Ministry of Finance and Economic Development
White Paper
On
Modernising the Public Procurement
Framework
Issues and Proposals for Consultation
July 2011
Preface
Total public sector investment has more than doubled over the last decade due
to the substantial increase in the number of projects as well as in their project value.
Moreover, the complexity of projects has also increased over the years.
These developments have brought in new challenges, particularly in project
preparation, procurement and execution. This is more so as the Public Sector
Investment Programme has a pipeline of projects of around Rs 140 billion for the period
2011-2015. In addition, around Rs 125 billion are expected to be invested under Public
Private Partnership arrangements.
To address these challenges, Government has over the past few years
implemented a series of reforms to modernise the public procurement system. Further
reform of the system is being called for as indicated in the Government Programme
2010-2015, where it is proposed that “the public procurement system will be further
reviewed, modernized, decentralized and supported by the implementation of an eprocurement platform.” The aim of the new system is to strike the right balance
between speed of project implementation and transparency while at the same time
ensuring value for money. The World Bank, COMESA and UNCITRAL advised
Government in the review of the current procurement system.
In view of the importance of public procurement in terms of good governance,
accountability, transparency, fairness and value for money, it is essential that inputs are
obtained from a wide array of stakeholders. In this regard, a White Paper has been
prepared based on recommendations made by a Review Committee chaired by a
representative of the Attorney-General’s Office and comprising key stakeholders
involved in public procurement. The White Paper identifies key issues in relation to
institutional arrangements, and procurement process and methods. This White Paper
has been structured in a systematic manner to allow readers to grasp the key issues at
hand followed by proposals for improving the existing system.
This White Paper is being put forward to all stakeholders for wider consultations.
Stakeholders are invited to submit their comment/suggestions on the issues and
proposals contained in this White Paper at latest by 12 August 2011 to the following
address:
Director
Procurement Policy Office
8th Floor, Emmanuel Anquetil Building
Port Louis
Fax no: 213-1003
E-mail address: pbeeharry@mail.gov.mu
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1.
Introduction
1.1
Our public procurement system has evolved over the last decade in line with
the country’s economic development and government initiative to optimise
the use of public resources. The introduction of the Public Procurement Act
(PPA) in 2008 was a major step in Government’s reforms plan as it allowed
Mauritius to harmonise its system with international norms and best
practices. The existing legislation is based on the UNCITRAL model on
procurement.
1.2
However, the country is now faced with a new challenge to increase the level
of investment, accelerate the execution of infrastructure projects and improve
the delivery of public services to achieve the ambitious target of one trillion
rupees in GDP by the 2020s. This challenge has given rise to a need for a
thorough review of our public procurement system. Moreover, promoting
Public-Private Partnership (PPP) as a complement to traditional procurement
also contributes towards the achievement of this goal. The framework for
undertaking PPP projects is governed by the PPP Act.
1.3
Accordingly, the Public Procurement Framework has recently been reviewed
by the World Bank, COMESA and UNCITRAL. The primary focus of the
review assessment was to further modernise our Public Procurement
Framework so as to improve the capacity of Public Sector Institutions to
implement capital projects and deliver services in an efficient and costeffective manner to support the bold ambition for Mauritius to grow rapidly to
a high income economy.
1.4
Both the World Bank and COMESA recommended the creation of an
independent regulatory authority to strengthen compliance monitoring while
ensuring greater transparency and integrity of the procurement process.
1.5
In August 2010, Government set up a Review Committee to propose
changes that need to be brought to our public procurement legislation in the
light of the observations and recommendations of the World Bank, COMESA
and UNCITRAL. In its deliberations, the Committee also took note of the
weaknesses and shortcomings identified during the course of implementation
of the Public Procurement Act 2008 and the feedback obtained from
stakeholders on our public procurement system.
1.6
The objective of the proposed reform in public procurement is to achieve
stronger accountability, greater transparency and a higher pace of project
execution whilst ensuring value for money.
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2.
Key Issues
2.1
The Review Committee submitted its report in February 2011. After analysis
of the report, proposals have been formulated to address key issues. These
issues together with proposals are described below.
2.2
INSTITUTIONAL ARRANGEMENTS
2.2.1
The current institutional setup comprises:
-
The Procurement Policy Office (PPO) as a policy making and oversight
institution.
-
The Public Private Partnership (PPP) Committee, set up under the PPP Act,
is responsible for dealing with all matters relating to PPP, including giving
approval to contracting authorities to proceed with procurement of PPP
projects. Under the PPP Act, a contracting authority is a Ministry or
Government department, local authority or statutory corporation.
-
The Central Procurement Board (CPB) for the vetting of bidding documents
and the conduct of the bidding process and approval of award in respect of
major contracts. These functions of the CPB apply to projects undertaken
under both the PPA and the PPP Act.
-
The Independent Review Panel (IRP) for review of procurement proceedings
following applications from unsatisfied bidders.
2.2.2
Although the PPA is substantially compliant with the UNCITRAL Model Law
on Public Procurement and the COMESA Procurement Directive, a major
deviation has been the maintenance of the Central Tender Board under the
new appellation of Central Procurement Board (CPB). The reasons which
motivated the decision were:
-
It was not considered appropriate to do away with such an institution
overnight without building up trust in the new public procurement system.
-
It was felt more appropriate to go for gradual decentralization while building
capacity of public bodies to handle higher value contracts.
Issues
2.2.3
However, as the provisions concerning the CPB in the PPA were copied from
the Central Tender Board Act, a number of problems cropped up. The CPB
assumed that in view of its operational independence it is not accountable to
the PPO the policy making and oversight authority and also not answerable
to the IRP during hearings in respect of procurement awards that were
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challenged by unsuccessful bidders. Moreover, compliance monitoring could
not be properly done as access to the relevant files was denied.
2.2.4
Ownership of decisions with respect to contract awards by public bodies was
jeopardized given that the CPB is also responsible for the evaluation of bids.
This was viewed as being very serious by funding institutions, which could
not get the comfort that the implementing public bodies were satisfied with
the evaluation and selection of the contractor.
2.2.5
A Review commissioned by the World Bank in 2010 on the Mauritian PPP
Legal and Institutional Framework revealed that the CPB does not have the
required knowledge or understanding of PPP projects and PPP feasibility
studies. Evaluation of PPP proposals requires not only a ranking between
proposals as is the case for conventional procurement but an assessment of
value for money, affordability, fiscal risk and risk transfer elements of the
proposals compared to expectations based on the PPP feasibility study. The
Review concluded that the CPB is not the appropriate body to carry out the
procurement function for PPP projects.
2.2.6
The Review of the PPP framework also highlighted that the definition of
contracting authorities as per the PPP Act is restrictive in the sense that it
does not cover all public enterprises. There is thus no standard practice
across the public sector. This not only exposes the implementation of PPP
projects to legal and procedural uncertainty but also to the risk that these
enterprises could enter into long-term contracts (outside the requirements of
the PPP Act) that could become unaffordable, not provide the public sector
with better value for money, and expose the public sector to significant fiscal
risks.
Proposals
2.2.7
Public Procurement Authority
2.2.7.1
In the place of the PPO, it is being proposed that an independent and strong
regulatory authority, the Public Procurement Authority (hereinafter referred to
as the Authority), be set up to regulate conventional procurement and to
perform the following functions:
Formulate policy and review legislation
Monitor compliance with the PPA
Develop and implement procurement performance assessment system
Review of thresholds applicable for major contracts that would require CPB’s
clearance
Investigate into cases of non-compliance/malpractice and recommend
disciplinary action against officers in breach of the PPA
Debar/disqualify bidders/suppliers
-
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-
Build capacity
Collect and analyse data
Provide guidance to public bodies on procedural matters
2.2.7.2
The independence of the Authority would be strengthened if the following
provisions are to be adopted:
-
The Chairperson and the Director General of the Authority to be appointed by
the President of the Republic on the recommendation of the Prime Minister
after the Prime Minister has consulted the Leader of the Opposition
The contracts of the Chairperson and the Director General can be terminated
only on grounds as stipulated in the PPA
The Authority not to be subject to the direction or control of any other person
or authority
-
2.2.7.3
With time as the Authority gathers experience, it may also be envisaged to
consider providing it with some financial autonomy. In the event that there is
consensus on the type of financial autonomy, a mechanism has to be worked
out accordingly.
2.2.8
Public Private Partnership Committee
2.2.8.1
It is proposed to strengthen the PPP Committee by improving its composition
and functions. In addition to its existing functions, the PPP Committee would
be responsible for overseeing all the stages within the PPP procurement
process, namely, advice on the most appropriate procurement method, vet
all procurement documents, provide clearance for the evaluation team
proposed by the contracting authority and review evaluations carried out by
the evaluation team. The PPP Committee would carry out quality control
throughout all stages of the PPP procurement process thus ensuring its
integrity.
2.2.8.2
This proposal implies that the responsibility for PPP procurement would be
transferred from the CPB to contracting authorities.
As stated at
paragraph 2.2.5, the latter being involved in the preparation of projects
through the feasibility study stage would be in a better position to prepare
procurement documents, invite and evaluate bids and approve and award
PPP projects.
2.2.8.3
To broaden the definition of contracting authority in the PPP Act to include
the Rodrigues Regional Assembly as well as any Public Enterprise. The
latter would include state-owned and state-controlled institutions.
2.2.8.4
The membership of the PPP Committee would be broadened to include the
Ministries of Housing and Land; Energy and Public Utilities; Local
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Government; and Environment. This would help to increase its capacity for
technical analysis and to identify and address issues relating to land, utilities,
permits and clearances at an early stage of the project cycle.
2.2.9
Central Procurement Board (CPB)
2.2.9.1
For conventional procurement the CPB to continue to exist with its role and
functions to be modified as follows:
-
Provide guidance to public bodies on operational matters
With regard to procurement exceeding the prescribed thresholds (prescribed
thresholds to vary taking into account the capacity of public bodies to handle
procurement)  vet bidding documents and procurement notices
 give its no objection prior to award
Make framework arrangements and administer their implementation for
procurement of standardized and common use items, and works and
services of repetitive nature
Collaborate with the Authority, amongst others, in the development of standard bidding documents
 the development of training programmes for procurement officials
-
-
2.2.9.2
For PPP projects, it is being proposed to transfer the responsibility for
procurement from the CPB to the relevant contracting authorities under the
oversight of the PPP Committee. The contracting authority would be
responsible to prepare and launch the bidding documents, evaluate the bids
received, approve and award the PPP project.
2.2.10
Independent Review Panel (IRP)
2.2.10.1
The IRP to continue to operate as a separate body responsible for attending
to complaints from unsatisfied bidders and reviewing of cases of appeals
relating to contract awards for both conventional and PPP procurement.
Furthermore, its capacity to be reinforced and its decisions to be made
binding.
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2.3
EXEMPTIONS FROM SCOPE AND APPLICATION OF THE ACT
Issues
2.3.1
PPA does not exempt procurements effected under bilateral agreements
where technical assistance is obtained from other States.
2.3.2
Exemptions under the PPA are given to certain public bodies (exempt
organisations) while generally an exclusion clause is provided for certain
types of procurement where it is not practical to apply the normal
procurement methods.
2.3.3
While procurement of defence and security items is excluded from the
provisions of the law, there is no established guideline to assist the
concerned public bodies to undertake such procurement.
Proposals
2.3.4
Procurement undertaken pursuant to a treaty or other form of agreement with
a State or States to be exempted from the provisions of the PPA as is the
case under the UNCITRAL model law.
2.3.5
The PPA to provide for exemption through the exclusion of certain types of
procurement applicable to all public bodies, as it is the practice in the EU, for
example, transmission rights, procurement of goods for resale, acquisition of
shares etc. This measure would allow the procurements other than those
excluded to be subject to the application of the provisions of the PPA for
greater transparency and consistency.
2.3.6
Procurement of defence and security items to remain outside the scope of
the PPA, but be subjected to different set of rules/guidelines as is the
practice in many developed countries.
2.4
PROCUREMENT METHODS
2.4.1
Restricted Bidding
Issue
2.4.1.1
There is a risk of abuse of the Restricted Bidding method as there is no
mechanism to shortlist suppliers in a transparent manner.
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Proposal
2.4.1.2
It is being proposed that the mechanism for shortlisting suppliers/service
providers/contractors be incorporated in the PPA to ensure fairness and
transparency.
2.4.2
Request for Sealed Quotations
Issue
2.4.2.1
Normally, the Request for Quotations is an informal method used for low
value procurements, which, in the current legislation, is not included as a
method of procurement. Instead, the PPA provides for Request for Sealed
Quotations as a formal procurement method which is more or less similar to
Restricted Bidding for procurements within a prescribed threshold.
Proposal
2.4.2.2
The Request for Sealed Quotations as a procurement method to be replaced
by Request for Quotations. Request for Quotations is being suggested for
procuring low value items.
2.4.3
Emergency Procurement
Issue
2.4.3.1
The PPA does not distinguish between ‘extreme urgency’ and ‘urgent’
situations. It prescribes Direct Procurement as the only method to cope with
emergency situations even where some degree of competition could be
introduced.
Proposal
2.4.3.2
There is a need to differentiate between cases of extreme urgency and
urgent situations. For extreme urgency cases, it is being recommended that
the application of Direct Procurement be maintained. However, for urgent
cases, Competitive Negotiations could be introduced as a new method of
procurement.
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2.4.4
Departmental Execution
Issue
2.4.4.1
Presently Departmental Execution is limited to works being carried out
directly by the public body itself or by another public body without entering
into any contract. The possibility of creating a separate entity operating on
commercial lines to provide specialised services for its parent Ministry and/or
other public bodies without going through a bidding exercise does not exist
under the current legislation.
Proposal
2.4.4.2
Consideration could be given to a Public Body to set up an agency under its
aegis to provide specialised services whenever the necessity is felt. In this
context, enabling provisions have to be made to allow for specialised
services to be delivered by in-house bodies.
2.4.4.3
Departmental Execution and the provision of services by in-house bodies to
be included under the exclusion section of the PPA.
2.4.5
Direct Procurement
Issue
2.4.5.1
The PPA defines Direct Procurement as the purchase of goods, other
services and works from a single source without competition. However, in
practice, both single source procurement and procurement of low value items
through informal quotations are being carried under the Direct Procurement
method.
Proposal
2.4.5.2
It is being suggested that Direct Procurement be replaced by Single-Source
Procurement. For low value procurements, use of Request for Quotations
method is to be considered.
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2.4.6
Framework Agreement
Issue
2.4.6.1
There is no mechanism to undertake procurement of common use items in
an economical manner as the current legislation is silent on framework
agreements.
Proposal
2.4.6.2
Consideration to be given for framework arrangements in order to achieve
economies of scale and higher level of efficiency when procuring common
use items and works and services of a repetitive nature.
2.4.7
Electronic Reverse Auction
Issue
2.4.7.1
Not prescribed as a procurement method under current PPA although such a
method would reduce cost and procurement lead time.
Proposal
2.4.7.2
Electronic Reverse Auction as a new procurement method could be
introduced to allow pre-qualified bidders to participate in a dynamic electronic
competitive bidding process. This method, under defined conditions, would
achieve higher efficiency by reducing cost and procurement lead time while
promoting transparency and equal treatment to bidders.
2.5
BIDDING PROCESS
2.5.1
Eligibility conditions for State-Owned Companies
2.5.1.1
Issue
The eligibility conditions for State Owned Enterprises to participate in public
procurement are not defined in the PPA, to ensure a level playing field and
equal opportunity for all bidders.
Proposal
2.5.1.2
The eligibility conditions for State Owned Enterprises to be defined in the
PPA.
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2.5.2
2.5.2.1
Pre-qualification Procedures
Issue
The use of pass/fail methodology as the pre-qualification procedures is not
explicitly stated in the PPA, though such methodology is provided for in the
Standard Bidding Documents.
Proposal
2.5.2.2
To ensure consistency and uniformity with regard to pre-qualification
procedure, the pass/fail methodology to be stated in the PPA.
2.5.3
Other Procedures
Issue
2.5.3.1
Provisions essential for achieving good procurement outcomes (e.g.
provisions on publication of bid notices on websites, content of bidding
documents, opening and evaluation procedures, record keeping) are
contained in the User Guide and not in the PPA or its regulations and as
such they do not have force of law.
Proposal
2.5.3.2
Essential provisions contained in the User Guide to be dealt with in the PPA
or its regulations.
2.5.4
Bid Security
Issue
2.5.4.1
The PPA does not provide for Bid Securing Declaration as an alternative
form of Bid Security which has been introduced to facilitate participation in
bidding exercises.
Proposal
2.5.4.2
The PPA to formally provide for Bid Securing Declaration as a form of Bid
Security.
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2.5.5
Preferential treatment
Issue
2.5.5.1
Although the Republic of Mauritius obtains benefits from friendly countries,
which also provide assistance in cases of emergency, there is no mechanism
in the current procurement legislation to provide preferential treatment to
such countries.
Proposal
2.5.5.2
Consideration could be given for the inclusion of an enabling clause in the
PPA for allowing a margin of preference to countries which provide Mauritius
with grants and/or concessionary finance of at least 50% of the funding for a
project. For example, a project of Rs100 million must benefit from a total of
at least Rs 50 million of grant and/or concessionary loan to be eligible.
2.5.5.3
For a loan to be considered as concessionary, it must include a grant
element of at least 30 percent. To determine if a loan is concessionary, the
grant element is calculated by taking the difference between the Net Present
Value (NPV) of the loan compared to borrowing at market rates. For
example, if a loan has a longer maturity and/or lower interest rates than
market instruments such that the NPV of the loan is Rs 30 million whilst that
of the market instrument is Rs 50 million, the grant element is Rs 20 million
i.e. a 40 percent grant element, making it concessionary.
2.5.5.4
The margin of preference would be applicable during the evaluation of bids
received from bidders of those countries providing us with grant and/or
concessionary finance. The quantum of preference would vary according to
the extent of support being offered to Mauritius but would not exceed 5% of
the value of the preferred bid. For example, in a tender for a water supply
project, if the preferred bid would result in consumers paying Rs 5 per cubic
metre and a project with preferences above would charge up to Rs 5.25 per
cubic metre, the latter would be awarded the tender despite the higher price.
However, if the price exceeded Rs 5.25 per cubic metre, the preferred bidder
would be awarded the project.
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2.5.6
Unsolicited Proposal
Issue
2.5.6.1
The PPA does not allow for unsolicited proposals. An unsolicited proposal is
a proposal which has neither been originated nor requested by a Public Body
but comes from an external party.
Proposal
2.5.6.2
The Public Body receiving an unsolicited proposal would first consider if the
proposal is in the public interest and fits within the strategic priorities of
Government.
2.5.6.3
If the proposal is accepted, it would be tested through a formal process which
includes an open competitive exercise. Two methods are being proposed
namely, the Swiss Challenge Method and the Bonus Method. After
consultations, one of these methods could be retained.
2.5.6.4
Either the Swiss Challenge Method
The party making the unsolicited proposal (referred to as the original
proponent) would be given the opportunity to match the price of the preferred
bidder in the event that the original proponent is not the preferred bidder. If
the original proponent accepts to match the preferred bid price, the original
proponent would be awarded the project.
Or the Bonus Method
The party making the unsolicited proposal (referred to as the original
proponent) would be given a weightage equivalent to 5% of the total marks
allocated to the technical score during the evaluation of bids. Following the
bid evaluation exercise, the original proponent would only be awarded the
project if it the preferred bidder.
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2.6
CHALLENGE AND APPEAL
Issues
2.6.1
The decisions of the IRP are not binding and as such do not guarantee
fairness to a bidder whose application was found to have merit.
2.6.2
The procurement process is unduly delayed due to a complex challenge and
appeal process.
2.6.3
The IRP does not have the appropriate resources to be able to resolve cases
within the statutory period of 30 days.
Proposals
2.6.4
The decisions of the IRP to be made binding to ensure fairness to a bidder
whose application was found to have merit, unless reversed by a court of
law.
2.6.5
In addition, the challenge and appeal process could be simplified to avoid
undue delay to the procurement process.
2.6.6
The IRP to have the appropriate staff and resources to be able to effectively
exercise its mandate.
2.6.7
With the introduction of Framework Agreement, it is proposed that challenge
be entertained only during the bidding process and not at the time of
individual call-off to avoid undue delays.
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2.7
DISQUALIFICATION AND DEBARMENT
Issue
2.7.1
Although disqualification and debarment lead to the same result, there are
two sets of regulations for dealing with disqualification and debarment, which
at times is a source of confusion.
Proposal
2.7.2
As the process for disqualification and debarment are similar, their
procedures could be merged into a single set of regulations.
2.8
PROCUREMENT INTEGRITY
Issues
2.8.1
Section 51(1)(f) of the PPA deprives officers for a period of 2 years after
leaving the public service from taking up employment in a position of
authority in any private firm with which he has had procurement dealings.
This provision has too wide implications. It would have been more
appropriate not to allow such an officer to deal or negotiate on behalf of the
contractor or supplier for a contract he had personally dealt with while in the
service.
2.8.2
Section 51(2)(a) of the PPA stipulates that a close relative of a public official
shall not participate in procurement proceedings or be awarded a contract in
the public body where the public official is employed. This is not practical as
strict compliance may deprive most bidders to do business with Government.
Disclosure of interest and withdrawal from the procurement process by such
official would be sufficient to preserve integrity of the process.
Proposal
2.8.3
Section 51(1)(f) and 51(2)(a) of the PPA to be amended to prevent
malpractices without, however, unduly penalising public officials and bidders.
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