Public Contracts: Ministry of Finance Tightens Regulations

In response to persistent shortcomings in the execution of public contracts, the Ministry of Finance has introduced new directives this January aimed at improving the quality of services provided by suppliers and contractors awarded contracts with public entities. These measures are part of a broader initiative to ensure stricter management of contracts, promote performance, and guarantee better utilization of public funds.

Faced with ongoing issues in public contract management, the Ministry is implementing reforms designed to raise performance standards.

A key component of these reforms will be the establishment of a Performance Review Committee within each public entity.

This committee, chaired by a senior official at least at the rank of Deputy Permanent Secretary, will include at least two members experienced in contract management.

Its primary responsibility will be to review the performance of suppliers and contractors, both for ongoing and upcoming contracts.

Additionally, the committee will handle cases of underperformance by submitting recommendations to the Chief Executive of the respective entity and will conduct monthly monitoring of projects exceeding Rs 300 million.

As part of this initiative, the Ministry of Finance emphasizes a zero-tolerance policy towards inadequate service delivery.

Suppliers or contractors deemed to be underperforming may face temporary exclusion from future tenders or public contracts for a period of six months.

However, before any exclusion decision is made, certain procedures must be followed.

Suppliers will be notified of their deficiencies and explicitly requested to implement corrective actions.

If satisfactory improvements are not made, the Performance Review Committee may recommend a temporary exclusion.

This recommendation must then be approved by the Chief Executive within 15 days.

Once validated, the decision will be communicated to the supplier, forwarded to the Procurement Policy Office, and published on the public entity’s website within seven days.

Nevertheless, suppliers will have the opportunity to address their shortcomings or contest unfavorable reports.

A dialogue can be initiated to discuss points of disagreement.

If a supplier believes a report is unjust, they may submit a written representation supported by factual evidence to bolster their position.

The Performance Review Committee will re-examine the initial report and may invite the supplier for a discussion before issuing its final recommendations.

Strategic projects, especially those exceeding Rs 300 million, will receive enhanced oversight with mandatory monthly reports.

For projects exceeding Rs 10 million, quarterly reports will be required.

These evaluations will also extend into the warranty period for defects, with thorough reviews of critical aspects deemed unsatisfactory.

Through these new guidelines, the Ministry of Finance is instituting mechanisms to govern public contract management.

The stated goal is to hold service providers accountable while enhancing transparency and rigor in the execution of projects funded by public money.

Source: Defi Media