Bill Analysis: Public Procurement and Disposal of Fixed Assets Bill

Posted in Legislative Research on Jan 17, 2020

This bill is submitted with the purpose of establishing effective principles and methods for the management of public budget and assets. There are two main parts: public procurement and disposal of fixed assets; and the selling and renting public assets. In this analysis, the aspects of decentralisation, transparency, responsibility and accountability have been examined.

(1) Public procurement and disposal of fixed assets

Tender committee

The current practices associated with public procurement are set out under President’s Office Directive No. 1/2017. For certain kinds of procurement, at union-level a tender committee must be formed, chaired by the permanent secretary of the relevant ministry, or more senior position; and at Region/State-level, the minister is the chairperson.

However, the bill says that the tender committee will be led by “the head of the procuring department/organisation in accordance with by-laws and standard procedures”. “The head of the procuring department/organisation” means those with delegated authority for budgets according to the budget law, such as the union-level minister, region/state minister and heads of department/organisation.

Here two points should be considered. Firstly, whether union or region/state ministers should be included in tender committees. It does seem proportionate to establish a norm whereby every committee does not need to include them, and that the tender committee be led by the head of department/organisation, except with some categories of mega project.

The next issue concerns a provision requiring approval of a procurement plan. The 1/2017 directive requires the submission of such a plan to the head of the relevant union ministries/organisations and region/state chief ministers. But the new bill only requires approval from the tender committee. Whilst this is surely intended to ensure effective and fast public procurement, to tackle the issue of budget surpluses being returned due to under-performance, it should be questioned whether this is also removing an important mechanism for oversight.

Record maintenance

Although the 1/2017 directive requires departments to retain records relating to the procurement process for at least 3 years, the bill increases this to 7 years. This brings Myanmar more into line with accounting practices in other countries, and goes some way towards to strengthening responsibility and accountability, by enabling successive governments to reexamine processes.

Cancelling tender process

“Procurement” is defined as building, purchasing and acquiring services in line with the budget law, and the budgets put forward by union-level and region/state-level government department/organisation. The procurement plan must be for purchasing within the allowed budget estimate of the procurement department/organisation and should therefore be embedded within the budget drafting process from the start.

The procuring department/organisation can cancel the tender process if it is determined that the procurement is no longer necessary and/or there is a lack of necessary funds. The chapter on procurement regulations says that “all the procurements must be included in the allowed budget of the department/organisation and the procurement plan”.

The conditions under which a tender process can be cancelled are therefore effectively an admission about ineffectiveness of the budget drafting process. Unless there are appropriate mechanisms to review such cancellations, through for example, proper audit procedures, and public/parliamentary oversight of public finances, there is risk that the responsibility and accountability of the relevant governmental department/organisation will be undermined. As the drafting of budget starts from the township level to the state level, it must be kept in mind that budget drafting is a measurement of performance of the governmental organisation.

Ethics for political post holder and government staff

When working on planning and preparing contracts, and coordinating procurement/disposal, the bill says that political appointees and government staff are obliged to keep secret information about procurement and disposal, including that related to the property and businesses of tender submitters.

There are two parts here, which are period and sort of information for secrecy, and information which ought to be public in order to avoid the corruption.

Firstly, it must be clarified that before the tender process, secrecy of information about the procurement and disposal process is important and prevents conflicts of interest and attempts by people to influence the tender decision. This protects politicians and government staff from accusations of corruption. However, when the tender process is started, it is important the process is fully transparent, responsible and accountable in the part of government department and organisation.

Except from information targeted to personal harm, information about property and businesses of tender submitters does not need to be concealed. The reason is that if the companies which succeed in their tender are related with political appointees and government staff, they will rightly become the target of public interest and questioning. It will help citizens and journalists uncover where black-listed companies reestablish themselves with a new name and compete again in the bidding, for example. Therefore, except from personal information, business-related information is necessarily to be transparent. If so, businesses are more likely become responsible and accountable, and the public will be more likely to receive a quality service.

(2) Selling and renting public assets

Regarding public assets, unless there are no separate law, by-law and directive, the government department/organisation can conduct selling and renting provided they are in line with administrative procedures in the relevant ministry.

Public assets mean “non-movable or movable assets, land, buildings” etc. But in the bill, it excludes buying, renting and selling of land and currently used buildings. This shows inconsistency in the bill and it gives a question of how to manage public land and building if there are no other laws.

All in all, the bill aims to be effectively used in the management of the state budget, and when debating in the Hluttaw, the aspects of decentralisation and transparency should be contested to strengthen the bill. Furthermore, the follow up of by-law and directives should not be a barrier to such important norms.

Backgrounder: Public Procurement and Disposal of Public Assets Bill