A statutory internal audit report for the second quarter of Financial Year 2018/2019 has unearthed rot in the Kampala Capital City Authority (KCCA)’s procurement process.
The report, published on January 31, was compiled by KCCA director of internal audit Moses Canon Bwire basing on the period between October and December last year. Mr Bwire’s report was backed by reviewing the contracts signed between July 10, 2016, and June 30, 2018.
The objective of the audit was to establish whether the procurement, management and payment for the city works were in line with government procedures and guidelines.
The audit findings indicate failure to submit performance securities by some contractors, inadequate usage of the existing contracts management system, calling off orders issued to contractors with higher unit prices under frame contracts and failure to prepare management plans for some contracts.
Others are failure to provide for retention during the defects liability period, delays in payment for certified works, payment of value added tax components to unregistered contractors and unclear land boundaries affecting project implementation.
The internal audit director is mandated by Section 60 of the KCCA Act to prepare quarterly audit reports and submit them to the authority and give a copy to the authority’s public accounts committee.
Section12(1,3,4) of the Public Procurement and Disposal of Public Assets (PPDA) regulations, 2014 states that a performance security shall be required to protect the procuring and disposing entity against non-performance of a contract. According to the PPDA regulations, the performance security shall be equivalent to 10 per cent of the value of a call-off order.
However, the audit shows that although KCCA signed contracts for road repairs with five contractors with a provision for a 10 per cent performance security of the contract price, two providers did not submit performance securities.
“…KCCA is not protected if the contractor fails to execute some of the contract obligations,” Mr Bwire warned.
According to the audit, KCCA’s department of Information Technology developed a contract management system to aid in monitoring contract implementation phases from inception up to completion.
But findings show that there were no updates by contract managers and other key stakeholders during the contract implementation and payment process.
Mr Bwire noted that such glaring irregularities undermine the purpose for creation of the contracts management system since it is difficult to monitor the performance of contractors.
KCCA as a contract manager is mandated by Section 51(3) of the PPDA (contracts) regulations, 2014 to prepare a contract management plan and forward a copy to the procurement and disposal unit for purposes of monitoring.
However, the audit reveals that there are instances where there was neither evidence on the contract management file nor the procurement file that KCCA prepared contracts management plans for the contracts reviewed.
Contracts where management plans were not prepared include emergency roof repairs, ceiling boards, electrical fittings and rainwater harvesting at Kololo Primary School, and construction of a classroom block at Kansanga Seed Secondary School.
Others are construction of a piggery unit and a chicken house at Kyanja Agriculture Resource Centre, and construction of a wall fence at Kisaasi Primary School.
“…failure to prepare contract management inhibits project monitoring by other stakeholders due to absence of the planned workflow information,” the audit states. Mr Bwire recommends that in future, the KCCA head of procurement should ensure that all contract managers prepare and submit contract management plans to ease monitoring of contract deliverables by various stakeholders.
According to the audit, KCCA entered into a framework contract for the routine road repairs with five service providers who were required to provide the said works and related services for a period of 18 months at different unit prices. The procurement guidelines require KCCA to issue a call-off order to the provider for only items with the lowest price where the framework agreement has been entered into with several providers for several items at different prices.
However, the audit shows that in several cases, the call-off orders were issued to providers with higher prices without evidence that they would offer the same services at a cheaper cost under the same contract framework.
Mr Bwire recommended that where framework contracts are entered into with more than one service provider, the issuance of call-off orders must always be done after analysing the prices to ensure that priority is given to the eligible providers who offer the services at the least cost to reduce unnecessary expenditures.
KCCA speaks out
In an email to this newspaper last week, KCCA spokesperson Peter Kaujju acknowledged the audit queries but noted that the report is intended to ensure system improvements at the authority.
“… as an institution, we pay high attention to the government procurement procedures and this explains our top ranking among government entities over the years. Last year, KCCA was ranked at 83 per cent in terms of performance,” the email reads in part.
“We have done well and will continue to observe the recommended procurement procedure in all our areas of business including contracting, management and across the entire procurement cycle,” Mr Kaujju added.
However, he did not explain how KCCA intends to recover the money which was lost as a result of irregularities in the procurement process.
But in a telephone interview yesterday, Kampala Lord Mayor Erias Lukwago noted that while the current 2010 KCCA Act requires the contracts committee to submit quarterly reports of procurement to the authority, the committee has never submitted any report since KCCA came into being in 2011.
Mr Lukwago further noted that the composition of the contracts committee members is not clear.
“Whenever we ask for the reports, they accuse us of interfering with the work of the executive director yet we are doing our supervisory role as an authority. However, we have made it clear that the law cannot be compromised hence we need compliance,” he said.
Section 66 of the 2010 KCCA Act states that the capital city contracts committee shall give to the authority a copy of the published quarterly summary reports of the procurements and disposals made by it during the quarter concerned containing such particulars.
Different view. In February, a KCCA public accounts committee report highlighted irregularities in the management of city properties. Failure to appoint contract managers, the report said, brought up lapses in the contracts management resulting in loss of revenue. The report states that absence of a contract manager to follow up on the execution of the lease that was granted to Formar Ltd for Plot 9B Kira Road, led to encroachment on the children’s park (Plot 9A) without KCCA’s notice.