PUBLIC PROCUREMENT IN TIMES OF CRISIS: NAVIGATING RISKS, CHALLENGES AND OPPORTUNITIES FOR PROTECTING AND FULFILLING HUMAN RIGHTS DURING COVID-19 - Andreas Daugaard, October 2020
In this blog post, I present key concepts and experiences highlighted at a session on 8 September 2020 at the United Nations Regional Forum for Business and Human Rights in Latin America and the Caribbean. The session was organized by the Danish Institute for Human Rights and the Inter-American Network on Government Procurement with presentations from:
· Helena Fonseca (moderator), Specialist in Public Management of the Organization of American States (OAS) and Technical Secretary of the Inter-American Network of Government Procurement (RICG)
· Olga Martin-Ortega (key-note speaker), Professor of International Law at the School of Law, Greenwich University
· Rafael Gonzales, National Director of UAEOS, Ministry of Labor of Colombia
· Gladys Bandiera Pittí, Sub-director General, General Directorate of Public Procurement of Panama
· Pablo Seitz, National Director of the National Directorate of Public Procurement of Paraguay
· Bárbara Lem Conde, General Manager, Perú Compras
· Daniel Morris, Adviser, Human Rights and Business, the Danish Institute for Human Rights
The global pandemic caused by COVID-19 has challenged societies across the world and put immense pressure on public procurement officers to guarantee and maintain the supply of necessary medical and personal protective equipment. The urgency required during the crisis raises the question of how and when states should utilize legal exceptions to expedite ‘emergency’ procurements, which temporarily suspend ordinary procedures related to transparency, responsibility and accountability.
Emergency purchasing is clearly needed during a pandemic as way to quickly access goods and services to protect citizens’ rights to health. However, it comes with risks of corruption and inadequate deals with inflated costs and corruption in the selection of suppliers. Indeed, there have been documented cases of goods which do not meet safety standards, and late or non-delivery of goods or services, which runs counter to the rationale for conducting emergency procurements.
Emergency procurements, which focus on speed, can also see processes to integrate human rights protections into public procurement temporarily suspended or downscaled. This can have the unfortunate side-effect that at a time when personal protective equipment, for example, is in great demand to protect the right to health of citizens in a procuring country, the workers making these gloves, masks or other equipment in the manufacturing country are left at increased risk of human rights abuses.
This heightened pressure on procurement officers due to Covid-19 comes at a time where public procurement has been broadly recognized as a means for States to fulfill their human rights obligations and achieve sustainable development. By including requirements within public procurement that suppliers respect human rights, states can help prevent human rights abuses such as modern slavery, child labor, human trafficking and excessive working hours from occurring within their value chains. Furthermore, public procurement can be used to promote for example the rights of persons with disabilities, women and children and economically disadvantaged minorities. The Danish Institute for Human Rights has created a toolkit on human rights for policy makers and public buyers, that provides guidance on how to drive change through public procurement.
With the pandemic causing not only a health crisis, but increasingly also an economic and social crisis, sustainable public procurement with integrated human rights standards should be a key component in states’ efforts to build back better.
With this background, the session brought together thematic experts and practitioners to explore and discuss concepts and experiences concerning two main questions:
· How can public procurement generally be utilized to protect and fulfill human rights?
· What are the impacts of the pandemic on human rights and how can public procurement be used to protect and fulfill human rights specifically during a pandemic?
KEY ACTIONS STATES CAN TAKE TO IMPROVE PUBLIC PROCUREMENT AND PROMOTE HUMAN RIGHTS DURING AND AFTER THE PANDEMIC
1. Develop guidelines and roadmaps to provide support to public procurement when emergency procurement processes are engaged, and normal safeguards are temporarily suspended or downscaled.
2. Increase the use of framework agreements to allow for expedited and effective acquisitions of items that are repeatedly purchased by public buyers.
3. Support public procurers by improving access to online catalogues and software and technologies to automate and improve transparency and accountability in procurement processes, including block chain.
4. Establish accessible websites to publish information related to purchases in times of crisis such as the Covid-19 pandemic.
5. Consider legislation to facilitate the participation of rural farmers and/or Micro, Small and Medium-sized Enterprises (MSMEs) in public procurement. This contributes to a more inclusive economic development.
These five actions have been identified based on the experiences and examples highlighted by the experts and practitioners during the session. While following these actions does not guarantee respect for human rights in public procurement, they may serve as roadmap for how governments can improve their pandemic response, including the protection and promotion of human rights.
HELENA FONSECA (MODERATOR)
Specialist in Public Management of the Organization of American States (OAS) and Technical Secretary of the Inter-American Network of Government Procurement (RICG)
Helena highlighted how public procurement today, more than ever, has become a mechanism for promoting access to rights such as health, education, and access to information and full and productive employment and decent work.
She explained how the pandemic has generated a tradeoff between immediacy and value for money, due to the urgency of purchasing to respond to public health needs. COVID-19 has evidenced institutional flaws in the global value chains, which has led to overpricing and limited supply versus a massive demand. This has turned into an opportunity for governments to use the urgent need for purchasing as a justification for utilizing direct purchasing and for relaxing their efforts to guarantee compliance with international human rights principles and standards.
She further stressed that it is important to create greater awareness and commitment to guarantee responsible business conduct and respect of human rights at all levels and across sectors; to engage key actors to improve results; to train public officials and suppliers, to educate relevant actors about the this growing area; and to adopt measures and mechanisms to address the risks of human rights violations.
Helena emphasized that we cannot pretend that we are promoting sustainable development by including social criteria, such as measures to promote the participation of micro, small and medium sized enterprises (MSMEs) in procurement processes, if we do not at the same time guarantee that suppliers comply with due diligence requirements. Similarly, we should not include environmental criteria in the procurement without having the necessary control and evaluation mechanisms to ensure that a supplier does not violate the rights of its workers.
Finally, she mentioned that the existence, or lack thereof, of a specific public policy on responsible business conduct does not necessarily determine whether or not awareness of responsible business conduct amongst decision makers can be promoted. However, it may be a forceful tool to generate state commitment to transform public procurement into a channel for improving human lives through access to and respect for human rights.
OLGA MARTIN-ORTEGA (KEY-NOTE SPEAKER)
Professor of International Law at the School of Law, Greenwich University
Olga explained how human rights and public procurement converge in two domains. Firstly, States purchase goods and services to exercise their function to meet public needs, thereby guaranteeing the exercise of their human rights and the fulfillment of the States’ international obligations. Secondly, public procurement is a motor for promoting and demanding responsible business conduct by creating market demand and specific obligations for businesses.
She made reference to the UN Guiding Principles on Business and Human Rights, which states in Principle 6 that: “States should promote respect for human rights by business enterprises with which they conduct commercial transactions.” The commentary to the principle states that: “States conduct a variety of commercial transactions with business enterprises, not least through their procurement activities.”
Olga highlighted the various impacts of COVID-19 on supply chains and working conditions:
· Collapse of certain sectors leaving hundreds of thousands of workers in a vulnerable situation;
· Exponential increase in the demand of certain products, which have allowed for: i) abusive and fraudulent practices of contracting and recruitment ii) abusive work conditions with excessive working hours, and iii) unhealthy physical conditions and infrastructure, which exposes workers to lesions and illnesses, including COVID-19;
· Contracting of providers known not to respect human rights and an increase in purchasing in sectors/countries with generalized human rights violations;
· Suspending audits and monitoring;
· Insecure supply chains, in which interruptions during emergencies puts at risk the supply of essential products.
She stressed that the massive demands have led to national and international competition for purchasing in conditions of limited supply. The urgency has aggravated some of the issues with public procurement that are already present under normal conditions: the need to preserve competition, transparency and anticorruption, institutional coordination and quality control. Furthermore, it has led to step-backs regarding environmental progress and recycling and.
As an example, the pandemic has aggravated the human rights issues involved in the production of rubber gloves in Malaysia, which were already documented prior to the outbreak of the pandemic.
Olga presented an overview of some quick measures taken by some States during the pandemic: i) emergency legislations, guidelines and practices, ii) elimination of requirements and procedural formalities of the acquisition to rapidly meet the needs, iii) efforts of efficiency and simplification of procedures and costs, including interregional joint purchases, and iv) use of direct purchasing.
Furthermore, she highlighted that the pandemic has led to issues with corruption and lack of adequate accountability, evidenced by cases of overprizing and conflict of interests.
Corruption has a human cost, which is directly linked to the fulfilment of human rights.
At the same time, she stressed that some states have taken measures to increase transparency including tools of access to information and implementation. These are not human rights protection measures in a direct sense, but transparency is essential for adequate accountability, protection of human rights and access to remedy.
Finally, Olga suggested important issues to consider related to public procurement during the pandemic going forward:
· The need to plan an economic recovery based on the reduction of social inequalities, economic resilience and the strengthening of the public health and service delivery systems.
· The pandemic presents opportunities for including requirements to respect human rights and the environment as requirements in public procurement in the future.
· The response must be based on basic principles such as: i) transparency, ii) responsibility and accountability, iii) flexibility, iv) collaboration and v) long-term vision.
Responses to questions
· Olga highlighted how doing things well can cost more. Responsible procurement appears to be more expensive because it requires guarantees and selection of companies that have sufficient structure to know their supply chains, to monitor them and to report etc.
· It is key to remember the importance of resilient supply chains. A supply chain with human rights violations is a weak supply chain. We should avoid facing a situation where we protect health and lives with masks, gloves and ventilators while demand for this equipment causes an increase in human rights abuses for others.
· Corruption is not only a problem for State resources but also for human rights, as corruption has a direct effect on human rights. Corruption is not a victimless crime. Combatting it requires efforts such as increasing transparency, accountability and pursuing corruption cases civil and criminally.
RAFAEL GONZALES
National Director of UAEOS, Ministry of Labor of Colombia
Rafael explained how a key aspect of the Colombian government’s Covid-19 response has focused on the rural, small to medium scale farmers. Under President Ivan Duque, Congress has passed a Bill on Local Public Procurement, which facilitates increased participation by rural farmers in local procurement processes to supply public feeding programs and institutions. Twenty-two per cent of the Columbian population, approximately eleven million people, are farmers in rural areas, but the conditions for competition have historically been unfair.
The Bill establishes the obligation for state institutions at national, regional and municipal level to facilitate access for small and medium sized farmers to participate in the procurement procedures and to pay them immediately. This also includes procurement done by public institutions. As a result, these farmers may have increased opportunities to supply produce to public feeding programs in schools, hospitals and other state institutions that use farmed produce.
He highlights how the legislation establishes an obligation for public institutions to report to Congress on October 15 every year. There is an ongoing process to establish an inter-institutional, technical working group to facilitate the engagement between rural farmers and the State’s procurement institution Colombia Compra Eficiente.
Together with the Contraloría General de la República, the Procuraduria General de la Nación and other oversight entities, Colombia Compra Eficiente will monitor compliance with the Bill.
Response to question
During the pandemic, the Colombian government has made concerted efforts to seek participation from regional organizations to introduce the products of rural farmers into commercial markets. This collaboration has permitted more than one million USD to reach the rural farmers so far. According to Rafael, this contributes to closing the gaps of inequality and lack of participation from rural farmers.
GLADYS BANDIERA PITTÍ
Sub-director General, General Directorate of Public Procurement of Panama
Gladys made reference to a new Reform of the Bill on Public Procurement that entered into force on 8 September 2020, which seeks to facilitate faster and more transparent procurement processes. Now all procurement has to be online on the procurement platform Panama Compra, with information accessible to the public. Previously, direct purchasing could be done by public officers, who simply picked up the phone and made a deal.
The Bill on Public Procurement lays out emergency purchasing in article 79, but the processes were not further regulated at the beginning of the pandemic. Thus, direct purchasing was allowed, but no specific steps were established for how to do it. That led her institution to design manuals that established the steps for how to do emergency purchasing and what to include in the mandatory reports.
The legislation mandates reports for each emergency purchase to be presented only after the emergency is resolved, but the institution created a subsection under the Panama Compra website, where all reports of emergency purchases are made public also during the emergency.
Response to question
· It continues to be a key challenge to include SMEs and rural farmers. These are sometimes discouraged from contracting with the state due to the bureaucracy and payment delays. We have a key challenge in spreading knowledge about the new legislation and our use of standardized forms to make clear to SMEs and farmers that they will not be asked for other documentation other than that which is made public on the website. Going forward we need to build capacity within the small-scale providers as well as with public procurement officers.
PABLO SEITZ
National Director of the National Directorate of Public Procurement of Paraguay
Pablo highlighted the utility of framework agreements to meet the public needs during a pandemic. The use of framework agreements allows for greater balance between the risks and advantages of direct purchases versus competitive purchases.
Secondly, he referenced a regulatory amendment which establishes the obligation, even during emergency purchasing, to publish the procurement material at least 48 hours before receiving offers and that the award of the contract is published before the contract is implemented. This allows control entities to verify the procurement processes before the contracts are implemented.
Implementing human rights standards into public procurement is difficult even under normal circumstances. During a pandemic, it becomes even more difficult. Even so, the institution passed a new policy of sustainable procurement just two days before the appearance of the first case of Covid-19, which contains elements of human rights analysis, supply chain management, corporate social responsibility and circular economy.
Response to question
· Pablo mentioned the main human rights included within public procurement in Paraguay, primarily labor rights as well as environmental, social and economic rights. Furthermore, many procurement processes are targeted towards SMEs and family farmers, who have historically been ignored.
BÁRBARA LEM CONDE
General Manager, Perú Compras
Bárbara highlighted several efforts made by Perú Compras to standardize and digitalize public procurement. For instance, they have created digital purchase catalogues, which include requirements of sustainability, such as mandatory certifications, and offers that don’t live up to the requirements are automatically eliminated.
She stated that Perú Compras has been one of the first institution in Latin America to utilize block chain technology during the procurement process.
Perú Compras has a designated Covid-19 portal on their website, which contains all information related to procurement, accessible to all citizens with no requirement of login or passwords.
Bárbara highlighted the utility of “doing things well” even though they may be more expensive initially. As an example, she mentioned including requirements to comply with the labor law when hiring security guards or cleaning personnel. This requirement will likely reduce the quantity of offers and may increase the price, but it will contribute to structuring the overall labor market in the country, which should be a goal for the government.
To mitigate the risks involved with emergency purchasing during the Covid19 pandemic, Perú Compras participated in special, internal purchasing procedures with relevant technical agencies within the Peruvian government. For instance, when purchasing test kits, the Ministry of Health designed the overall test strategy, the Institute of Health determined the technical requirements of the test kits; Perú Compras processed the offers and did the necessary market analysis. Then the Institute of Health verified the market analysis, before Perú Compras would go on to formalize the purchase contracts.
Response to question
· It is key to push for further digitalization to ensure traceability in the supply chains. Another key challenge going forward is to define which human rights standards and sustainability parameters to include within public procurement and for providers to familiarize themselves with these new requirements.
DANIEL MORRIS
Adviser, Human Rights and Business, the Danish Institute for Human Rights
Daniel presented the toolkit on human rights for policy makers and public buyers, developed by the Danish Institute for Human Rights. The objective of the toolkit is to enable policymakers, public buyers and managers to include requirements to promote the respect for human rights in public procurement.
He highlighted a new universal methodology for measuring how states use procurement to protect human rights and the environment under SDG 12.7.1. This methodology has the potential for guiding states’ efforts of sustainable procurement in the future. He mentioned how the methodology of indicator 12.7.1 has been developed to measure how a state is implementing sustainable procurement through policies and in practice at national and/or subnational level. It is designed to be used by both states with advanced sustainable procurement mechanisms as well as those that are just commencing to develop their mechanisms.
The methodology contains six rated elements and a calculation index to produce a score between 0 and 1. This includes:
· To recognize explicitly the three dimensions of sustainable public procurement: environmental, social and economic.
· That the social dimension of sustainable public procurement is explicitly linked to human rights norms.
· That fundamental and human rights principles such as equality and non-discrimination are included in the calculations.
· A state can choose three approaches to add points: measuring progress at i) national, ii) subnational or iii) at national as well as subnational level. If a state chooses approach ii) or iii), then it will include cities’ and regions’ efforts to realize sustainable public procurement.
· Points can be added for practical support to procurement officers such as guidelines, tools, a technical assistance service and the establishment of networks for professionals to share best practices.
· Points can be added for the existence of systems to monitor sustainable public procurement.
The development of a methodology for calculating indicator 12.7.1 is a positive progress, as states will share comparative data that can be used to measure how states, regions and cities are protecting human rights and the environment through public procurement.
The next step is for states to collect the data, which may prove difficult, as some states may not have systems and procedures to collect the specific data required. As states commence to collect data, we can see where they are adding points and where not. As a result, this methodology has the potential to guide future efforts of states to carry out sustainable public procurement.