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Annual Performance Evaluation Report Financial Year 2010/11

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Annual Performance Evaluation Report Financial Year 2010/11 ANNUAL PERFORMANCE EVALUATION REPORT FOR THE FINANCIAL YEAR 2010/2011 90% 80% 80% 73% 69% 68% 70% 59% 60% 55% 50% 49% s 50% s PE 39% PE s 40% 174 91 PE 30% 99 AVERAGE COMPLIANCE 20%LEVELS 100 PEs 10% 20 PEs 0% 2006/07 2007/08 2008/09 2009/10 2010/11 ACTUAL TARGET TREND OF PEs COMPLIANCE WITH PPA 2004 AND ITS REGULATIONS October 2011 v PPF Tower, 8th Floor Ohio Street/Garden Avenue P.O. Box 49, Dar-es Salaam, TANZANIA Tel: +255 22 2133466, 2121236/7 Fax: +255 22 2121238 E-mail: [email protected] Web: www.ppra.go.tz In reply please quote: Ref. no. AB30/200/01/”B”/86 7th November, 2011 Hon. Mustafa H. Mkulo (Mp), Minister for Finance, P. O. Box 9111, DAR ES SALAAM. Honourable Minister, RE: SUBMISSION OF ANNUAL PERFORMANCE EVALUATION REPORT FOR THE FINANCIAL YEAR 2010/11 Pursuant to Section 26 (1) of the Public Procurement Act, Cap 410, I have the honour, on behalf of the Board of Directors of the Public Procurement Regulatory Authority (PPRA), to submit to you the Annual Performance Evaluation Report of PPRA for the financial year 2010/11. A copy of the report will be submitted to the Controller and Auditor General as required by the same Section of the Act. Section 26 (2) of the Act requires the Minister to lay this report before the National Assembly within two months from the date of receiving it or at the next meeting of the House whichever comes earlier. This report generally discloses the performance of PPRA in implementing its mandate as required by the Act and its five‐year Medium Term Strategic Plan (2009/10 – 2013/14). It further enumerates the performance of Procuring Entities (PEs) in carrying out procurement activities in compliance with the Act. Despite the various challenges encountered in exercising its mandate in FY 2010/11, there are a number of achievements that PPRA has recorded during the period under review as indicated in the Report. vi Honourable Minister, PPRA has continued to collect information on the volume of awarded tenders by PEs for the financial year 2010/11. Generally, there has been an increasing trend by PEs to submit this information to the Authority. During the period under review, 315 PEs, representing 81% of all, complied with this requirement. From the submitted information, it has been established that 142,396 contracts worth Tshs. 4.5 trillion, were awarded by these PEs. The awarded contracts, when compared with the Government budget for the FY 2010/11, represent 41% of PEs’ expenditure on procurement. The report confirms the importance of PPRA to continue monitoring procurement processes in PEs to enable the Government realise value for money. Honourable Minister, It is encouraging that PEs are now increasingly complying with the public procurement law. From the audits carried out in 106 PEs for procurements worth Tshs 314 billion carried out in financial year 2010/11, the Authority has established that the compliance level was 63%. From the procurement audit follow up of procurements worth Tshs. 408 billion which was carried out on 68 PEs that were audited by the Authority in previous years and whose average compliance level was 54 %, it has been established that the compliance level has improved to an average of 75 %. This is a result of implementing specific recommendations that were contained in the previous audit report as well as capacity building interventions by the Authority in which more than 2,000 staff from PEs were trained, thanks to the ADB financing. Despite the noted improvements, many PEs still have problems in areas of records keeping, publication of contracts awards and contracts management. The Authority will put a special focus to build capacity of PEs to ensure compliance in these important areas. For the first time the Authority has carried out value for money audits to 136 construction projects in 30 PEs worth Tshs 184 billion. The audit has established that many PEs, particularly LGAs have serious problems with quality assurance and contract administration. Many of the audited projects in LGAs lack project supervisors a situation which leads to poor quality of works. Also there is a serious problem of delayed payments to contractors which leads to erosion of contractor’s confidence in executing public financed contracts. The Government, through your Ministry should direct PEs to award contracts matching the available resources and this will be achieved if there is integration of procurement planning in the budget preparation process both at the institutional and at the whole government level. In addition, the Government should ensure that adequate physical and human resources are availed to Local Government Authorities to enable them adequately supervise the construction works at their levels. vii Honourable Minister, During the period under review, the Government continued with the implementation of the system for procurement of Common Use Items and Services (CUIS) that started in the previous financial year. During the year, the Government Procurement Services Agency (GPSA) advertised 34 tenders through the system. Call‐off orders that resulted from these tenders amounted to TZS 24.78 billion which is an increase of 115.8% compared to last year’s records where a total of TZS 1.97 billion worth call‐off orders had been placed. This is a big increase, however the total call‐off orders for the period under review accounted for only 1.18% of total procurement volumes of goods as per PPRA records that stood at TZS 1 billion. This means that more effort needs to be employed by relevant state organs to ensure that all PEs use it. So far, only 102 PEs are using the system. PPRA, in collaboration with GPSA, is continuing with efforts to promote the system so that it is used by all PEs. It is expected that full implementation of the system will minimize procurement transaction costs hence add more value to the Government. Honourable Minister, Wide advertisement of tenders is an important aspect of enhancing competition and transparency in the procurement process. To enable PEs meet this important requirement of PPA, CAP 210 and its Regulations at minimum cost, the Authority has established a journal which is named “Tanzania Procurement Journal (TPJ)”. The journal is circulated as an insert in the Daily News paper of every Tuesday. In addition, PPRA has developed a state of the art tender portal that allows PEs to post their tenders online. Despite the obvious cost savings by PEs through the use of these two facilities, some PEs have been reluctant to use them. We request the Ministry to put provisions in the new Public Procurement Regulations to be issued that shall compel all PEs to make use of TPJ as well as tender portal in advertising their procurement opportunities. Honourable Minister, On its part, PPRA, despite achieving its set targets, has continued to face two major challenges namely; inadequate financial resources and shortage of working space. Currently, the Authority owns a piece of land in Kurasini area, Dar es Salaam which was formerly owned by the defunct National Agriculture and Food Corporation (NAFCO). Due to unavailability of funds, PPRA has been unable to develop the plot, a move that could solve the problem of limited office space as well as expanding PPRA’s revenue base by leasing or letting out part of the building on commercial terms. viii Honourable Minister, The Authority is largely dependent on the Government and development partners for financing. This makes it difficult for it to achieve its annual plans due to declining financial support from the two sources. Inadequate financing has in particular severely impacted on the Authority’s plans to expand its outreach by employing more staff and opening the planned zonal offices. Given the big magnitude of public financial resources that are spent in public procurement, it is important that efforts put by Government to increase revenue collection through TRA should go hand in hand with efforts to capacitate procurement oversight institutions, like PPRA and PPAA, to enable them plug loopholes that leads to leakage of those resources. We call upon the Government to increase the budget of the Authority for the financial year 2012/13 to enable it employ new staff, open zonal offices and develop the Kurasini plot, increase scope of procurement audits and capacity building efforts. Furthermore, we request your support to PPRA’s efforts to have sustainable sources of income by including in the Public Procurement Regulations, provisions that will allow the Authority to generate funds through imposition of charges on tender adverts to be placed on TPJ and PPRA’s tender portal. In addition, we request the Ministry to introduce in the Regulations, a capacity building levy to be imposed on procurement contacts. Proceeds of the levy shall supplement the budget for capacity building to PEs and other stakeholders of public procurement such as the Ministry of Finance, PPAA, GPSA and PSPTB. Honourable Minister, Finally, let me express my sincere appreciation to the Government through the Ministry of Finance, for its support to PPRA. As we begin a new financial year, we count on the Government’s continued support towards strengthening of PPRA so as to achieve the ultimate goal of ensuring that public procurement delivers value for money to the Country. Honourable Minister, I hereby submit. Yours Sincerely, Dr Enos S. Bukuku BOARD CHAIRMAN PUBLIC PROCUREMENT REGULATORY AUTHORITY ix TABLE OF CONTENTS Letter of Transmittal ....................................................................................................................................
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