with new technology required for mega-projects

3. Funding

4. Presence of Foreign Contractors

5. Design and Build Procurement System

6. Bi-lateral financing with foreign labour

7. Level of procurement experience and expertise in local actors

8. Productivity level vs International operators

9. Alleged corruption in all stages of the procurement process

10. Legislative framework – HSE legislation and regulation

• Public Sector Procurement Process

This report discusses the principal challenges and attempts to provide solutions,

recommendations and strategies to combat these challenges. The challenges that were considered

to be of utter importance included nos. 2, 3,4,5,7 and 9 from the listed previously stated. These

were considered to be principal challenges because these issues are currently plaguing society

and most prevalent in Trinidad and Tobago’ public procurement system. The construction sector

of Trinidad and Tobago can be considered as the most severe pathogen to these hosts of public

procurement challenges.
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Chapter 2 - Literature Review

This chapter attempts to define the public procurement process, it also describes the

legislative and regulatory framework behind public procurement in Trinidad and Tobago and

provide a synopsis of the procurement cycle observed by the Central Tenders Board.

2.1 Overview of the Current Public Procurement Process

2.1.1 Definition of Public Procurement

Procurement can be defined as the acquisition of goods and services including the

undertaking of works and consultancy services for use by the client organization. Procurement is

therefore a comprehensive process that includes inter-alia design, publicity, tendering, receiving,

opening and evaluation of offers, award and signing of contract, guarantees, installation, testing

and start up operation, service and maintenance (Central Tenders Board n.d.).

Public procurement involves the utilization of public money in a complex

of processes and choices in which needs are evaluated, scope of works,

products or services identified, form of delivery and methodology for making

contractual choices determined, contractual arrangements entered into and

works or services performed.

Public procurement distinguishes itself from private procurement through

the utilization of public money and as a result is subject to a greater degree

of transparency and accountability than obtains in the private sector. The

utilization of public money imposes on all agents a duty of care in the public

interest and a duty to safeguard and ensure the attainment of value for

money. The utilization of public money also demands that such utilization
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will be undertaken only for the purposes intended and authorized. Public

procurement occurs wherever public money is spent on the acquisition,

maintenance and disposal of property, or the procurement of works and

services. This means that the legal framework will apply not only to

Government ministries and departments but also to statutory authorities,

State-owned enterprises (SOEs) and civil society bodies. Wherever and

whenever public money is being spent, the public interest must be

paramount (Ministry of Finance of Trinidad and TObago 2005).

2.1.2 The Evolution of the Legislative and Regulatory Framework

During the period 1956 to 1960, there was a significant increase in Public

Sector in-house construction activity which gave rise to a number of financial

management problems. This led in 1961 to the establishment of a legislative

and regulatory framework known as The Central Tenders Board Ordinance

No. 22 of 1961 which incorporated the development of the following:

i. A Cost Accounting Division in the Ministry of Finance

ii. The Central Tenders Board (CTB)

The Cost Accounting Division in the Ministry of Finance was the agency charged with the

responsibility of spending public funds and is therefore accountable to the population for such

expenditure. The majority of this expenditure involves the procurement of goods and services.

Approximately 75% of the Budget allowances for this procurement are through the Tendering

Process.

The Central Tenders Board was therefore established by Act No. 22 of 1961 to ensure that

the proper procedures are followed to obtain the most suitable supplies and services from
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available resources. The Central Tenders Board forms an integral part of the Financial

Regulations as it is the Government Agency responsible for awarding contracts as requested by

Government Ministries, Departments and certain Statutory Bodies. The Central Tenders

Board (CTB) was instated to be “…the sole and exclusive authority in

inviting, considering and accepting or rejecting offers for the supply of

articles or for the undertaking of works or any services necessary for

carrying out the functions of Government or any statutory bodies, and to

dispose of surplus or unserviceable articles belonging to the Government or

any statutory bodies.”

These measures applied the principles of efficiency, transparency and

accountability, as understood at that time, to the management of public

procurement. Over the years, the Government of the Republic of Trinidad

and Tobago has played an increasingly influential role in the public

procurement system.

In 1979, the Ordinance was amended to allow the Government to act

on its own behalf. This reflected a major shift in policy on the role of the CTB

as Government’s sole procuring agency. The amendment also increased the

powers of the CTB to contract consultants.

In 1987, the Ordinance was amended further to provide for the

handling of matters in the event of an emergency without reference to the

CTB.

In 1991, an amendment provided for a Special Ministerial Tenders

Committee to be established at the Ministry of National Security to procure

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arms, ammunition, and equipment for the Defense Force and the Protective

Services.

In 1993, an amendment validated the National Insurance Property

Development Company Ltd (NIPDEC) as a procurement agency for

Government outside the ambit of the CTB.

Further decentralization of the procurement regime was also effected

from 1979 onwards by the establishment of new statutory corporations and

the removal of some earlier established statutory bodies from the purview of

the CTB. The CTB now has an exceedingly diminished role as compared to

1961.
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2.1.3 Current Procurement Practice observed by the Central Tenders

Board

Note: The text highlighted in red for steps 5 & 6 indicates the alteration to the Procurement
cycle to represent Selective Tendering

Figure 2.1: Procurement Cycle

Source: Central Tenders Board. "Procurement Cycle." In Central tenders Board of Trinidad and Tobago
Information Booklet, 14. 2008

The following is a synopsis of the Procurement Method observed by the Central Tenders Board

(Central Tenders Board n.d.):

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• The Client Ministry or Department conducts a needs assessment, reconciling its needs

with available funding. A Bid Package is subsequently prepared and submitted to the

Central Tenders Board Division.

• Upon receipt of the bid package, the Central Tenders Board reviews the documents and

ensures that they conform to the Central Tenders Board Regulations and Procedures.

• Once all documentation received from the Client Ministry is reviewed and found to be

within the proper procedures, the Central Tenders Board invites bids/tenders publicly or

selectively.

• Tenders are invited publicly by advertising tender notices locally, in the press and in at

least two (2) newspapers of wide circulation; and internationally, in reputable Journals

and the Development Business Forum. Tenders are also published on the Central Tenders

Board’s Website.

• Tenders are invited selectively from a shortlist of registered contractors, consultants and

firms that have all undergone a prequalification exercise.

• Tenders received are opened publicly on the closing date of the tender and are forwarded

to an evaluation team approved by the Board.

• The Central Tenders Board then reviews the evaluation reports prepared by the team. The

evaluation team may also be required to provide explanations of aspects of their report.

• The Award of Contract is subsequently decided upon by the Central Tenders Board. In

the case of consultancies, the two-envelope system is used.

• Letters of Acceptance are issued to successful bidders by the Central Tenders Board

Division.
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• In the case of major projects, the form of contract Agreement is prepared by the Chief

State Solicitor’s Office who formally arranges the execution of the contract Agreement

by parties to the contract.

• All Contracts awarded are published monthly by the Central Tenders Board in the

Trinidad and Tobago Gazette and on the organization’s website. Copies of the Contracts

awarded are also submitted to the Auditor General.

• The Client Ministry or Department is responsible for administering the contract.

However, the Central Tenders Board may become involved in this stage of the process

only if called upon to resolve a dispute or approve a variation to the contract outside of

the client’s jurisdiction.

• A report is submitted to the Central Tenders Board, upon completion of the contract,

which in turn authorizes the release of performance bonds and the refund of deposits. The

Auditor General is responsible for financial audits.

• Tender committees within the Client Ministries or Departments may act for the Central

Tenders Board within limits, as provided by the Central Tenders Board Ordinance (No.

22-1961, as amended). Such committees are chaired by representatives of the Central

Tenders Board and follow the procedures of the Division. In cases where the value of the

acquisition is below a certain limit, the committee has the ability to award the contract.

• Permanent Secretaries and Departmental Heads can also procure goods and services

below a certain financial limit. All financial limits are defined in the Regulations, Rules

and Procedures of the Central Tenders Board.

• Most statutory bodies, all State-owned enterprises and NIPDEC are fully responsible for

their own procurement procedures. Agencies/Bodies outside of the governance of the

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Central Tenders Board may be engaged by government ministries as contractors for

major capital works.

• State enterprises are required to invite a representative of the Central Tenders Board to sit

on panels considering Tenders above a certain level. The award of contracts by these

agencies is subject to monitoring by a Central Audit Committee, established within the

Ministry of Finance.
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Chapter 3 - Discussion of the Principal Challenges to the

Development of Efficient Procurement Processes in the
Public Sector in Trinidad and Tobago
This chapter presents discussions of the principal challenges to the development of efficient

processes in the public sector in Trinidad and Tobago. Recommendations for overcoming these

challenges are provided where possible.

3.1 Design and Build Procurement System

Currently there is battle looming in the industry over the concept of design/build as the

preferred building construction delivery method. This method challenges what we have come to

accept as the norm, which is the system of design/ bid/ build or client design and tender where

the latter process involves the client hiring the architect and the architect assembles the design

team of engineers and quantity surveyors together. They prepare a preliminary design and cost

estimates in accordance with the client’s brief and instructions, and contractors are then invited

to tender.

This method of delivery for construction projects has been around since the 1500s with the

master carpenter/master-builder having full responsibility for the design and construction of

building projects. However, around the eighteenth century, the professional class of architects

and engineers replaced the master carpenter or master-builder of earlier times. The architect

eventually became the client representative taking charge of projects from conception to

completion including the outfitting of most projects with requisite furnishing. The system of

client design-tender then took root as the preferred method of delivery.

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However, this process became very adversarial and confrontational between the owner, designer

and contractor - with much time and money being spent on litigation and or the avoidance of

litigation when projects failed to meet budgetary and completion schedules (Joseph 2008).

These failures were due to a number of factors, the main ones being:

i. The inability of the architect and quantity surveyor to keep current with construction cost.

ii. Incomplete design at the tender stage, resulting in final construction drawings that varied

greatly, both in scope and specifications, from the preliminary tender documents.

iii. Client change orders during the construction stage, resulting in completed work having to

be demolished and rebuilt or materials already procured having to be replaced. This

problem, originates from a lack of meaningful communication between the client, the

architect and the contractor. Proper communication would allow for value engineering

during the process of construction or even at the time of tender.

iv. Improper allocations of risks.

v. Lengthy delays in decision making and providing information to the contractor.

vi. Adversarial relationships between all parties resulting from some or all of the above.

The design/build method as we know it today was reintroduced to reduce the adversarial

relationship and increase the efficiency and cost effectiveness of construction project delivery by

having a single entity take responsibility for the entire project. This is actually nothing new to

the construction sector here in Trinidad and Tobago. This procurement system is one where a

single contract is awarded for the design and construction of the work to be performed. It

suggests that the client enters into contract with one agency for the complete delivery of the

project. This system is also referred to as a turnkey system or package deal (see Figure 3.2).
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Design
Client
Construct

Design and Build – Joint Venture

Design
Client
Construct

Design and Build – Separate Departments

Figure 3.2: Design and Build Procurement System

This approach offers the following advantages (Suite n.d.)

i. It facilitates greater unity between the two functions. It allows the design process to be

carried out just ahead of the construction process and therefore result in less time for the

project.

ii. It removes the adversarial relationship which could arise in the traditional procurement

system.

iii. It facilitates late changes in the design when they do arise.

iv. This system is highly economic hence this leads to greater savings and a lower contract

price.
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3.1.1 Challenges Faced by the Adoption of a Design and Build Procurement

System

3.1.1.1 Prohibition of Local Firm from acting as Main Contractor

The design and build approach is usually adopted by the government for the procurement

of large projects. As evidence suggests, this leads to improved project outcomes but it prohibits

an experienced local firm from acting as the main contractor due to capacity constraints (mainly

financial) and an inability to carry the additional risks. In most cases when this occurs, the local

firms and enterprises are used as subcontractors to subcontract sections of the work or to procure

supplies. The widespread subcontracting of local firms has a negative impact on the development

of an efficient procurement system within the public sector (Wells and Hawkins 2008).

3.1.1.2 Corruption

In the case of the design-build procurement method, the occurrence of corruption is likely

to increase because the entire process, as compared with that of the more traditional methods, is

less transparent with fewer opportunities for oversight by independent supervisors. The selection

process of a design-builder is itself an opportunity for corruption. It is often referred to as a

‘beauty parade’ because there is a variety of criteria such as design, cost, schedule, quality,

experience and financial resources that can be easily manipulated under the guise of a

supposedly transparent process to achieve any desired result. Whereas in the traditional methods,

the project stages such as pre-design, design, financing, planning and construction are

supervised/overseen by a variety of independent agencies and interests, in design-build the

project stages are reduced from five to three, or even less, thereby reducing transparency and

making it more difficult to supervise/oversee and to detect the possibility of corruption.

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Corruption is another factor that contributes to the degradation of an efficient public procurement

process (Archibald 2009).

3.1.1.3 Integrity and Quality of Design

The fact there is an absence of independent scrutiny and supervision on the contractor

within a design and build system creates a source of concern. It raises curiosity towards the

integrity and quality of the design, the selection and use of materials and the general quality of

the works. Another area of concern deals with the liability of the design and build contractor.

While it does appear that the contractor should be liable for the design and construction, the

question rests with how will the client establish what is the nature and extent of the damage or

fault and hence the liability, particularly when these faults are not immediately apparent. The

concealing of faults and poor quality designs originating from the utilization of the design and

build approach in public procurement certainly affects the efficiency of the process (Suite n.d.).

3.1.2 Recommendations to Combat Challenges of Design/Build Approach

This section attempts to describe possible solutions to the problems encountered by the

design and build approach currently used by the Government of Trinidad and Tobago for the

public procurement process.

3.1.2.1 Joint Venture Design and Build Approach

In the case where local firms may be prohibited from acting as the main contractor as

seen in the design and build approach, a modification to this system can utilized as another

innovative way of creating opportunities for small contractors on a sizeable project. This

modification involves the formation of a joint venture (see Figure 3.2) between foreign

contractors and local contractors. An example of this system exists where the foreign firm is
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employed as the management contractor and the local firm as the labour contractor. This

example is demonstrated in Zambia for the delivery of access roads. A hybrid

consultant/management contractor called an ‘Implementing Engineering Firm’ (IEF) was

appointed to execute and supervise the work, with supervision assistance form the district

councils. The IEF signed a contract for the works with the tender board and then contracted

small scale labour-based contractors to carry out the work. A total of 47 labour based contractors

were employed on the project and together they built 700km of gravel roads in five years at a

cost of around $7,000/km (Wells and Hawkins 2008).

This joint venture system is also depicted in the water projects in Trinidad and Tobago

where Mekorot Development and Enterprise Ltd. From Israel will work with the Water and

Sewerage Authority of Trinidad and Tobago to develop, plan and build projects worth $100

million. The work includes a project to improve the drinking water supply system, the overall

supply management, and upgrading water treatment plants. Mekorot Development and

Enterprise is already active in Trinidad. Last September, the company signed a consultancy and

training agreement with WASA, and in November an agreement was signed for developing

water management and carrier infrastructures (Barkat 2010).

3.1.3 Performance Based Contracts

Performance-based contracts (1) describe the work in terms of what is to be the required

output rather than how the work is to be accomplished; (2) place the responsibility for quality

performance on the contractor; and (3) stipulate formal and measurable performance standards,

including surveillance plans.

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Performance based contracts is another way of promoting involvement of local actors in

the public procurement process as they expand the range of acceptable solutions and permit the

inclusion of indigenous technologies. They are also seen as having potential to reduce corruption

(Wells and Hawkins 2008).

Incentives should be included for cost-savings, improved financial accountability, and

effective use of sub-contractors where quality and cost-savings can be enhanced.

3.1.4 External Consultancy Services

In order to reduce the occurrence of flaws in publicly procured projects, the client i.e. the

relevant Ministry, Government Department or Statutory Authority should source independent

advice from a consultancy agency to vet the design and monitor the construction phase.

However, this option involves the client paying additional fees.

3.2 Alleged Corruption in All Stages of the Procurement Process

Experts identify procurement as one of the areas most prone to corruption in the construction,

health and education sectors. Corruption in public procurement:

• affects the efficiency of public spending and donors' resources.

• harms companies that produce goods and services as it increases operation costs,

reduces competitiveness and, in the medium term, is not good business.

• leads to a distortion of fair competition, the waste of scare resources and the neglect of

basic needs, thus perpetuating poverty;

• can give rise to massive market inefficiencies and, in the extreme, lead to the destruction

of development opportunities; and

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• can add 20-25% to the costs of government procurement and frequently result in inferior

quality goods and services and unnecessary purchases.

Contracting is the main way a government operates and public money is spent. In this sense,

contracts are the vehicles for implementing public policy. A significant portion of

construction, health and education expenditure goes to procurement or contracts for goods

and services. Preventing and controlling corruption in procurement is, therefore, a

determining factor in policy and project efficiency (Trinidad and Tobago Transparency

Institute 2008).

The Construction Sector in Trinidad and Tobago

The construction sector is the primary vehicle used by governments

and aid agencies to achieve physical development in developing countries

and is the conduit through which billions of dollars enter the national

economy. Therefore, it is no surprise that construction procurement acts as a

magnet for persons wishing to illegally line their pockets.

Trinidad and Tobago is described as a developing country but we are

not typical because we rely less on aid than most other developing countries.

This is because we enjoy a per capita income of

US$14,000.00, the highest in the region, mainly due to the income derived

from our hydrocarbon resources. Our procurement rules, therefore, have

been developed over the years more from self regulation than from

impositions from external agencies as is the case with most developing

countries. Nonetheless, in common with other developing countries, we rely

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very heavily on the construction industry as the main vehicle in our

development thrust. As a consequence, the record shows that construction

procurement has been one of the more fertile grounds for corruption locally

(Hart 2008).

3.2.1 How corruption operates in the Public Procurement Process

Corruption in public procurement can take the form of bribery, extortion, deception

(fraud) or simple abuse. The risks of corruption in public contracting can be more easily

understood in relation to each stage of a contracting process. Most contracting processes broadly

follow the same steps. It is generally believed that the risk of corruption is especially high during

the evaluation phase of a contracting process, when offers are studied in order to select the

contractor. But the risks are not limited to this phase. Corruption can occur even before a

contracting process starts, when decisions are taken about what to contract. Some projects start

off ear-marked for award to a particular party. There is also room for abuse once the contracting

process has finished and the contractor has been selected. Underperformance, contract

renegotiation, change orders, over-billing, and non compliance are just some of the forms of

abuse (U4 Anti-Corruption Resource Center n.d.).

The table below synthesizes some of the corruption related risks at each stage of the process:

Table 3.1: Corruption Related Risks at each stage of the Procurement Process

Stage A: Decision to contract ( identification of need)

Description Main risks (examples)
The government decides to The decision does not follow a policy rational or an existing need but
purchase or sell goods or rather the desire to channel benefits to an individual or and
services, or to outsource the organisation. For example, demand is created for a good no one buys
management of a unit. simply to benefit the company's owner.
Stage B: Identification/definition of contract characteristics (technical requirements, characteristics of

goods and services, etc.)
Description
The government determines
what it needs to buy or sell or
privatize (technical
requirements, specific
characteristics) and how it will
go about it (contracting method,
agency responsible, etc)
Stage C: Contracting process
Description
A contracting process opens. It
should take place according to
what method the law determines
be used to receive proposals
(e.g. open bidding system) or
evaluate contractors (e.g. single
source)
Stage D: Contract award
Description
Contract process ends and a
decision is made in order to
select the winning bidder (in
open bids) or the contractor (in
single-source processes).
Stage E: Contract implementation and supervision
Description
xxvi
Main risks (examples)
Characteristics (technical or not) are made to favour a special supplier
or contractor and not to properly address the need identified;
Exceptions to an open bidding process are abused, leading to single
source processes);
Participation of relevant stakeholders is limited, making it difficult to
assess the need and relevance of the characteristics as they are being
defined;
Evaluation criteria are not set from the start or are not objective,
thereby making them prone to abuse
Main risks (examples)
Invitation to tender (an open bid) is not publicised, thereby restricting
the number of bidders that participate;
When short-lists are used, companies bribe to be included or to gain
access to them;
Invitation to tender is publicised but very little time is given to
present offers, making it difficult for bidders without prior knowledge
of the contract to present bids;
Abuse of confidentiality or lack of publicity creates unequal playing
field for bidders;
In single-source processes, lack of publicity or transparency leads to
unjustifiable decisions;
Bidders or contractors collude to influence prices or to share the
market by artificially losing bids, or not presenting offers.
Main risks (examples)
Evaluation criteria are not clearly stated in tender documents,
leaving no grounds to justify the decision;
Evaluation of bids is subjective or leaves room for manipulation and
biased assessments;
Contract awards are not publicised (nor the grounds for the decision).
Main risks (examples)
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The contract is signed with the Contract changes and renegotiations after the award are of a nature
selected bidder or contractor that changes the substance of the contract itself;

Supervising agencies/individuals are unduly influenced to alter the

contents of their reports so changes in quality, performance, equipment
and characteristics go unnoticed;

Contractor's claims are false or inaccurate and are protected by those

in charge of revising them;

Subcontractors and partners are chosen in a non-transparent way, are

unaccountable or are used to channel bribes.

Additional Risks

Additional risks are created by confusing or contradictory legislation. In some cases, for

example, donor and credit agencies require their procurement procedures to be used instead of

national procedures. In some cases, this has been helpful; but in others, requirements for

transparency are higher under national legislation. In this case, an important tool to prevent

corruption is lost. An additional burden is created if the local implementation agency is not

familiarized with the donor or credit agency's guidelines, or if it has to simultaneously handle

several processes under different regulations.

Research has told us that corruption in procurement takes place because of - and is

worsened by - the following factors:

Size

Bribes are often calculated as percentages of the total sum, representing a proportional

relationship. Hence, the more money involved the more reason to demand a bribe.

Mystification

The more high technology involved, or seemingly involved, the more attractive the

project will be to the potential beneficiaries. This kind of "mystification" reduces the risk of
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being criticized for paying too much. (For example: How many people can say whether a

particular fighter aircraft should have cost $21million rather than $23million?)

Immediacy

The term of office may be brief to many politicians, but also to officials. From this it

follows that the most attractive projects are those in which the full purchase price, or at least a

very substantial deposit, is payable at an early stage.

Discretion

The discretionary authority of public officials often represents a golden opportunity to obtain

bribes. Discretionary power is at its greatest when the public demand and the public preferences

are delegated to the public agent and defined during a bilateral bargaining process. Then the civil

servant is choosing the private part, while price and other contract conditions are the result of the

negotiation process. The discretionary authority includes

• The power of invitation

• The power of short-listing or pre-qualification

• The choice of technology

• Confidential information

• Modifications of the contract

• Bilateral negotiation of governmental contracts

3.2.2 Mitigation Strategies for Corruption in Public Procurement

It is possible to combat and prevent corruption in public contracting. There is now a

global consensus on the need to curb corruption that encompasses companies, governments,

donors and credit agencies and civil society organizations around the world.
 xxix

For many years, it was believed that the only way to fight corruption in public contracting

was through law enforcement and control. While this is clearly necessary, it often comes too late,

after the damage has been caused. More importantly, corrupt behaviour should be prevented by

giving those involved in contracting the opportunity to avoid it and the pressure to do so.

Moreover, it is important to realize that there is no single solution to the problem.

Contracting processes need to be permanently monitored. Supervision and control play a key role

since good rules are necessary but not always enough to curb corruption. It is also important to

have clear and publicly available procedures and to have regular audits by external parties (U4

Anti-Corruption Resource Center n.d.).

3.2.2.1 Good Rules, Transparency and Monitoring

Good rules, transparency and monitoring are three elements that help to prevent corruption.

• In the case of absent rules or rules which can be manipulated to one's advantage, donors

should assist governments in elaborating and enforcing procurement laws and procedural

guidelines which comply with international standards.

• These procurement rules should at least minimize confidentiality, state open bidding from

pre-qualified suppliers as a principle, guarantee access to information, and make sure

bidding documents, procedures, evaluations and awards are publicly and timely available.

They should also establish administrative review systems, foster objective evaluation

criteria and provide structures for it. These rules should ensure that the different

procurement functions and responsibilities (selection, quantification, product

specification, pre-selection of suppliers and adjudication on suppliers) are divided among

 xxx

different offices, committees and individuals, each with the appropriate expertise and

resources for the specific function.

• Access to information can be provided through documentation and communication

systems, including online systems, where information can be shared with auditors,

complainants and the general public. Tools for improving electronic procurement systems

are supported by the World Bank and other donors.

• Efficient management is one of the most effective preventive mechanisms. It promotes

transparency and accountability, facilitates oversight and citizen participation, and brings

legitimacy to governmental decisions. Rules that follow these principles also provide a

good basis to prevent corruption.

• Written procurement procedures should outline the whole process, using explicit criteria

to award contracts.

• Rules are not enough, however, and law enforcement mechanisms are often weak.

Monitoring by local experts and independent oversight agencies can help make existing

norms effective. Civil society also has an important role to play in monitoring.

Transparency International has developed and implemented a number of monitoring tools

to increase transparency and access to information that involve cooperation between

governments, companies, donors and civil society. Monitoring should also include an

annual external audit.

• Donors can also promote integrity in the private sector, e.g. through information

campaigns for small and medium sized businesses. It is the latter who lose out in corrupt
 xxxi

procurement deals as larger firms can more easily afford to position themselves vis-à-vis

decision-makers.

Some contracting or procurement problems stem from inefficiencies in the contracting

system. Some tools that help to correct these inefficiencies may also prevent corruption and vice

versa. But this is not always the case. For example, speeding up the procurement process may

increase the risks of corruption if transparency and accountability are not assured. Conversely, a

strategy to prevent corruption, if not implemented appropriately, may introduce unnecessary

delays. This means that a careful consideration of impact and implementation should be

performed. Adequate training of procurement officers, the establishment of multidisciplinary and

multi-party evaluation committees, rotation principles for procurement officials and the

establishment of accountability and report procedures, are key in fighting corruption. Incentives

promoting 'good behaviour' for individuals are also needed, such as the performance-based staff

incentive structures. Systems usually plan punishment for 'bad behaviour', but experience proves

that rewards for good behaviour can motivate individuals. The development of codes of conduct

for staff is also extremely important.

3.2.2.2 Competitive Bidding

Competitive bidding includes a good public procurement system that can ensure fair

competition and best value for money. There is also broad agreement about the main elements in

a competitive bidding process; namely, it should feature:

• Public notification of bidding opportunities

• Documents that clearly set out the needs, describe the bidding process and contract terms

and conditions, and give the criteria for choosing the winner
 xxxii

• Submission of secret sealed bids that are opened in the presence of the bidders at a

specified time and place

• Impartial evaluation and comparison of bids by competent evaluators without influence

or interference by bidders or other parties

• Award of the contract to the bidder complying with all requirements and offering the best

bid, as defined by the published selection criteria.

3.2.2.3 Political Commitment

Research has demonstrated that the fight against corruption must start with an explicit

commitment by the prime leadership of the country. Ending the pettier forms of corruption in the

bureaucracy is almost impossible if grand political corruption persists. Accordingly, political

commitment is a necessary condition for successful procurement reform.

An anti-corruption reform of the public procurement system depends on the political will

to disclose the state budgets, to extend the obligation to keep accounts, to establish external

monitoring systems and to improve public access to bureaucratic and political information.

3.2.2.4 Uprooting of Corrupt Relationships

Because the challenge in the arrangement of corrupt agreements is often the search for a

proper counterpart, an important anti-corruption strategy is to disturb these established, secret

connections, and further increase the transaction costs of corruption. Rotation of public officials

responsible for procurement is one possibility.

 xxxiii

3.2.2.5 Simplification of Rules

It is important to make the underlying rules as clear and simple as possible, so that people

know what an honest system is supposed to produce. Uncertain and variable rules tend to create

opportunities for corruption. Information about areas of responsibility and degrees of

discretionary authority among public officials should for instance also be made accessible to

ordinary people.

3.2.2.6 Bench-marking and off-the-shelf items

The goods procured should be "simplified". Anti-corruption benefits are just one of

several economic reasons to prefer standardized products to more specialized custom-made or

"state-of-the-art" products. The state administration should apply private market prices as

benchmarks and specify their requirements in terms of standard off-the-shelf items. This would

reduce both the cost of procurement as well as the risk of corruption.

3.2.2.7 Supplementary Work

In particular construction, but to a certain extent also procurement, tend to become much

more expensive than envisaged in the first plans. This is a global problem.

Accordingly, the way additional work is specified in the contract is important. Does such

kind of work have to go through a new procurement procedure? Or is it supposed to be carried

out by the same enterprise? The latter might end up in a monopoly price if not prices of

supplementary work are determined in advance. And what is the definition of supplementary

work? These questions should be clearly answered in the procurement contract, while decisions

to change or supplement the project should be monitored with caution by officials external to the

centre in charge of the contract award.

 xxxiv

3.2.2.8 Inspection

All kinds of procurement decisions have to be monitored in some way. For discretional

procurement decisions this represents a certain challenge. While elements like technical value,

times of execution, costs of utilization to some extent can be monitored objectively; there will

often remain an aspect of evaluation that is clearly individual. Also to enable inspection of these

judgments, specific objectives are the solution. When significant problems arise during

execution, a committee should respond, and not just one official.

3.2.2.9 Codes of conduct and rules of disqualification

Rules to ensure integrity make it easier for public officials to renounce corruption. Codes

of conduct are a "compulsory" part of any procuring institution. However, they should not just

remain on the paper, but characterize all forms of bureaucratic activity. A step in that direction

would be to include ethical standards in the legal framework. Codes of conduct are supposed to

serve as an obstacle for private interests to interfere with those of the government. Important

elements are the way gifts and personal benefits should be treated; forms of communication and

association with external agents involved in administrative cases; what to do when fraud or

corruption is discovered among colleagues; and what to do when uncertainty about these issues

arises.

3.2.2.10 Competition

Competition is usually efficient to curb corruption in procurement. Monopoly suppliers

are one element, but also monopoly providers of public services can be problematic. In a given

example where the office issuing drivers licenses frequently demands bribes, even when you

have all papers in perfect order, an idea could be to establish other public offices with the same
 xxxv

authority. That way you could address the office which doesn't add the extra price the bribe

money incurs. Competition in the provision of public services has in some cases been forwarded

as a possible solution.

3.2.2.11 Anti-Corruption Tools Developed by Transparency International

The following three anti-corruption tools have been developed by – or their development

facilitated by- Transparency International (Trinidad and Tobago Transparency Institute 2008)

Integrity Pact

The Integrity Pact (IP) is aimed at preventing corruption in public contracting. It consists

of a process that includes an agreement (entered into before bids are invited) between a

government or a government department (at the federal, national or local level) and all pre-

qualified bidders for a public contract. It contains rights and obligations to the effect that neither

side will: pay, offer, demand or accept bribes; collude with competitors to obtain the contract; or

engage in such abuses while carrying out the contract. The IP also introduces a monitoring

system that provides for independent oversight and accountability.

Through the use of the IP, governments are able to reduce the high cost of corruption in

procurement, privatization and licensing arrangements. Successful implementation of the IP on a

major project can go a long way to restoring public confidence in a country’s public procurement

processes.

The IP has shown itself to be adaptable to many legal settings and flexible in its

application. In the case of Trinidad and Tobago, no new legislation is required for its

introduction. Obviously, the legal requirement will vary from country to country and that would

need to be examined locally. So far, the IP has been successfully introduced in about 20
 xxxvi

countries around the world with some major success reported. Regrettably, despite lobbying by

TTTI, the government of Trinidad and Tobago is yet to use the IP on any of its projects.

Anti-Corruption Forums

Another tool promoted by TI is the infrastructure anti-corruption forum. This is a private

sector anti-corruption alliance between the infrastructure industry (represented by business and

professional associations and companies) and civil society (represented by TI and other

organisations with particular interest in the infrastructure sector). The forum agrees and promotes

anti-corruption actions in the infrastructure sector and liaises as necessary with government and

other national bodies.

In the UK an Anti-Corruption Forum (ACF) was successfully established in 2004. It is an

alliance of TI’s UK chapter with business associations, professional institutions and companies

with interests in the domestic and international infrastructure, construction and engineering

sectors. Over 1,000 UK companies and 200,000 engineers and construction managers are

represented on the Forum.

The purpose of the UK ACF is to promote industry-led actions which can help eliminate

corruption. The members believe that corruption can only be eliminated if governments,

financiers, business and professional associations, and companies working in these sectors co-

operate in the development and implementation of effective anti-corruption actions.

The Project Anti-Corruption System (PACS)

The Project Anti-Corruption System is an integrated and comprehensive system designed to

assist in the prevention of corruption on construction projects. It uses a variety of measures

 xxxvii

which impact on all project phases, on all major participants and at a number of contractual

levels.

The developers of PACS have started from the premise that corruption on construction

projects is a complex problem. It may occur in the form of bribery, extortion, fraud or collusion.

It can take place during any phase of a project, including project identification, planning,

financing, design, tender, execution, operation and maintenance. In each project phase,

corruption may involve any one or more of the participants i.e. government, state enterprises,

project-owner, financiers, consultants, contractors, sub-contractors, suppliers, joint venture

partners, and agents. It may occur at any level of the contractual structure.

PACS is modular system comprising:

• standards that recommend anti-corruption measures which should be used on

construction projects; and

• templates that provide the tools by which the measures recommended in the PACS

Standards may be implemented.

A government, a public or private sector project owner, or a funder can:

a) assess its existing project anti-corruption measures against the PACS Standards;

b) modify its existing measures in accordance with the PACS Standards; and/or

c) use some or all of the PACS Templates, appropriately customised, in order to implement

its anti-corruption measures.

 xxxviii

3.3 Presence of Foreign Contractors

In most developing countries the construction sector plays an important role in the developmental

process. Developed countries can also derive the benefits of the construction industry. Construction is a

major consumer of products from the primary sector as well as the manufacturing sector. The

construction sector provides critical backward and forward linkages.

The sheer size of the market in construction presents significant opportunities for competent firms

and individuals no matter where they are based or their size, provided they have the necessary interest,

opportunity and support. However, like in other countries, regional firms must receive support politically

and economically from the Governments of the region.

It is claimed that firms within the Caribbean Community (CARICOM) are not as competitive as

they should be against firms from other parts of the world. However a significant number of professionals

in the region are of the opinion this may not always have to do with elements of industry efficiency per se

and that the support, subsidies and incentives (albeit often hidden) available to foreign firms create unfair

terms of trade and are largely responsible for the imbalances in ‘competitiveness’ as measured by winning

international competitively bid contracts. The region is also faced with the phenomenon of cheap labour

from countries such as China and questionable working conditions.

3.3.1 Chinese Experience in Trinidad and Tobago

The Chinese presence began elsewhere in the region. Their presence was evident with the design

and construction of the sporting facilities for the hosting of the Cricket World Cup matches. The Chinese

construction company – Shanghai Construction, was introduced to Trinidad and Tobago with the design

and construction of the Prime Minister’s residence and diplomatic centre at cost of nearly TT$150

million. It has since expanded further locally with the design and construction of cultural centres

in Port of Spain and San Fernando and government office buildings and even houses in Tobago.

In some cases, the Government of China has financed these projects at concessionary terms.
 xxxix

There has been at least one report in the local press that a private developer was also using

‘Chinese labour’.

Several issues arise from this development in the region. Issues that relate to the

importation of a foreign design style and culture, the displacement of local consultants,

contractors and labour, the importation of materials that are usually available locally, the use of

materials that may not satisfy local construction codes, the absence of independent supervision

and certification of the designs and construction works, that the Chinese are supposed to be

delivering projects much faster and more economically than local contractors (Lewis and Imbert

n.d.).

Lack of Transparency

The Chinese projects fail the ‘transparency’ test because the details of the contractual

arrangements between government and the Chinese contractors are being treated like state

secrets. There has been no disclosure to the public, or to Parliament, of the contract terms.

Generally, there has been no consultation by government on the proposed plans. The designs of

the Cultural Centres in T&T have been finalized without design inputs from the facilities

intended users. After much lobbying, very limited consultation took place, after the fact, and

resulted in delays to the projects because of the resulting need to go back to the drawing board.

In the case of the Prime Minister’s Residence and Diplomatic Centre, no stakeholder

consultation took place.

Lack of Accountability

The Chinese projects fail the ‘accountability’ test because there is no overseeing of the

contractor’s work by independent competent local professionals. In the case of the the Prime
 xl

Minister’s Residence and Diplomatic Centre, there was an electricity outage during the first

function, the tour by media and special guests. If press reports are correct, the outage was the

result of the electrical design and installation not meeting the standards of local codes. Further,

the Electrical Stand-by Generator is reported to have failed to operate as intended because of

design faults.

Value for money

It is impossible to determine whether Trinidad and Tobago is receiving value for money

from the Chinese awarded projects, simply due to the lack of information. It can be deemed that

they fail to deliver value for money. This conclusion can be drawn from the following

observations:

• Firstly, in most cases, the Chinese contractors are not made to tender in competition with

local or regional contractors, therefore, no one is sure if contracts are awarded for the best

price. The international norm is that competitive tendering is a prerequisite for ensuring

value for money and every credible funding agency such as the World Bank etc. insist on

it but for exceptional circumstances.

• Secondly, an important part of the ‘value for money’ equation which has not been met is

the transfer of technology from the foreigners to locals. There was a failure in the

appointment of local understudies on any of these projects. Therefore, when the Chinese

labourers depart, Trinidad and Tobago may be left in a situation where we may

experience difficulty in maintaining buildings due to the lack of sharing of first-hand

knowledge with the locals. Further, maintenance of the buildings will require the

sourcing of materials and equipment that are not readily available in the local market.
 xli

These two issues have raised concern as to whether the Chinese contractors are receiving

preferential treatment not enjoyed by local contractors (Trinidad and Tobago Transparency

Institute 2008).

It can be concluded that the high influx of foreign contractors stifles the expansion of local content.

This means that it reduces the chances for local people to earn income through employment on the

construction site or in the supply industries. It also reduces the opportunities for local businesses as

contractors, subcontractors, producers or suppliers of material and equipment and increased local

knowledge and skills. Procuring services and goods from local contractors and suppliers and using

techniques adapted to the local resource endowment, will generate income locally and make a substantial

contribution to economic growth.

3.3.2 Local Contractor Praised

The reputation of local contractors in Trinidad and Tobago is at such a deplorable state

that when a local contractor succeeds to deliver a project on time, their performance is well

recognized and appraised. According to the article “Local contractor praised” dated 22nd

September 2009, a local contractor Sharoz Enterprises Lrd. was commended by the Minister of

Legal Affairs for delivering of St. Mary’s Primary School on time and within budget despite

Government’s preference for foreign contractors (Bethel 2009). This gesture by the Government

indicates the extent at which the potential of local contractors is viewed by the public.

3.3.3 Recommendations

Leveling the Playing Field

The following describes recommendations and alternatives that should be introduced into the

public sector (Lewis and Imbert n.d.).

 xlii

• Avoid combination/multi-stage contracts, which make them too big for local firms, for example,

financing, construction and installation works as in major turnkey contracts. Disaggregate very

large projects into multiple contracts where feasible so that

• Established protocols for consortia of local firms and joint ventures between local and foreign

firms for adequate technology transfer and equitable sharing of risk, responsibility and profits.

• Review pre-qualification criteria, particularly the weighting given to ‘local experience’, which

should be significant.

• Promote the use of uniform standards and specifications relevant to the region. Legislation is

needed to codify building codes and expeditious approval of plans.

• Facilitate access by local firms to funds to enable interest rate equalization and in the provision of

insurance and bonds to alleviate disadvantages of the small size of the economy and firms.

• Address the issue of unfair tax concessions for foreign consultants and contractors.

• Restrict the right to Commercial Presence by a foreign firm when this can be shown to be

detrimental to local firms.

Local firms need to collaborate, as consortia or joint ventures where appropriate, with other firms to gain

size and financial strength to compete for larger contracts.

Institutional Strengthening

• Local associations need institutional support for the further development of the professional

bodies (e.g. tax-free status as a charitable body).

• Professional associations should have institutional representation on Boards of Directors of

engineering related public sector institutions.

• Government regulatory/approval agencies need strengthening with adequate professional

resources.

Training and Recognition of Qualifications

• Strengthen technical and technology-based training in the region.

 xliii

• Promote standardization of technical and technology-based training in the region.

• There is a need for an agreed standard for accrediting skilled artisans, tradesmen and craftsmen.

This is the responsibility of the Caribbean Association of National Training Agencies (CANTA).

• There should be mandatory local registration of all professionals and firms as a precondition for

offering construction and installation services in the region.

• For regional equivalency and reciprocity, it is necessary that similar registration legislation be

enacted in each country.

• The Caribbean Accreditation Council for Engineering and Technology (CACET) should be

established as soon as possible and become a member of the Washington Accord.

• There is a need for a system for reciprocal recognition of similarly registered and licensed

professionals from other countries or regions.

• Limit foreign personnel to professional and senior supervisory staff.

Information Flow and Access

Both Governments and the private sector organizations have a responsibility:

• To facilitate and encourage information flow through the local sector, especially documentation

and access to project proposals and data.

• To carry out further studies into the performance of the construction sector for baseline data on

construction costs, educational and training programmes and human resources in the various

categories of skills.

• To initiate a process whereby Governments, developmental and lending agencies would provide

information on development plans, proposals and tenders.

• To establish and maintain an up-to-date website on the Caribbean Single Market and Economy

and trade negotiations and agreements and their implications for the regional industry.

Modified Procurement Strategies

 xliv

The Government of Trinidad and Tobago adopted a meticulous tendering process for the

procurement of the Interchange Project along the Uriah Butler Highway. This strategy involved a

delay in the process of approximately six months to allow local contractors to participate in the

project by entering into joint ventures with their foreign counterparts. This effort to include the

local content into the project proved useless because not a single local contractor submitted a bid.

After considerable due diligence and independent verification a contract was signed with foreign

contractor Vinci. Although this attempt was not successful, this strategy can be adopted for

future projects as a method for improving the efficiency of public procurement (Tack Chan

2009).
 xlv

3.4 Public Sector Procurement Process

Since as early as 1987 there have been several attempts to reform the current public procurement

process. Weaknesses in this process include (Ministry of Finance of Trinidad and TObago 2005):

3.4.1 Deficiencies in the Legal and Regulatory Framework

The existing procurement legislation is considered archaic by all

stakeholders and in need of major reform if it is to meet current needs and to

conform to current best practice. The underlying principle of accountability in

the CTB Ordinance was compromised by prescribing the CTB as the

procuring agency of the State, while at the same time limiting its activities

mainly to the tendering stage. The processes, as prescribed particularly in

relation to the award of contracts, do not reflect involvement in the full

procurement cycle. (see Figure 2.1)

The critical decisions involved in spending public money for property

and services are made at step 1 of the procurement cycle. These decisions

permeate the process and affect the award of the contract. In law, the CTB

has no direct involvement in the design of the Terms of Reference (TOR), nor

the preparation of Requests For Proposal (RFPs), nor the monitoring or the

execution of the contract. Further, after the award of a contract, all matters

that are dealt with fall within the domain of contract law to which the CTB

cannot be a party.

Even within its realm of responsibility, the CTB in many cases refers

the documents back to the client Ministry/Department as a consequence of

 xlvi

obvious faults, which appear to predispose a particular outcome in

contradiction to the principle of fair competition, and compromises the

integrity of the procurement process. As a consequence, the process is often

delayed.

Some contractors, suppliers and consultants share the view that there

are too many stages in the procurement process, especially where it is

necessary to go back and forth from CTB to client. They argue that the

resultant delays affect tender prices and more often than not justify price

increases since the validity period of three months expires before a contract

is awarded.

Because of concerns that the procurement procedures are outdated,

different forms of project delivery systems such as Design Finance Construct

(DFC), Build Own Lease Transfer (BOLT) and Build Own Operate Transfer

(BOOT) are used to shorten the procurement cycle. The Ordinance does not

apply to tendering on financial matters and as a result does not

accommodate these systems. These limitations effectively put the

procurement activity of these projects outside the ambit of the CTB.

In addition, amendments to the CTB Ordinance have led to the use of

off-budget arrangements and the proliferation of procurement activities not

covered by the legal and regulatory framework.

3.4.2 Absence of Uniformity in the Tendering Process

State-owned enterprises and NIPDEC are fully responsible for their own

procurement activities. These procuring entities tend to use their own

 xlvii

standard bidding documents (SBD’s) and procedures, thereby creating

unnecessary parallel systems. While the CTB has striven for uniformity in the

tendering process, in practice this uniformity has not been achieved. The net

result is a complete lack of standardization at all levels of the procurement

cycle, and particularly so in the standardization of bidding documents.

Standardization is an essential prerequisite for the utilization of digital

technology and the modernization of organizational processes.

3.4.3 Human Resource Limitations

The current staffing and training of the CTB’s personnel constrains the

organization’s ability to adequately service ministries and departments. The

organization is restricted also in its ability to be current with present

practices in a rapidly changing technological environment.

Currently, the office of the Chief State Solicitor prepares all major

contracts in the goods, works and services areas. However, it is neither

staffed nor structured to deal efficiently with the volume and complexity of

the work involved or with rapid changes in technology contracts. This

contributes to delays in the preparation and execution of contracts and is a

major deficiency in the system.

Many State-owned enterprises, NIPDEC and Statutory Bodies, also lack

staff properly trained in procurement. In fact, procurement is not looked

upon as a professional discipline in its own right.

 xlviii

3.4.4 Lack of Regulatory Oversight

The partially decentralized nature of the current system extends the

contracting authority among the various players without providing adequate

monitoring. Cabinet has authority to direct Ministries/Departments to use

selected State-owned enterprises under Section 20A (1) (c) of the Ordinance

thereby bypassing the regulatory oversight of the CTB. In most cases, these

companies lack the technical capability to conduct the activities under

contract and award sub-contracts using their own procurement rules and

procedures.

The CTB does not have the authority to regulate. The regulatory

procurement framework lacks the authority to audit the procurement system

and ensure compliance with the rules and procedures for the award and

implementation of contracts. However, under the

Constitution, the Auditor General is responsible for auditing and reporting

annually on public expenditure matters.

3.4.5 Absence of a Complaints Mechanism and Dispute Resolution

Although the CTB receives and acts upon supplier complaints with

respect to the procurement process, there is no formal independent

complaint and dispute resolution mechanism in place.

3.4.6 Lack of National Registry

Each procurement agency keeps its own register for inviting bids, and

uses its own procedures for prequalification registration. There is no national

 xlix

registry of contractors, consultants and suppliers. The absence of such a

registry creates additional work for consultants and contractors by having to

register with the various agencies.

3.4.7 Lack of an Electronic Public Information System

There is no system in place to provide suppliers or the public at large

with full, up-to-date and electronically accessible information on tender

opportunities, the publication and status of bids and awards, or the progress

of major projects.

3.4.8 Concerns of Local Suppliers

Notwithstanding the Government’s stated objective of supporting the

development of local industry, local contractors, consultants and other

suppliers do not believe that they are being fairly considered in the tendering

process. There are concerns that some SOEs negate fair competition by the

use of the selective tendering process without due regard to the

prequalification or registration criteria. The Ordinance does not stipulate any

guidelines or restrictions limiting the use of this method of procurement.

3.4.9 Poor Data Collection and Reporting

Procurement records are maintained by both CTB and State-owned

Companies. There is no minimum requirement, however, on the contents of

such records and the maintenance period that is applicable to all procuring

entities. Furthermore, there is no adequate centralized reporting of the

awards of government contracts.

 l

3.4.10 Current Best Practices

In response to the evolving complexities of the global marketplace,

many countries are reforming their governmental procurement systems.

These efforts are leading to general agreement on what constitutes good

public procurement practice. An analysis of these reform efforts suggests

that any system of public procurement should:

• be efficient and reflect best business practice;

• be publicly acknowledged as fair, open and above reproach;

• involve civil society as a check and balance to ensure transparent

practices;

• be ethical: the conduct of all parties must be that of mutual trust,

respect and integrity;

• promote competition and not discriminate;

• promote the competitiveness of local business;

• clearly identify relevant decision-makers; and

• be alert to the impact of technology in the marketplace and avoid

bureaucratic red tape;

3.4.1 Operating Principles for Best Procurement Practice

Based on a survey of a number of reformed procurement systems in

the Commonwealth, including Jamaica and Australia, and those in operation

by multilateral financial institutions, some core operating principles which

characterize these systems have been identified. These principles are

 li

primarily Value for Money, Transparency and Accountability. They redefine

the economic concerns, identify with the public interest, and impact the

procurement process. How these principles are implemented in best practice

is outlined below.

3.4.1.1 Value for Money

Value for Money in the context of current best practice in procurement

means the attainment of the best combination of price and quality to meet

the particular need in the shortest possible time. It is essential that

procurement attains the best quality of property and services for the price

that is paid, or the lowest price for the acceptable quality of property and

services. It does not necessarily result in the lowest priced goods available or

the absolute highest quality available. It is the best combination of price and

quality to meet the particular need. An assessment of Value for Money must

take into account not only the immediate cost of property and services

procured, but also:

• the performance of the suppliers in meeting their contractual obligations,

quantitatively and qualitatively;

• financial considerations including the source and cost of funds;

• the cost of maintenance support; and

• the anticipated price on disposal.

 lii

In other words, life cycle costing must be done as part of the

evaluation process leading to the recommendation for award. Measures

which might be employed to effect Value for Money include:

• Undertaking of value analyses for contracts over a specified limit;

• Public consultation on the rationale and elements of major projects during

the design phase before the bidding documents are finalized;

• Greater use of standard clauses in Conditions of Contract;

• A registration system of endorsed suppliers, contractors and consultants

who get preferential consideration for contracts by virtue of that registration

after a thorough prequalification or evaluation exercise;

• Prompt payment of suppliers, contractors and consultants by Government

agencies and the introduction of penalty interest in the event of late

payment;

• Monitoring of the execution of large contracts by civil society;

• Coordinated purchasing by Government departments to take advantage of

volume discounts (bulk purchasing);

• The use of measurable criteria to determine the best combination of price

and quality.

3.4.1.2 Transparency

Transparency through internal and external scrutiny is an essential

element of accountability and should be an inherent characteristic of all

processes and procedures, plans, actions or decisions relating to

 liii

procurement. Given that procurement systems are a key indicator of the

prevailing culture of governance, it is a generally stated imperative of reform

that procurement systems be transparent, particularly with respect to details

of bids and awards.

Best procurement practice requires that all information regarding the

process be in the public domain. The potential suppliers of property and

services must have full access to information on procurement requirements,

rules and decision-making criteria. Bids are opened publicly and all decisions

are fully recorded and published. The public is therefore able to debate the

rationale of projects, particularly the large ticket items or those of strategic

importance, and to monitor the implementation of contracts awarded.

Some measures employed in other jurisdictions to incorporate the

principle of Transparency into the procurement process are:

• public reporting, of all business opportunities in an adequate and

timely fashion and in a separate gazette, for example a Procurement

and Disposal Gazette, and the Internet;

• greater use of e-procurement;

• reporting of details of awards, agreements, and reasons for selection of

the supplier, contractor or consultant;

• oral debriefing of all unsuccessful bidders by the awarding agency;

• public access to details of different tendering procedures;

• incorporation of the draft Agreement and/or Contract in the tender

documents;
 liv

• publication of bids and awards with price;

• incorporation of specified ethical standards and codes of conduct into

the Terms of Reference, Requests for Proposal, tender notices and

letters of invitation

3.4.1.3 Accountability

In the context of current best practice in public procurement, officials

of buying agencies are not only clearly identified but are held directly

accountable within the framework of ministerial responsibility to

Government, Parliament and the public. In conducting their duties, they are

protected from the undue influence of the Executive.

They are obliged by law to ensure that their procurement practices

reflect the policies and principles that are specified. In addition, they are

subject to heavy penalties and personal liability if the policies and principles

laid down are not manifested in transactions involving public money.

Some measures in current best practice to incorporate the principle of

Accountability in procurement are:

• all interested parties are required to sign a joint undertaking

guaranteeing the integrity of the process and accepting sanctions in

the event there is a lapse, arbitration in the event of disputes, and

monitoring by a third party such as a civil society body;

• identification of contact persons and relevant decision-makers together

with details of the extent of their authority and contact information;

 lv

• keeping of proper auditable records, which can be scrutinized at any

point of the process; and

• instituting and enforcing heavy penalties for parties in transgression as

well as adverse publicity and debarment from future consideration

both in their corporate and individual personas.

3.4.2 Legislative Models Effecting Current Best Practice

The Prescriptive Model

The UNCITRAL model law typifies this model. It prescribes in detail for

the purchaser as decision maker a range of procedures for different types of

transactions that reflect the principles of value for money and good

governance. Some consider this model to be a more relevant and

sophisticated version of the current model of the CTB Ordinance. Like the

Ordinance, it does not address the contract implementation phase.

Modification of any of its provisions requires Parliamentary approval. This

results in some operational rigidity making it less suitable for a rapidly

changing environment.

Generally the provisions in the UNCITRAL Model Law treat in detail with

the process of solicitation, pre-qualification proceedings, submission of

tenders, evaluation of tenders, principal methods of procurement, and

alternative methods of procurement such as two-stage tendering,

competitive negotiations and single service procurement.

The Institutional Model

 lvi

This model, reflected in the Contractor General Act of Jamaica,

concentrates on establishing the institutions involved in managing

Government contracts together with their reporting relationships. The

Jamaican law establishes the office of Contractor General as a Commission of

Parliament to ensure that the award and implementation of Government

contracts do not involve impropriety or irregularity. It constitutes the

National Contracts Commission to promote efficiency in the award and

implementation of contracts. Specification of procedures and monitoring are

the responsibility of these institutions. The law does not explicitly adopt the

core principles of value for money, transparency and accountability nor does

it explicitly draw the link between procurement and policy objectives. The

emphasis is on investigation and sanctions.

The Principle Model

The conceptual basis of the legal framework of this model is the ethical

use of public money and public property by an agency within the prescribed

principles of Value for Money, Accountability and Transparency. The

legislation, in addition to prescribing the principles, also establishes the

broad parameters that promote best procurement practices. This is achieved

by the development and implementation of mandatory guidelines which are

amplifications of the operating principles, and address issues such as:

• the requirement that procurement specifications are rendered in

functional and performance terms;

 lvii

• means of improving the cycles of competitive tendering and

contracting;

• determination of Value for Money;

• achievement of good governance;

• bonded suppliers in the case where the prime responsibility for

procurement resides with individual buying agencies;

• preferential treatment afforded to local suppliers;

• open and effective competition which would include public notification

of opportunities and of evaluation criteria to be used in the bid

process;

• public consultation on major contracts;

• review of the procurement process at critical points of the procurement

cycle;

• a joint undertaking by all parties to comply with an agreed code of

ethics;

• publication of details of contracts;

• an endorsed supplier system; and

• the impact of other policies, such as those pertaining to national

competitiveness and industry development, on the procurement

process.
 lviii

3.4.3 The Preferred Procurement Model

3.4.3.1 Introduction

The emergence of the global economy, increasing decentralization of

Government functions, greater discretionary powers of public officials, the

disparate objectives of public procurement, and the weaknesses of the

current system have led to the need to regulate procurement in new ways.

While the attainment of Government’s policy objective is

conventionally through the operation of Government Ministries and

Departments, the trend increasingly is towards the achievement of public

objectives through contractual arrangements with State-owned enterprises,

statutory bodies and private organizations, incorporated and unincorporated.

Any discussion for a preferred procurement model for Trinidad and

Tobago must therefore acknowledge the increasing use of these bodies and

agencies as a common means of achieving Governmental objectives.

The success of the procurement system depends on a clear articulation

and understanding of what the legal and regulatory framework seeks to

achieve. The framework must reflect the various objectives and the relative

weights given to these objectives. In the context of Trinidad and Tobago,

these objectives must include:

• value for money in public spending,

• greater public accountability,

• promotion of greater transparency in public procurement,

• consistency with and support of government policies,

 lix

• effective and efficient contract performance,

• balance between a commitment to develop local businesses and the

need to

• provide a level playing field, and

• a trade-off between control, rules, regulations and accountability on

the one hand,

• and efficiency, flexibility, judgment and innovation on the other.

A regulatory framework that accommodates the demands of these

objectives is the Principle Model, appropriately modified to take into account

the domestic environment.

The underlying philosophy of the Principle Model is that once a body is

spending public money there follows an obligation on that body to account

for Value for Money – which by definition encompasses efficient and effective

delivery of the property and services for which public money is spent. It is

the use of “public money” that determines the degree of public

accountability for expenditure – not the institutional or organizational

framework of the spender.

Critical to the new procurement regime is therefore a clear understanding

of “public money” which, as articulated in legal models reflecting current

best procurement practice and effective accountability, encompasses:

a. all money received by a public body, regardless of source; and

b. all money received by a non-public body, from a public body.

The legal framework will embrace expenditure by –

 lx

a. a public organization for a public or private purpose; or

b. a private organization for a public purpose regardless of the source or

type of funding where it can be reasonably inferred that the State is

ultimately liable.

In addition, public accountability may exist for private money where that

money is used for a public purpose even though the spender may be a

private organization generally raising funds independently of the State.

The test lies not with the mode of incorporation or even the extent of

public control or funding, but whether or not it can be reasonably inferred

that the ultimate financial responsibility is to be borne by the State.

3.4.3.2 The Preferred Model

Government’s policy, as articulated in Vision 2020, is for greater

transparency and accountability in public sector decision-making, and best

practice in public procurement.

The proposed new procurement regime must deal therefore with all

components of the public procurement cycle and affect all involved in public

procurement without fear or favour.

From this perspective, the Principle Model, appropriately adapted to the

economic, social and political environment of Trinidad and Tobago is the

preferred model. It provides an overarching framework for all agencies

involved in procurement using public money with immutable parameters in

which the operating principles and guidelines are not negotiable.

This Model addresses many of the weaknesses with the current system:
 lxi

• It recognizes the validity of the tendering process of agencies while

providing an overarching uniform system which affects all transactions;

• It increases openness and accountability, thereby enabling greater scrutiny

by the public;

• It enables stakeholder participation in the development of policies and

guidelines;

• It enables flexibility to accommodate technological change;

• It removes ambiguities in the reporting relationships and strengthens

Parliamentary oversight of public expenditure in procurement;

• It enables greater monitoring of contract execution;

• It provides a specific dispute resolution mechanism and proposes clear

sanctions in the event of breach.

3.5 Funding

Funding is one of the difficulties encountered by local enterprises (many of which are

small) in accessing the public procurement market. These include the high fixed costs of access

(regulation and prequalification costs), the high costs of tender information, the policy of

bundling contracts which favours large firms and financial constraints. The most critical

constraint to local construction firms winning contracts is lack of access to capital, particularly

working capital. One of the key advantages of Chinese contractors in construction markets is

their ready access to cheap finance from state owned banks. Foreign contractors often get tax

concessions on imported materials and equipment, concessions which are denied to domestic contractors,

particularly in construction. In a recent study, Ghana contractors complained of having to pay import

duties and VAT on metal framework imported from Spain, while foreign contractors can bring in such
 lxii

items duty free (Wells and Hawkins 2008). The above factors combine to ensure that providers of

construction services from the least developed countries are often unable to compete for projects in their

own home markets. While supply side assistance is also needed, the fact remains that lack of access to the

market is the most critical factor inhibiting the development and growth of many small local producers.

3.5.1 Recommendations

The following list includes solutions that Government can adopt in order to get more local

contractors involved in the public procurement processes.

• Waiving or lowering the requirement for performance bonds

• Lowering the cost of accessing tender information by either charging for the cost of

reproducing the documents or supplying the documents free of charge

• Introducing a prompt payment regime

• Providing cash advances

Government should also consider separating the purchase of materials from the provision

of labour services as this may give better outcomes in terms of utilizing local contractors and

suppliers. It would open up the public procurement market to the large number of labour

contractors who do not have the capital and are not willing to take the risk of supplying

materials. At the same time it would give the client greater control over the source and quality of

materials. This approach, however, requires strict controls on the purchasing, storing and issuing

of materials.
 lxiii

3.6 Weakness of Local Contractors’ Organization, Registration,

Management, Labour, Skill, Familiarity with New Technology
Required for Mega Projects

Incompetency in local contractors’ organization, registration, management, labour, skill,

and familiarity with new technology required for Mega projects is as a result of the level of

procurement experience and expertise in local actors. A quick review of Trinidad and Tobago’s

current local environment reveals that in this very heated construction industry with demand

exceeding supply for construction services there exists a high mobility of critical resources

(professionals, skilled and unskilled labour moving from company to company) and low

investment in systems and skills development by consultants/contractors to increase capacity.

Local contractors in Trinidad and Tobago currently exhibit the following features which prove to

be a hindrance to the development of efficient public procurement processes.

• Limited utilization of project management best practices

• Lack of expertise in certain specialized fields e.g. hotel renovations, smart buildings

• Greater affinity to “good enough” than “excellent”

• Lack of consequence and project recovery

3.6.1 Registration

A possibility exists that the local contractors are not familiar with the registration process

which ,may discourage local contractors and suppliers from tendering for public projects, This

dilemma is due to the absence of a system to efficiently provide suppliers of property and

services and the public with all the relevant.

 lxiv

3.6.2 Management

A failure of local contractors to adopt project management best practices can result in

foreign contractors being favoured by the Government. There practices mainly focus on efficient

resource and time management. It is known that local contractors in Trinidad and Tobago are

always busy, their resources are stretched and they fail to keep project delivery schedules and

cost overruns. Misuse or failure to implement project management strategies can result in poor

and inefficient public procurement processes.

3.6.3 Labour

Mainly in the construction sector there is a shortage of labour, this problem poses a

disadvantageous situation to local contractors in that they stand the chance of being offered a

sub-contractor role to the foreign contractors.

3.6.4 Skill and Familiarity with Mega Projects

Britain’s Major Projects Association (MPA) defines major projects as “those which require

knowledge, skills or resources that exceed what is readily or conventionally available to the key

participants” (major Projects Association 2008). It is with this stipulation that the Government is

forced to procure mega-projects to foreign contractors since local contractors fail to posses the

required set of skills and knowledge for handling this type of project. Some recent mega-projects that

were awarded to foreign contractors include (Gumbs-Sandiford and Anika 2010):

• Shanghai Construction Co:

1. NAPA (north) $480 million and south $600 million

2. Outdoor stage at the St Ann’s residence of the prime minister – $10 million

3. Carnival Entertainment Centre – $450 million

 lxv

• Vinci Construction:

1. Interchange along the Uriah Butler Highway – $166.7 million.

• China Railway Construction Corp:

1. Completion of the Scarborough Hospital – $241.3 million

• Genivar:

1. Port-of-Spain International Waterfront – $18 million

3.6.5 Recommendations

The following include strategies that can be adopted to improve the skills and competence of

the local contractors.

• Government can devise a plan for the transfer of technology and building skills from the

foreign contractors to the local contractors

• Benchmarking – In cases where a similar project exists in the world, the Government can

find out about the experience of those that have done it before; what worked; what failed

and why.

• Investigations on a contractors’ workload and resource availability should be made prior

to tender invitation

• Implementation of a system to efficiently inform contractors on the required registration

process

• Establishment of programmes that enforce the use of project management best practices

and training in these areas should be offered to local contractors

 lxvi

Chapter 4 - Conclusion

The analysis of the challenges faced by the current public procurement system in Trinidad

and Tobago revealed its weaknesses and it also addressed possible outcomes. It was noticed that

there is a high level of integration and overlapping of the challenges and the recommendations

for one particular challenge may in fact eliminate the occurrence of another. For instance, the

presence of foreign contractors is highly related to the fact that local contractors are unable to

fund projects. Therefore, a solution to the funding issue will reduce the need for foreign

contractors which can further lead to a boost in the local content of Trinidad and Tobago and the

entire public procurement system.

 lxvii

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