REVIEW REQUIREMENTS FOR FOREIGN CONSTRUCTION COMPANIES

MBABANE –A recommendation has been that ESPPRA and CIC should review the impact of the requirements for international companies/ firms in construction contracts to work in partnership or work jointly with domestic companies.

This is one of the recommendations carried in the assessment of the public procurement system report jointly conducted by the Eswatini Public Procurement Regulatory Agency (ESPPRA) and the African Development Bank (AfDB). The assessment was conducted using the Methodology for Assessing Procurement System (MAPS). The assessment of the public procurement system of Eswatini using the 2018 MAPS methodology was initiated at the request of the Kingdom of Eswatini, ESPPRA under the aegis of the Ministry of Finance.

Mandatory

The aforementioned recommendation follows that it was noted that the mandatory requirements for international companies or firms in construction contracts to work in partnership or joint working with domestic companies (CIC Act Section 41 and 42) constitutes a barrier to entry and may reduce competition and value for money outcomes. This gap is assigned a red flag because it may impede achieving competition and value for money outcomes, impacting on the overall effectiveness of the procurement system and because it will require joint review and decision making by stakeholder institutions and does not lie solely within the procurement sphere.

Therefore, the review of the requirements for international companies/ firms in construction should also clarify registration requirements to ensure it is clear that registration is not a precondition to participation in a tender process. The report further made a recommendation for government to set up appropriate standards for competitive procedures. It was recommended for government to consider enhanced measures, including amendments to the public procurement regulations(PPR), to ensure that the choice of procurement procedure is, in all cases, clearly documented and justified in accordance with the legal framework and that the terms ‘emergency’ and ‘emergency situation’ are well-defined, to prevent over-use or misuse.

Preparation

This may be tied in with requirements relating to preparation and publication of procurement plans, with justification for use of methods other than open tendering to be addressed in that plan.  Implement measures to ensure that use of emergency single source procurement/single source method is permitted only in exceptional circumstances. This recommendations comes after a gap was noted that the legislative framework specifies standards for competitive procedures and provides safeguards, but there is strong evidence that these provisions are not working effectively and do not achieve the intended aim of ensuring that competitive procurement is the preferred method for procurement.

Opportunities

It was noted that there are high levels of use of emergency single source/single source as a method of procurement. This reduces opportunities for market competition and diminishes the transparency and integrity of the procurement system. Value for money is a less likely outcome where direct award is used. This gap significantly impedes achieving competition and value for money outcomes, impacting on the overall effectiveness of the procurement system. In response to this gap, key stakeholders (Ministry of Finance Technical Secretariat, ESPPRA and Eswatini Government Tender Board) should collaborate and jointly issue enforceable regulatory provisions, policy and/or guidelines to apply to all procuring entities.

This should stress the importance of documenting and justifying choice of procurement methods and emphasise the limited and prescribed circumstances where emergency single source may be used. The policy and/or guidelines should confirm that the circumstances and conditions permitting use of single source procurement/single source method must be interpreted narrowly. This may be tied in with requirements relating to procurement, plans for specific procurements with justification for use of methods other than open competitive bidding to be addressed in that plan.

Participating

Another gap highlighted in the report was that the legal framework does not establish rules for State-owned enterprises (SOEs) participating as suppliers of works or goods. This may jeopardise fair competition as SOEs may have an unfair advantage over other bidders because, for example, they benefit from subsidies, tax exemptions or other forms of preferential treatment. In response to this, a recommendation was made to the effect that government must include in the legal framework, specific rules applying to participation of SOEs as bidders for the supply of works or goods, aimed at promoting fair competition. This could be dealt with in the eligibility criteria in standard bidding documents for mandatory use, pending revision of PPR.

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