The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged to establish a private sector-managed National Procurement Bureau as an alternative to across-the-board spending cuts, a well-known doctor suggesting it could save taxpayers up to $200 million per year.

Dr Johnathan Rodgers told Tribune Business that this Board, which would be responsible for tendering and awarding every government procurement contract, would help to eliminate the wastage, inefficiency and cronyism that allegedly plagued many awards (see column on Page 4B).

He suggested this would generate true ‘value for money’ for Bahamian taxpayers, and provide better returns than simply slashing public expenditure by set percentage or amount.

The Government is looking to cut spending by 10 per cent in the upcoming 2013-2014 Budget, and by a further 25 per cent in 2014-2015, but Dr Rodgers said its poor fiscal management track record meant these goals were unlikely to be achieved.

And, apart from creating a fiscal boost, Dr Rodgers said his proposed National Procurement Board - part of his “smart austerity:” strategy - would also benefit the private sector via greater transparency and giving every bidder ‘a fair shake’.

Writing in Tribune Business today, Dr Rodgers said: “In my opinion, the proposed 10 per cent budget cut for government ministries, corporations and other sponsored agencies would be very difficult to implement due to moral hazard, nepotism, cronyism, corruption and a culture of financial mismanagement inherent in these entities.

“A much better alternative would be the formation of a National Procurement Bureau, which would be mandated by government but managed by the private sector.

“Such an organization would be mandated to adhere to internationally-accepted and transparent tendering policies and procedures, and would be responsible for all of the Government’s purchases from pencils to BEC generators,” he added.

“An IDB study done a few years ago showed that this could save government up to $200 million per year. Over a five-year period this could reduce the national debt by $1 billion.”

Describing the Bureau as “the way around” the proposed across-the-board spending cuts, Dr Rodgers subsequently told Tribune Business: “It cuts out the cronyism, nepotism and any alleged corruption.

“Everyone knows what everyone else bid, and people can see government got the best price for the best product.”

Suggesting that an accounting firm manage the Bureau and its administrative work, Dr Rodgers said having it run by the private sector would help ensure “it’s all above board and adheres to international tender policies, procedures and standards.”

Wastage would be eliminated, he argued, and with every government ministry, department, corporation and agency using the Bureau, the procurement process will be more efficient.

No longer would procurement be left “to the whim” of a particular Minister or Ministry, while also taking the pressure off them. “They can’t be accused of cronyism or corruption,” Dr Rodgers told Tribune Business.

Explaining why he felt his National Procurement Bureau would be a superior solution to simple spending cut targets, he added: “You can’t expect people who have demonstrated no good fiscal management in the past to cut across the board. You have to do it for them.”

Apart from improving the Government’s spending efficiency, Dr Rodgers also sought to justify why his National Procurement Bureau would aid the Bahamian private sector.

“All the potential vendors would appreciate that, as everyone has a fair crack at providing the Government with a product or service, and it’s completely transparent,” he said.

He called on the Government to avoid cutting its subsidy to the College of the Bahamas (COB) by $2.5-$3 million in the upcoming Budget, as this worked against the development of a “knowledge-based workforce”.

Elsewhere, though, Dr Rodgers urged the Government to apply a Value-Added Tax (VAT) to goods and services purchased by cruise ship passengers while docked in Nassau, Freeport or their Bahamian private cays.

Arguing that this would expand the tax base by close to four million persons, he said there was precedent for this, given that Alaska imposed similar taxes to help finance its government services.

However, acknowledging that not every cruise visitor would consume something in the Bahamas, and that auditing the lines’ books might prove difficult, Dr Rodgers suggested imposing a further $15-$20 levy per head - on top of the existing departure and other taxes.

This could generate upwards of $50 million in new revenue, and he wrote: “Sales and services aboard the cruise ships while in dock and their six owned cays would be subject to the new...... taxes.

“This is the case in Alaska, and is a large source of revenue for local government. One must remember that the cruise ships that come to the Bahamas have more sales and services than 10 Bay Streets.

“Because of the logistical difficulties of accessing accurate sales and services information from the cruise lines, the easiest way to implement this would be to make the cruise ships pay a flat rate of $15 per passenger.”