Mon | Aug 21, 2017

Ensure procurement officers follow the rules

Published:Monday | July 25, 2016 | 7:00 AM

THE EDITOR, Sir:

I read with interest an advisory on 'Bid Securities - Tender Bonds' on page B8 (Saturday Gleaner, July 23, 2016).

The advisory defined a bid security as a requirement used to assure compensation to the Government of Jamaica for the time and money lost, if the successful bidder fails to honour the bid and the contractual obligations therein. Bidders are made aware of a requirement to provide a bid security.

The acceptable forms of bid security must be issued from a reputable financial institution and are limited to:

i) An irrevocable letter of credit.

ii) Bank guarantee.

iii) A bid bond issued by a surety which is incorporated and domiciled in Jamaica.

iv) A bid securing declaration.

v) Certified manager's cheque.

vi) Insurance certificate.

Procurement officers are a law unto themselves and need to be roped in. I say this because of personal experience I have had with them:

1) Procurement officers, in their bid documents, do not include the six acceptable forms of bid security. They, however, publish the most difficult one to acquire from a bank. I say this because if the two signatories to a current account are not present in Jamaica when a banker's guarantee is requested, the bank will not issue same (I have had this experience with the Ministry of Health).

 

BID SECURITY

 

2) Procurement officers issue bid documents where contracts are in excess of $15 million but request no bid security.

3) Procurement officers negotiate with selected bidders - when this was not included in the bid documents - and they fail to negotiate with successful bidders, when it is printed in the bid documents. They are offering contractors non-negotiated rates. Procurement officers are requesting bid securities without including the value of the contract on their bid documents.

The procurement rules also speak to payments to be made a minimum of 30 days, after the bill of quantity has been certified, and a maximum of 90 days. However, it can take years for a contractor to be paid and no interest is paid on the outstanding balance.

The interest of the procuring entity is protected via the bid security. However, there is no protection in place for contractors who, on many occasions, have to borrow at high interest rates or use equity financing to finance the contract.

Permanent secretaries and the Office of the Contractor General must ensure that procurement officers follow the rules as laid down in the procurement rules and regulations. All infringement must be dealt with. Contractors are forced to retain lawyers to deal with breaches, at great costs to them.

It is unfair to offer a contract to a bidder at prices that are unrealistic and expect the Government to get value for money.

Joseph M. Cornwall (Snr)

Managing Director /CEO

House of Tranquillity

tranquillityfh@yahoo.com