24 January 2013

Uganda: IGG Cancels NSSF Pension Towers Tender

The Inspectorate of Government has cancelled the tender for the sh312b second phase of the National Social Security Fund (NSSF) pension towers over leaked information and corruption.

"The whole of the bidding process for Phase 2 of the NSSF Pension Towers should be cancelled owing to the amount of information about it that has gone out to various bidders, staff of various institutions involved in review processes and the general public, as well as the persistent allegations of corruption," the inspectorate said in its report.

The report released on Monday added that the NSSF board of directors and management should implement their resolution to outsource services for procurements in respect of projects that are above $2.5m (sh6.6b), starting with the procurement of a contractor for the towers.

The inspectorate noted that preparation of bidding documents should correct the anomalies and gaps identified by the Public Procurement and Disposal of Public Assets Authority (PPDA) in its administrative review in order to prevent re-occurrence of mistakes identified in the previous procurement processes.

It added that bid documents should be critically reviewed and approved by PPDA before the procurement commences. The inspectorate said outsourced service providers should carry out procurement strictly according to PPDA provisions and bid documents.


The inspectorate ordered the NSSF board of directors to sternly warn the corporation secretary, David Nambale, and accounting officer Patrick Ayota, for failing to provide the necessary advice to ensure that the re-evaluation of bids for phase two of the Pension Towers Project is carried out by an objective and impartial evaluation committee, and for their resultant contribution to delaying the project.

"The members of the re-evaluation committee who are employees of NSSF be subjected to disciplinary proceedings for failure to comply with the law and regulatory guidance contrary to the Ethical Code of Conduct under the PPDA Act and Regulations, and for their contribution to the delay in procuring a contractor for the project," the report stated. The recommendations followed several complaints against the management of NSSF alleging that there was corruption in the award of the tender to construct the pension towers.

There were also earlier allegations that a Chinese firm, China Civil Engineering and Construction Corporation (CCECC), whose bid was being considered for the award was sh20b higher than that of China National Aero-Technology International Engineering (CATIC), which was the lowest pre-qualified bidder. The inspectorate noted that because of the interest by the NSSF managers, the NSSF head of procurement, Elis Biryahwaho, was interdicted so that the fraud could be covered up. Biryahwaho's job was recently advertised.

Complaints by bidder

At around the same time, one of the bidders complained about the process to PPDA. Following consultations between the inspectorate and PPDA, it was agreed that PPDA proceeds with investigations into the allegations.

Although the bidder's complaint was later withdrawn from PPDA, the NSSF board of directors had also lodged a complaint with PPDA about the process and requested for an administrative review, which PPDA carried out.

The PPDA report issued on September 18, 2012, and copied to the Inspectorate of Government recommended that NSSF conducts a re-evaluation of the 17 bids that had been submitted for pre-qualification, taking into consideration the PPDA findings and observations.

But shortly after, the inspectorate received another complaint from a whistleblower that the NSSF management had ignored the recommendations made in the PPDA administrative review.

"Despite the report by PPDA that queried the award of the tender to CCECC, NSSF has gone ahead to pre-qualify the company in the re-evaluation exercise notwithstanding that the company did not meet the preliminary requirements. CCECC had been faulted in the PPDA report for submitting defective Powers of Attorney and using experience of subsidiary companies and thus could not pass the pre-qualification stage," the whistleblower wrote.

The Inspectorate of Government then decided to stop the tendering process and carry out an investigation into the allegations.

Missing documents

The best evaluated bidder (CCECC) was supposed to be displayed on the NSSF notice board for public view from July 30 to August 10, 2012 as required by law, but the documents were stolen earlier on July 27, 2012.

In the memo addressed to NSSF's managing director Richard Byarugaba, Biryahwaho said; "This is to bring to your attention that a copy of a pre-qualification document and tender document that were submitted to PDU (Procurement and Disposal Unit) by the above company (CCECC) were taken out of office on the Friday evening (July 27) without our knowledge."

Biryahwaho also copied the memo to contracts committee members; Edward Senyonjo (acting NSSF head of risk) and Geoffrey Barigye (head of audit).

Following the documents' disappearance, Biryahwaho noted that competing firms might have got hold of the pre-qualification and bid documents that CCECC had submitted together with the copy of the evaluation report that had just been concluded.

"In light of this, I find it difficult as the custodian of these documents and all the procurement-related information to guarantee confidentiality of information regarding the just concluded evaluation process of the Pension Towers project," he wrote.

In March, ROKO Construction Company which constructed the basement of the towers lost out on the contract of the towers that covers 16 acres on plots 15A, 15B and 17 on Lumumba Avenue in Nakasero.

Seventeen companies responded to the pre-qualification bidding process. However, Roko was not considered among the final three companies which were asked to submit their bids for evaluation.

The three selected Chinese firms were; CCECC, CATIC, and Sinohydro Corporation Limited, a Chinese state-owned hydropower engineering and construction company.

Rising costs

The project whose contract was signed on April 1, 2008, had its cost first shoot up from sh36b to sh120b by 2008, prompting Parliament to summon NSSF chiefs to explain. The then NSSF chairman, David Chandi Jamwa, attributed the rise to extensive changes in the project design.

But by the beginning of 2009, the cost had risen to sh147b and it is expected to shoot up to $120m (sh312b) upon completion.

The entire complex, which consists of three joint towers; two of them having 10 storeys each, and another having 23 storeys, will cover 60,000 square meters when completed.

Byarugaba had in March 2012 said the second phase was expected to be complete within three years - meaning it will be finished by 2015, but the cancellation of the tendering process is likely to affect it.

The first phase of the project was supposed to be completed in two years, but took longer after a retainer wall collapsed on October 14, 2008, killing seven workers and leaving scores injured. The construction was supposed to begin on April 1, 2008 and end by at least May 2010.

But after the tragedy, the works dragged on up to January 2012 when Roko completed the first phase.

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