June 2021 | By Al-Leecia Delancy
Public Procurement Act 2021: obtaining government contracts
The government has been criticised both locally and internationally in relation to the transparency and procedure surrounding the procurement of government contracts. Partly as a result of this criticism, the government has enacted the Public Procurement Act 2021 (PPA), which seeks to modernise the government’s use of public funds in its procurement process and add a heightened level of transparency.
The PPA repeals and replaces the Financial Administration and Audit Act 2010, which was criticised as it did not retain the brief regulations on procurement that existed prior to its enactment. This meant that, ostensibly, there were no regulations in place and the common law had to be relied on. This was not a satisfactory state of affairs and militated against transparency and economic development. The PPA brings about much-needed reform to cure the unsatisfactory state of affairs.
This article provides a brief overview of the PPA.
To be eligible to participate in the procurement of goods, works and services with the government, a person must be registered in the electronic procurement system used by the Public Procurement Department. This is required in all instances, except where the international bidding method of procurement is used (see below).
The PPA established the Public Procurement Department to execute various functions, such as:
- implementing policies and standards on public procurement;
- developing standard bidding and contract documents to be used by procuring entities;
- managing the electronic procurement system, which was launched in 2019;
- promoting public awareness of public procurement; and
- implementing guidance and practices designed to support, enhance and measure the participation of micro, small and medium-sized enterprises in public procurement.
The PPA also established a Public Procurement Board, which will review the various contracts before making recommendations.
The PPA sets out the following financial thresholds:
- Contracts worth less than BSD$50,000 will be dealt with by the procurement unit of a procuring entity.
- Contracts worth between BSD$50,000 and BSD$250,000 will be dealt with by the tender committee, established in each procuring entity, subject to the minister’s approval.
- Contracts worth between BSD$250,000 and BSD$1.2 million will be dealt with by the Public Procurement Board upon the tender committee’s recommendation.
- For contracts worth more than BSD$1.2 million, the Public Procurement Board must make recommendations to Cabinet, subject to the minister’s approval.
Where the Public Procurement Board’s recommendation is not accepted by the minister, the minister must provide a written statement of objection and refer the recommendation back to the Public Procurement Board for further advice or direct that a new procurement process be carried out. The PPA is unclear on whether this written objection requires the minister to provide reasons for the objection.
The PPA also prohibits the division of procurement contracts intended to avoid the prescribed financial thresholds. However, a procurement contract may be divided if it is anticipated that the award of separate contracts may result in the best overall value for the procuring entity, but not if doing so would create problems of compatibility and increase the costs of servicing, maintenance or similar requirements.
The PPA sets out seven methods of procurement available to procuring entities, one of which is specifically tailored for consultancy contracts. The method selected by the procuring entity should consider:
- the estimated value of the procurement;
- the potential sources for the procurement (competitiveness of the national and international markets and likely interest of potential and international bidders); and
- the nature of the goods, works or services required.
Competitive bidding is the main method of procurement which must be used by procurement entities, except where any of the other six methods are used. Where a method other than competitive bidding is used, the procurement entity must provide a written justification for its decision and include the grounds for taking such a decision.
International bidding is used where the estimated contract amount is higher than BSD$6 million in the case of works contracts and BSD$150,000 in the case of goods contracts and non-consultancy services. All bids must be in Bahamian dollars.
Selective bidding is used in cases of high-value procurement or complex goods, works or services where it is necessary or desirable to identify, prior to the submission of bids, those bidders that are qualified. A bid received from an entity other than a pre-qualified bidder will be rejected or excluded.
Restricted bidding is used where the goods, works or services are available from only a small number of suppliers or where the time and cost of considering a large number of bids are disproportionate to the estimated value of the procurement, having regard to the nature of the procurement. There must be sufficient bidders to ensure effective competition, but in all cases there must be a minimum of three bidders.
Limited bidding is used:
- where there have been no suitable bids submitted in response to a competitive bidding method;
- where the procurement contract may be performed by only a particular supplier and no reasonable alternative or substitute exists;
- for reasons of emergency or extreme urgency;
- for new services; or
- for goods purchased on a commodity market.
Where this method is imposed, the procuring entity has 21 days to provide written justification, along with the grounds for taking such a decision.
Request for quotations
This method is used where the procurement for readily available goods is not specially manufactured to the particular specifications of the procuring entity and:
- its estimated value does not exceed BSD$5,000;
- the procurement of works does not exceed BSD$10,000; or
- the estimated value of procurement services does not exceed BSD$5,000.
Request for proposals
This method is used for the services of a consultant. The procuring entity must prepare a list of three to six consulting firms of the same category and similar capacity and business objectives. Where the estimated value of the procurement of the services of a consultant exceeds BSD$1 million, a notice must be placed in the Gazette and, where appropriate, a relevant trade publication or technical or professional journal or published by other electronic means.
A notice of invitation to bid or pre-qualify in a bidding process must be published in the Gazette or in one or more national newspapers, as well as the electronic procurement system. The notice must include:
- the identity and address of the procurement entity;
- the nature and timeframe for the procurement;
- the procurement method;
- the place and deadline for submissions of bids or applications to pre-qualify; and
- the price of the bidding documents, the manner of obtaining the bidding documents and any pre-qualification documents required.
Criteria for potential bidders
A procuring entity may require a potential bidder to provide evidence of their:
- technical abilities (eg, experience, financial resources, equipment and necessary professional qualifications);
- legal capacity to perform the procurement contract (eg, that the bidder is not insolvent, bankrupt or in receivership or liquidation);
- good standing with the government (eg, with respect to taxes, licence fees and other fees or charges); and
- integrity (eg, that the bidder has not been convicted of a criminal offence in The Bahamas or elsewhere relating to their professional conduct, matters of dishonesty or a breach of anti-corruption legislation or been suspended or debarred).
A bidder may be disqualified if the submitted qualifications are false or misleading. Additionally, multiple bids by the same beneficial owner are prohibited and can result in that bidder being debarred.
A performance security may be required to secure the contractor’s obligation to fulfil the procurement contract. This will be no more than 10% of the procurement’s value and may be expressed as a fixed amount or as a percentage of the procurement’s value.
A bid security may also be required to deter non-compliant bids and encourage bidders to fulfil the conditions of their bids. This will be a fixed amount between 2% and 5% of the estimated value of the procurement contract.
All potential bids must be submitted in written form, signed and sealed in an envelope or submitted electronically. All bids will be opened or accessed electronically and may be attended by the bidders or their representatives. The name of each bidder, the total amount of each bid, any discounts or alternatives offered and the presence or absence of any required bid security or essential documents must be read out and recorded. No decision regarding the rejection of a bid will be announced at the bid opening. A copy of the record of the bid opening will be made available to any bidder on request, and bidders are also entitled to be informed in writing of the reason for the rejection of their application within 14 days of their request.
Award of contract
Procurement entities must publish a notice of the award of the procurement contract within 60 days of the award, detailing:
- the title of the bid;
- the name of the procuring entity;
- the selection method used;
- the awarded bidder’s name and address; and
- the procurement contract price.
Challenges and appeal
The PPA establishes a Procurement Review Tribunal, which will be independent and have exclusive jurisdiction to hear and determine all appeals, matters and disputes referred thereto.
Any aggrieved bidder can make a complaint to the procuring entity for review of the procurement contract in question. This complaint must be made in writing and identify the specific act, omission or commission alleged to be in breach of the PPA, as well as the bidding documents. Should the bidder be further aggrieved by the decision of the procuring entity and wish to appeal such decision, they must do so within 10 days of the decision or having become aware of the circumstances giving rise to the complaint. Upon hearing the complaint, a panel of the tribunal will provide a written decision within 10 days of concluding its deliberations.
A bidder cannot be suspended or disbarred unless they have received notice in writing and been given a reasonable opportunity to respond to the grounds within 14 days following receipt of the notice. The period of disbarment must not exceed three years.
Although the PPA’s aim is to promote transparency and integrity in the procurement of contracts, a procuring entity cannot disclose any information relating to the content of pre-qualification applications and bids or the examination, clarification, evaluation or comparison of bids to suppliers, contractors or any other person not involved in the examination, evaluation or comparison of a bid or in making the decision of whether the bid should be accepted. The Public Procurement Board is prohibited from communicating any information contained in any document relating to any business or transaction of the procuring entity or from passing on such document to any person other than those authorised under the PPA.
This PPA is seemingly not retroactive; therefore, any information regarding procurement contracts prior to this enactment or outside what is allowed by the PPA may have to be sought through the Freedom of Information Act 2019. However, the relevant sections of the Freedom of Information Act have yet to be operational.
Offences created by the PPA range from tampering with records or other documents relative to the procurement contract and collusion to actions made with the intent of gaining any advantage or concession by any member of the Public Procurement Board, tender committee or employee of the Public Procurement Board. Penalties include a fine, up to five years’ imprisonment or both.
The PPA is scheduled to take effect on 1 September 2021 and will not apply to procurement contracts to the extent that they, among other things:
- conflict with the procurement rules of a donor or funding agency;
- involve the procurement or acquisition of a fiscal agency, depository services, liquidation and management services for regulated financial institutions or services relating to the sale, redemption or distribution of public debt;
- include research and development services;
- comprise legal advisory services;
- involve the procurement of agricultural products made in furtherance of agricultural support programmes and human feeding programmes, including food aid; and
- involve the procurement of electricity, telecoms, water and sewerage.
For further information on this topic please contact Al-Leecia Delancy by email (email@example.com) or telephone (+1 242 502 5000).