-As?Contracts Review Boards Looks on Toothless

wpid-Ghana-Revenue-Authority.jpegTo win procurement contract in Ghana?s public sector requires following strict bureaucratic regulations, under the Public Procurement Act. This requirement is intended to save the country value for money in spending public funds by State institutions in their procurement budgets, which the World Bank has indicated as accounting for between 50 -70 % of the total annual national budget.

Major reason corruption in procurement has become attractive is the failure of the various procurement committees and boards to conduct due diligence on contract estimates, which are mostly pregnant with inflated price quotations, some exceeding the thresholds for approval.

The conditions set in the procurement law to prevent fictitious procurement deals are frequently ignored by some public entities. Contracts are awarded to cronies for kickbacks!

For instance, data investigations into procurement activities at the Ghana Revenue Authority (GRA) has revealed how the procurement law was flouted to award contracts to undeserving companies. Also, failure by the Entity Tender Committee (ETC) to scrutinize some award of contracts, particularly approval of highly inflated contract sums which could have saved the GRA and the tax payer value for money.

The GRA awarded a technical contract for an installation of Moving Messages Signs (Outdoor LED Display Screen) for its [GRA] Head office, Customs Head Office and the Domestic Tax Division Office at a cost of GH? 49,910.00 each.

Award of Contract dated 29th April, 2013, to Messrs Media Majique, signed by George Blankson, Commissioner-General of the Ghana Revenue Authority states: ?We are pleased to notify you that your quotation dated 19th April, 2013 for the execution of contract for the supply and installation of LED Signs at GRA Office at the sum of One Hundred and Forty-Nine Thousand Seven Hundred and Thirty Ghana Cedis (GH? 149,730.00) as quoted in the Tender Document and recommended by our Evaluation Panel has been endorsed by Entity Tender Committee.?

Meanwhile, per the Procurement Act, the threshold for Entity Tender Committee to approve the above contract (Technical Services) must not exceed GH? 100,000.
To expose the above contract of lacking due diligence on value for money, an independent market price inquiry on the Outdoor LED Display Screen (0.4/3 meters), from the same source ? the manufacturer (Apparel Sole Business) who built for the GRA contract was quoted as GH? 4,000 per unit (proof of an invoice). Therefore, three of the Outdoor LED Display Screen would cost GH?12,000.

Also, in November 30, 2011, documents available indicate that JEMR-Harrods Company Limited tendered in a GRA contract to supply 12 Toyota vehicles (4/4 Double Cabin Pick-Ups, 4WD SUVs (2 Model), Saloon Cars (2.0L) at a cost of GH?989,956.80. The contract was awarded on April 2, 2012.

In the same contract, a new contract sum was endorsed and issued by the GRA on April 23, 2012, raising the earlier price quotation of GH?989,956.80 by JEMR-Harrods Company Limited to GH?1,108,751.62. The increase in the contract sum of GH?118,794.816, according to the GRA was a 12% adjustment based on exchange rate variations.

The point of interest in the above contract is that, the GRA endorsing a 12% increase in the contract sum based on changes in exchange rate raised a lot of doubts to justify the quantum increase (GHC 118,794.816) within 21 days by which the Ghanaian currency fluctuated against the American dollar.

Again, another concern was why the contract which should have been awarded to recognized registered automobile companies in Ghana per the procurement law, was eventually awarded to a company lacking the capacity to supply vehicles. However, Toyota Ghana finally supplied the vehicles on behalf of JEMR-Harrods Company Limited. The irony is that Toyota Ghana (recognized automobile company) contested the tendering process, but could not win the contract.

Meanwhile, the Public Procurement Act, 2003 (Act 633) in section 39 (1) states: ?Where a procurement entity engages in restricted tendering ? it shall, (a) invite tenders from suppliers and contractors who can provide the goods, works or services; (b) select in a non-discriminatory manner, a number of suppliers or contractors to ensure effective competition.

Mr. Kofi Andoh is the Deputy Commissioner in charge of Communication and Public Affairs at the Ghana Revenue Authority. He responded when contacted that, reasons why a company may be ineligible for a procurement contract varies, citing failure to satisfy some basic requirements such as SNNIT and Tax clearance certificates as an instance.

What is lacking in most procurement contracts is the role of the approving boards and committees to conduct due diligence, on value for money analysis or market intelligence survey before contracts are approved.

GRA during the last quarter of the year (2013) submitted to the Ministerial Tender Review Board various contracts for approval. Some of these contracts included renovation of offices and officers? accommodation across the country, a regimental band for the Customs Division, Office and Communication Equipments among others. The Ministerial Tender Review Board has the task to ensure the various contracts meet value for money approval.

To defend its mandate, the Public Procurement Authority (PPA) said the law allows the authority to conduct market intelligence survey on estimated cost on procurement, in order to clear doubts on price quotations. Mrs. Rhoda Appiah, Public Relations Manager at PPA said value for money analysis is done by her outfit to check whether procurement price quotations correspond with the PPA average in their price database.

Bending the procurement rules to favor cronies is a public sector canker. Procurement officers in public institutions are accused of benefiting from kickbacks in dubious contracts awarded to their favorites. Corrupt practices by suppliers or contractors in a procurement process are cautioned in the Public Procurement Act, Section 93 (2) of criminal consequences as defined in the Criminal Code, 1960 (Act 29).

The PPA has an administrative mandate to crack the whip on companies and individuals engaged in corrupt procurement practices by debarring them from any public procurement tendering. Unfortunately, this administrative cleansing tool has never been exercised since the Public Procurement Authority started its work in 2004.

Mrs. Rhoda Appiah explained that entities (public institutions) in Ghana lack the courage to report corrupt practices in procurement to the PPA for further action.

Unlike Ghana, countries such Uganda and Tanzania have effective regulations to sanction entities and individuals from engaging in fraudulent procurement activities. For instance, Section 94 of the Uganda Public Procurement and Disposal of Public Assets Authority (PPDA) Act, and Regulation 351 of the PPDA Regulations, empowers the authority to suspend providers who do not comply with the Act, Regulations or Guidelines made under the Act or for breaching the Code of Ethics for Providers. The May, 2013, list of suspended providers included 41 public institutions and their directors. The providers [public institutions] and their directors/partners have been prohibited from participating in any public procurement or disposal proceedings with any central or local government procuring and disposing entity in Uganda.

Interestingly, two companies in Ghana have been listed on the World Bank list of ineligible firms and individuals debarred from World Bank financed contracts for a period indicated because they were sanctioned under the Bank?s fraud and corruption policy as set forth in their procurement guidelines.

The blacklisted companies are ACCRA COMPOST PLANT (24-SEP-2013 to 23-SEP-2015), ZOOMLION GHANA LTD and its affiliate in Togo, Angola and Zambia (24-SEP-2013 to 23-SEP-2015).The grounds for their debarment were based on flaws in procurement guidelines.

What the PPA in Ghana does in preventing corrupt procurement deals is to cancel contracts that flout the basic procedures in the Procurement Law.
According to the 2010 annual report of the PPA, out of the total number of 364 public institutions that applied for Single Source Procurement, 29 were not approved. While out of 311 applications for Restricted Tendering for the same year, 8 applicants were disqualified for procurement.

Section 38 of the Procurement Act, defines restricted tendering as: ?A procurement entity may for reasons of economy and efficiency and subject to the approval of the Board engage in procurement by means of restricted tendering; (a) if goods, works or services are available only from a limited number of suppliers or contractors; or (b) if the time and cost required to examine and evaluate large number of tenders is disproportionate to the value of the goods, works or services to be procured.?

Section 41 of the same Act also explains Single or ?Sole? Source Procurement: ?The procurement entity may procure goods, works or technical services by inviting a proposal or price quotation from a single supplier or contractor under the section 40 (a) [among others] where goods, works or services are only available from a particular supplier or contractor, or if a particular supplier or contractor has exclusive rights in respect of the goods, works or services, and no reasonable alternative or substitute exists.?

For public institutions to qualify PPA?s approval of contracts by either Restricted Tendering or Single Source Procurement, the above regulations in the Act [Sections 38, 41] must be strictly followed. However, the suspicion on controversial contracts approval has been why Tender Committee members who are responsible for preventing inflated procurement contracts, allow such practices to go on undetected. Could it be the incentive for kickbacks?

Source: Philip Forson

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