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Business News of Tuesday, 22 March 2016

Source: B&FT

Public spending under check with passage of new Procurement Act

Ghana Ghana

Parliament has passed a new public procurement legislation Public Procurement Act (2015) as part of efforts to strengthen the regulations regarding the purchase of public goods and services in a manner that promotes efficiency, fair competition and accountability in the use of the public purse.

The passage of the new act reiterates government’s quest to check the perennial issue of excess spending by strengthening existing rules on public procurement as a way of fostering competition, improving administrative efficiency in the tender process in a transparent and accountable manner.

According to the Finance Committee of Parliament, the new legislation comes to correct some imbalances and bottlenecks contained in the previous one as regards the need to clarify the categorization, membership and functions of entity tender committees and the need for harmonised functions.

Chairman of the committee, James Klutse Avedzi, addressing the house prior to the passage of the Act, indicated that the new legislation will also do away with the ambiguous and operational issues that has bedeviled the Act since its inception.

According to him, the existing law regarding the public procurement process—Public Procurement Act, 2003 (Act 663)—is particularly limited by the issues of low spending threshold for high spending public institutions; a situation that makes it difficult for such institutions to respond swiftly to emergencies.

Mr. Avedzi indicated: “There has been difficulties in the application of the Act to most commercially-oriented State-Owned Enterprises (SoEs) due to their independence from direct government oversight. This has occurred as a result of the low procurement thresholds.

“It has therefore become necessary to re-categorise these entities to allow for a more sustainable threshold that reflects the expenditure patterns of these institutions.”

Under the new procurement legislation, contract value thresholds for goods have been increased from GHC25,000 to GHC100,000 while that for works and technical services have been raised from GHC50,000 to GHC200,000 and GHC25,000 to GHC50,000 respectively.

Mr. Avedzi said the new procurement legislation will strengthen the country’s public financial management system, facilitate a more efficient, sustainable and cost-effective procurement regime.

He added: “The passage of the bill is also intended to help promote good governance and strengthen the public financial management system in the country.”

The Public Procurement Act provides for fair, equal and equitable treatment of suppliers and contractors as well as promote the integrity and confidence in the procurement process and the amendment was to ensure a transparent and accountable procurement process in line with current international best practices.

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