Nov 26, 2020
The Public Procurement Law in Lebanon: First Serious Step Towards Combating Corruption

Causes of Corruption
 
Since independence, Lebanon has suffered from an integral crisis in the style and approach of running the state. Although several institutions and legislations are there to ensure effective and transparent governance, successive Lebanese administrations have failed to develop them and enable them to keep up with the times. For decades, Lebanese authorities functioned through circumventing these institutions and legislations. They were merely used for political, sectarian, and personal interests by exploiting legal loopholes and controlling institutions through appointments based on absolute subordination to the ruling authority.
 
The above situation contributed to the spread of corruption, bringing the country - burdened with a frightening public debt and looted public finances - to the brink of collapse. The persistent and systematic plunder of public funds relied heavily on public deals in all fields and services.
 
 
Public Procurement in Lebanon
 
The state is the biggest buyer in the market all around the world. It meets its labor, supply, and services needs through contracts with suppliers, making it its largest expenditure after salaries. In Lebanon, this constitutes 13% of the state budget, without counting the deals conducted by public institutions and municipalities. Consequently, procurement becomes of utmost importance in Lebanon and has a direct impact on the state's finances and economy.
 
The governing system lacks unity and falls under separate - and largely outdated - laws. The Public Accountability Law issued in 1963 and the Tender Law promulgated in 1959 and amended in 1962 are old and lost their objective validity. Consequently, the quality of the public procurement system in Lebanon declined significantly, where the indicator for efficiency of the public procurement cycle reached 48/100 with international bodies.
 
 
Importance of Reform
 
A fundamental reform of the procurement system thus becomes necessary. It entails a modern public procurement law and its tools, such as clear terms of reference and procedures. The law is of the main pillars in the fight against semi-legalized corruption and waste, armed with loopholes in the current texts and the political cover of consensual contracts. The law's approval is a key condition in all rescue plans presented to the Lebanese state, from the CEDRE conference to the IMF.
 
The Public Procurement Bill currently under discussion in the relevant parliamentary committees, presents a modern approach. It addresses the disarray in tenders and procurement at its core, in addition to various legislative gaps in the public procurement system in Lebanon. Estimates by the Basil Fuleihan Financial and Economic Institute show that its approval could achieve annual savings of $500 million, increasing the state's investment spending. It will also open the way for SMEs to actively participate in government contracts, by addressing the prevailing problems related to delay in payment in current procurement by 75% annually. It also provides access to information regarding deals and their conditions, in the interest of developing the Lebanese economy.
 
 
Key Reforms and Impact
 
The bill comprehensively covers all deals by the Lebanese state, its institutions, and facilities.  It provides the capacity for the Public Procurement Department to intervene to stop any violations. For the first time, it ensures accountability in tenders based on the right to access information that necessitates absolute transparency, preventing corruption to a large extent.
 
In its introduction, the proposed law identifies the following basic principles:
●      Apply competitive procedures as a general rule.
●      Provide equal opportunities without discrimination to participate in public procurement.
●      Provide fair, equal, transparent, and responsible treatment to all exhibitors and contractors.
●      Ensure the openness, integrity, and professionalism of the procedures through oversight and accountability.
●      Encourage local economic development and national production on the basis of the best value from spending public money, without compromising efficiency.
 
Procurement processes are subject to the rules of good governance and take into account sustainable development requirements without any exception.
 
It also includes the creation of an independent Public Procurement Department to organize and supervise the procurement system and a Complaints Committee that hears reviews and objections. The law proposal also ensures the ability of the Public Procurement Department to directly intervene to stop violations. It provides the capacity for the Public Procurement Department to intervene to stop any violations. For the first time, it ensures accountability in tenders based on the right to access information that necessitates absolute transparency, preventing corruption to a large extent.

On the other hand, the law proposal deals with the curse of terms of reference that have always been prepared for the benefit of certain individuals or companies. It defines their contents, such as the accurate description of the need or the required commodity, the terms of contracts, the currency used, and all forms of grace periods.
 
 
The Bill's Downside
 
The discussion of the Public Procurement Law by Parliamentary Committees initiated a public debate between supporters and opponents. All experts and stakeholders agree on the need for such a law, but some believe the current proposal suffers from a fundamental problem. It transfers the current tendering administration to the procurement administration stipulated and reduces its role in the interest of ministers who are not subject to administrative accountability. It also takes away from the role of the supervisory authority, restricting it to monitoring and issuing reports. The proposal also fails to give the head of the Public Procurement Department the needed financial and administrative powers. It kept them to be determined by a decree issued by the Council of Ministers, unlike the rest of the heads of other oversight bodies.

 
The Bill's Future
 
According to experts, the Law, if approved, will be an advanced step in the direction of controlling waste, combating corruption, and developing the procurement and contracting system in Lebanon. However, they unanimously agree that it will be insufficient unless accompanied by a package of measures and reforms that begin with identifying all parties authorized to public procurement and setting the limits of their powers. They should also include developing the administration of tenders to allow access to electronic procurement that ensures integrity and transparency and raises the level of confidence in the state among the public and investors alike.
 
In conclusion, the approval of the Public Procurement Law is one of the main conditions for the international community and donors to agree to help Lebanon overcome its economic and financial ordeal, in addition to the law on the independence of the judiciary and electricity sector reform. The question remains about the extent to which the political class in Lebanon is serious about undertaking the required reforms to avoid the dissolution of the state in light of the existing political balances and its close intertwining with the financial interests of individuals and groups that make up this class. Is there a possibility of it relinquishing the gains it made through suspicious deals voluntarily, knowing that they remain a key reason for its existence as a force that controls the state of affairs in Lebanon.
 
Mahmoud El Natour