30th July 2013 – Independent Review Panel – Increase in processing fee.

Access to the Independent Review Panel: The non-refundable processing fee has increased from Rs. 5,000 to Rs. 50,000

Since the 6 July 2013, an application for the review of procurement proceedings before the Independent Review Panel must be accompanied by a non-refundable processing fee of Rs. 50,000 over and above a security deposit of either Rs. 100,000 or Rs. 25,000, depending on the type of the contract.

Under the previous regulation 51 of the Public Procurement Regulations, an unsatisfied bidder had to pay a deposit of Rs. 75,000 where the application for review relates to the bid opening process or the award of a major contract or Rs. 10,000 in any other case. A non-refundable processing fee of Rs. 5,000 had also to be paid.

Comments

Understandably, a security deposit must be liable to be forfeited where the Independent Review Panel dismisses an application for review on the ground that it is frivolous.  Indeed, at the Second Reading of the Public Procurement Bill on 12th December 2006, the Honourable Minister who introduced the Bill stated that the deposit amount aims “at protecting the procurement process against spurious and frivolous complaints and disruptions resulting into excessive delays and costs.”

It is not that clear as to why a processing fee of Rs. 50,000 which is half the amount of the security deposit of Rs. 100,000, in the case of a major contract, and twice the amount of the security deposit of Rs. 25,000, in any other case, must accompany an application for review together with the above mentioned security deposit.

A processing fee is usually paid to cover the administrative costs incurred, for example, to process an application. What is questionable with the amendment brought to regulation 51 of the Public Procurement Regulations pursuant to GN 173 of 2013 is the prescription of a non-refundable processing fee of such magnitude. The high non-refundable processing fee coupled with the security deposit may discourage an unsatisfied bidder from seeking remedies before the Independent Review Panel.

Under the pre-Public Procurement Act, the decisions of the former Central Tender Board and the public body in connection with the award of a contract were subject to judicial review. The ‘processing fee’ (I use the expression ‘processing fee’ in quotes purposely), if any, which has to be paid to the Cashier of the Supreme Court does not exceed the 3 digits figure.

It is understood that the two aims behind the creation of the Independent Review Panel are first to ensure that the review of the decisions of public bodies in matters of major contracts is dealt with expeditiously and second, to reduce the costs to the bidder. These two aims are clearly stated in the speech of the Honourable Minister: “Currently an aggrieved bidder may seek by way of judicial review and the award or operation of the procurement contract remains suspended until such time that the issue is resolved. The process is costly both to the bidder and Government.  … The establishment of the Independent Review Panel will certainly remedy the situation expeditiously dealing with appeals and, at the same time, increase the credibility and confidence in the new procurement legislation.

It is not because the decision of the Central Procurement Board or a public body is reviewed before the Independent Review Panel and they are subject to adverse comments that an exorbitant non-refundable processing fee must be imposed on the unsatisfied bidder. As a matter of fact, adverse comments are made even if an application is unsuccessful.

The ability for an unsatisfied bidder to apply for the review of the decision of the Central Procurement Board and a public body before the Independent Review Panel, which is a quasi-judicial body, is very important. This Independent Review Panel is given the opportunity to probe into the procurement proceedings to ensure that the Central Procurement Board achieves the highest standards of transparency and equity in the execution of its duties; for example, the equality of opportunity has been granted to all the bidders, they have all been treated fairly and there is transparency in the procurement process and the decisions taken.

By increasing the non-refundable processing fee to Rs. 50,000, an unsatisfied bidder may no longer be keen to dispute the decision of the Central Procurement Board; hence, the procurement proceedings will not be subject to scrutiny.  The end result will be that, even if the Public Procurement Act imposes a duty on the Central Procurement Board to achieve the highest standards of transparency and equity in the execution of its duties, cases which would give the Independent Review Panel the opportunity to examine the procurement proceedings will be reduced considerably.