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Evaluating Public Procurement Regimes in the South Pacific: Perspectives on Fiji, Samoa and Vanuatu (Article) [2005] JSPL 9; (2005) 9(1) Journal of South Pacific Law

EVALUATING PUBLIC PROCUREMENT REGIMES IN THE SOUTH PACIFIC: PERSPECTIVES ON FIJI, SAMOA AND VANUATU*

MOHAMMED L. AHMADU**

INTRODUCTION

The objective of the article is to analyse the problems of conventional public procurement regimes in the South Pacific with a view to identifying ways of overcoming them. A discussion on the prospects of electronic procurement in the region has similarly been covered elsewhere.^[1]

Globalisation and internationalisation of capital, finance and technology are development imperatives which will ultimately exert pressure on island countries to re-examine their current procurement policies and practices.^[2]

The capacity of a country, whether developed or developing, to efficiently procure its material requirements is fundamental to enhancing the level of its national development and improving the prosperity of its citizens.^[3] Public procurement is one such means by which both goals can be achieved.^[4] This is especially important for Fiji, Samoa and Vanuatu because of their reliance on aid to fund development projects.^[5] Today, bilateral or multilateral aid donors are tying their grants to the issues of effective governance, transparency and efficiency in public procurement.^[6] It is now becoming apparent to aid recipient countries that until and unless they take steps to improve the level of performance of their pubic sector institutions generally and in particular, increase efficiency in their procurement practices, they are likely to miss out on much needed aid and the inflow of foreign investment capital.^[7]

More importantly, an inefficient and corrupt public procurement regime^[8] only adds to the difficulty of liberalising their economies by hindering their participation and integration into the global economy.^[9] This article analyses the issues surrounding public procurement with reference to the existing national procurement regimes and practices in Fiji, Samoa and Vanuatu. These countries still operate conventional or manual procurement processes. Thus, adopting a model procurement law is not a problem. Perhaps, the problems as will be demonstrated lie in the practical operation of the systems and the limitations imposed by their current procurement laws.^[10]  

It is against the foregoing scenario that the article begins by discussing the general contextual profile of Fiji, Samoa and Vanuatu. It also examines some theoretical propositions underpinning the conduct of public procurement. The main thrust of the article centres on the evaluation of the national procurement regimes in the three countries. The article concludes by proffering suggestions on how to raise the standard of public procurement in the region.

Definition

For the purpose of this article, public procurement contracts refer to agreements entered into between sovereign states and private commercial entities for the procurement, by the former from the latter, of goods, services or construction works.^[11] The scope of this definition is limited to civilian procurements, thus excluding defence contracts.^[12]  

CONTEXTUAL PERSPECTIVE

The general context of the article is the South Pacific region but the specific context is confined to Fiji, Samoa and Vanuatu.^[13] According to South Pacific Commission:

Pacific Islands are made up of 22 sovereign and dependent states covering 30 million square kilometres of ocean. Island nations have for years based their unique development strategies in terms of their geographical isolation, comparatively small land area, cultural and ethic diversity and vulnerability to nature and foreign influences.^[14]

Fiji

Fiji became a British colony as a result of the Deed of Cession signed on 10 October 1874. The colony was ruled by Britain until it gained political independence in 1970.^[15] The country consists of about 300 islands with a total land area of 18,274 square kilometres, and an Exclusive Economic Zone of 1.26 million square kilometres of ocean.^[16]

There is, in theory, the separation of powers between the executive, judiciary and the legislature.^[17] It adopted the parliamentary system of representative government based on universal suffrage. Fiji has two houses of Parliament, the House of Representatives and the Senate. The Senate is made up of elected and appointed representatives.

Of all island countries in the South Pacific, Fiji has the most complex mix of races.^[18] The two dominant ones are the indigenous Fijians and the Indo-Fijians.^[19] There are also to be found people of mixed racial parentage, Rotumans,^[20] Chinese, Europeans, Pacific Islanders^[21] and others.^[22] Cultural activities and traditional ways of life feature in most activities and people in the rural areas stay close to their culture. The vast majority of the population live in the rural areas, but there are significant urban settlements across the country.^[23]

The legal system derived is derived from Britain. The court system is made of the Magistrates’ Court, the High Court, Court of Appeal and the Supreme Court which is the highest appellate court in the country.  There is also the native or Tikina Court operating informally at the village level, and a Disputes Tribunal that hears small civil matters. Fiji has a fairly sizeable industrial and economic base. It has light and some heavy industries and is a major exporter of sugar in the Pacific.^[24] With revenues generated from its relatively wide industrial base, it is able to support a number of social services and national development projects.

Samoa

Formerly known as Western Samoa, the country was also colonised. It became a German protectorate^[25] in February 1900 and later a League of Nations trust territory in December 1920^[26] administered by New Zealand until it gained political independence from New Zealand in 1962.^[27]

Samoa is an archipelagic group with a total land area of 2934 square kilometres and an EEZ of 12000 square kilometres, the smallest in the South Pacific. The national capital is Apia and the total population of the country is around 162000, with a natural rate of population growth of around 2.4 % per annum.^[28]

The country is a parliamentary democracy based on the Westminster model. It has a unicameral legislature and the electoral processes are tilted in favour of matai title holders.^[29] The constitution recognises the separation of power between the executive, legislature and the judiciary. As in Fiji the legal system is derived from Britain. The main court system is made up of District Courts, the Supreme Court, and the Court of Appeal. There is also a separate Land and Titles Court. Local customary authorities, or village fono have statutory recognition, and these fono can be considered “custom courts”.

Samoa has very limited industries which are mainly confined to light manufacturing. The economy is predominantly agricultural, except for the service and financial sectors.^[30] It is a Polynesian country.^[31]

Vanuatu

Vanuatu presents a slightly different colonial context to Fiji and Samoa. It was a condominium jointly administered from 1906 by the French and British before gaining political independence in 1980. The estimated population (1993) was 161,000 spread over a land area of 12,189 square kilometres, but the archipelago covers 680000 sq km of sea. Vanuatu is classified by the United Nations as a Least Developed Country.^[32]

At independence, the country adopted the parliamentary system of representative government based on universal suffrage. It has a unicameral legislature.  The country has a written constitution which provides for the separation of powers between the executive, legislature and judiciary.

The legal system derived its origin not only from the English legal system, but also incorporates French laws formerly enforced by the French colonial power.^[33] The court system is made up of the Magistrates Court, Supreme Court and the Court of Appeal, which is the highest appellate court in the country. There are also local quasi-customary courts known as Island Courts. A land tribunal has recently been established to resolve land disputes in line with local customs.^[34]

Vanuatu has a very limited industrial base. There are only light industries and the country is heavily dependent on imports.^[35] It has abundant fertile land which supports both commercial and subsistence agriculture. The main exports are beef and copra. The country heavily relies on tourism for its exports earnings and is also a fledging offshore centre and tax haven.^[36] Vanuatu is a typical Melanesian country with the majority of its indigenous population being Ni-Vanuatu. 

THEORETICAL UNDERPINNINGS

While there is as yet no substantive body of jurisprudence on the theory of public procurement in the South Pacific as such, discussing some general theoretical propositions^[37]  will provide the background against which the public procurement regimes in the three countries will be examined.^[38] No doubt, there is an array of literature on international contracts in abundance.^[39] However, none of these are works on public procurement in small island countries in the South Pacific. This article attempts to partly fill this gap. 

To commence, public procurement contracts have been used, and are still being used by states^[40] to procure goods, services and construction in order to fulfil the material requirements of public administration.^[41]  According to Lloyd, the scope of government contracting is enormous and that this all goes to the heart of a nation’s form of government and economy. He further asserted that in a capitalist economy of representative democracy, states must engage in contracts with private firms if they are to meet their requirements for supplies and services.^[42] These cover a wide range of products from office pins to huge public infrastructural works such as dams and hydro electric projects. It is impossible for any government to effectively function without engaging in public procurement. As Turpin also pointed out, countries could contract for the development or production of highly specialised equipment^[43] or construction, repair, maintenance or purchase of goods or the procurement of services involving large sums of public funds.^[44]

The increasing reliance by states on public policy as a tool of public administration is having an impact on the conception, formulation and execution of public procurement contracts.^[45] According to Stover, public policy choice is now a political issue. In a sense, this affects the way public procurement contracts are formulated or executed.^[46] Public policy is to some extent whatever governments choose to do or not to do.^[47] Because of this, public policy has theoretical and practical effects on the formation and execution of public procurement contracts.^[48]

Public procurement is as old as the concept of state sovereignty.^[49] Over the years however, changes in the nature of the nation-state,^[50] principles of international law^[51] and commercial practice have reshaped the doctrine of state sovereignty^[52] and the principles of public procurement contracts.^[53]

Changes in the doctrine of state sovereignty^[54] have also impacted on the nature of public procurement.^[55] This has created a dichotomy in the nature of state acts and in the way public procurement is to be analysed. Purely commercial functions of the state are no longer subject to the limitations imposed by the doctrine of sovereign immunity.^[56] According to Lloyd, a state as a sovereign entity^[57] would be expected to exercise unfettered powers in its contractual relations. Yet sovereignty in public procurement is now of secondary importance.^[58] As similarly stated by Lewis, there may be situations when contracts entered into by a statutory corporation may be mixed with the elements of public law. The exercise of such powers by the corporation would therefore be limited to acts expressly or impliedly authorised by statute. In such instances, the state will be governed by the normal rules of contractual liability.^[59]

However, in spite of the foregoing, national courts are generally barred by statutes from granting injunctions against actions of island states, whether in regards to public or private acts.^[60] This legal trend is slightly moving towards the granting of certain injunctive relief against some states in the region. Declarations are allowed and in fact have on various occasions been made against state action.^[61]

Because public procurements are combinations of the sovereign and commercial acts of states, ^[62] this often creates problems in the administration or execution of such contracts, especially where states are in default.^[63] According to Endeshaw, the government has two roles in the market place. It is a contracting party as well as a sovereign.^[64] Consequently, this duality of roles leads to the question of whether redress against states for breach of public procurement contracts is to lie in private or public law or both.^[65]

With nation-states gaining independence, international law had imposed additional obligations on them through accession to treaties or conventions.^[66] Some of these treaties or conventions have introduced new international standards in the way states conduct businesses or carry out commercial transactions.^[67] Because of this development, signatory countries in the South Pacific cannot anymore be oblivious to the demands of the international community on how they run their affairs. For the countries in the region, these demands are not and cannot always easily be met because of their inherent limitations in size, economy and industrial base.^[68]  

Globalisation^[69] and the opening up to international capital,^[70] donor aid scrutiny^[71] and the quest for greater transparency, now mean that policy makers and others involved with public procurement need to understand the relationship between the theory and practice of these contracts.^[72] According to Linarelli et.al, regulating public procurement will help to educate government officials and others involved on how to deal with all aspects of such contracts.^[73] Commenting along similar lines, Craig stated that the cost of preparing and submitting tenders is so enormous that no participant can afford to be ignorant of the law and practice of public procurement.^[74]

At another level, public procurement is to be seen as an objective and efficient way of contracting between the state and private entities.^[75] Tender procedures enhance transparency in bidding processes.^[76] According to Schooner, a transparent public procurement system uses procedures which instil confidence in offerors and contractors that business with government was done impartially and openly.^[77] This helps to promote good governance.^[78] It is also a means by which good working partnerships can be developed between the public and private sectors of the economy.^[79]

The processes for awarding public procurement contracts guarantee and safeguard the rights and interests of the state on one hand and those of the contractor on the other.^[80] This is one way of achieving efficient use of resources. As Bovis stated, in a market economy, free trade and international market competition are considered to be the most efficient instruments for promoting optimal resource allocation and economic growth.^[81] 

Public procurement contracts embody commercial as well as sovereign acts of states.^[82] Such contracts are governed by appropriation rules formulated by parliaments.^[83] When contracting, states are bound by the normal rules of contract.^[84] These characteristics make public procurement contracts unique. Thus, such contracts are invested with the dual attributes of public and private laws.^[85] According to Atiyah, when public bodies enter into ordinary contracts, they are to submit to the ordinary rules of contract and in fact are so governed, but the wider duties of such entities go beyond the obligations imposed by ordinary contracts.^[86]   

Public procurement contracts provide the mechanisms by which the national development goals of states can be attained.^[87] According to Arrowsmith, public procurement contracts are means of achieving national development objectives.^[88] However, there are no objective criteria by which these could be measured in small island countries.^[89] Lack of up-to-date and accurate statistics on vital economic and social indicators is responsible. Even where these exist, such data or information is outdated or incomplete, and hence unreliable. 

The complex nature of public procurement creates obstacles to their effectiveness and the wide-spread use by private suppliers wishing to contract with the state.^[90] In commenting on the complexity of public procurement regime of the European Union, Tobler observed that the legislation is of bewildering complexity.^[91] Because of this problem, there is no level playing field between huge multinational corporations and small island states with limited resources. ^[92] Accordingly, it has been argued that all public works contractors need a level playing field. ‘Through anti-competitive means, irresponsible contractors undercut sound business practices and artificially restrict opportunities for small, locally based enterprises.’^[93] International contractors or suppliers end up dictating terms and conditions which island states have to take or leave. The urgent demand for their services, which in many cases cannot be locally procured, leaves these states with little or no choice but to accede to oppressive contracts.^[94]  

There is also the further difficulty of successfully navigating through the processes of negotiating these contracts.^[95] While this may not be a problem for larger and advanced countries, it is a problem for small island economies such as Samoa, Vanuatu and to a lesser extent Fiji.