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New procurement law could streamline the murky tendering

A new law referred to as the Public Procurement, concessions and disposal Act seeks to breathe life into the lengthy and shadowy processes involved in purchasing and selling assets of the state.

The government says the law which now establishes a semi-autonomous public body to be known as the Public Procurement Authority, aims at laying down principles and practices of public procurement to minimize corruption and to make sure that public funds are used for the purposes for which they were intended to.

It covers all forms of public procurement and establishes institutional structures for public procurement and stipulates methods and procedures for public procurement and purposes related thereto.

“The law through the legislation, full transparency in public procurement, clear procedures and contracts, will ensure benefiting the public of this country. The purpose of this Act is to establish institutional structures for managing public procurement and provide procedures for procurement of goods, works, services and other contract terms; administration of concession agreements; and disposal of unserviceable, obsolete, or surplus stores, and equipment by public entities,” the government wrote is an elaborate preamble to the law.

By making the law universally applicable across the country, the government also aims a maximizing the economy through the advancement of procurement efficiency which will save the government millions of dollars wasted in bureaucracy and illegal red tape.

All the arms of government including the executive agencies like, all authorities, bureaus, departments and agencies; the Judiciary and the Legislature, subsidized – agencies, Independent bodies and Authority set up by the State are expected to start using the new specified procedures of procurement.

Even counties, districts and local authorities and all the education, health and financial institutions including public trusts, pension funds, insurance companies, building societies and similar institutions which are wholly owned by the State or in which the State has majority interest will have to familiarize with the new law to start using it in their procurement.

As a business enabler that levels the private sector to do business equally with the government, the law is expected to promote competition and foster participation in all procurement proceedings and agreements by qualified suppliers, consultants, business people and contractors.

With a higher requirement for public officers to remain ethical and uphold high standards of integrity, the law is also expected to foster fairness, accountability and public confidence in all procurement processes.

The new Act comes in force to displace three other laws including all Public Procurement, Concessions and Disposal Act 2014 Provisions in The Financial and Accounting Procedures of The State Law No. 02 of December 29, 1961. No. 317 of December 17, 1962. No. 318 of December 18, 1962 now it’s in commencement, 2014.

Although the legislation is a step in the right direction to reform procurement in Somalia, there are a number of loopholes which the Somali Investment Magazine has been able to pick out which may shoot down the efforts to streamline such a key procedure in trade.

The first weakness of the law is in its width. It is extensive in coverage to all procurement of goods, works, and services; the disposal of unserviceable, obsolete, or surplus supplies and equipment; and concession agreements by all public entities at central, regional and local levels of government. This makes it hard to implement, given that the wider the scope, the more the chances that unique difficulties emerge in implementing the law in a blanket form.

Like many other countries where procurement corruption remains a huge headache, Somalia has left a loophole in the procurement of military and national security equipment. Countries like Kenya have the biggest procurement scandal in the military. The Minister is given a free hand in determining what qualifies as security equipment again leaving a legal limbo that can be exploited by those keen to champion corruption.

Minister responsible for Defense is not the only one this law gives power, his counterpart in the Finance docket have powers to make appointments in both the procurement board and the review panel, a big recipe for conflict of interest and unchallenged influence the minister may have on huge tenders.

Article 37 of the Act which specifies membership and appointment of the Board allows the minister to appoint nine members including the chairperson who is required not be in the public service and have no conflict of interest with the activities of the Authority.

In the same breath, the law allows the minister to constitute the Independent Procurement Review Panel, which is expected to conduct independent administrative review of complaints and appeals made by bidders on bids and contract award decisions and make decisions thereon.

As an arbitrator in any conflicts arising from the procurement processes, there ought to have been some little space to delink it from the influence of the minister. The five   members who are supposed to be eminent nationals, but shall not active public servants are most likely to remain under heavy influence from the Minister who can go at any length to exercise his authorities in achieving some goals.  

“All parties must observe the highest ethical standards during procurement process and contract execution. In this context, any corrupt, fraudulent, collusive, coercive, fraud or obstructive actions taken by public officers, bidders, suppliers, contractors and their subcontractors and consultants for undue advantage are prohibited,” reads Article 15 of the Act. The real penalty for anyone engaging in these actions are vague or at least less punitive. Tight measures like banning a business from doing business with the government of barring an individual from holding corporate positions is good riddance for such offenders.

Another key loophole and a recipe for procurement disputes is in Article 20section 2 which while trying to eliminate obstacles for small or local businesses, sets them up for disputes when the larger competitors are denied tenders for any technical reasons.

“Any descriptions of the technical or quality characteristics of the goods, works, or services to be procured and requirements as to testing, packaging, marking, labeling, or conformity certification; or symbols and terminology that are irrelevant to the performance of the goods or create unjustified obstacles to participation by qualified bidders, and unnecessarily and without justification limit competition, shall not be included or used in the bidding and prequalification documents,” reads the law.

Technical specifications makes an easy way out of knocking bidders from lucrative tenders. What the law creates however is a vague specification that allows procuring entities to reject tenders on technical grounds citing failure to meet undisclosed standards which the law allows them not to disclose anyway.

The law goes on to protect the procurement entities from being liable to a bidder by reason of rejection of all bids or cancellation of procurement proceedings and ties the bidders whose bids have been cancelled to    not to re-bid to the same specifications and contract conditions unless the cancellation of the initial proceeding is for budgetary or other reasons unrelated to the specifications and contract conditions.

Essentially though, laws are as good as they can be implemented, the new law which has a wide scope including how concessions are arrived at will only make any impact if it can be adhered to.

In fact, the law is very clear that bidders, suppliers, consultants, concessionaires and contractors who engage in fraudulent, corrupt, coercive or obstructive practices in connection with public procurement are subject to prosecution pursuant to the applicable criminal laws, including the Anti-Corruption Act. This then needs a multi-agency approach since it will be hard to tackle unique issues related to bidding under the larger menace that is corruption.

Tendering procedures can be complicated, corrupt and overly expensive and any attempts to streamline it is a welcome move, the taste of the soup however is in the pudding. It remains a watch a see how the law will be allowed to take its course.

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