5 February 2013

Zambia: 'MMD Awarded U.S.$53 Million Tender Without Legal Opinion'

THE MMD government awarded a tender worth US$53 million (KR265million) to AVIC of China for the supply of mobile health units without legal opinion from the Attorney-general.

Glaring irregularities have been laid bare in the Auditor-general's latest edition in the manner the mobile health units were procured.

The contract involving AVIC was not submitted to the Attorney-general for a legal opinion contrary to the provisions of the Zambia Public Procurement Authority (ZPPA) Act as backed by Clause (e) of the Public Procurement Act of 2008.

The once controversial issue during former leader Rupiah Banda's reign has shown that the Ministry of Health evaluation committee recommended to the ZPPA for the award of the contract subject to satisfying various conditionalities.

The contract with AVIC was for a period of 20 weeks from the time of signing the loan agreement in May 2010.

Payments were to be made with an initial 45 per cent of the contract price being US$23.8 million (KR119 million), to be paid within 45 days of signing the contract as an advance payment. An additional 20 per cent of the contract price being $10.6 million (KR53 million) of the goods shipped was to be paid within 45 days of submission of documents and 25 per cent translating into $13.2 million (KR66.6 million) was to be paid within 45 days of receipt of goods.

A 10 per cent being $5.3 million (KR26.5 million) was retention fee and payable after two years of commissioning and acceptance.

"However, the Ministry of Health entered into the contract with AVIC at a total contract sum of $53 million despite the fact that AVIC did not meet all the conditions given by the Evaluation Committee," the report said.

The contract stated that AVIC would be responsible for carrying out maintenance of the equipment in Zambia for a period of two years. Further, the Ministry of Health was to assign a number of technicians to work with AVIC, for purposes of transferring technical knowledge to the Zambian technicians.

However, the Auditor-general's report stated that as of October last year, there had been no local technicians assigned to work with their AVIC counterparts.

Additionally, as of December last year, there were no records showing that a $6 million (KR30million) was spent for the supply of medicine and other consumable medical appliances as indicated in the contract.

It was reported further that it was not clear why the then Ministry of Finance and National Planning had commenced loan payment to Export-Import Bank of China towards an amount of $63.4 million (KR317.5million), when the agreement clearly specified that there was a grace period of five years before commencement of repayment.

"It is also good practice that, at the contract performance and administration stage, goods must be inspected upon delivery and an acceptance certificate signed by the buyer, the supplier and a witness," it stated.

However, the Ministry of Health did not develop the specifications of the mobile hospitals that were to be procured. Instead, this was left to the supplier.

In addition, there was no evidence that an acceptance certificate was issued.

Therefore, it was not possible to determine whether the units supplied were in the right quantities and specifications.

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