Major Reform Of PNG's Public Procurement Laws Mr Stephen Massa and Steve Patrick

Background

PNG's public procurement framework, currently set out in the Public Finances (Management) Act 1995 (PFMA), will soon be replaced by a substantially different framework to be set out in a new National Procurement Act (NPA). This will be the most significant reform to the management of public procurement in PNG for over 20 years.

The NPA abolishes the Central Supply and Tenders Board and creates a new National Procurement Commission. The new law also provides revised procurement thresholds and gives local companies exclusive rights to bid for State contracts valued at under K$10 million. All public and statutory bodies, except those certified as having procurement capacity, will have all their procurement capability withdrawn and all procurement will be undertaken by the new National Procurement Commission.

The NPA was passed by the National Parliament on 12 September 2018 and is now awaiting certification by the Speaker and public notice in the National Gazette by the Head of State before coming into operation.

Key features

Key features of the NPA include:

New procurement process and thresholds

Contracts with public or statutory bodies (e.g. SOEs) having a value greater than K$500,000 to be undertaken by the National Procurement Commission (NPC) which replaces the Central Supply and Tenders Board. The NPC shall appoint a Technical and Financial Evaluation Committee (TFEC) for each procurement that it undertakes. The TFEC shall make a recommendation to the NPC to approve and award a contract. However, the NPC is not bound by the recommendation of the TFEC. Contracts below K$500,000 can be procured by the relevant public or statutory body provided that the contract has been procured through a system approved by the NPC and the procuring public or statutory body has been certified by an Authority to Pre-commit Expenditure Committee (APC Committee), to be established under an amendment to the PFMA, as having the capacity to undertake procurement. Any contract greater than K$500,000 not procured through the NPC, or for contracts up to K$500,000 not procured through a procurement system approved by the NPC and through a body certified by the APC Committee, is void and no claim for damages, compensation or other relief can be made. Contracts with a value greater than K$10 million are required to be approved and awarded by the National Executive Council (NEC) (i.e. the Cabinet), upon recommendation of the NPC, and to be signed by the...