Millions slip through cracks
Police, NHF, Petrojam flagged for misclassifying emergency contracts
The Integrity Commission has flagged three critical state agencies for instances in which goods and services procured were misclassified under the emergency contracting methodology.
Kevon Stephenson, director of investigations at the Integrity Commission, reported that between January 2015 and December 2019, a procurement review showed that the Jamaica Constabulary Force (JCF), the National Health Fund (NHF), and Petrojam committed misclassifications.
This meant that a number of the items and services procured were not purchased under circumstances for which the use of the emergency contracting methodology is permitted under Section 1.1.5 of the Government of Jamaica Handbook of Public Sector Procurement Procedures (GHPP).
Collating information from its Quarterly Contract Award database, the commission said that the aggregate sum of contracts reported from January 2015 to December 2019 amounted to 79,717, with a total contract value of J$525.6 billion. This takes into account 197 procuring entities with contract values greater than J$500,000, irrespective of the procurement methodology employed.
The commission pointed out that the emergency contracting methodology only accounted for three per cent of the contracts over the four-year period.
In his recommendations, Stephenson urged organisations to ensure that all procurement done through the emergency contracting methodology fits squarely within the scope and purpose for the use of that method.
He said this involves making a distinction between an emergency situation such as an immediate threat and matters of urgency in which there is a foreseeable threat. In the latter case, direct contracting is permitted, the commission pointed out.
“It is also recommended that procuring entities ensure that contracts awarded by way of emergency contracting commence within the specified time frame consistent with the use of the methodology, since the purpose of same includes, amongst other things, resolving a matter of emergency in the shortest possible time,” Stephenson added.
In its analysis of the data, the commission found that the emergency contracting methodology was utilised by at least 18 of the 197 public bodies in any given quarter.
The commission said there were at least three procuring entities that utilised the method to award contracts that were in excess of 50 per cent of the total annual contract value.
The director of investigations said that the total value of the contracts awarded using the emergency contracting by the JCF during 2015 accounted for 78 per cent of its total annual value.
According to the commission, the method was used by the police force to procure forensic supplies, safety tools and apparel, motor vehicles, equipment, as well as services to repair or rehabilitate police stations.
Fifty-one per cent of the contracts awarded by the JCF using the emergency contracting methodology were above the $5-million threshold for which procuring entities are required to report to the Public Procurement Commission (PPC).
One contract was awarded for a value greater than J$100 million. The requisite external approvals (PPC & Cabinet) were obtained in keeping with Section 1.1.5 of the GHPP.
For the calendar years 2016 and 2019, the NHF used the emergency contracting method to procure goods, works, and services, which amounted to 55 per cent and 65 per cent, respectively, of the total annual contract value.
Thirty-five per cent of the contracts awarded by the NHF using the method during 2016 were greater than $5 million. The highest contract value for the stated calendar year of $73 million falls within the $100-million threshold for which the head of the procuring entity may approve the use of the methodology.
During calendar year 2018, the procuring entity with the highest cumulative contract value for that period was Petrojam.
The value of the contracts awarded by Petrojam using the emergency contracting methodology amounted to five per cent, or $1 billion, of the procuring entity’s overall contract value. The method was used by this procuring entity during the calendar year to procure goods and services directly related to the functioning of the oil refinery.
Section 1.2.2. of the GHPP provides permission for commercial entities like Petrojam to employ the emergency contracting methodology for business-sensitive procurements.
Notably, the value of contracts awarded by Petrojam using the emergency contracting methodology is approximately seven per cent greater than the value of contracts awarded by the NHF using the same method.
The number of contracts awarded by way of emergency contracting by the NHF accounts for 22 per cent of the overall number of contracts awarded and cumulatively values $1 billion, or 32 per cent of the Fund’s overall contract value.