Uganda. Country Procurement Assessment Report (CPAR)

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Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Uganda Country Procurement Assessment Report (CPAR) Volume III ANNEES v3 Public Disclosure Authorized June 15,
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Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Uganda Country Procurement Assessment Report (CPAR) Volume III ANNEES v3 Public Disclosure Authorized June 15, 2004 Operational Quality and Knowledge services Africa Region Uganda 2004 CPAR Annexes -2- June 2004 Table of Contents ANNE 1 - List of Task Force Members...3 Annex 2: Monitoring and Controlling Public Procurement...4 Annex 3: Status on recommendations from Uganda CPAR Annex 4: List of people met during main missions...13 ANNE 5 - Checklist comparing National Competitive Bidding Procedures and World Bank Policy...17 ANNE 6 - Questionnaire on Public Procurement System...20 ANNE 7 - RECOMMENDED CPAR ACTION PLAN...39 Uganda 2004 CPAR Annexes -3- June 2004 ANNE 1 - List of Task Force Members Name Organization 1. Mr. M.N Kamugisha Ministry of Finance, Planning & Economic Development 2. Mr. Patrick Mutabwire Ministry of Local Government 3. Mrs. Adah Kabarokole Muwanga Ministry of Public Service 4.Mr. Aeloi Deo Ministry of Works, Housing & Communication 5. Mr. Kisitu Jonathan Ministry of Health 6. Mr. David Kiyingi Ministry of Education and Sports 7. Mr. W.Z Bushoberwa Ministry of Tourism, Trade & Industry 8. Mr. Ashaba-Ahebwa Directorate of Ethics & Integrity 9. The Solicitor General 10. Mr. Kalule Swaibu Inspector General of Government 11. John Walala Uganda Revenue Authority 12. Edgar Kamara National Chamber of Commerce 13. Eng. Hans J.W.B Mwesigwa Uganda Institution of Professional Engineers 14. Eng. G.B Zaribwende Uganda National Association of Building, Civil Engineering and Contractors 15. Dr. Kituuka Stephen Institution of Ugandan Surveyors 16. Ms. Rhoda Mugamba Makerere University 17. Mr. David Kabaterine Ministry of Finance, Planning & Economic Development 18. Prof. Sam Tulya-Muhika International Development Consultants Ltd 19. Mr. Mukwaya Bernard Uganda National Bureau of Standards 20. Mrs. Liz Nkongi Uganda Local Authorities Association 21. Mr. Julius P. Motto Private Sector Foundation 22. Architect Stanley Mulumba Architects Registration Board 23. Dr. Paul Sagala Uganda Association of Consulting Engineers Mr. Martin Onyach Olaa Ministry of Local Government 25. Architect Joel Kateregga Uganda Society of Architects 26. Mr. Daudi Ndiwalana Uganda Manufacturers Association 27. Ben Michael Kiiza Victoria Motors Ltd. 28. Mrs. Rebecca Namirembe UMIA 29. Eng. I.W Barasa Uganda Association of Consulting Engineers Uganda 2004 CPAR Annexes -4- June 2004 Annex 2: Monitoring and Controlling Public Procurement Overview of all Central and Local Government Procuring and Disposing Entities Report for Period Ending: Indicator Value FY00/01 FY01/02 FY02/03 FY03/04 FY04/05 FY05/06 FY06/07 1. Number and percentage of Procuring and Disposing Entities (PDEs) 1 that do not have a procurement plan approved by their accounting officer 2. Number and percentage of PDE procurement activities that have been initiated but are not in the approved procurement plan 3. Number and percentage of PDEs2 to which funds have been released but that have not prepared procurement plans 4. Number and percentage of procurement activities for which there has been no public advertisement to tender 5. Number and percentage of bids issued before requirements have been defined, and specifications and estimates established 6. Number and percentage of contracts awarded without bids having been solicited. 7. Number and percentage of contracts not awarded to the lowest evaluated bid 8. Number and percentage of contracts awarded without a bid evaluation based upon pre-determined evaluation criteria 9. Number and percentage of contracts awarded more than 30 days after the bidclosing date. 10. Total value of contracts awarded using methods that are less competitive than those set out in the approved procurement plan, and their value as a percentage of all contracts awarded. Number Percentage Number Percentage Number Percentage Number Percentage Number Percentage Number Percentage Number Percentage Number Percentage Number Percentage Total Value Percentage 1 This overview report combines information from two groups of Procuring and Disposing Entities (PDEs): Ministries, Departments and Agencies (MDAs) in the Central Government; and Districts at the Local Government level. The expression PDEs thus refers to all MDAs and Districts. 2 Ministries, Departments and Agencies of Government Uganda 2004 CPAR Annexes -5- June 2004 Indicator Value FY00/01 FY01/02 FY02/03 FY03/04 FY04/05 FY05/06 FY06/ Number and percentage of contract awards that have been appealed 12. Number and percentage of contract awards that have been appealed successfully 13. Number and percentage of contracts awarded before there was a confirmation of funds being available 14. Number and percentage of approved contract variations that exceed the thresholds set out in the Public Procurement Regulations 15. Total value of approved contract variations that exceed the thresholds set out in the Public Procurement Regulations, and their value as a percentage of the total value of the contracts to which they are related. 16. Number and value of bid validities that have been extended 17. Number and percentage of payments to contractors that have been paid more than 30 days after the submission of a claim 18. Number and percentage of contracts terminated early by PDEs after payments were made but before goods and services were delivered 19. Total value of payments issued against contracts terminated early by PDEs before goods and services were delivered, and the value of this amount as a percentage of the total value of the contracts to which they are related. 20. Number and percentage of contracts abandoned by contractors after advance payments were received, but before goods and services were delivered. Number Percentage Number Percentage Number Percentage Number Percentage Total value Percentage Number Value Number Percentage Number Percentage Total value Percentage Number 21. Total value of advance payments issued against contracts abandoned by contractors before good and services were delivered, and the value of this amount as a percentage of the total value of the contracts to which they are related. 22. Number of complaints about corrupt practice in procurement filed with the, IGG or CID 3 Percentage Total value Percentage Number 3 Public Procurement and Disposal of Public Assets Authority, Inspectorate General of Government, Criminal Investigation Department Uganda 2004 CPAR Annexes -6- June 2004 Indicator Value FY00/01 FY01/02 FY02/03 FY03/04 FY04/05 FY05/06 FY06/ Number of firms and individuals blacklisted for having been found guilty of any corrupt practice including misrepresenting any facts in respect of ownership in a tender submission or in registration with the Registrar of Companies. 24. Number of staff who have been disciplined, sanctioned or charged with breaking the law in connection with public procurement or disposal activities 25. Number and percentage of PDEs that have been given a clean audit certificate by the 26. Number and percentage of PDEs that have been given a clean audit certificate by the Auditor General 27. Number and percentage of PDE accounting officers sanctioned for matters relating to public procurement or disposal Number Number Number Percentage Number Percentage Number Percentage Uganda 2004 CPAR Annexes -7- June 2004 Annex 3: Status on recommendations from Uganda CPAR 2001 Uganda CPAR 2001 Recommendations Status: Accompliced In process No action Recommendation Status Comments PROCEDURES AND PRACTICES Procurement Planning and Annual Updating of Plans 1 Ministries, agencies and parastatals should be required to prepare procurement plans as part of budget proposals. Funds should not be released to agencies without procurement plans. Procurement plans should be revised on a six-month basis. Repeated ad hoc and emergency procurement should not be sanctioned. Procurement Process and Methods 2 Standard Bidding Documents (SBDs) should be prepared for goods, works and services. The goods and work SBDs should include the following as a minimum: Invitations for Bids; Instructions to Bidders; General Conditions of Contract; and Standard forms. For consultancy services the minimum should be: Letter of Invitation; Instructions to Consultants; General Conditions of Contract and standard forms. It should be made clear mandatory for all the procurement entities to use the standard bidding documents. The World Bank SBDs could be adapted for this purpose. 3 The fees to be charged for bidding documents should be the minimum required to cover production costs. Operational expenses for the Tender Board should be part of the normal operational budget. Procurement plans are a requirement of the Procurement Act, but not the requirement is not adequately enforced The have issued draft SBDs on works. Even though these are only drafts, they are in use. SBDs in other areas remain. Bidders report excessive charging for inclusion on registration lists. 4 Remove requirement for site visit as a prequalification criterion. This is no longer a requirement in the Regulations. Uganda 2004 CPAR Annexes -8- June 2004 Recommendation Status Comments 5 Stop accepting bid bonds and advance payment security bonds from insurance companies and only accept those issued by reputable Banks. Since bid securities offered by banks are very expensive, one option is to include in the future law automatic suspension of a bidder who, winning a contract, does not sign it. 6 Develop standard contracts for service, goods and works where these issues are regulated according to normal international standards. This will make issues like size of advance payments -- a non-negotiable issue, provision for interest payments to contractors will be introduced, and liquidated damages will be included. Advance payments should be limited to a maximum of 20% of contract prize. 7 Implement more limitations on the use of restricted tendering and require that the short-listing process be fair when restricted tendering is used. 8 The use of merit point system for goods and works should be discontinued unless the goods are of very complex nature, because it is prone to subjectivity. 9 In order to determine the level of preferences to be given to domestic suppliers, due consideration should be given to the economic benefits to be derived. To this effect a minimum of 30% value added is being recommended. Domestic preference should be applicable to tenders under international competitive bidding only. 10 To avoid potential conflict-of-interest in procurement, the declaration of assets and liabilities of leaders should include ownership of companies or shares in companies; the new, computerized registry of companies prepared by the Ministry of Justice should be made available to the public on CD ROM and/or an internet web site; the Uganda land registry, beginning with the city of Kampala, should be put onto a computerized data base and be made available to the public; and the list of firms tendering for government contracts should be published quarterly. Monitoring and Contract Management 11 (a) Develop a handbook for monitoring services, goods and works. The handbook shall build on best practice and guide contract managers through the job in a systemic and professional manner. The handbook must be designed to suit the existing organisation to enable easy application. It must deal with both financial and technical issues and its development must be linked to the implementation of the new procurement law and the requirements derived from this. Standard contracts will be part of the SBDs when they are developed. The use of the registration lists and non-transparent shortlisting procedures remains one of the most pressing issues to be dealt with The Regulations allow merit point system The Regulations do not contain precise and mandatory rules on application of domestic preference The Company Registrar is still unable to provide the information needed. The intend to develop guidelines in parallel with the SBDs Uganda 2004 CPAR Annexes -9- June 2004 Recommendation Status Comments (b) For larger contracts, include as a condition for final payment, that an external expert together with the employer s representative co-sign the certificate releasing final payment. In a construction project the external expert can be an engineer who is asked to check that basic quality and quantity is fulfilled by the contractor according to the contract. The external expert shall be nominated by a professional organisation and appointed by the Government. The appointment will be done immediately before the inspection to avoid collusion between the expert and the contractor. (c) Strengthen the monitoring system by developing adequate sanctions, which must be well known to both contractors and implementing agencies. (d) A maximum period of one month for payment of contractor claims should be set. Accounting officers should be held responsible for failing to meet such standards. (e) Contract variations should be done only under very exceptional circumstances. When this is absolutely necessary, approval must be obtained from the appropriate tender board. The method for determining price variation during contract execution must be incorporated in the contract. The formula method is recommended rather than the method of documentary evidence. 12 (a) Review the effectiveness of the current procurement filing system in all public entities to ensure transparency and accountability according to international best practice. Include record management as part of basic procurement training program. (b) If a new filing system is not feasible as a short-term recommendation, another solution aimed at public procurement must be developed. This can be as a description of minimum requirements for a paper based filing system, which can document the procurement process and ensure accountability according to international standards. (c) Filing systems and accountability shall be included as part of the basic training of the procurement professionals to ensure capacity on how to establish and maintain the filing system. Further it must be ensured that necessary funds are available for the filing and documentation process. It must be possible for the procurement professionals to have access to copy facilities, paper, ring binders, filing cabinets etc. (d) An archiving system should be established. ORGANISATION AND RESOURCES Such a condition is not included in the Regulations A system of monitoring is well developed in the Procurement Act, but not yet implemented effectively Such a condition is not included in the Regulations Pre-contract negotiations and contract variations are frequently seen. Often caused by poor specifications. Such a review has not been carried out. The Procurement Act now contains such minimum requirements for a procurement record Training in filing is to some extent available, but funds are lacking for necessary office equipment The Records and Archive Act(2001) has not yet been implemented Uganda 2004 CPAR Annexes -10- June 2004 Recommendation Status Comments Resources - findings 13 It will take the Government some time to build the necessary procurement capacity in the public sector. In the meantime, the Government is advised to employ procurement agents to carry out procurement on its behalf. The procurement agents should also be given the responsibility of training government employees and special incentives should be built in their contracts to ensure that training is carried out. Resources - recommendations Undertake a needs assessment of procurement professionals and compare it with available procurement capacity in Uganda. 2. Develop professional standards for procurement cadres, through a certification system 3. Develop training program and training materials leading to certifications as cadre. The training material must build on the procurement manual developed by the RCTB. 4. The PALMA is commended for providing the sort of procurement training that is desired and the Government needs to support the Association as much as possible. More organizations providing this sort of training, such as Universities and Technical Colleges are needed to satisfy the training needs of staff at Central and Local Government levels. Such agencies should operate in a network to share experiences and optimize the benefits of cooperation. 5. The general, systematic and continuous on-the-job training for all civil servants should be considered alongside the specialized training of procurement experts. 6. Since decisions on procurement are made by multiple layers of administrative officers, procurement training needs to be broadly conceived to benefit such officers as well. 7. Government should increase availability of training resources in the country for promoting the establishment of a well-qualified and trained procurement cadre. The high cost of training and capacity building, which the proposed reforms entail, should be weighted against the benefits of enhanced capacity and reduction in corrupt practices. PERFORMANCE ON BANK-ASSISTED PROJECTS FINDINGS Government is largely carrying out procurement itself. Training is being piloted by the. Several needs assessments by various consultancy teams have been carried out, and these now form the basis of the capacity building strategy This has yet to be established A training programme is under development by the. However, this has not yet been linked to a certification mechanism. After the withdrawal of its main donor, the ITC, PALMA is no longer capable of providing training. However, other training providers have been established and will likely, in time, fill this gap. Efforts are being made by the, and backed by the Development Partners, to increase training capacity in Uganda Training, including on-the-job training i on-going. Up until now, training has mainly targeted the new procurement cadre in central government. Building up capacity and establishing training programmes for staff involved in local government remains a challenge Capacity building efforts have so far mainly been financed by the international donors in Uganda Uganda 2004 CPAR Annexes -11- June 2004 Recommendation Status Comments Procurement audit 15 (a) Implementing Agencies should prepare updated annual procurement plans and use the Plan as a monitoring tool. COMMERCIAL PRACTICE Trade practices (b) To augment in-house procurement capacity, Procurement Agents should be hired. (c) Additional training is required for officials dealing with procurement. (d) The Bank through its Country Office should take a greater role in providing Procurement Advice to the Projects. A resident procurement expert needs to be recruited for the Uganda Country Office. (e) The filing system needs to be revised to have individual files for each specific procurement action from advertising to contract award and administration. 16 The URA should conduct a study into the possibilities of optimising the effect of pre-shipment inspection. This study could among other things include a review of the pre-shipment contract and procedural design including the introduction of proper ex-post reconciliation procedures. The study could review the merits of destination inspection for some imports, say, from neighbouring countries. The pre-shipment procedures should (i) increase its focus on quality control of imports to cover dubious imports from certain countries and (ii) continue using random selection procedures for inspection for imports from other countries. Private Sector procurement 17 There is a need for the private sector to develop procedures that will ensure that they achieve maximum efficiency and economy in their procurement. They could achieve this jointly through their professional associations. The CPAR team did not encounter any real procurement plans. Rather the recognition of the importance
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