OPC interfering in public procurement

Malawi Government is using a unit perched in the Office of the President and Cabinet (OPC) to scrutinise public procurements, a move the Office of the Director of Public Procurement (ODPP), a legal body established to do just that, has described as “illegal”.

But Attorney General Anthony Kamanga has defended OPC, arguing the unit and the ODPP have different functions.

Weekend Nation has established that the Malawi Government Contract Negotiating Unit (MGCNU) set up in 2012 is not supported by any law and it slides Malawi back to a centralised regime which donors said was prone to corruption way back in 2004.

Stakeholders, including the Malawi Institute of Procurement and Supply (Mips), view this unit as an effort by the Executive arm of government to exert undue influence in the award of government contracts.

In an e-mail interview this week, head of Mips, Gladys Mwale, said: “This is duplication of work.

“A lot of people were against the formation of this unit in OPC but because there were vested interests, politicians bulldozed and here we are. This is the vehicle being used to siphon money because ODPP has been sidelined. The act does not mention anything on the formation of such unit. We honestly have to think about this.”

On the other hand, the ODPP, in its 2012 position paper authored by assistant director Timothy Kalembo seen by Weekend Nation described the establishment of MGCNU as “unlawful”, but OPC has not acted on the contents to date.

Instead, government is pushing for yet another law that proposes an amendment to the Trade Act to specifically provide that all government contracts should be awarded to youths.

This development also contradicts efforts already underway to further strengthen ODPP with investigatory powers and technical teeth to better police public procurements, by replacing the Public Procurement Act (PPA) with a law that would establish an authority than a mere department as ODPP is.

A draft bill Weekend Nation has seen shows that such a body, to be called the Malawi Public Procurement and Disposal of Assets Authority (MPPDAA), would have better instruments to police public procurement including investigating and prosecuting offenders.

According to the draft, PPA “does not specifically provide for powers of the Office of Director of Public Procurement to institute investigations in a Procuring Entity where procurement misconducts are suspected.

“As a result, procurement misconducts have gone un-investigated and unpunished and this has led to an increased perception of widespread corruption in public procurement,” reads the bill.

In an interview, chairperson of Budget and Finance Committee of Parliament Francis Kasaila suggested that “it would make more sense if MGCNU was within ODPP as a technical section.

“It should have technical people who should be looking at technical agreements, but whether that’s what is happening, I stand to be corrected. It would be better, if anything, to be a technical arm of the ODPP.”

Although OPC was yet to respond to our questionnaire on the matter as we went to press, Kamanga defended the establishment, arguing that MGCNU and ODPP have different functions.

According to Kamanga, ODPP is there to ensure that “public procurement complies with a procurement code” while MGCNU has an internal function to coordinate procurement.

“You need to understand that ODPP does not coordinate procurement and they don’t do procurement because they are an oversight body. The negotiating unit complements ODPP as an internal function,” said Kamanga.

But according to lawyer Justine Dzonzi of Justice Link, activities of the MGNCU can be easily challenged “because it does not have a legal mandate for its existence.”

Dzonzi agreed that ODPP’s presence has not sanitised public procurement but blamed it on loopholes in the PPA and lack of political will to give the ODPP teeth.

“There have been cases where OPC has overridden decisions of the ODPP and also cases where ODPP has been by-passed altogether and this is because corruption in Malawi has now been institutionalised such that no law would root it out but political will,” he observed.

Establishment of MGCNU

President Joyce Banda first mentioned MGCNU when she officially opened the National Dialogue on the Economy Conference in Mangochi on June 29th to June 30th, 2012.

“I expect the newly-established Contracting Unit in my office to assist government to effectively negotiate contracts to the benefit of Malawians,” she said.

Later in October, former Chief Secretary Bright Msaka formalised the unit in a circular, saying its mandate “shall include all contracts including construction, provision or supply of goods and services, concessions and all such agreements that place an obligation on the Malawi Government or have an impact on the resources and endowment of Malawi.”

Further, Msaka said GCNU would also be responsible for reviewing, considering, vetting, negotiating and passing contractual proposals before they are concluded and agreed between the Malawi Government and other parties and stakeholders.

Before the end of 2012, ODPP had responded to this Cabinet directive through a position paper which, among others, reminded OPC that this was moving the country backwards.

The ODPP position paper reminded OPC of its history by also emphasising the illegality of the MGCNU, saying it contradicts Section 4 of the Public Procurement Act.

The section provides that the ODPP is the only office given the mandate to regulate, oversee and monitor all public procurement activities.

“Under Section 5(2) (k), the rightful office to give advice to government is the ODPP. It is clear that the ODPP had no hand in producing this circular,” reads the ODPP’s opinion.

By establishing MGNCU, the OPC argued that it was meant to achieve value for money, but ODPP countered this, saying “the unit cannot achieve value for money through negotiations.

“One should consider the issue of value for money at the inception of the procurement process and determine what sort of arrangement a PE (Procuring Entity) wants to enter, the quality of the bidding document, method of procurement used, etc.

“It is not clear how the Government of Malawi expects an institution which was not party to the process all along will play an effective role of achieving value for money at contract negotiation stage,” reads the ODPP’s position.

Prior to the establishment of the ODPP, following the enactment of the PPA in 2003, Malawi had the Government Contracting-out Unit (GCU) in OPC which was disbanded.

The GCU replaced the Central Tender Board abolished in May 2000 through Circular No. 1/2000 of 9th June 2000 with responsibilities to privatise and contract out various government activities and to approve government tenders.

According to a May, 2004 World Bank report, also endorsed by the Malawi Government, the PPA, which came into effect on August 1, 2003, “supersedes any previous procurement statutes and regulations in force, including the Interim Guidelines.”

A member of the Mips board who did not want to be named said: “The formation of MGCNU was going backwards to GCU time where decisions were centralised and led to loss of public funds due to corruption.

“Instead, the government should have strengthened that capacity within ODPP and management of various institutions to meet the required standards. Legally, the PPA which supersedes all written laws on the same, empowers only the Director of Public Procurement to oversee public procurement in Malawi,” said the member.

The government already started the process to strengthen ODPP through the proposed repeal of PPA and enactment of another law suggested to be the Malawi Public Procurement and Disposal of Assets Act which would then establish the Malawi Public Procurement and Disposal of Assets Authority.

In an interview, Minister of Information and Civic Education Brown Mpinganjira said it is now up to Cabinet or Parliament to decide whether to merge MGCNU and ODPP when they review the bill in their respective jurisdictions.

“When the bill comes to Cabinet or Parliament and they think the two should be merged, so shall it be,” he said.

Mpinganjira said: “The government has constitutional mandate to set up structures when government deems needful for smooth running of its affairs.

“That’s why today you hear Ministry of Information and Tourism tomorrow it is Ministry of Information and Civic Education.”

According to Mpinganjira, with ODPP alone, “there has been no mechanism to monitor the conduct of government contracts.”

ODPP spokesperson Mary Mbekeani and director Dye Mawindo were not available for comment on the matter.