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New Purchasing Code Revamps Way Central Government Buys From Suppliers

Government is island’s major consumer, spending more than $8 billion a year; benefits of code are enumerated by Bids Reconsideration Board chairwoman


August 24, 2000
Copyright © 2000 CARIBBEAN BUSINESS. All Rights Reserved.

It used to be that if you participated in bids at five different Puerto Rico government agencies, you prepared five costly sets of original documents.

It used to be that a supplier could sell the same item to different public agencies for a different price.

That was then and this is now.

The new Uniform Law for Executive Branch Purchases, recently signed by Gov. Pedro Rossello, regulates all central government acquisitions. While most reports have focused on the members of the Bids Reconsideration Board created by the law, the measure implements sweeping changes that radically alter the way suppliers and government do business.

This is nothing to scoff at considering that, in materials and equipment alone, Puerto Rico government purchases in 1999 totaled $8.05 billion. Those purchases were made by about 10,000 purchasing agents who work for municipalities, public corporations, and the central government, with the vast majority–70%–working for the latter, according to public officials.

"[This measure] sows the seed to create a uniform government commercial code and this is very important because the government is the largest consumer in Puerto Rico," said Maria Mujica, who chairs the five-member Bids Reconsideration Board, in a recent exclusive interview with CARIBBEAN BUSINESS.

The need for a uniform purchasing law became evident after a 1995 study commissioned by Rossello revealed rampant disparities in the way central government agencies did their shopping. The study concluded that the General Services Administration (GSA) had the best purchasing law and that became the foundation on which they built the new legislation, Mujica said.

"This is not a measure that sprouted from one day to the next," she said "This is a measure that resulted from years of study."

The study also showed that modern factors that impact government purchases, such as environmental regulations and information technology, had to be taken into account in the new law.

"Many companies that operate and have representatives here do not treat those in Puerto Rico, including the government, in the same way they treat others in the U.S. when it comes to purchasing through the Internet or through catalogues," Mujica said. "They treat Puerto Rico as an international sale and impose greater requirements and costs."

With this in mind, Sen. Kenneth McClintock (NPP-at large), who has spearheaded the fight in Puerto Rico to force stateside companies to treat the island commercially on an equal footing with the States, included an amendment in the law.

"As of July 1, 2001, companies that discriminate against Puerto Rico [in the way they do business] will be eliminated as suppliers from the government roster," Mujica said, adding that this applies to many computer companies.

The new law not only tackles differences in commerce but also addresses the issue of training for government purchasers. At present, up to 80% of government purchasers lack university education, and while private companies train their staff in marketing techniques and international sales trends, no such orientation was given to those who buy for the government, Mujica said.

"This law imposes on the GSA the obligation to train or provide seminars at least twice a year for purchasers," she said. The GSA already has paired up with Sacred Heart University to offer a bachelor’s degree in commerce with a concentration in government purchases, she added.

The training by the GSA would provide credits toward the position of government purchasing manager, raising purchasers to a professional level within the government’s employment framework. "In many agencies, purchasers are office clerks and secretaries," Mujica said.

Along with training in commercial strategies, the law also requires the Government Ethics Office (GEO) to provide ethical training to purchasers. It also goes beyond current law in requiring all purchasing agents in the executive branch to report to the GEO, officials said.

"All government personnel who in any way handle purchases–purchasers, members of bid boards or purchasing directors–will have to file financial statements with the GEO," Mujica noted.

Another improvement included in the law is the creation of a single mechanized register of potential bidders that will be kept at the GSA and which will provide information on suppliers, including how many contracts they have and how many they have complied with.

"If I see that one supplier has 15 contracts, maybe he’s giving me the best offer on a bid but he’s not necessarily going to be able to comply because he can’t handle one more contract," Mujica said. "Or, if I see that of the 15 contracts he hasn’t complied with seven, that gives me one more objective fact on which to base my bid award."

The law also streamlines the process through which suppliers can bid for government purchase contracts. Before the new law, suppliers had to file a document at each agency in which they planned to bid for a contract and take copies of the same required certifications–such as the ones from the Treasury Department and Child Support Administration–to each as well.

"Now you will be able to go to a single place and other agencies can access that information through the GSA registry of suppliers," Mujica said, adding that the law also allows suppliers who don’t want to pick up the required documents to pay $3 and sign an authorization so the GSA compiles the papers itself.

"That makes things tremendously easy for suppliers because we were asking them for information that the government already has," she said. "Why should we ask them to take the trouble and find the information, if we can find it ourselves? Also, by making it cheaper for suppliers, they will be able to give the government better prices."

A glossary of purchasing terms used in Puerto Rico and a digest of the laws, regulations, and rules related to government commerce will also result from this legislation. The law places the responsibility for the digest on the lap of the Justice Department.

"That’s like talking about a Justinian Code [Justinian I ruled the Byzantine Empire in the 6th century and completed the codification of Roman law]," Mujica said. "For the first time, all that the government has regulated in commerce, that’s currently in effect, will be compiled."

This Caribbean Business article appears courtesy of Casiano Communications.
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