Caribbean Development Challenges and Possible Solutions by Magda Theodate International Trade Attorney & Public Procurement Specialist

1. January 2016
Why Is Project Procurement Still So Difficult?
By: MAGDA THEODATE
Port of Spain, Trinidad
PART I of II – Original publication available (http://blogs.iadb.org/caribbean-dev-
trends/2016/02/10/why-is-project-procurement-still-so-difficult-part-i/ )
In December 2013, the IDB conducted a multi-country procurement operational
efficiency analysis to identify factors that cause project implementation delays. The
study revealed key issues affecting project execution, and despite the IDB’s excellent
work since to strengthen and adopt national procurement systems, the subject is worth
revisiting.
Over the last decade in the Caribbean, development institutions have invested millions
of US$ to “create procurement capacity,” enhance local procurement standards, and
optimize value chains for “sustainable procurement.” These investments, in the form
of traditional loans, grants, policy based lending, and technical assistance, have
brought procurement to the forefront of public sector reforms. Much progress has been
made, and procurement has gone from a transactional, to a strategic function. Today,
there are professional procurement training centres of excellence across the region.
Further, on the pioneering heels of top regional centres such as the Caribbean
Procurement Institute, University of the West Indies, and others, the Caribbean will
soon have a new Regional Procurement Centre focused on capacity building. Yet,
there is still work to be done to maximize government purchasing power.

2. January 2016
Although many Caribbean countries have taken on the challenge of modernizing their
procurement systems thru new legislation, or endeavouring to create electronic
platforms, to date, few have seen the cost savings, dynamic private-sector interactions,
and speed improvements that have long been proclaimed as the assured results of
such overhauls. So what are some possible solutions for this conundrum? The answers
depend on the perspective from which you view the issues.
1/ Measure impact, rather than methods
The results framework approach for procurement forces institutional project teams to
stick to conventional procurement methods when designing projects because they are
easier to measure than less conventional ones that may have a better quality impact.
There is little to no incentive to take even limited risks.
Much like standardized testing has become a supposed panacea to public school
assessments, and praise (or scorn) in some countries, so has results-based
management become the magic pill for making projects seem successful. The
approach has obligated governments and development partners to strongly focus on
traditional inputs that bring measurable results. That’s great, in principle, however, not
all procurement lends itself to fitting nicely into standard frameworks.
In a development context, it is often non-conventional procurement methods that tend
to be more efficient and aligned with sustainability goals. Projects such as citizen
security, neighbourhood economic renewal, recycling, or even erosion management,
could all have solid efficiency gains through non-conventional methods such as
community procurement; restricted national competition; lease-versus-buy; or even
indirect buy/pooled procurement options between agencies or between CARICOM
countries. These lend themselves well to the Caribbean context, while achieving the
procurement goals, and having positive externalities (ex. involving local communities
in urban renewal, encouraging vendor service accountability with local government,
and creating employment).
2/ Prepare local markets to compete in an international environment
Caribbean governments, and governments of developing economies in general, can
and should use their public purchasing power to directly promote domestic/local
industry’s participation in procurement, where there is a comparative advantage (e.g.,
tourism, agro-bio products, information services, to name a few).
Certainly “open, fair, and transparent” competition in government procurement are
values to be strictly upheld. Nonetheless, developed economies often use soft credits,
subsidies, and tax breaks to encourage their national firms to participate in international
markets, and governments of developing economies have a responsibility to analyse
how to best use their resources to promote industries that can compete on equal
footing with foreign competitors. If Caribbean governments only seek value for money
as their sourcing aim, they will miss the opportunities procurement presents to link local
industry to global technical expertise, increase intra-regional trade, and spur innovation
through research and development.

3. January 2016
Government procurement processes are carried out within the framework of laws,
norms, rules and procedures established internationally and domestically, and each
framework affects the effectiveness of project implementation. Under the General
Agreement on Tariffs and Trade (GATT), as well as the General Agreement in Trade
in Services (GATS), to which 14 Caribbean countries acceded, government
procurement is explicitly excluded. That is why the plurilateral Agreement on
Government Procurement (GPA) was later established, along with special and
differential treatment afforded to developing countries that have signed the GPA. The
aforementioned exclusion means the WTO’s founding legal principle of non-
discrimination between domestic goods and services compared to foreign ones, does
not automatically apply to all government procurement. In a globalized society, that is
not protectionism, it’s smart development policy.
If applied in a transparent and clear manner, a harmonized policy to promote local
industry comparative advantages in public procurement, could see significant
competitiveness gains for the region.
Stay tuned for Part II.