New homework for tenderprenuers

30 Oct, 2016 - 00:10 0 Views
New homework for tenderprenuers

The Sunday Mail

Darlington Musarurwa Business Editor —
DID you know that it is perfectly legal to award a public tender to an ex-convict? Well, Section 34(1) of the Procurement Act – which spells out the preconditions for suppliers to qualify for the tendering process – makes it discretionary for a public entity that is acquiring goods or services to qualify or disqualify suppliers.

But money can indeed buy discretion; in other words, it can be used to “help” those in positions of authority to make favourable decisions. This is one of the reasons why this arguably scandalous piece of legislation has become the “bible”, guide and hymn book for sleek tenderpreneurs who have been riding on the wave of Government’s demand for goods and services to make themselves obscenely rich.

Such awkward and inefficient procurement systems have almost always resulted in situations where ordinary taxpayers have been funding the lifestyles of unscrupulous businessmen, while getting nothing in return. There are explicit examples highlighting the excesses of such a system.

Zimbabwe now owes more than US$9 million to- Hydro Cahora Bassa of Mozambique and US$18 million to Eskom of South Africa for power supplies. Yet the grand national solar power projects that were supposed to add 300MW to the grid could have enabled the Zimbabwe Electricity Supply Authority to meet local demand. Hypothetically, Zesa might have been importing only 50MW by now.

The tenders to construct the three separate solar power plants were floated in 2013. Although three companies – ZTE Corporation; Chint Enterprises, which had partnered with Intratrek; and Green Solar – were shortlisted for the project, there is still no movement on the ground.

Each project, which was expected to generate 100MW, was valued at US$183 million. Ironically, Intratrek and ZTE Corporation, who were both losing bidders, were given a share of the cake as the scope of the project expanded. As it stands, the project seems to be on the highway to nowhere.

Interestingly, in the same period, Pakistan has managed to float its tender, shortlisted a winning bidder – China’s Tebian Electric Apparatus Stock Company – and add 100MW to its grid by May last year. The installation of the plant was done in record time, from November 2014 to January 2015.

On the other hand, Zimbabwe is paying for its inefficient tendering system. Though Government’s good intentions to expand the scope of the solar project by adding two additional plants cannot be faulted, roping in losing bidders cannot be considered a prudent decision.

By failing to meet the minimum requirements of the tendering system, the losing bidders proved they could not have possibly carried out the projects efficiently. Their ability to implement the projects was also brought to question. The inordinate delay in making the projects take off has resulted in project costs being inflated from US$183 million to US$240 million for each plant.

It gets more worrying when the integrity of some of the directors of companies that won the tenders are put to the test. Mr Wicknell Chivayo, the MD of Intratrek Zimbabwe, served a three-year jail sentence for a 2005 conviction on money laundering charges.

In such circumstances, where project costs are inflated and companies that do not have a solid track record of implementing the same projects are handed crucial contracts, it is difficult to see how ordinary taxpayers get value for money. It is a microcosm of what has been happening in parastatals, state entities, Government departments and local authorities. This has all been aided and abetted by an unreliable public Procurement Act.

The new system
However, the new Procurement Act, which is also a key requirement of Section 315 of the new Constitution, is designed to ensure that contracts are awarded to companies that have the ability to see them through at the lowest possible cost to Government. It is a culmination of lessons learnt from the past, the expertise input of procurement experts and extensive consultations.

The envisaged Act will transform the State Procurement Board, whose integrity had been tainted by embarrassing scandals, from a procurement agent into a regulator – the Procurement Regulatory Authority of Zimbabwe. In essence, its responsibilities will include advising Government, setting standards and guidelines, and training and professional development.

It will also refer contraventions of the law to enforcement agencies such as the police. In addition, it will also investigate procuring entities and suppliers, and gather information and statistics on public procurement. Crucially, it will not only be the contracting of goods, services and public works that will be subjected to scrutiny, but other services such as consultancy, joint venture projects and disposals.

Recently, Energy and Power Development Minister Dr Samuel Udenge was caught up in the eye of a storm for giving a directive to Zesa to outsource public relations services from Fruitful Communications, an unknown local company. It was the same for the Ministry of Indigenisation.

Procurement Management Units will be set up in various public departments, parastatals and local authorities. However, the accounting officers – such as CEOs of parastatals – will ultimately be responsible for decision-making. Clause 16 of the Procurement Bill enables the accounting officers from complying to illegal decisions that are made by a superior authority.

And there have been many cases where accounting officers escape culpability for procurement processes gone wrong by shifting the blame to powerful office bearers such as ministers.  Where there is interference, the accounting officers can now lodge an objection with the Chief Secretary to the President and Cabinet.

In cases where disputes arise, before they are referred to the Administrative Court – where many cases remain trapped by the slow-moving wheels of bureaucracy – there are now internal review mechanisms to try and administer justice. A special committee that is made up of the three AGs (Attorney-General, Auditor-General and Accountant-General) will be set up to review the awards.

It will also have the power to refer or order the cancellation of procurement proceedings. Challenges by bidders can made at any stage of the tendering process. There has been a trend where challenges were made after the tender was already made, making them only academic challenges.

In addition, in cases where there are allegations of impropriety, the regulatory authority will have the power to appoint an investigator, who will have the same power as a commissioner as spelt out in the Commissioner of Inquiry Act. The new law seems to be well rounded to such an extent that even procurement of sundry items in Government will be harmonised.

In other words, all Government departments will be buying goods at the same price, unless in cases where procuring entities can prove that they can buy the same quality at a relatively cheaper price. But it is the market which will have the opportunity to review and judge the draft bill, which was expected to be gazetted on Friday.

No doubt, interested parties will pore over the document to try and find if there aren’t any loopholes that can be exploited again.
Overall, the reforms – driven by the Office of the President and Cabinet with support from the World Bank – will set a sustainable institutional framework that could save Government of continued leakages.

The law is expected to be passed before the end of 2016.

Share This:

Survey


We value your opinion! Take a moment to complete our survey

This will close in 20 seconds