Comments by the Republic of Honduras on the Draft Preliminary Report

COMMENTS BY THE REPUBLIC OF HONDURAS ON THE DRAFT PRELIMINARY REPORT

The Republic of Honduras, in the person of its lead expert, would like to thank the Technical Secretariat (Office of Legal Cooperation, Department of International Legal Affairs, General Secretariat of the OAS) for the draft preliminary report dealing with the implementation of the provisions of the Inter-American Convention against Corruption selected for analysis in the second round and with the follow-up given to the recommendations extended to the country during the first round. We also thank the Experts from the United States and from Argentina for their comments and questions, which have served to enrich the report.

We will address solely those paragraphs regarding which we have suggestions or comments. The suggested changes appear in red ink and underlined.

Part one refers to the content of the report and the suggestions of Honduras, while the second and third parts deal with the comments and observations made by the United States of America and Argentina.

SUGGESTIONS AND COMMENTS ON THE CONTENTS OF THE REPORT

1.1.GOVERNMENT HIRING SYSTEMS

Comment: The suggestion of formulating a recommendation is not, in Honduras’s view, appropriate, since the goal is to recognize and protect the administrative career, empowering, on an equal footing, both those employees already in that career and those re-entering it. The final paragraph of Article 256 of the Constitution of the Republic stipulates that the State is to protect its servants within the administrative career. We agree with the comments of United States of America and the comment made by the Republic of Argentina regarding modification. (Page 5, paragraph 4.)

As regards the concern that the Post Description Manual has not been made public and is not easily accessible for members of the public who wish to consult it, we note that we have no problems with its partial or complete publication, but we believe it would be better to publish the important parts and those dealing with personnel selection.

Comment: Under Article 10, paragraphs (a) and (b) of the Law, the Council is empowered to annul the results; nevertheless, we concur that this power is not expressly stated, and so we believe the recommendation should be directed at making the corresponding amendment.

Comment: In speaking about the Labor Statute for Legislative Branch Employees, the Secretariat states that this statute “is inadequate for pursuit of the Convention’s purposes.” While this may be true, it must be borne in mind that the statute in question was issued in 1993 and, prior to that year, there were no legal provisions to protect public servants employed by the legislature: they were liable for dismissal without receiving benefit payments or indemnifications. It establishes a legal framework and, even with the modifications that are necessary, we believe progress has been made. The comment made could lead to a change in the language used to address that point.

Comment: We repeat the comment made above, in which we state that the goal is to empower the judicial career. It is also important to note that the judicial branch, through the Selection Tribunal, conducts the selection process for judicial positions by means of competitive processes (oposiciones), which entail several phases, including merit-based competitions, the results of which (and others) are published so that the candidates can remain informed. It should be noted that judicial experience is not a determining factor.

Comment: The Public Prosecution Service (MP) does not appear on the list of government agencies exempt from application of the Civil Service Law, since it was created after that legislation came into effect. The Public Prosecution Service is considered a constitutional organ, not attached to any specific branch of government and enjoying financial and administrative autonomy; consequently, it can establish its own staff rules and the provisions of the Civil Service Law are thus not applicable to it.

Comment: We do not agree with the suggested Recommendation, since it goes against the administrative career of Tribunal employees and officers who know they can aspire to vacancies and that an external competition will only be organized if there are no internal candidates meeting the requirements set for the position. The objective of the Regime is to protect and encourage the administrative career, together with its functional efficiency and stability (Article 2, Nos. 1, 2, 3, and 5 of the Regime).

Comment: While it is true that there is no express provision regarding challenges in the selection process, all resolutions adopted by the plenary of the Tribunal or by its authorities may be challenged and amended within the Tribunal, or applications may be filed against them before the administrative courts, as provided for in the Law on Administrative Procedure.

Comment: Although we recognize there are no training programs for those responsible for running the selection and staffing processes, there are training and induction programs for individuals who have recently entered public service. For example: a) in the Public Prosecution Service this training is managed by Directorate of Human Resources through the Department of Training, and by the Department of Curricular Development; b) in the Superior Court of Accounts all personnel, particularly those performing auditing functions, must pass through, prior to entry, an induction process run by the Directorate of Human Resources, through the Department of Training and the corresponding auditing directorates, together with the training given by the Directorate of Probity and Ethics.

• We do not agree with the claim in the second paragraph that “the Civil Service Law and its Regulations are not being enforced” because it is not true: enforcement is underway, albeit on a partial basis, and consequently we suggest the following change: “While the Committee welcomes the development of the Integrated System for Human Resource Management, it is concerned with the currently partial application of the Civil Service Law and its Regulations.”
• We also believe that the passage of time is not a determining factor in the enforcement or non-enforcement of a law, and so we hold the paragraph in question could be drafted as follows:

1.2.GOVERNMENT SYSTEMS FOR THE PROCUREMENT OF GOODS AND SERVICES

Comment: We think it is important to point out that direct contracting is highly restricted, to the cases indicated in Articles 9 and 63 of the State Contracting Law (LCE). Article 9 establishes, as a prior requirement, that a state of emergency be declared, either by a decree of the President of the Republic or by the vote of two-thirds of the corresponding municipal corporation, for contracting without observing the bidding requirements, in cases of natural disasters, epidemics, or other situations amounting to public emergencies. In such cases, it is difficult to abide by rigid procedures.

The other cases covered by Article 63, paragraphs 2 to 7, of the Law also require the authorization of the President of the Republic, if the central government is involved, or of the corresponding directorate if the decentralized administration is involved, explaining in detail the reasons for the direct contracting; in any event, the best price must be negotiated.

The HONDUCOMPRAS webpage clearly defines the procedural diagram for direct contracting, including the following: in the applicable cases (LCE Articles 9 and 63, and LCE Regulations Articles 169 and 170), the body in question must invariably specify the purpose of the contract, the emergency, need, or public goal, and a budgetary estimate (LCE Article 23, and RLCE Article 37) and accounting code for goods (RLCE Article 80).

In direct contracting processes, the technical specifications and conditions for the contract must be drawn up; possible suppliers or contractors, as applicable, must be identified; and, in accordance with LCE Article 142 and RLCE Article 105, clarifications and clarifying responses must be provided. Proceed to negotiate the most favorable prices and conditions (RLCE Article 171), draw up the Report, formalize the contract, and record it with the Finance Secretariat.

Comment: Article 63 of the LCE also states that the decree issued by the President of the Republic must express the reasons or situations that require such operations to be kept secret, and so we support neither the comment nor the need for a Recommendation.

Comment: The LCE enshrines the principles of disclosure and transparency, as does Article 10 of RLCE; consequently the information relating to administrative contracting activities, access to which is guaranteed to interested parties under the aforesaid articles of the Law, includes details on the start of contractor selection procedures, the need for prequalification or registration in the Register of Suppliers and Contractors, access to the list of conditions whereunder the procedure is to be conducted, the opportunity to be informed of amounts and other relevant aspects of the offers when the bid envelopes are opened, notification of the resolutions issued as a part of those procedures, together with any other information of a similar related nature. This is to be understood without prejudice to the special characteristics of the direct contracting procedure. In observance of the ban set out in Article 6, second paragraph, of the Law, regarding information which by its nature is considered reserved, the contracting bodies are required to safeguard all the bids submitted and not to reveal them until the date and time specified for the opening of the bid envelopes; they must also refrain from providing, to bidders or any other person without an official interest, any verbal or written information about the analysis and evaluation of the bids and about the award recommendation drawn up by the Evaluation Commission described in Article 33 of the Law until notice of the awarding of the contract is given. In light of this, we do not agree with the need for a Recommendation in this case.

Comment: We remain unclear about this comment and the possible Recommendation. The LCE clearly states, in Article 59, that in private requests for tenders, invitations to bid will be issued to at least three potential bidders who appear in the register of suppliers and contractors.

Comment: The quoted article empowers the administration to resolve contracts on grounds of public interest and to amend them by reducing or increasing the payment terms specified. If there is an increase, in accordance with LCE Article 123, it must be duly justifiedand shall be admissible when circumstances or new needs unforeseen at the time of contracting arise and that is the only way to satisfy the public interest sought. The total value of the modifications may not exceed 25% of the initial contract amount or address a purpose or goal other than the one originally contracted for; increases in excess of 25% require the approval of Congress. Consequently, we do not agree with the comment from WB/IDB-CPAR that holds that “Agreements to modify the price or the scope of contracts are often reached in private, without much consideration given to the original provisions of the contract… as such, amendments are the rule and not the exception as a result of this informal bargaining process”; although it is true that there is a high rate of modifications in the country, the alleged discretion does not exist.

Comment: We are not entirely in agreement with this comment on account of the following: RLCE Article 139 states that “Auctions for public works or supplies will be awarded within the period of validity of the bids, by means of a grounded resolution issued by the competent body” – in other words, the award does have to be justified. In addition, Article 142 of the same Regulations provides that: “Notification of the resolution awarding the contract issued by the body responsible for the bidding process shall be given to the bidders, and a record thereof shall be left in the dossier. It could be that such notifications are given prior to the adjudication, and so we will accept whatever the Committee orders. There is no legal restriction disallowing disclosure of those documents to any interested party or to the general public.”

Comment: We think it is unlikely that a State Contracting Law would regulate the existence of qualified citizen overseers or supervisors. LCE Article 30 establishes a Consultative Committee comprising representatives of the State and qualified members of civil society such as: the Honduran Private Enterprise Council, the Honduran Construction Chamber, the College of Civil Engineers of Honduras, and the Honduran Chamber of Consulting Companies. If we link that article with Article 54(4) of the Organic Law of the Superior Court of Accounts, which stipulates that the Court has the power to “to verify, on an ex officio basis or at the request of any of the members of the Consultative Committee of the Contracts and Acquisitions Office, described in Article 30 of the Law on State Contracting, that the selection and contracting procedures carried out comply with the principles of legality, efficiency, disclosure, transparency, equality, and free competition enshrined in Articles 5, 6, and 7 of that Law and, additionally, with the provisions of Articles 69 and 70 of said Law, which indicate that the social control mechanism, for the purposes of the Law, is the process of citizen participation, intended to assist the Court with the functions assigned to it; and to assist the legal, correct, ethical, honest, efficient, and effective administration of the State’s resources and property; in addition, for due compliance with obligations and responsibilities of the passive subjects and private citizens in their patrimonial relations with the State, with the effect of allowing the citizenry to present complaints alleging irregularities in the execution of contracts, we must conclude that there are legal mechanisms in place whereby citizens can participate in the supervision of public works processes. In consideration whereof, we do not agree with either the comment or the Recommendation.

Comment: All public sector offices, which manage the country’s important contracting sector, have internal auditing services whose functions include that of overseeing and monitoring the use of funds derived from the public works, supply, and consultancy contracts entered into. In addition, all contracts – and, most particularly, those of a certain size – are required by law to have independent supervision selected by means of public competitive procedure. Finally, the powers afforded to the Court by Article 54 of its Organic Law should not be overlooked, paragraph 5 of which empowers it to: “Oversee, on a concurrent basis, when it deems necessary, the execution and supervision of public works, supplies of goods and services, and consultancies.”

Comment: The Superior Court of Accounts, through its Directorate of Citizen Participation, has already heard and resolved reports of complaints and irregularities in the procurement system for goods and services, and so we do not believe that any Recommendation on this point is necessary.

• The fiduciary fence was not established by the country but rather by the sources of external resources (including the IDB, the World Bank, the Central American Bank for Economic Integration (BCIE), and the European Union (EU)), which require their own regulations to be applied in procurement processes, to the detriment of domestic regulations; the elimination of the fiduciary fence is in the hands of those international agencies and not in those of the country.
• It is claimed that “Based on the foregoing, the Committee is concerned that in spite of the relatively recent enactment of a modern Law on State Contracting and its Regulation, these legal texts have only been partially implemented.” This lack of implementation is essentially due to the factors identified above.
• Using resources from those same international agencies (particularly the IDB), Honduras has invested billions of dollars in strengthening and improving its domestic procurement system and so the recommendation whereby “international donors and lenders will be willing to allow their funds to be disbursed and managed under that system” should be directed at the international lenders and cooperation agencies, since the country itself can do very little in that regard.
• Indeed, budgetary limitations at the Superior Court of Accounts affect its optimal oversight functioning in terms of its coverage but not of its being “fully operational.”
• We fully agree that the development of a sound national procurement system requires fully operational and functional external and internal control systems; the Court, on account of budgetary considerations, has coverage problems, but where it carries out control activities it does so fully.
• It is technically incorrect to speak of an “internal control unit,” since this is a system that operates throughout the organization and functions under the responsibility of the institution’s top authority; as a part of that system is the internal auditing unit which, in Honduras’s case, exists and operates within the three branches of government and in the different agencies of the public sector.
• To ensure coordination and complementarity between internal and external oversight and full enforcement of the international control provisions, the Tribunal is currently working on implementing the National System for the Control of Public Resources.
• It is inappropriate to suggest that “each organ should have an internal control unit,” since what the law requires is the existence of an internal auditing unit, which does exist in the country and must enforce not only the General Internal Auditing Standards issued by the Superior Court of Accounts, but also the General Internal Control Standards issued by that same Court.
• It is inappropriate to say that “the Committee considers that until such time as donor organizations are willing to allow application of the national procurement system to contracts executed with their funds, there is still a role to be played by the Superior Court of Accounts, with respect to its control and oversight functions,” since it must perform that function independently of the decisions reached by the external sources.
• The Superior Court of Accounts is subject to no restrictions in its oversight of projects and programs funded by external sources of resources, and so it is not true that there is a displacement of its supervisory (read: oversight) role, and so no recommendation in that regard is appropriate.
• Indeed, using schemes such as the UNDP in the procurement of goods and services affects the proper development of Honduras’s national procurement system. However, the use of that mechanism has nothing to do with the oversight process, since even the agreements entered into by the UNDP and various agencies of the Government stipulate that the Court can oversee the award process, which was the only element delegated to the UNDP. Currently the Government of Honduras has adopted the political decision to refrain from using that Agreement.

2.PROTECTION SYSTEMS