By Ofani Eremae

The National Hosting Authority (NHA) created a special procurement system to speed up the delivery of the 2023 Pacific Games, documents show.

These emerged after outgoing Auditor General David Teika Dennis released on Saturday a special audit his office did on the 2023 Pacific Games.

But the High Court has now ruled that the procurement’s most controversial feature – a “Blanket Waiver” allowing priority contracts to bypass competitive tendering – was unlawful.

Justice Augustine Aulanga found that the NHA, established to oversee the games, had exceeded its statutory powers when it adopted the “Modified Procurement System” under Resolution NHA 03-23-01.

The ruling draws a clear line between modifying procurement procedures and removing the requirement for competitive procurement altogether.

Justice Aulanga ruled NHA could not use its modified system to override safeguards contained in the Public Financial Management Act 2013 (PFMA) and related procurement rules.

For the NHA, its procurement system had been presented as a practical response to the extraordinary demands of hosting a major international sporting event on a fixed deadline.

It argued that the existing government procurement system was simply “too slow”.

The court, however, found that the solution adopted by the NHA went too far.

The dispute now provides a revealing insight into how the authority sought to spend hundreds of millions of dollars in the final months before the Games.

Why NHA Wanted A  New System

The NHA, chaired by Dr Jimmie Rodgers, then secretary to  Prime Minister Manasseh Sogavare, did not dispute that it needed to change its procurement processes.

Its March 2023 proposal said it had been following the Ministry of Finance and Treasury financial requirements and had established an Internal Tendering Board (ITB) and Games Tender Board (GTB) in 2021.

Those mechanisms were intended to provide oversight and compliance.

But with only eight months remaining before the Games, the NHA said the existing system had become “too slow”.

It said the bulk of purchasing had to be completed within about four months.

The nature of procurement had also changed.

The Games were moving away from large construction and site-related requirements towards catering, transport, accommodation, technology, communications and public awareness.

The NHA argued that many of those requirements could not easily fit within traditional tendering processes.

The Games Relay was one example.

The NHA said the programme had a budget of about $5 million, but could involve roughly 1,000 separate purchases.

None of those individual purchases would exceed $100,000.

The Authority argued that requiring every transaction to pass through the ITB (internal tender board or GTB (games tender board) would not make logistical sense.

Transport, it added, presented another challenge.

The Games Organising Committee (GOC) expected to hire up to 300 vehicles from the local market.

The vehicles would have to meet standard requirements for insurance, safety and availability.

The NHA argued that this was essentially a negotiated service rather than a conventional tender.

The Authority also pointed to catering.

It anticipated potentially dozens of contracts involving variable costs, unit rates and different service requirements.

The NHA argued that the GOC needed flexibility to negotiate with qualified suppliers rather than have every individual contract locked into a conventional tender process.

The $225 Million Deadline

The NHA’s strongest argument was the sheer scale and urgency of the task.

It estimated that approximately $225 million worth of work had to be procured or committed within four months.

Without changes to procurement policies, processes and delegated authority, the NHA warned there was a “significant and clear risk” that the Games timetable would not be met.

Its solution was the Modified Procurement System.

The system was intended to provide greater authority to senior officials while retaining what the NHA described as overall accountability and oversight.

But it went much further than simply increasing spending limits.

The ‘Blanket Waiver’

At the centre of the new system was a proposal for a Blanket Waiver covering all priority procurement.

Under the proposal, committees could obtain goods and services without normal competitive tendering.

They could instead use sole-source procurement, three quotations or selective tendering.

The waiver was also designed to allow multiple contracts and purchase orders to be executed under an overarching approval.

The system substantially increased spending powers.

The GOC chief executive could approve commitments up to $500,000.

The GOC chief executive and chair could approve up to $1 million.

The NHA Chair could approve awards between $2.5 million and $8 million.

Awards between $8 million and $10 million could be approved by the NHA Chair and the GTB co-chair.

The GTB would deal with awards above $10 million.

The proposal also raised the threshold for a simple three-quotation process from $100,000 to $250,000.

The NHA Board – made up of Rodgers, then Attorney General John Muria Jnr., Permanent Secretary Finance, City Clerk and others – ultimately approved the changes as the framework under which priority procurement would proceed.

High Court Drew The Line

But Justice Aulanga’s ruling has now fundamentally challenged the legal foundation of that system NHA established.

The judge accepted that procurement rules could, in appropriate circumstances, be modified.

But Justice Aulanga found that completely removing competitive bidding was not a modification.

“It was an unlawful override of the statutory procurement safeguards,” he stated.

“Blanket Waiver breached section 73(2) of the PFMA, which protects competitive procurement,” Justice Aulanga added.

Furthermore, he pointed out that the removal of competitive tendering also bypassed requirements under section 12 of the Pacific Games 2023 Act and rule 9 of the Procurement Instructions concerning the assessment of bids by designated bodies.

He ultimately ruled that public expenditure made under the Blanket Waiver was incurred without lawful authority.

But Justice Aulanga did not strike down every element of the Modified Procurement System.

The ruling distinguished between the blanket removal of competition and other internal changes.

Threshold adjustments and additional approval layers that did not eliminate competitive procurement were left intact.

It was the total bypass of competition through the Blanket Waiver that was declared unlawful.

That distinction is important because the court was not saying the NHA could never have a faster procurement system.

It was saying the NHA could not create one that effectively “dispensed with the law requiring competition”.

NHA Rejected Auditor-General’s Interpretation

The dispute did not begin with the High Court.

It arose from the Auditor-General’s special audit of the Pacific Games expenditure.

The NHA rejected the Auditor-General’s findings, arguing that the audit had assessed Games procurement against the standard Solomon Islands Government Procurement and Contract Administration Manual.

The Authority insisted that the Auditor-General first needed to agree with it on the correct legal framework before finalising its audit.

At the heart of the disagreement was the Pacific Games Act 2017.

The NHA argued that the Act, which incorporated the Pacific Games Council Charter and Host Agreement into Solomon Islands law, created a special legal framework for the Games.

It maintained that the Games delivery bodies – including the NHA and GOC – operated outside the normal government ministry structure.

The NHA also relied on advice from the Attorney-General’s Chambers and the Pacific Games Council to support its position.

In essence, the NHA’s position was that the Pacific Games were not an ordinary government programme and therefore could not simply be subjected to ordinary government procurement processes.

That position was strongly supported by then-Attorney-General John Muria Jnr.

Muria argued that the 2023 Pacific Games required a special, streamlined legal and operational framework.

“It was a one-off international event with a fixed opening date,” Muria stated.

“There was no possibility of extending the deadline because government procurement processes had taken too long.

“The Pacific Games Act 2017 had domesticated the Pacific Games Council Charter and Host Agreement and deliberately created independent bodies to deliver the Games.

“These included the NHA, GOC and Facilities Committee.”

Muria further argued that the Sports Solomons Fund was a Special Fund, established under section 30 of the Pacific Games Act and section 100(2) of the Constitution.

Crucially, Muria relied on section 46 of the Pacific Games Act, which he said empowered the NHA to develop its own streamlined procurement instructions.

On that basis, Muria concluded that the NHA had acted within its legal mandate.

And he described the modified procurement arrangements as “necessary and proportionate” for a fixed-date international event.

He also considered the NHA’s actions to have been taken in good faith and under Board oversight.

Muria did not accept the Auditor-General’s criticisms as evidence of unlawful conduct.

Instead, he characterised them as “opportunities for improvement” and lessons that could be applied to future major projects.

High Court Rejects NHA  And Muria Stand

That legal position has now been rejected by the High Court in its ruling, delivered on Friday.

Justice Aulanga found that the Pacific Games Act did not exempt the “Sports Solomons Fund” from the Public Finance Management Act.

“Nor did it give the NHA the power to create a blanket waiver that eliminated competitive procurement,” the judge added.

Justice Aulanga’s ruling establishes that calling a fund a “Special Fund” does not place public money outside the country’s public financial management laws.

Nor can a statutory authority rely on its special-purpose legislation to remove mandatory financial safeguards unless Parliament has clearly given it that power.

The NHA’s argument was essentially that the “exceptional nature of the Games justified exceptional procurement arrangements”.

But Justice Aulanga disagreed: that urgency does not itself create legal authority.

His ruling gave Auditor General David Dennis the authority to finally release his much-anticipated Audit Report on the Games!