Wednesday, January 26, 2011

Tender for Water Supply Project: the word 'not'

These are the findings for one of the fraudlent tenders in Karamoja titled 'Tender for Water Supply Project':

1.1 It was established that during the Financial Year 2004/2005, Kotido District placed an advertisement in the “The New Vision” newspaper that some funds from the European Union have been received for utilization on several works and supplies. The water supply project was in among this category. The implement agency is Karamoja Programme Implementation Unit (KPIU)

• This advertisement was placed in the newspaper, on 30th June 2004, inviting competent firms to bid for the construction of several works and supply of several goods and services. The advertisement invited bids for 25 different items, among them, the Water Supply Project. It was spelt out in the advert as Item number eleven with four sub components, as detailed below:

a) Purchase and installation of wind pump 26ft.
b) Plumbing works from tank to trough.
c) Construction of trough.
d) Construction of 50,000-m3 storage tank.

• The advertisement however didn’t indicate the deadline of submission and the time and place of delivery contrary to procurement laws and procedures.

• The advertisement specified the cost of the bid document as Shs. 50,000 and five firms bought bid documents however at Shs. 30,000 contrary to what was advertised. The firms that bought bid documents were;

• Danlop Enterprises.
• Dodoth Hand Pump Mechanics Association.
• Oliabong Traders.
• Spider Contractors Ltd.
• Toror Tropical Hardware.

The firms then submitted their BoQs for the project. The DWO designed the BoQs that were divided into three lots made of five sections namely;

• Preliminaries and General
• Preparing the foundation
• Assembling the Windmill
• Construction of 9 Cattle troughs.
• Plumbing works.

1.2 From a study of the BoQs that were submitted by the five firms, it was established that only one bidder (M/S Spider Contractors Ltd.) bidded for all the lots whereas other four companies bidded for one or two lots. The Companies quoted as shown below:

a. Danlop Enterprise bidded for Construction of cattle troughs at UGX 39,981,357=
b. Dodoth hand pump Mechanics Association for construction of cattle troughs and plumbing works at UGX 22,797,450=
c. Oliabong Traders bidded for construction of 50,000 m3 water tanks (plastic) at UGX23,999,999=
d. Spider Contractors Ltd bidded for all the 5 sections at UGX 235,867,149=
Toror Tropical Hardware bidded for plumbing Work at UGX 39,833,820=

Source: DTEC report

1.3 In a DTEC meeting held on 30th September 2004, M/S Spider Contractors Ltd. was recommended for the award of tender for Water supply at Shs. 235,867,149= against a reserve price of Shs. 215,179,965=. The Committee noted that the other four companies only provided incomplete bids. A copy of the minutes of the DTEC meeting.

1.4 On the 11th and 12th October 2004, Kotido DTB held a meeting to award tenders. In the deliberations of the meeting, the District Water Officer (DWO) Mr. Akorio Ibrahim made a presentation in which he informed the Board that “the bid document for the Water Project were “prepared as a complete document, but some bidders went ahead and filled the documents partially, yet the project was a complete Unit”. He further stated, “ the DTEC technically knocked out the bidders who bided only for one component of the Project on grounds of submission of incomplete bid documents”. The DTB thereafter under Min. 5/Oct/2004(4) awarded the tender for water supply to M/S Spider Contractors.

1.5 In a letter dated 2nd November 2004, the Secretary, DTB informed M/S Spider Contractors of the tender award. The award was to provide water for livestock at a contract sum of 195,769,734/= (One hundred ninety five million, seven hundred and sixty nine thousand, seven hundred and thirty four shillings only) exclusive of VAT. The Secretary DTB could not explain where he extracted the sum of 195,769,734/= from, since it neither reflects the reserve price nor the bid price as quoted by M/S Spider Construction.

1.6 In an acceptance letter to the Secretary DTB on the same date, one of the Directors of M/S Spider Contractors, Mr. Nicholas Jemba informed the Secretary that the firm would proceed with the execution of the works under the contract. Another Director is Ms Deborah Katiti not Kotido District officials as alleged.

1.7 When the original bid documents were scrutinized, It was found out that they were changed to read that the contract was a unit and that bidders were not allowed to bid for only one item. Evidence adduced reflected that the original bid document read “the prospective Tenderer’s are free to bid for one two or all the three Lots under this Contract” . The document was later altered to read: “the prospective Tenderer’s are not free to bid for one two or all the three Lots under this Contract”.

1.8 Further scrutiny of the all bid document revealed that page 2 of 27 of the bid document had photocopies inserted into the Instructions To Tenderers for all bidders’ documents save for one copy of M/s Dodoth Hand Pump Mechanic Association obtained from the District Engineer’s office.

1.9 When the DWO Mr. Akorio Ibrahim was asked on the alteration he denied having changed the document. The Secretary DTB and other members stated that the bids they received had already been altered. It is worth noting that the bid documents were in the custody of DWO until when they were transferred to the District Executive Engineer’s office after evaluation.

1.10 When one of the bidders (the Proprietor) of M/S Toror Tropical Hardwares, Mr. Okello Pope Paul was interviewed, he stated that the four lots were separate and independent of each other, as shown in the District Budget for the Financial Year 2004/2005 and the original bid documents. He further stated that the DWO compiled a single document reflecting BOQs for each of the four lots as advertised. Further that the CAO and DWO advised them to go ahead and buy the BoQs and that each firm completes the section of its interest. That therefore, the DTEC was wrong to consider their bid incomplete on Account of having bidded for each item separately.

1.11 When the concerns of Mr. Okello the Proprietor of M/S Toror Tropical Hardwares were raised, both the CAO and the DWO denied the allegations. They stated that the District advertised the Water Supply Project as one Unit to avoid substandard materials and shoddy works on the different aspects of the project, as well as creation of easiness in terms of monitoring of the project. The Chairman, Secretary and Members of DTB stated that it was on the basis of DTEC’s recommendation and DWO’s explanation that they made the award to M/s Spider Contractors ltd..

1.12 After the award of the tender to M/S Spider Contractors by the DTB, several complaints were raised. On 1st December, 2004, the Programme Manager for Karamoja Programme Implementation Unit (KPIU) Mr. Stefan Kluge wrote to the CAO Kotido, informing him that: “following their verbal discussion; all water related projects were to be put on hold, until justification, analysis and evaluation of the projects and selection of competent Contractors was done”. A copy of this letter is attached as Annex 9. At the time of investigations, M/S Spider Contractors was due to sign a contract agreement with the District, after the location of project sites. The firm had not, therefore, commenced with construction works.

1.13 In a telephone interview, Mr. Stefan Kluge the Programme Manager KPIU stated that they had halted the water supply project, because the specifications were not properly provided for and the prices were too high. He further stated that given the nature of the project, they were concerned about its implementation and that they would not award the contract to “Briefcase Companies”.

The above is what happened and I have written on how to detect procurement frauds; in case of need of that book please contact me."

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