Billions of Ghana Cedis are spent each year by the Ghana government buying goods and services for public projects; majority of this is spent in the construction sector. The construction sector worldwide has repeatedly been known to be susceptible to corrupt practices and this has primarily been during the pre-contract procurement stage not to say construction phase is devoid of corrupt practices. Practices such as bid rigging and cover pricing have been endemic in the construction industry worldwide which at a point prompted the then Office of Fair Trading – UK, now Competitions and Markets Authority, UK in 2009 to investigate and prosecute those involved in anti-competitive behaviours in the UK.
In Ghana, Public Procurement has been the process by which our government and other Public entities acquire its goods, works, and services to implement government’s commitments and public projects. The World Bank acknowledges that overall Public Procurements accounts for at least 15% of the world’s gross domestic product (GDP), and even more in African countries.
It is therefore vital for the taxpayer to achieve Value for Money (VfM) for how its tax is being expended. The World Bank indicated in its report on Ghana’s Public Procurement Reforms in Feb, 2013 that “reducing bottlenecks, combatting corruption, and building capacity in procurement help governments maximize the buying power of their budgets and improve the quality of service delivery to their citizens. Competitive and transparent public procurement systems are therefore a key element to achieving sustainable development and more prosperous societies in Africa”
In the construction sector, procurement process spans the whole life cycle of any project. The following process is critical to any procurement life cycle (1) The need to purchase; (2) Supplier selection and Contracting; and (3) Delivery of the required goods, services and or works.
In the UK, procurement activities are legally bound under the EU procurement rules. The EU procurement directives stipulate threshold for goods and services. In Ghana, the government’s procurement activities are regulated by the Public Procurement (Amended) Act, 2016.
It is scary the increasing number of procurement challenges in the Technology and Construction Courts in the United Kingdom lately. These challenges are coming from bidders who are calling for a review, clarification or frankly challenging the process in which their bids were dealt with.
The claims ranges from potential loss of profit, wasted time and associated costs. Claimants are identifying both their wasted costs and their loss of profit arising from the flawed procurement process.
Recent cases in the UK have shown that it is not entirely necessary for an unsuccessful tenderer to prove that had it not been for the evaluation errors, they would have been successful. All that is required is to prove that the evaluation process have not been fairly carried out and that the process is flawed.
What does good looks like?
For Construction procurement activities in Ghana in particular, there has to be a distinction between Selection Criteria and Award Criteria. Inevitable problems arise when the two criteria are confused and or interchanged during selection. A transparent and clearer selection criterion is required in assessing the tenderer’s ability and suitability to perform. This should be well defined and explicit at prequalification stage in order to shortlist bidders for the tendering process. Also the decision making process should be clearly defined to avoid any confusion in the later stages of the procurement process. This was evident in the Lianakis2 case where the ECJ held that the weightings and sub-criteria which are the basis of the evaluation process cannot be changed after contractors have submitted their tender. The selection criterion could center on assessing tenderers experience, qualification, economic or financial standing. Once this is established, the basis of the selection may not be used to disqualify tenderers at award stage as they would have been deemed to have passed the qualification stage. In exceptional circumstances where the selection criteria could be used at award stage, the process and decision making process will have to be transparent at the very onset, preferably at Invitation To Tender (ITT) stage.
The Award Criteria is therefore an assessment or relate to the bid which is the Most Economically Advantageous Tender (MEAT). This can range from Price, Commercial Submission, Technical and Methodology, Programme, Resource, Sustainability, Alternative Proposals (if required). The selection of the selection or award criteria is entirely the prerogative of the contracting authority. The selection and award should be aimed at the tender which provides the MEAT.
At the time the President-elect Nana Addo Dankwa Akufo Addo was vying for the leadership of this country, he posted on his Facebook wall the following frustrations on 25th September 2016 “The procurement of most roadworks has mainly been by sole sourcing since January 2009 when the NDC-led government took over the administration of this country, inspite of being in an environment where expertise for construction and maintenance of roads and related structures is in abundance. In the Public Procurement Authority’s report for 2010 fiscal year, at pages 51 to 74, out of 364 requests to procure roadworks by sole sourcing only 29 were turned down. This shows that 92% of the requests were approved. This was in the early stages of the “Better Ghana Agenda”.
“In the Authority’s recent annual report for 2014 fiscal year the usual request for sole sourcing cunningly changed to “Restricted Tendering” and from pages 56 to 75 all the 40 requests on roadworks were approved.
“Recently, the awards of contracts for roadworks to be funded by COCOBOD engendered a lot of heated controversy. No single project went through the preferred competitive tendering process. It was “projects for sale” at COCOBOD office.”
Clearly Sole Sourcing or Single Tendering is not the best litmus test for Value for Money except in exceptional circumstance where the nature of the works is of a specialised nature and only a contractor with that specialist expertise could carry out the works.
The Most Economically Advantageous Tender Versus the Lowest Price Approach
Lowest price does not always equal Value for Money. The UK government has a document on Managing Public Money revised August 2015 and is aimed at maintaining public trust and credibility. Ghana must have a document of similar nature which ensures providing confidence and public trust and direction on expending tax payers’ money. The PP Act is one thing but all too often it is read as a legal document, argued and left to the legal brains. Too much decision making powers and authority is given to heads of departments and committees. Although this is done in good faith, it does not drive confidence in the public discourse. We have come far as a country and the staus quo must be challenged.
To ensure the effectiveness of the competitions and procurement activities, the challenge is that the assessment criteria or the tender evaluation model being aimed at obtaining the most economically advantageous tender; the scoring mechanism being transparent and fair; and a no-one-size-fits-all type of scoring mechanism is in place. Each remit is reviewed on its own merit and a MEAT criterion generated to suit its expectations and defined well in advance.
The lowest price approach is generally suitable for the procurement of goods such as stationary and the like but not entirely suitable for complex projects where whole life costing is to be considered.
Audit Trail
Procurement professionals need to be aware that any decision made should have a clear audit trail behind it and maintained for future records. This should be readily available for unsuccessful and successful tenderers to view.
The Ghanaian tax payer needs to have the full confidence that the government is there to serve and not to be served. The Ghanaian tax payer needs to be able to trust the Public Procurement Authority that they are there to ensure the tax payer gets VfM. For this to happen, there is the utmost need to have transparency in the dealings of the PPA, be able to request, tender and challenge unsuccessful outcomes. We need to have the confidence that when bids/tenders are challenged, contractors will not suddenly find themselves in the naughty list or be blacklisted and not invited for future tendering.
The confidence the Ghanaian people have reposed in the President – elect and his team is overwhelming. We have the faith and tenacity to make Ghana work and grow again. In the meantime, I hold my breath and wait to see. May God help our homeland Ghana.
The author is a professional Quantity Surveyor. A Commercial Manager with over 15 years’ experience in the UK construction industry. He holds MSc in Construction Management from Birmingham University and MSc in Construction Law from University of West of England. He is passionate about transparency in public procurement, risk and opportunity management, and maximising margin/profit in Construction projects.