22 February 2013

Zambia: Beware of Tender Adverts

THEY are at it again. It is that time of the year when companies raise cool, cheap and easy money by taking advantage of the disadvantaged, the desperate and the gullible.

Every year around this time companies and organisations run advertisements in the print media inviting suppliers of various goods and services to register with them as suppliers of goods and services for a particular financial year.

Typically these advertisements state that application forms would be obtained upon payment of a non-refundable fee of anything from KR150 to KR300 or even more, and there is usually a rider to the effect that being registered is not a guarantee of doing business with the company for supplying goods and services.

The application forms may usually comprise only a page or two whose cost cannot justify the application fees. The requested categories of goods and services may range from supplying of cakes and bread to provision of professional consultancy services.

On the face of it these advertisements appear to be legitimate, especially when compared to invitations to tender for, say, builder's works in the construction industry, invitations for registration of suppliers of goods and services seem to have been "cloned" from these traditional invitations to bidders in the construction industry.

This method of fundraising seems to have spread to such institutions of learning as colleges and universities where potential students are requested to pay non-refundable application fees.

The issue at hand is not necessarily the invitation to register as a supplier of goods and services but rather the payment of the non-refundable application fee and the qualification that even though you may be registered it does not follow that if the company is in need of goods and services they will order them from you. The question then is what are you paying for?

In the construction industry invitations to contractors to tender for particular construction projects carry various detailed tender documents including architectural drawings, engineering drawings, specifications and detailed bills of quantities covering preliminary and general items and other bills complete with quantities specific, particular and peculiar to the project.

The preparation of these tender documents will cost the client time and money and it is important to ensure that only those contractors seriously contemplating to take part in the submission of bids should be allowed to get these tender documents hence the request for payment of reasonable non-refundable fees before picking up tender documents.

On the other hand application forms to register as a supplier of goods and services may consist of one or two pages and hardly justifies the exorbitant application fees demanded.

Invitations to tender for builder's works are about specific and live building or engineering projects about to commence and any participating bidder stands an equal chance of being awarded the particular tender.

Registration of suppliers of goods and services for each financial year is really speculative, the inviting organisation is actually saying "we may need to buy some apples etc during the 2013/2014 financial year, in case this need does arise pay a non-refundable fee of so much so that we can include you on our register of suppliers but even if the need does arise it does not follow that we will get back to you".

This is what the request for registration of suppliers is all about. Even the actual award of tenders in the construction process should follow certain procedures in order to instill confidence, integrity and transparency in the process from the time and date when tenders must be deposited in the tender box, time and where tenders would be opened and who should be present.

After the tender opening and announcing the tender figures, contract periods and so on all those present would have an idea as to who is likely to be awarded the tender without any bitter feeling.

In the case of registering as a supplier of goods and services and paying the non-refundable fees there are no further contacts with the company that you have registered with that would assure you of transparency and confidence in the procurement process adopted by the company.

In practice registration of suppliers of goods and services does not even make it a prudent procurement method to any procurement officer. If for, instance half way through the financial year there is need for a company to purchase certain items it would not be prudent for the procurement officer to source those goods only from those suppliers on the register when there is another supplier not on the register but with better quality and cheaper goods.

Therefore the tendency has been to collect your application form together with your non-refundable fees and throw away the register; when there is need to source any goods the procurement officer knows where to go after all the advertisement did state that registering with the company is not a guarantee of business so there is nothing to protect your interests, in short registration of suppliers of goods and services is more about fundraising for the company than creating job opportunities for those responding to the advertisement.

All professional consultants are required by law to register with their respective professional bodies. The Zambia Institute of Architects maintains a register of their members and so does the Law Association of Zambia for lawyers, the Engineering Institute of Zambia for engineers and the Zambia Medical Council for doctors and so on.

Anyone in need of any professional services would easily get a copy of the legally registered consultants from the relevant professional bodies as no other register of professional consultants can supersede the registers maintained by these professional bodies.

On the other hand business houses dealing in various goods and services and registered with the Registrar of Companies do maintain business premises where they operate from and can be accessed whenever anyone is in need of particular goods and/or services.

This status of things does not justify any organisation maintaining its own register and making business houses pay separate annual registration fees over and above those fees required by law, the only explanation is that the annual invitations to registers with some companies upon payment of non-refundable fees are fundraising ventures.

This trend to collect money from various companies and the general public through the annual advertisements for registration of suppliers of goods and services has been going on for some time now and no institution or government department has raised any objections to this arrangement.

May be the arrangement is legally accepted since no one is compelled to respond to these advertisements and no one has investigated how the issue actually operates and therefore the issue of obtaining money by false pretences could not arise.

However even if this arrangement is legally accepted there surely must be something morally wrong in collecting money from the general public by hoodwinking the public the way the current situation is.

The advertisements to register as suppliers of goods and services cannot be likened to advertisements for tenders for builder's works in the construction industry as the two processes are different since the two adopt different procedures as stated above.

There probably would be nothing wrong in asking organisations to register as suppliers of goods and services without necessarily asking applicants to pay non-refundable fees because the fees being asked do not tally with expenses incurred and the request emanating from the requesting company is after all in their own interest since they are the ones originating the advertisement.

In the end the inevitable conclusion is that advertisements to register as suppliers of goods and services after payment of a non-refundable fee is nothing more than fundraising ventures and it is up to the affected persons or organizations to weigh the options and decide when and if to respond to such advertisements.

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