UNCITRAL United Nations Commission on International Trade Law Developing local procurement legislation - Adapting the UNICITRAL Model Law Caroline Nicholas UNCITRAL Secretariat June 2014 Discussant: Professor Christopher Yukins George Washington University Law School

UNCITRAL United Nations Commission on International Trade Law 2 Adapting the UNICITRAL Model Law What is the UNCITRAL Model Law? Why does it need adapting to local circumstances? How is it adapted in practice?

UNCITRAL Working Process

UNCITRAL Model Law Working Group

UNCITRAL United Nations Commission on International Trade Law 5 Why use the UNCITRAL Model Law? Suitable for all countries in all regions International best procurement practice Not designed by or for any one region Negotiated in intergovernmental meetings over 7 years All regions/countries and many IGOs/international NGOs participated

Case Study: UNCITRAL and Pending Trinidad & Tobago Procurement Law

UNCITRAL United Nations Commission on International Trade Law 7 What is the UNCITRAL Model Law? A template for national procurement legislation Not a binding legal agreement – unlike UN Convention Against Corruption WTO GPA/Regional FTA The Convention and regional agreements have other primary objectives eg prevention of corruption, international market access

Example of “Template” for Progress: Framework Agreements Trinidad & Tobago “framework agreement” means an agreement or other arrangement between one or more procuring entities and one or more contractors or suppliers which establishes the terms, in particular the terms as to price and, where appropriate, quantity, under which the contractor or supplier will enter into one or more contracts with the procuring entity during the period in which the framework agreement or arrangement applies; UNCITRAL Model Law “Framework agreement procedure” (e) “Framework agreement procedure” means a procedure conducted n two stages: a first stage to select a supplier (or suppliers) or a contractor (or contractors) to be a party (or parties) to a framework agreement with a procuring entity, and a second stage to award a procurement contract under the framework agreement to a supplier or contractor party to the framework agreement: (i) “Framework agreement” means an agreement between the procuring entity and the selected supplier (or suppliers) or contractor (or contractors) concluded upon completion of the first stage of the framework agreement procedure;

UNCITRAL United Nations Commission on International Trade Law 9 Consistency of Model Law and other texts A national law must allow for international obligations Domestic preferences not permitted in many international texts like the GPA Model Law allows for use of MDBs’ Procurement Policies, Guidelines and Rules in donor-funded procurement MDBsUNCITRALUNCACEU DirectivesWTO/GPA/FTAs Fully consistent with UNCAC More flexible on preferences than GPA

Trinidad & Tobago Proposed Law: Domestic Preference 28. (1) A procuring entity may limit participation in procurement proceedings to promote local industry development and local content. (2) A procuring entity, when first soliciting the participation of suppliers or contractors, shall declare whether the participation of suppliers or contractors is limited pursuant to this section and the nature of and reason for the limitation. (3) A declaration made under subsection (2) shall not be altered. (4) A procuring entity that decides to limit the participation of suppliers or contractors pursuant to this section shall include in the record of the procurement proceedings a statement of the reasons and circumstances on which it relied.

Trinidad & Tobago Proposed Law: Domestic Preference 28. (1) A procuring entity may limit participation in procurement proceedings to promote local industry development and local content. (2) A procuring entity, when first soliciting the participation of suppliers or contractors, shall declare whether the participation of suppliers or contractors is limited pursuant to this section and the nature of and reason for the limitation. (3) A declaration made under subsection (2) shall not be altered. (4) A procuring entity that decides to limit the participation of suppliers or contractors pursuant to this section shall include in the record of the procurement proceedings a statement of the reasons and circumstances on which it relied. 3. In addition to the criteria set out in paragraph 2 of this article, the evaluation criteria may include:... (b) A margin of preference for the benefit of domestic suppliers or contractors or for domestically produced goods, or any other preference, if authorized or required by the procurement regulations or other provisions of law of this State.... Open question: May preferences be set on a procurement- by-procurement basis in Trinidad & Tobago?

UNCITRAL United Nations Commission on International Trade Law 12 Adapting the Model Law in practice Issue 1: law, regulations and rules A template for a national law A framework law: all essential principles, rules and procedures Needs supporting procurement regulations – more detail (art 4) UNCITRAL Guidance on Procurement Regulations (2013) UNCITRAL Glossary (2013) Distinction between law and regulations?

UNCITRAL United Nations Commission on International Trade Law 13 Adapting the Model Law in practice Issue 1: law, regulations and rules The law should cover … What is allowed, what is not allowed The items that should not be changed without Parliamentary scrutiny Key safeguards Main procedures

Example: Abnormally Low Tenders Where a tender is “abnormally low... and raises concerns with the procuring entity as to the ability of the supplier or contractor who presented that submission to perform the procurement contract, the procuring entity may reject the submission.”

Example: Abnormally Low Tenders Where a tender is “abnormally low... And raises concerns with the procuring entity as to the ability of the supplier or contractor who presented that submission to perform the procurement contract, the procuring entity may reject the submission.” UNCITRAL model law uses same language as proposed Trinidad & Tobago statute UNCITRAL Guide to Enactment may help frame implementing regulations: May request samples to ensure quality Use market research Should focus on price – not on vendor’s costs Key is performance risk – not discrimination If vendor refuses to provide information, that alone is not grounds for rejection

UNCITRAL United Nations Commission on International Trade Law 16 Issue 1: Law, regulations and rules Some key issues for regulations/other law Gaps intentionally left for regulation, eg What fees apply to participation? Thresholds Time limits Procurement vocabulary More detail – eg record, solicitation documents Other issues Budgeting and PFM Government socio-economic policies Classified information Low-value procurement – what is it in the country context? Debriefing Debarment and sanctions

Four Paradigms for Debarment Responsibility (Qualification) Only On a case-by- case basis In U.S. – done by contracting officer Allowed by new EU Directives Adjudicative Debarment for “Bad Acts” E.g., World Bank Court-Ordered Debarment, After Judicial Proceedings Discretionary Debarment – U.S. Federal Based on “present responsibility”: focus on present status Debarment is a cross- government “meta- qualification” determination Performance Risk Reputation Risk

UNCITRAL United Nations Commission on International Trade Law 18 Issue 2: Key options in the national law Definition of procuring entity SOEs ? Use of prior approval procedures Which procurement methods to enact? Use of negotiations Preferences? How to structure the challenge mechanism

UNCITRAL Review Mechanisms Procuring Agency Independent Administrative Court Independent Administrative Court 19

Proposed Trinidad & Tobago Procurement Law: Part V – Challenges Procuring Agency Independent Administrative Court Office of Procurement Regulation Court? 20

Proposed Trinidad & Tobago Procurement Law: Part V – Challenges Procuring Agency Independent Administrative Court Office of Procurement Regulation Court? 21 UNCITRAL: “Any supplier or contractor participating in the procurement proceedings to which the application relates, as well as any governmental authority whose interests are or could be affected by the application, shall have the right to participate in challenge proceedings... “ Proposed Trinidad & Tobago law: “Any supplier or contractor participating in the procurement proceedings to which the application relates, as well as any public body whose interests are or could be affected by the application, shall have the right to participate in challenge proceedings... “

UNCITRAL United Nations Commission on International Trade Law 22 Issue 3: Other key aspects of Model Law requiring guidance Procurement planning Choosing suppliers for direct solicitation Use of contractors’ registers? Contract administration Institutions to support procurement system Ensuring consistency in all areas Mandatory laws to apply? Employment terms Environmental criteria

Key Administration Issue: Fraud Proposed Trinidad & Tobago Procurement Law addresses fraud in: Barring contractors Rejecting tenders Policy question: Should “reckless” fraud be enough to trigger penalties? World Bank Sanctions: “’Fraudulent practice’ is any act or omission, including a misrepresentation, that knowingly or recklessly misleads, or attempts to mislead, a party to obtain a financial or other benefit or to avoid an obligation....”

UNCITRAL United Nations Commission on International Trade Law 24 The Guide to Enactment of the Model Law Background and explanatory information on policies in the Model Law Discusses what is appropriate Encourages standard documents/processes Advises on options in the Model Law Types of framework agreements Local circumstances – e.g. use of below- threshold preferences

UNCITRAL United Nations Commission on International Trade Law 25 Supporting the law to frame a good system Key roles for institutions Disseminating best practice Advising Monitoring and enforcement PPA Competition authority Audit body Review body

UNCITRAL United Nations Commission on International Trade Law 26 Adapting the UNICITRAL Model Law For more information Website: exts/procurement_infrastructure.html Contact: THANK YOU Christopher Yukins,