Dr. Chandana Jayalath

A high priority has been given to ensure that development efforts across all sectors are evenly balanced and distributed to all cross sectors of the society. In order to meet the overall national development and enhance the quality of life of its citizens, it is imperative to ensure speed, transparency and integrity in all the development spheres. Procurement function of goods, works and services plays a critical role in regard to this aspect. The development programs which are instituted and others in the pipe line essentially include those which are financed by public funds as well as by external funding. Within this context, the availability of a set of guidelines on procurement which harmonizes the processes to be followed under the different funding agency procedures has been identified and acknowledged by all providers of development funding as a vital factor. It is in this context that the National Procurement Agency (NPA) was established far back in 2004 to study, revise and adopt the procedures and processes.

The Government Procurement Guidelines -2006 was issued with the approval of then the Cabinet of Ministers in order to enhance the transparency of Government procurement process to minimize delays and to obtain financially the most advantageous and qualitatively the best services and supplies for the nation. The Guidelines on Government Tender Procedure (Revised Edition, 1997), Revised Guidelines on Government Tender Procedure for Projects assisted by the Foreign Financing Agencies (Revised Edition- 2000) and Treasury circulars pertaining to the Guidelines on Government Tender Procedure issued up to 20th October 2005 were repealed and replaced by these Guidelines. However, it was heard that the government’s decision in 2007 to shut down the NPA was made due to political reasons and had nothing to do with the NPA’s lack of performance or effectiveness. The government officially informed the NPA in December 2007 to close down operations and hand over its assets, liabilities and staff before January 31, 2008. NPA Chairman Daya Liyanage, had submitted a written appeal, dated January 10, 2008, outlining the achievements of the Agency, and urging that it continues. However, the functions of the NPA reverted back to the Public Finance Division of the Treasury Department, under a process described by a Cabinet Memorandum dated 11 May 2004, as time consuming, permitted corrupt practices and also resulted in exceptionally delayed implementation.

The NPA was formulated to eliminate these problems through proper monitoring of the tender process. Until December 2007, all government contracts had gone through the NPA but that there have been none since. Irrespective of the NPA, however, there are still procurement guidelines that have to be adhered to by anyone connected with the public procurement. Following the government’s decision to close the NPA, an international conference on public procurement management and global communications network, which was scheduled to be held in Sri Lanka in May 2008 was also cancelled. Plans to establish a training and research Centre in Sri Lanka which the World Bank (WB) had agreed to finance was also abandoned.

Why do we need a promotional and regulatory body is certainly out of question. Originally formulated by a Cabinet Memorandum dated May 6, 2004 by then President Chandrika Kumaratunga, the President cited an urgent need to formulate a National Procurement Strategy and streamline the National Procurement System and Procedures with a view to eliminate corrupt practices, waste of time and funds and improve transparency and efficiency pertaining to government work. This Cabinet Memorandum was based on a Country Procurement Assessment Report on guidelines on the government tender procedure submitted by the WB in June 2003. The WB Report was then carried out with the full cooperation and participation of the Government of Sri Lanka, the Asian Development Bank, and the Japan Bank for International Cooperation and the National Construction Contractors Association of Sri Lanka. The senior government officials who participated with the WB in this report included officials from the Procurement Support Bureau under the Ministry of Finance and Planning, the Ceylon Electricity Board, Road Development Authority and Railways Department, the Ministry of Irrigation, State Pharmaceuticals Corporation, Ministry of Port Development and Shipping, National Water Supply and Drainage Board as well as the Deputy Auditor General and the Director General of the Bribery Commission amongst others.

In the short term, recommendations were made to strengthen the Procurement Support Bureau, simplifying the Review and Approval Process, revision of guidelines, development of standard tender and contract documents and the standardization of goods specifications. In the medium term, some of the recommendations were to create a Procurement Regulatory Agency, establish a Procurement Accreditation System, and strengthen the Bribery Commission and the Auditor General’s Department and to introduce a Code of Conduct. Recommendations on long term actions included enacting a Public Procurement Law if necessary and reviewing, revising and implementing a Procurement Training Master Plan.

Strictly speaking, the government procurement system and procedure has become a major road block when implementing development programs since it involves a time consuming process which permits corrupt practices and also result in exceptionally delayed implementation. It is a known fact that very often project construction takes lesser time than the connected procurement process. The underutilization of budgeted provisions and foreign aid is largely attributable to procurement delays. Furthermore, although there is a standard procurement procedure as per the Government Tender Guidelines, there are variations from one transaction to another transaction from one ministry to another. This is something that cannot be overlooked easily. Indeed, a scientific and efficient procurement system needs professional input since it is a specialized job. In Sri Lanka, the Tender Boards are constituted by Secretaries of line Ministries and the Technical Evaluation Committees by officials of various government agencies. They are basically non-technical with little and limited knowledge on technically complex and sophisticated procurement transactions. This has not only hindered the effective performance of regular work of Ministries and other government agencies but also weakened the intuitional framework required to ensure a well-functioning government procurement system.

On the other hand, different client organizations had been registering contractors during the past using different criteria. To avoid anomalies and to maintain uniformity, a Central Registration scheme was started in 1989 by the Institution for Construction Training and Development (ICTAD) and it was revised in 1993, 1995 and 2008. Registration and grading is a screening process for the capabilities of prospective contractors to determine their general ability to undertake different types and sizes of projects without reference to any specific contract. Registration and grading will be determined by evaluating a contractor mainly on his financial capability, the technical ability with staff and plant and machinery, and the experience gained in relevant fields. Initially under this scheme the contractors were classified under 10 grades (M1 to M10) on financial terms. Meanwhile ICTAD registration (now known as CIDA registration) is a requirement for obtaining government contracts. In this methodology, the client organizations can select the right contractor to the project by following the grading system. But this registration scheme is not intended to replace the pre-qualification for major contracts. The Grading system motivates the contractor for self-development, for upgrading while preventing contractors from under taking project beyond their capabilities. Contracting organizations registered in Sri Lanka for the purpose of carrying out the business of Building/Civil Engineering, Electro Mechanical, Piling & Specialized construction either with the Registrar of the Companies under the Companies Act or with the Provincial Secretaries. However the ICTAD or now called the CIDA registration has been under threat, fallen into disuse and of no interest by the contractors who really pursue indirect methods and unsolicited tenders from different agencies. As a result, the number of contractors who maintain CIDA registration has been reduced to circa 2000 over the last decade despite of the total number of contractors should actually exceed some 10,000 island wide. Under circumstances, it is imperative the new government revisits the entire procurement ‘saga’ and move from lethargy to action and corruption to transparency if it really wants to exploit the benefit of good governance in its true sense.