Public Procurement in CARICOM: Challenges and Strategic Reform

Introduction and Background

Today, the United Nations formally recognizes 15 Caribbean states, including: Antigua and Barbuda, Belize, Dominica, Grenada, Haiti, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, The Bahamas, Barbados, Guyana, Jamaica, Suriname, and Trinidad and Tobago. Guyana is the largest Caribbean state among this group by geographic area (United Nations, 2022). These states, together with other neighboring nations that have a significant economic interest in this region, comprise the Caribbean Community (CARICOM). CARICOM seeks to promote economic cooperation and integration as well as coordinated foreign policy formulation (Chuck-A-Sang et al., 2013). In this regard, the formal vision of the CARICOM organization is to develop a community of member-states that is "integrated, inclusive and resilient; driven by knowledge, excellence, innovation and productivity . . . which is a unified and competitive force in the global arena" (Caribbean Community Secretariat, 2022).

However, achieving this vision has been challenged on a number of fronts since the organization's founding — particularly the diversity of priorities among CARICOM member-states. It has also been challenged by differing views concerning optimal foreign policies that are in their respective best economic and political interests, and by the relative economic and population weight that each member-state brings to the bargaining table. Some indication of the significant diversity of CARICOM's member-states can be discerned from the statistics set forth in Table 1 below.

Table 1. Respective population, geographic area, and GDP of CARICOM member-states

Antigua and Barbuda: Population 0.10 M | Area 440 km² | GDP 1.37 bn US$
Bahamas: Population 0.39 M | Area 14,000 km² | GDP 9.91 bn US$
Barbados: Population 0.29 M | Area 430 km² | GDP 4.42 bn US$
Belize: Population 0.40 M | Area 23,000 km² | GDP 1.64 bn US$
Dominica: Population 0.07 M | Area 750 km² | GDP 504.21 m US$
Grenada: Population 0.11 M | Area 340 km² | GDP 1.04 bn US$
Guyana: Population 0.79 M | Area 215,000 km² | GDP 5.47 bn US$
Haiti: Population 11.40 M | Area 28,000 km² | GDP 14.51 bn US$
Jamaica: Population 2.96 M | Area 11,000 km² | GDP 13.81 bn US$
Montserrat: Population 0.01 M | Area 102 km² | GDP 167.4 m US$
Saint Kitts and Nevis: Population 0.05 M | Area 260 km² | GDP 980.74 m US$
Saint Lucia: Population 0.18 M | Area 620 km² | GDP 1.62 bn US$
Saint Vincent and the Grenadines: Population 0.11 M | Area 390 km² | GDP 807.47 m US$
Suriname: Population 0.59 M | Area 164,000 km² | GDP 2.88 bn US$
Trinidad and Tobago: Population 1.40 M | Area 5,130 km² | GDP 21.59 bn US$

Source: Adapted from tabular data in World Data (2022).

As can be readily discerned from the profound differences in population, geographic area, and GDP set forth in Table 1 above, the more affluent member-states of CARICOM clearly have economic interests that may place weaker member-states at a disadvantage. Furthermore, any efforts to raise the level of contribution in this multinational organization will inevitably come at the expense of its more powerful member-states, meaning that such efforts will most likely not be assigned a high priority as long as such vast differences exist among its constituents.

Even the most populous and affluent member-states of the CARICOM alliance have minuscule geographic areas, populations, and economies compared to their North American counterparts as well as most members of the European Union and South America — which are the primary markets for CARICOM's modest number of exports. In this regard, CARICOM reports that "all member states comprise a total area of 463,000 km² and about 18.85 million people. This is 0.31% of the habitable area around the world and 0.24% of the world population. The value of all exported goods of these 15 countries was 23.63 billion US dollars per year at last count" (World Data, 2022).

Against this backdrop, it is clear that CARICOM is well situated to take advantage of the growing polarization of the global economy, provided its member-states are able to come together to present a unified voice on the geopolitical stage that promotes mutual economic cooperation, development, transparency, and good governance within and across its common market. This regional trade organization, however, also faces a number of other challenges during this period of its evolutionary history, as discussed further below.

Problem Statement and Research Scope

Any organization that purports to represent the respective interests of its members in an equitable fashion will invariably encounter problems due to the diverse range of economic interests involved, as well as the various ways in which global events are viewed and interpreted by different countries — and CARICOM is certainly no exception. Some analysts believe that completing the alliance's intraregional economic integration scheme represents one of the most significant challenges confronting its member-states today (Constantine, 2020). This is an especially important challenge since it directly affects the ability of CARICOM member-states to compete effectively in regional and global marketplaces.

Improving the efficiency of the public sector procurement function likewise represents a corresponding and related challenge, given the geographic distances between CARICOM member-states and their strategic supply chain partners (Hughes et al., 2019). Finally, the public sector among CARICOM member-states is also faced with the need to "devise and implement strategies for 'inserting' the CARICOM economies into a dynamic and competitive global economy in the wake of expiring preferential trade arrangements with its two largest trade partners, the United States and the European Union" (EveryCRSReport, 2022). Taken together, these main problem areas all focus on the continued integration of the CARICOM member-states' economies to improve the procurement function.

The scope of the proposed study extends to all current public sector procurement practices and practitioners in CARICOM member-states. In the context of the proposed study, the term "public sector procurement" is used to refer to "the acquisition of goods, services or works or any combination thereof" (Caribbean Community Secretariat, 2019).

The current CARICOM economic integration framework was originally established by the Treaty of Chaguaramas in July 1973, which was subsequently updated and expanded in the Revised Treaty of Chaguaramas signed into effect in July 2001 (Roberts et al., 2018). The Revised Treaty created a common market for the member-states of the CARICOM alliance, an initiative that represents an important economic development scheme during this critical juncture in world history. According to Elias-Roberts and Hanoman, "as a regional bloc, the Revised Treaty of Chaguaramas provides an opportunity for all of its Member States to benefit from regional integration and to better withstand the effects of globalization" (Elias-Roberts et al., p. 67). To the extent that CARICOM member-states succeed in using this opportunity to improve the efficiency of their respective public sectors and take advantage of the economies of scale that such a collective scheme offers will be the extent to which the alliance fulfills its mission to "create the environment for innovation, the development and application of technology, productivity and global competitiveness, in which the collective strength of the Region is unleashed" (Caribbean Community Secretariat, 2022).

The proposed study will be guided by the following research questions: (1) What are the current procurement structures, policies, and accountability in CARICOM member-states? (2) What are the current trends and challenges facing public procurement and contracting in Caribbean countries? (3) What changes, if any, are needed to make public procurement in Caribbean countries more responsive and efficient in light of current challenges? The overarching aim of the study is to develop timely and informed answers to these questions and to improve understanding of the challenges that public sector procurement practitioners encounter in their day-to-day activities. The study also tests the following hypothesis: Policy and structural changes in public procurement will improve the responsiveness and effectiveness of government contracting in CARICOM member-states.

Literature Review and Existing Research

Despite the longevity of the CARICOM organization, there remains a paucity of relevant research concerning its operations in general and the implications of membership for the public sector procurement function in particular. A report by public sector procurement authorities in Jamaica to the CARICOM House Caribbean Regional Procurement Center in 2016 pointed out that "stronger procurement knowledge is needed to fulfil economic, government and private sector goals in the region, while ensuring more efficient use of scarce public resources in a region still burdened with debt following the recession of a few years ago" (Caribbean Community Secretariat, 2016).

Notwithstanding this lack of relevant research, there are a few studies that provide useful information for the purposes of the proposed study. For example, a study by Preston et al. analyzed a number of aspects of the types of medicines sourced in different CARICOM procurement markets. These aspects included: (1) manufacturer headquarters location, (2) regulatory history, (3) type (innovator versus generic), (4) the proportion of World Health Organization (WHO) essential medicines, and (5) the most expensive medicines procured (Preston et al., 2021).

The analysis by Preston and colleagues used procurement data publicly available from four public sector procurement lists acquired from selected CARICOM procurement agencies. Because these data were reported in widely varying formats with differing types of content, the researchers used the most appropriate analytical method for each dataset. The findings included the fact that a majority — between 63% and 67% — of the procured products were sourced from North American and European manufacturers, with a comparatively small percentage originating from CARICOM member-states themselves.

In addition, Preston et al. found that between one-quarter and one-half of the procured medicines were listed on the WHO Essential Medicines List, while the percentage of medicines procured from generic companies ranged from 60% to 87%. A further significant finding was the existence of substantial price variations among the most expensive medicines procured from North American and European markets (Preston et al., 2021). These findings underscore the vulnerabilities that exist within the public sector procurement function among CARICOM member-states with respect to the quality and price of medicines, and provide a useful benchmark for future research in this area.

Although not peer-reviewed, a recent study by CARICOM's executive staff — which produced the organization's Competition Commission Strategic Plan for the period 2020 to 2022 — provides valuable insights concerning the Commission's strengths, weaknesses, opportunities, and threats (SWOT). The strengths and weaknesses listed below are internal to the CARICOM Commission, while the opportunities and threats are external.

Table 2. SWOT analysis of the CARICOM Competition Commission's current status

Strengths: Hiring of new managerial and professional staff; trained Commissioners and staff; jurisdiction to act as a regional competition authority; good relations with CARICOM and international development partners; dual treaty role in competition and consumer protection.

Weaknesses: Budget deficits that constrain operations and ability to deliver; low degree of public awareness; delays in completing major investigations; outdated information technologies; weak standard operating procedures and internal policies.

Opportunities: Member-states accept the need for competition and consumer laws and policies; availability of ICT platforms for remote service delivery; willingness of international development partners to collaborate; increasing public interest in mergers and acquisitions and consumer protection; desire for stronger competition and consumer cultures.

Threats: Low perception of the Commission, especially in enforcement; delays in receiving member-state contributions; internal and external shocks such as natural and health disasters and economic crises; remote stakeholders making outreach expensive; low priority for funding competition and consumer protection.

Source: Adapted from CARICOM Strategic Plan 2020–2022: A Roadmap for Future Growth and Development.

As can be discerned from this SWOT analysis, many of CARICOM's strengths and opportunities relevant to public sector procurement are countered by corresponding weaknesses and threats. One recurrent theme is the need for additional resources to administer CARICOM's far-flung operations and to enforce its policies and decisions — an issue also cited in other scholarship on CARICOM (Griffin, 2020). Likewise, the internal weakness of obsolete information technologies is countered by the corresponding opportunity presented by available ICT networks capable of improving CARICOM's administrative operations.

Another relevant study, by Ismail et al., examined the major constraints affecting the public sector procurement function in Western nations. Although these researchers identified a range of factors that can positively and negatively affect public sector procurement, one of the more important issues was the potential for corruption to erode progress within regional trade blocs such as CARICOM. According to Ismail and colleagues, "the finding is that no job rotation in high-risk areas is the top factor that influences public procurement issues. Normally, the absence of job rotations will create opportunities for procurement officers to collude with outsiders to commit fraud" (Ismail et al., 2018). In other words, absent effective oversight, public procurement authorities are increasingly well positioned to criminally exploit weaknesses in their respective procurement networks the longer they remain in their roles.

A further significant finding from the Ismail et al. study was that other issues can substantially affect the effectiveness of control activities used in public procurement. Ismail et al. report that "besides job rotations, the other factors that influence procurement issues are related to components of control activities in the Committee of Sponsoring Organizations (COSO) framework" (Ismail et al., 2018). The COSO framework provides a number of internal control mechanisms that can be used to ensure the ethical and transparent operation of public sector procurement services. Accordingly, another major finding by Ismail et al. was that "the role of internal auditors has a negative relationship towards procurement issues in the public sector. However, only procurement procedures have a significant relationship towards procurement issues in the public sector compared to the role of internal auditors" (Ismail et al., 2018). This finding suggests that, like their counterparts elsewhere, the ethicality and transparency of the public sector procurement function in CARICOM member-states is significantly affected by internal auditing monitoring mechanisms.

The review of the literature identified a severe gap in the body of knowledge concerning public sector procurement in the CARICOM trade bloc. It is especially noteworthy that there has been only one peer-reviewed study — to this author's knowledge — concerning the public sector procurement function within CARICOM member-states to date, and this paucity of scholarship underscores the significant gap in current research.