Kudos to Govt for blacklisting errant firms

13 Nov, 2022 - 00:11 0 Views
Kudos to Govt for blacklisting errant firms

Among the companies blacklisted by the Government for providing substandard goods or services, or overcharging at extreme levels, are now 19 companies that can kiss goodbye to any more Government contracts after dealing in the foreign currency black market after being paid.

The Government is easily the largest single buyer of goods and services in Zimbabwe. This is why there is that thick annual directory of companies that have gone to the trouble of paying a moderate fee and going through the modest initial screening by the Procurement Regulatory Authority of Zimbabwe (PRAZ).

This latest move is just what is now becoming routine, that the Government expects those it contracts to be law-abiding entities following a reasonable code of ethics. Ideally, it wants all the companies that put in bids for floated tenders to be of this nature, so the final selection is between good and honest suppliers offering value for money.

The latest Government blacklisting is the result of a firm Government policy. As far as possible, the Government wants to be open to all businesses that wish to be suppliers. This is one reason why the initial PRAZ screening before you are allowed to submit tenders is easy on experience, but heavy on statutory obligations.

Companies that want to be on the PRAZ list, and so be allowed to submit tenders, only have to be registered businesses, have a tax clearance certificate from Zimra stating they are up-to-date on tax payments, and have a physical address, rather than be operated from a briefcase. All this means that both established companies and new companies can at least get on that list of possible suppliers.

It would be easy to limit contracts to established businesses with a track record, but that would hardly be fair and would not necessarily give the Government the best deals. Some older businesses become complacent, or are taken over by another company that does not care, or have a bad succession plan so that when the founder, the person who actually cared, dies or retires, the successor is not nearly as good.

New businesses arise. Sometimes highly skilled people leave an established concern to go out on their own; sometimes a group of smart youngsters acquire the required skills and set up a business.

They must be given at least the opportunity to compete. Usually, a new company might only be considered for the smaller contracts, so if they do not work out the damage is insignificant.

The procuring ministries, departments and agencies are expected to go through the nitty gritty of contracts. While PRAZ has removed the out-and-out chancers, they do not select winning tenders.

The departments have to draw up detailed specifications, the tender documents, for each procurement or continual flow of whatever is being ordered.

Those departments are then supposed to check out that what is offered meets the specifications and then that the quoted price is offering value for money, and that second criterion needs to be stressed with the adjudicators at least knowing, in detail, general market prices.

They then have to go further, and make sure what is delivered either as goods or as a service or as a complex contract is what was ordered. This should be routine. And now, led by the Ministry of Finance and Economic Development, the unit that makes the payments, it is being enforced.

We have been told that contractors who produce sub-standard work are being crossed off lists of potential suppliers. The Ministry of Roads and Infrastructure Development made this quite clear when it said that, while generally those it was hiring to build or repair roads were doing a good job, some were just not competent, or even worse were putting in sub-standard work to maximise profit. Neither group will be working for the Government again.

We had that recent drive of value for money. The Finance Ministry, worried about the sort of prices it was paying, and for that matter the sort of prices that the procuring unit was ready to pay, clamped down. Some were very critical, but it quickly became apparent that 70 percent of suppliers easily passed the test and were promptly paid, showing the price cheats were a minority messing things up for the scrupulous and needed to be disciplined.

The latest move against the 19 playing the black market was not unexpected. The Finance Ministry in particular, and the authorities in general, have for some months been making it clear they were aware that some Government suppliers were rushing off to the black market when paid. They sympathised with those wanting to lock in value and made alterations to the payment system. They sold gold coins as a legal way of locking in value. And the rapid fall in monthly inflation has eased the pressure anyway.

But while the authorities were dealing with the legitimate problems of those who, at least, would prefer to be honest, they made it clear that they would no longer turn a blind eye to black market dealings and that everyone needed to shape up. Some ignored the warning, or assumed that the Government was not serious, or reckoned their financial manager could hide the dealings.

They were wrong, and the Financial Intelligence Unit of the Reserve Bank of Zimbabwe tracked down their dealings, some of which were a lot more indirect that just meeting a dealer, and worked out what was being done.

So they join the others who the Government sees as undesirable contractors and will get no more Government business. Just that. But if you want dealings, then you need to follow Government rules.

That now comes back to the Government requirements and Government rules. The present a system of prequalification by PRAZ, setting and adjudicating tenders by the expert units who know exactly what they need, and the final value for money requirements of the Finance Ministry seem to work when everyone in the chain does their job properly.

But a lot of the system was set up when corruption in Government was a serious problem or at least a potential problem, and corruption in the supplier private sector was ignored. But while Government corruption has been hammered, private sector corruption and law breaking has not, and so the ad hoc measures by the Finance Ministry now need to be brought into the standard procurement rulebook, and the dishonest and corrupt locked out automatically.

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