Craig Brewin continues his series on Procurement issues arising from last year’s hurricane season, as covered at the Caribbean Development Bank special conference. Part 1 is here and Part 2 is here.
Is the impact of a hurricane an unforeseeable disaster that requires exemptions from procurement rules? Not according to the Caribbean Development Bank and the World Bank. At their Procurement in Emergency Situations workshop held in Barbados this year they outlined the dangers of this and their view that any procurement regime should be able to deal with seasonal events, however catastrophic the potential impact may be.
The alternatives are creating a bureaucracy to substitute for the lack of appropriate delegation, or trying to provide essential services with no due diligence where supply chains are disrupted. What organisations need is a set of procurement rules that can operate within the emergency situation. These need to encourage activity to ensure the best prices, speed of purchasing and security of supply, but also ensure records are kept, contracts are in place, and there is transparency.
The most comprehensive example of a flexible governance system for emergency procurement was presented to the workshop by Santiago Ibargüen of the Pan American Health Organisation. PAHO has two procurement regimes. The non-emergency rules switch to the emergency rules immediately that an emergency is declared. After the declaration there is no longer a requirement to use electronic tendering, no need to seek competition over the $5,000 threshold, no restriction on credit card purchases, and a tenfold increase in petty cash limits. Budgets are reprogrammed, delegation is extended to a greater range of staff including procurement officers in the field, and there is an immediate release of internal funds before the UN is approached.
PAHO’s procurement principles must still be followed, but these include “the best interests of the organisation,” which was described as “the joker” in the procedures. This provides more discretionary powers to officers in the field, particularly where there is ambiguity over the rules. Reporting on the use if this principle can be retrospective and there is no requirement to have achieved the lowest price where it has been used. PAHO can also use any other tender process that is conducted to recognised international standards, which means it can piggyback onto any competitive tender run by any other NGO.
This may be easier for NGOs than Governments but the approach is also used on some Caribbean Islands. Delegates heard that in Jamaica, where procurement is devolved, there are emergency rules which can operate up to a limit of $100m, and in Anguilla there is a time limit of three months. Jamaica also has standard contract clauses for use in emergencies to ensure the paperwork is not forgotten.
But if hurricanes are predictable, where they hit, and their scale is not, which can make even a flexible procurement regime difficult to comply with. Getting three quotes when the phones are down is not that easy. In this part of the country markets can be weak with few suppliers able to respond in a disaster situation. Ensuring capability of the supply chain when regular suppliers are unable to respond is difficult.
So what becomes key is ensuring that the use of emergency procedures is time limited, and that local emergency response is prepared for on a regional basis. A key message was to make sure you do not try to rebuild using the emergency rules. Switch back to the standard process as soon as possible. It’s in everyone’s interest that the emergency arrangements are quickly determined to be at an end.