Analysis Educ and Water

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ANALYSIS OF THEPRICEWATERHOUSECOOPERS

PROCUREMENT AUDIT REPORT

BY PUBLIC PROCUREMENT AND DISPOSAL OFPUBLIC ASSETS AUTHORITY (PPDA)

April 2004


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INTRODUCTION

The Public Procurement and Disposal of Public Assets Authority (PPDA) analysed the procurement audit report byPriceWaterHouseCoopers.The report covered the Ministry of Water, Lands and Environment and Ministry ofEducation and Sports. The tables/ charts below are summary matrices of the cases handled. The findings werecategorised according to the degree of significance as: High risk, Medium risk and low risk.

This analysis has covered all the high-risk cases. According to the Consultants, the high-risk cases are theprocurements with serious weaknesses, which could cause material, financial, regulatory or reputational risks to the

Ministries warranting immediate attention by Senior Management.All procurements (20) without any documentswere considered high-risk cases.

Medium risk cases are procurements with weaknesses which, although less likely to lead to material, financial,regulatory or reputational risk, warrant timely management action using the existing management framework to ensurea formal and effective system of management control exists in the Ministry. The absence of key controls in an area ofthe Ministry would normally be graded medium provided there is sufficient evidence of hands on managementcontrol and oversight at an appropriate level of seniority.

Low risk cases are procurements with weaknesses where resolution within the normal management framework isconsidered desirable to improve efficiency or ensure that the business matches current market best practice.Deviations from laid down detailed procedures would normally be graded low provided there is sufficient evidence

of management action to put in place and monitor compliance with detailed procedures.

The audit report covered 60 procurements in the Ministry of Water, Lands and Environment. Ten (10) contracts werecovered in the Ministry of Education and Sports. This was 20% value of the total procurements.

MINISTRY OF WATER, LANDS AND ENVIRONMENT

MWLE CATEGORY OF CASES

HIGH RISK

MEDIUM RISK

LOW RISK

CATEGORYOFCONTRACT

NUMBER OFCONTRACTS

PERCENTAGE

HIGH RISK 31 51.7

MEDIUM

RISK

7 11.7

LOW RISK 22 36.6

TOTAL 60 100.

MINISTRY OF EDUCATION AND SPORTSThe sample selected under MoES covered 10 contractsThese were categorised as:

CATEGORYOFCONTRACT

NUMBER OFCONTRACTS

PERCENTAGEMoES CATEGORY OF CASES

HIGH RISK

MEDIUM RISK

LOW RISK

HIGH RISK 8 80

1 10MEDIUM RISK

1 10LOW RISK

10 100TOTAL

2


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GENERAL OBSERVATION

The audit report revealed the following weaknesses in both Ministries:

Lack of procurement plans

Lack of documentation- Record of Service Providers.- Request For Proposals submitted to bidders.- Evaluation Reports.- Minutes of bid opening.

Lack of special attention to procurement related complaints from Providers. There are very many retrospective approvals for contracts in both Ministries.

There is a lot of interference from the Senior Ministry Officials who are not related to the procurementprocess.

There are many cases of cost overruns especially in consultancy and works contracts.

There is limited participation of the Procurement Units in big contracts and instead the Contracts Committeesand User Departments handle the procurement and disposal process.


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CONTRACT: 2.4.3 Procurement of goods and services for the Metrology Department Project at US$3Case Person/Officer

ResponsibleComments byEntity to the draft report

Counter Response by tAuditor

The amount that was approved by theContracts Committee for the purchaseof goods and services was US$300,000which was above the approved budgetamount of Shs.200 million.After the RFQ was approved for these

goods, there is no further informationavailable regarding this procurement.We therefore could not establish thetotal procurement or how these goodsand services were procured.

Director DWD

(High Risk)

As you may be aware, some project cycles cutacross financial years. The budget in questionrelates only to the financial year 2001/2002.However, Contracts Committee authorised theentire procurement amounting to US $300,000.

As regards the procurement method, the valueof the contract is well above the threshold foropen tendering. Besides, the Committee canopt for open tendering if it feels it will getbetter value for money by doing so.

The value of the procuremenabove the threshold for open The impression that the ContCommittee had the option fortendering is inconsistent withprovisions of SI 2000 No. 64

Regulation 20.

MINISTRYS CLARIFICATIONS TO THE FINAL AUDIT REPORT

The User Department wanted to procure specialised equipments worth US$ 300,000, which the Contracts Committee financial years, but the approved annual budget was Ug.Shs.200million only.

A clarification was made that due to inadequate technical capacity of the User Departments, they did not have a clear uprocurement methods especially RFP and Selective Tendering. However, Selective Tendering was used in this partic

The Ministry Officials promised to send supporting documents for this procurements.


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PPDA RECOMMENDATION/S

The Authority should make a follow-up on this procurement and retrieve the necessary docum

CONTRACT: 2.4.4 Detailed Design and Construction Supervision of the Rehabilitation and expansion of Watein the Towns of Hoima, Masindi, and Mubende awarded to Geoprogetti S.R.I Consulting Engineers at Ush. 1,02001Case Person/Officer

Responsible

Comments by

Entity to the draft report

Co

by The only documents provided to Auditors inthis regard were two letters. Also the listing ofthe procurements undertaken by the MWLEprovided to Audit Team for the auditcomprised a tender awarded to M/s DorshConsult for a contract sum ofShs.1, 300,095,330.On requesting documents relating to thisprocurement, we were informed that this wasan error and that this procurement was thesame as the one awarded to M/s GeoprogettS.R.L Consulting Engineers.Given the lack of documents, we could not

establish whether M/s Dorsh Consultparticipated in the procurement process andhow the Contracts Committee with the inputof the Procurement Unit eventually awardedthe contract.

The Chairperson ofthe ContractsCommittee

(High Risk)

The contract documents and the evaluation report for thisprocurement have been obtained and forwarded to the AuditTeam for review. This is a European Union funded and paid forproject. It involves Ministry of Finance, Planning and EconomicDevelopment where the National Authorising Officer is themain Coordinator of the procurement.EDF procurement regulations conform to the procurementprocess. The National Authorising Officer in the Ministry ofFinance plays the role in the procurement, and the ContractsCommittee only comes in when requested.

The tender was originally awarded to Ms Geoprogett S.R.LConsulting Engineers but declined and later on awarded to the

second compliant firm M/s Dorsh Consult at Ush.1,300,095,330Relevant documents were presented to the Audit Team forreview

No fwasAudproc


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The Ministry maintained its position, that CTB used to keep all the documents and did the evaluation of bids. CTB woaward of tenders to the Ministry. Therefore all the relevant documents were with CTB.


The Ministry should submit the original contract of this project to enable further reviewinformation should be provided to the Authority not later than the 15

thJuly 2004.

CONTRACT: 2.4.7 Project to scan and digitise land title records at US$1,500,000. Initiated in April 2awarded.Case Person/Officer

ResponsibleComments byEntity to the draftreport

Counter Response by the Auditor

The method of procurement under thisprocurement should have been open tendering.However, the User Department as well as theMinister are advocating for the use of therequest for proposal method, which is contraryto the regulations.Under this contract, there has been a highinvolvement of Senior Ministry staff that areotherwise not part of the Contracts Committeenor the procurement process.

We noted that the Contracts Committee has sofar resisted the interference and insisted onopen bidding.

Minister of WaterLands andEnvironment

(High Risk)

This procurement is inits initial stages and nocontract has beenawarded. It shouldtherefore, not form partsof the audit.

While the Ministry considers that thisprocurement should not have been includedin the procurements to be reviewed underour assignment, we are of the opinion that itwas correctly included and it is the onlyprocurement in the Ministry that shows thatthe systems put in place by the PPDA Act2003 are actually working and are notsubject to political interference within theMinistry.


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The Ministrys Contracts Committee rejected the methods of procurement as advocated by the User Department and thas sought for a waiver from the Solicitor General to use Selective Bidding as the procurement method in sourcing for

The Minister has also directed the Permanent Secretary to form a Task Force of which the Under Secretary, Finance anProcurement Unit should be members, to implement the project.

The Contracts Committee requested PPDA to intervene in this particular procurement to eliminate political interferenc


The Ministry should handle this procurement through open international bidding given the a

CONTRACT: 2.4.8 Construction supervision for Bombo Town water system by Engiplan at Shs 110,2of payment dated 22ndOct 2001 by the Contracts Committee.Case Person/Officer


Counter Responseby the Auditor


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The Request for Proposal method that wasused is contrary to the guidelines that wouldin this case require that the open tenderingmethod be used based on the amountsinvolved.

We noted that the bidding period was 8days contrary to the required 30 daysstipulated in the guidelines. This impliesthat consultants were not given adequate

time to prepare proposals.

We also noted that although the ContractsCommittee, forwarded the tenderdocuments to SWIPCO for review, by thetime SWIPCO completed the review,Consultants had already submitted bids andopened.

The ChairpersonContractsCommittee

(High Risk)

This is a unique procurement and theDirectorate of Water for Developmentrequested for pre-qualification basing onpast experiences.

It is not true as indicated that the biddingperiod was 8 days but 30 days as requiredby the regulations

The contract documents, and evaluation

report for this procurement have beenobtained and forwarded to the Audit teamfor review.

This is not a unique procuremvery similar to the Masindi WSupply system, which was suopen tendering. The argumenMinistry selected the firms bpast experience is not satisfacbecause it evaluated the expethe bidders during the prelimevaluation. If indeed the firmselected based on past experi

were they evaluated on experafter submission of proposalsalso reinforces our recommenthat the Ministry needs to preboth Consultants and Contracservices that it regularly proc


The Ministry should submit the signed contract and the Solicitor Generals approval to PPinformation should be provided to the Authority not later than the 15thJuly 2004.


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It was recommended that the Contracts Committee should be warned against making retrospCONTRACT: 2.4.13 Construction of Kalangala Town Water Supply System at Ush.796,291,391 contrCase Person/Officer


Counter Response by theAuditor

The Contracts Committee approved the

award in its meeting held on 1 Feb 2002 yetSpencon had already been notified of theaward on 31 Jan 2002. The letter of 29thJan 2002 to DWD was pre-empting the roleof the contracts committee and this was amajor divergence from the procurementprocedures. This may cause financial loss tothe Ministry in case the ContractsCommittee does not award the tender to theContractor who was recommended by theEvaluation Committee.

Director DWD

(Medium case)

There was a misrepresentation of the

dates regarding this procurement.The authority to negotiate was givenby the Contracts Committee at their31stmeeting held on 29thJan 2002and the negotiations commenced onthe 7thFeb 2002. However theminutes of the Contracts Committeeerroneously indicates that themeeting was held on 1stFeb 2002.

Although the Ministrys

acknowledgements that it erroneoindicated the wrong dates in theminutes of the Contracts CommittWe can not change the content of report regarding this procurementwhich is consistent with the docummaintained by the Ministry asreviewed by us


The Ministry explained that members of the Evaluation team are drawn from User Departments as away of creating vaThis is the main reason why tender awards leak to Contractors before official award of contracts as User Departments

Secondly, the Audit Team misinterpreted the 31stContracts Committee meeting as being 31/01/2002, which was held Spencon on the 29thJanuary 2002


The User Department should be warned against notifying contract award decisions before the

Contracts Committees approval.


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The Contracts Committee and the Procurement and Disposal Unit should be warned agai

awarding tenders to only one firm without rotation to other pre-qualified providers.

CONTRACT: 3.4.2 Provision of Janitorial services for the Financial Year 2001/2002 and 2002/2003 awarded toUshs 73,286,475

Case Person/OfficerResponsible

Comments by Entity to the draftreport

Counter Respoby the Auditor

The Head of the Procurement Unit dictatedthe evaluation criteria to be used to theEvaluation Committee. This implies that thecriteria may not have been well elaborated inthe ITT. The duration allowed for the biddersto prepare and submit proposals was 15 days

as opposed to the 30 days bidding periodprescribed by the guidelines.

The PrincipalProcurement Officer-

(High Risk)

No comments received from the Ministry Since there were ncomments from thMinistry, there is ncounter response


The Ministry clarified that invitation to tender went out and called upon PPDA to look at the bid documents accordinRegulations 2000.PPDA will look at the bid document for this procurement and follow up this issue whether the evaluation criteria givsame as one in the bid document.


The Ag. Procurement OfficerMr JosephMutumbashould be warned against interfering w

mandate. The evaluation criteria communicated to the evaluation team was different from th

was a contravention with the SI 2000 No. 64 Regulation 33(8).


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Corporation at Ush. 694,278,000Case Person/Officer

ResponsibleComments by Entity to the draft report Counter Respon

Except for the minutes of theContracts Committee, there were nodocuments availed to us regardingthis procurement. Our findings weretherefore based on the informationof the minutes of the Contracts

Committee.The Permanent Secretarys officeused sole sourcing and thenrequested the Contracts Committeeto approve the method ofprocurement retrospectively in itsmeeting held on 28 October 2002.

The PermanentSecretary MoES

(High Risk)

It is the Education Sector Consultative Committee(ESCC) not the Ministry Contracts Committee that askedthe Permanent Secretary as to why the 100.000 copies ofthe primary curriculum Teachers Guide Volume IIdelivered by the Government Printers had not beendistributed. The Permanent Secretary was asked to make

sure he gets corresponding copies of the CurriculumVolume II immediately.The MCC approved the transactions retrospectively afterthey had perused through all the necessarydocumentation and got an explanation why the Ministryhad used Uganda Printing and Publishing Corporation, aGovernment parastatal.

Was the Ministry nothe corresponding cuthe time of the initiatprocurement?

Despite the fact that

Publishing Co. is a gthe Ministry might stsavings if it had comboth copies. Secondaapprove the method Contracts Committeeretrospectively award


That volume I of the curriculum was competitive but in volume II the Contracts committee used direct procurement ba. The volume and complexity of work required a big printer hence, resorted to government printery;

b. National curriculum lacked funds to print curricula;d. The emergency of the procurement and;e. Insufficient planning by the Ministry.


The Permanent Secretary was advised not to interfere with the work of the Contracts Commi


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CONTRACT: 3.4.5 Printing of HIV/ IEC material awarded to M/s Fountain Publishers at Ushs. 570,000,000

Case PersonResponsible

Comments by Entity to the draft report CounterAuditor

There were nodocuments availed tous for review. We,however, noted inthe Committeesminutes that this

procurement was aPresidentialdirective.

The Chairperson ofthe ContractsCommittee.

This procurement was handled using direct procurement. The rush to have thisprocurement was to enable the Ministry avail to schools urgently PIASCY andHIV/IEC reading materials quickly to implement his Excellency the Presidentsdirective that schools disseminate HIV/IEC messages at school assemblies witheffect from first term of 2003 and before the second National UPE Advocacycampaign. Where was the RISK in this case? Was it to the PPDA or

Management of the Ministry? There is a provision in the Guidelines on how togo about emergencies and hence the reason why the transaction was forwardedto the MCC.

The risk inthe only inprocuremeContracts other inforeview. It

risk in lighProcuremall contrarthe procur


The Ministry clarified that the procurement was direct due to the following reasons:

(i) The Contract was a Presidential directive through the Minister, hence it was treated as an emergency;(ii) The Procurement Unit did not take any part in the sourcing.(ii) M/s Fountain Publishers was preferred because they had previously printed excellent work.


The Permanent Secretary should always follow procurement procedures and documents

should be submitted to PPDA for further review.

CONTRACT: 3.4.6 Proposed construction of a library at Ntare School Mbarara awarded to M/S ExUshs.428.808.867Case Person

ResponsibleComments by Entity to thedraft report

Counter Respothe Auditor


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CONTRACT: 3.4.8 Bukinda Core PTC Kabale

Case PersonResponsible

Comments by Entity to the draft report Counter Response by tAuditor

We were not availed documents forthis procurement. This procurementwas not included in procurement

reports submitted to us. It wasidentified from the review of theminutes of the Contracts Committee.

Permanent

Secretary

It is also important to note that some tenderdocument for Bukinda Core Primary TeachersColleges, Kabale were presented to

PriceWaterHouseCoopers but were rejectedespecially since this project has never beenexecuted.

We still maintain that we didreceive any documentation sutender documents, evaluation

reports, copies of contracts etrelated to the procurement inquestion.

MINISTRYS CLARIFICATIONS TO THE FINAL AUDIT REPORTThe contract has not ended. Three Colleges (Bishop Stuart - Kibingo, Bishop Willis - Iganga and Nyondo College) were cobeen completed; yet the funding of the project is winding up soon. This was one contract for the four colleges.

.


Documents relating to these procurements should be submitted to PPDA for further review a

full inspection of these procurements.


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Analysis Educ and Water

Documents

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