Public Procurement and Disposal of Public Assets Authority Investigation Into the Alleged Irregularities in the Award of a Contr

PUBLIC PROCUREMENT AND DISPOSAL OF PUBLIC ASSETS AUTHORITY

INVESTIGATION INTO THE ALLEGED IRREGULARITIES IN THE AWARD OF A CONTRACT FOR THE UPGARDING OF MUKONO-KYETUME-KATOSI/KISOGA- NYENGA ROAD FROM GRAVEL TO PAVED STANDARD TO M/S EUTAW CONSTRUCTION COMPANY

ENTITY: UGANDA NATIONAL ROADS AUTHORITY

COMPLAINANT: REFERED BY INSPECTORATE OF GOVERNMENT

JUNE 2014

Contents Acronyms 1 Executive Summary 2 1.0 Background 4 2.0 Summary of Facts 4 3.0 Law Applicable 12 4.0 Objectives 12 5.0 Findings of The Authority 12 6.0 Other Observations 14 7.0 Conclusions 15 8.0 Recommendations 15

ACRONYMS

AO - Accounting Officer Authority - Public Procurement and Disposal of Public Assets Authority BD - Bidding Document BoQs Bills of Quantities BEB - Best Evaluated Bidder CC - Contracts Committee EC - Evaluation Committee HPDU - Head Procurement and Disposal Unit NoBEB - Notice of Best Evaluated Bidder PPDA Act - Public Procurement and Disposal of Public Assets Act No. 1 of 2003 PPDA - Public Procurement and Disposal of Public Assets Authority SBD - Standard Bidding Document

1 Investigation Into The Alleged Irregularities In The Award Of A Contract For The Upgrading Of Mukono-Kyetume-Katosi/Kisoga-Nyenga Road From Gravel To Paved Standard EXECUTIVE SUMMARY

Uganda National Roads Authority procured firms for Civil Works for the upgrading of Mukono- Kyetume-Katosi/Kisoga-Nyenga road from gravel to paved standard at an estimated cost of UGX. 184,357,246,540. On 8th November 2013, the contract was awarded to M/s Eutaw Construction Company Inc. at UGX. 165,721,456,814 and a contract signed on 15th November 2013.

On 13th February 2014, the Authority received a complaint from the Inspectorate of Government alleging that the contract awarded to M/s Eutaw Construction Company Inc. for the upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyengaroad was awarded in a dubious manner and that the costs were unrealistic.

In exercise of its regulatory role in Section 8 (c) of the PPDA Act 2003, the Authority instituted an investigation into the matter.

STATUS OF THE PROCUREMENT

Uganda National Roads Authority awarded the contract for Civil Works for the upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga road from bituminous to paved standard to M/s Eutaw Construction Company on 7th November 2013 and signed the contract on 15th November 2013.

PPDA FINDINGS

The Authority noted the following:

Whether the award of contract to M/s Eutaw Construction Company Inc. for the upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga road was done in a dubious manner;

The Authority noted that the procurement for the contractor for upgrading the Mukono- Kyetume-Katosi/Kisoga-Nyenga road commenced in July 2010 and by 19th January 2011, the procurement had reached award stage. However due to lack of funding as stated by the PDU the contract could not be awarded hence the request by PDU on 22nd March 2012 to have it cancelled. The First request by PDU to have the contract cancelled was rejected by the CC. However on re-submission by the PDU on 9th May 2012, the CC approved the cancellation.

It was noted that one year after approval of the cancellation by the CC was done on 17th May 2012, the PDU on 4th July 2013 submitted a request for the withdrawal of the cancellation made on 17th may 2012. The PDU argued that although the CC approved cancellation, the AO did not communicate the decision to the bidders, expecting a possible allocation of funding for the project. The PDU further noted that the funding had been earmarked for the FY 2013/14 hence the need to have the cancellation decision rescinded.

2 Investigation Into The Alleged Irregularities In The Award Of A Contract For The Upgrading Of Mukono-Kyetume-Katosi/Kisoga-Nyenga Road From Gravel To Paved Standard The Authority noted that the submission by the PDU to CC requesting that the decision be rescinded was done well knowing that the bids had long expired.

Indeed, on 12th July 2013, the HPDU wrote to M/s Eutaw Construction Company Inc. asking the provider to confirm interest in continuing with the process and asked them to re-validate both the bid security and the bid. The HPDU also recommended that negotiations be held with M/s Eutaw Construction Company Inc. to confirm cost adjustments. The negotiations were held by the appointed members (see annex) and this culminated into signing of the contract with M/s Eutaw Construction Company Inc. on 15th November 2013 at UGX. 165,272,156,814 after SG approval.

The Authority notes that it was irregular for the Entity on 4th July 2013 to resurrect a process which had been cancelled by the CC a year earlier on 17th May 2012 and whose bids had long expired. The action by the PDE amounted into a direct procurement without regard of the provisions under the Forth Schedule Clause 6 of the PPDA Act.

The Authority finds merit in the complaint raised.

Whether the costs for the upgrading of the Mukono-Kyetume-Katosi/Kisoga-Nyenga road were unrealistic;

The Authority noted that the UNRA Directorate of Planning prepared BoQs from which the estimated value of the procurement was derived amounting to UGX. 184,357,246,540. It was noted that the Contracts Committee approved the solicitation document to be used on 2nd November 2010.

The Authority noted that only two firms; M/s Unik Construction Engineering (Pty) Ltd with a bid price of UGX 182,379,505,048.35 and M/s Eutaw Construction Co. Inc. with a bid price of UGX. 181,587,841,600 returned bids that were subsequently opened.

The Authority noted that the Evaluation Committee submitted the Evaluation report for approval by the Contracts Committee indicating M/s Eutaw Construction Company Inc. as the Best Evaluated Bidder at a price of UGX 182,983,576,600 after which negotiations were held between the UNRA negotiation team and M/s Eutaw Construction Co. The negotiation team recommended that a price of UGX 165,272,156,814 was sufficient to carry out the works.

The Authority noted that the reduction in price from UGX 182,983,576,600 to UGX. 165,272,156,814 amounted to negotiation on price, contrary to the requirements under PPDA Regulation 219 (3), 2003.

The Authority finds merit in the complaint raised. 3 Investigation Into The Alleged Irregularities In The Award Of A Contract For The Upgrading Of Mukono-Kyetume-Katosi/Kisoga-Nyenga Road From Gravel To Paved Standard RECOMMENDATIONS

In accordance with Section 9 of the PPDA Act 2003 and based on the above findings, the Authority recommends the following:-

i. The Accounting Officer should take responsibility for signing a contract basing on expired bids; ii. The Accounting Officer should caution the Contracts Committee for approving negotiations that were irregular; and iii. The Authority shall carryout a Contract Audit of the civil works for the upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga road from gravel to paved standard to ascertain that basic principles are being achieved as enshrined Section 6 (a) of the PPDA Act 2003.

1.0 BACKGROUND

Uganda National Roads Authority procured firms for civil works for the upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga road from gravel to paved standard at an estimated cost of UGX. 184,357,246,540.

On 8th November 2013, the contract was awarded to M/s Eutaw Construction Company Inc. at UGX. 165,721,456,814 and a contract signed on 15th November 2013.

On 13th February 2014, the Authority received a complaint from the Inspectorate of Government alleging the following;

i. The award of contract to M/s Eutaw Construction Company Inc. for the upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga road from gravel to paved standard was in a dubious manner ii. The cost for the upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga road from gravel to pavedwere unrealistic.

In light of the above, the Authority in accordance with Section 8 (c) of the PPDA Act 2003, instituted an independent investigation into the procurement process for the upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga road from gravel to pavedwere unrealistic.

2.0 SUMMARY OF FACTS

2.1 The UNRA Directorate of Planning initiated the procurement of civil works for the upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga road from gravel to paved standard on 22nd July 2010 at an estimated cost of UGX. 184,357,246,540.

4 Investigation Into The Alleged Irregularities In The Award Of A Contract For The Upgrading Of Mukono-Kyetume-Katosi/Kisoga-Nyenga Road From Gravel To Paved Standard 2.2 On 2nd November 2010, the Contracts Committee approved both the bidding document and the Open International Bidding procurement method to be used in the procurement of Civil Works for the upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga road from Gravel to paved standard.

2.3 On 8th November 2010, Uganda National Roads Authority invited firms to bid for the procurement of Civil Works for the Mukono-Kyetume-Katosi/Kisoga-Nyenga road. The invitation was sent out to all firms prequalified to provide road works. The deadline for receipt of bids was 8th December, 2010. The record of issue of solicitation document was as below:

RECORD OF ISSUE OF SOLICITATION DOCUMENT Name Date Received UNIK Construction Engineering (Pty)Ltd 9/11/2010 EUTAW Construction Co. Inc 10/11/2010

Namukwanga Engineering 10/11/2010

Hawk International Finance And Construction Co 17/11/2010

2.4 On 18th November 2010, the PDU submitted Addendum No. 1 to the Contracts Committee for approval. The Contracts Committee observed that after the issue of the solicitation documents, the Design Consultant noted that some fundamental information was lacking in the bidding document relating to the specifications thus it was necessary for some amendments to the bidding documents. The Contracts Committee approved the Addendum No. 1 on 18th November 2010.

RECORD OF ISSUE OF ADDENDUM NO.1 Name Date Received HAWK International Finance And Construction Co Ltd 26/11/2010 UNIK Construction Engineering (Pty)Ltd 26/11/2010 EUTAW Construction Co. Inc 28/11/2010 Namukwanga Engineering 29/11/2010 Salini Construction 30/11/2010

2.5 On 19th December 2010, the entity held a pre-bid meeting at Colline Hotel Mukono, the minutes of which were issued to the providers as follows:

5 Investigation Into The Alleged Irregularities In The Award Of A Contract For The Upgrading Of Mukono-Kyetume-Katosi/Kisoga-Nyenga Road From Gravel To Paved Standard RECORD OF ISSUE OF PRE-BID MEETING MINUTES Name Date Received Hawk International Finance And Construction Co Ltd 26/11/2010 EUTAW Construction Co. Inc 26/11/2010 Unik Construction Engineering (Pty)Ltd 26/11/2010 Namukwanga Engineering 29/11/2010

2.6 Addendums and clarifications to the solicitation documents were issued as follows: RECORD OF ISSUE OF CLARIFICATION NO.1 Name Date Received UNIK Construction Engineering (Pty)Ltd 9/11/2010 EUTAW Construction Co. Inc 10/11/2010 Namukwanga Engineering 10/11/2010 Soma Enterprises Ltd 10/11/2010

RECORD OF ISSUE OF ADDENDUM NO. 2 Name Date Received HAWK International Finance and Construction Co Ltd 26/11/2010 Soma Enterprises Ltd 26/11/2010 UNIK Construction Engineering (Pty)Ltd 26/11/2010 EUTAW Construction Co. Inc 28/11/2010 Namukwanga Engineering 29/11/2010 Salini Construction 30/11/2010

2.7 On 8th December 2010, bids were received after which followed bid opening. It was noted that only two bids were received. RECORD OF RECEIPT OF BIDS Name Date Received UNIK Construction Engineering (Pty)Ltd 8/12/2010 EUTAW Construction Co. Inc 8/12/2010

RECORD OF BID OPENING Currency And Price As Name Read Out Bid Security Unik Construction Engineering (Pty)Ltd UGX. 182,379,505,048.35 USD. 905,000 EUTAW Construction Co. Inc UGX. 181,587,841,600 UGX. 1,900,000,000 6 Investigation Into The Alleged Irregularities In The Award Of A Contract For The Upgrading Of Mukono-Kyetume-Katosi/Kisoga-Nyenga Road From Gravel To Paved Standard 2.8 On 9th December 2010, the PDU submitted a proposed Evaluation Committee to the Contracts Committee for approval.

2.9 On 10th December 2010, the Contracts Committee approved the Evaluation Committee comprising of the following nine (9) persons: s/n NAME DESIGNATION FIRM 1 Mr. MahadevaGopinath Highway Engineer Independent Consulting Engineer 2 Eng. Timothy Balaza Civil Engineer BTVET Kampala 3 Mr. JayadeepNayat Team Leader Sheladia Associates 4 Mr. Hussein MzaraRajabu Highway Engineer SMEC International Consultants 5 Mr. John Paul Ssetumba General Manager Smart Buy

6 Eng. Lucas Team Leader Max And Partners NyandondoOchieng Consulting Engineers 7 Eng. Mushota Charles Highway Independent Consultants Engineer/Procurement Specialist 8 Eng. ZenebeTilahunAbayneh Engineer Head Engineering Services And Procurement - Ethiopia

9 Eng. Othieno Peter K'ojwang Civil/Highway EGIS BCOEM - Kenya Engineer

2.10 On 15th December 2010, Preliminary examination for administrative compliance was done. Both bids from M/s EUTAW Construction Co. Inc. and M/s Unik Construction were found to be compliant and qualified for Commercial/Technical Evaluation.

2.11 On 19th December 2010, Commercial/Technical Evaluation was carried out. M/s EUTAW Construction and M/s Unik Construction were found to have responsive bids and qualified for financial evaluation. It was noted during financial evaluation that both M/s EUTAW Construction and M/s Unik Construction had arithmetic errors. UNKI Construction Engineering EUTAW Construction Company Original amount UGX. 182,379,505,048 UGX. 181,587,481,600 Corrected amount UGX. 189,924,991,348 UGX. 182,983,576,600 Arithmetic error UGX. 7,545,486,300 UGX. 1,396,095,000

7 Investigation Into The Alleged Irregularities In The Award Of A Contract For The Upgrading Of Mukono-Kyetume-Katosi/Kisoga-Nyenga Road From Gravel To Paved Standard 2.12 On 20th December 2010, the Evaluation Committee wrote to both M/s Unik Construction Engineering (Pty) and M/s EUTAW Construction seeking clarification on arithmetic errors amounting to UGX.7,545,486,300 and UGX.1,396,095,000 respectively.

2.13 On 23rd December 2010, M/s Unik Construction Engineering responded accepting the arithmetic errors and therefore the change in bid price from UGX. 182,379,505,048 to UGX. 189,924,991,348

2.14 On 23rd December 2010, the Evaluation Committee submitted the evaluation report to the Contracts Committee for approval.

2.15 On 30th December 2010, the CC reviewed the evaluation report and noted some inconsistencies in the evaluation.The Contracts Committee noted that the EC did not exhaustively review the adequacy of the Bidders’ method statements to highlight any technical issues that may impact on the downstream execution of works and may perhaps also form the basis of any negotiations and did not review the current commitments provided by the bidders, used as a basis for determining whether they could take on additional works despite their existing commitments.

The Contracts Committee directed the PDU to re-evaluate all bids taking into account the observations in the Contracts Committee decision on the evaluation report. The CC also directed the PDU to include in the revised evaluation report, an affirmative determination in accordance with ITB 36 of the Instructions to Bidders that the Best Evaluated Bidder meets the qualifying requirements. Verification of Best Evaluated Bidder’s qualifications will as a minimum be done to confirm the accuracy and authenticity of the past and current project experience.

2.16 On 11th January 2011, M/s EUTAW Construction Co. Inc. wrote to the HPDU accepting the arithmetic errors and therefore the change in the bid price from UGX. 181,587,481,600 to UGX.182,983,576,600.

2.17 On 19th January 2011, the Evaluation committee resubmitted the evaluation report for approval of the Contracts Committee. The Contracts Committee approved the evaluation report indicating M/s EUTAW Construction Company Inc. as the Best Evaluated Bidder.

2.18 On 22nd March 2012, the HPDU submitted a request for cancellation of the procurement due to lack of funding. The Contracts Committee stayed the cancellation of the procurement pending clarification from the PDU.

8 Investigation Into The Alleged Irregularities In The Award Of A Contract For The Upgrading Of Mukono-Kyetume-Katosi/Kisoga-Nyenga Road From Gravel To Paved Standard 2.19 On 9th May 2012, the PDU resubmitted a recommendation to cancel the procurement of Civil Works for the upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga road from gravel to paved standard.

2.20 On 15th May 2012, the Contracts Committee reviewed the submission from the HPDU for cancellation

2.21 On 17th May 2012, the Contracts Committee approved the cancellation of the procurement of firms for civil works for the upgrading of Mukono-Kyetume- Katosi/Kisoga-Nyenga road from gravel to paved standard.

2.22 On 24th June 2013, the PDU submitted an application for withdrawal of cancellation of procurement and associated services for Mukono-Kyetume-Katosi/Kisoga-Nyenga road.

2.23 On 4th July 2013, the Contracts Committee reviewed the application for withdrawal of cancellation of procurement and associated services for Mukono-Kyetume- Katosi/Kisoga-Nyenga road. It was indicated that the decision to cancel the project was not communicated to the providers by the Accounting Officer, expecting a possible allocation of funding by the government. The PDU noted that funding for the project was earmarked for the Financial Year 2013/14 and therefore need to rescind the decision to cancel the procurement. The Contracts Committee approved the request to rescind the cancellation but directed the PDU to ensure that the BEB confirm interest in the tenders and that the bids are still valid or otherwise be revalidated.

2.24 On 12th July 2013, the HPDU wrote to the provider, M/s EUTAW Construction Company asking the provider to confirm interest in continuing with the procurement and to revalidate both the bid and bid security for the Civil Works for the upgrading of Mukono- Kyetume-Katosi/Kisoga-Nyenga Road from gravel to paved standard. The HPDU also requested for further negotiations to be held and for the provider to confirm a new base date for adjustments for changes in cost due to changed situations between the negotiation date and the current date.

2.25 On 14th August 2013, M/s EUTAW Construction Company wrote to the HPDU, confirming interest in continuing with the procurement. M/s EUTAW Construction also confirmed revalidation of the bid and bid security paid for the bid for civil works for upgrading of Mukono-Kyetume-Kisoga/Katosi-Nyenga road from gravel to bituminous standard. The provider confirmed willingness to continue to carryout negotiations but also stated commitment to execute the works as tendered out in 2010 according to the

9 Investigation Into The Alleged Irregularities In The Award Of A Contract For The Upgrading Of Mukono-Kyetume-Katosi/Kisoga-Nyenga Road From Gravel To Paved Standard original bid submission. M/s EUTAW Construction noted that the inclusion of a VOP may create a pricing concern for the entity given the prevailing market trends.

2.26 On 10th September 2013, the HPDU submitted a supplementary negotiation plan and negotiation team to the Contracts Committee for approval. The negotiations team comprised of:

NEGOTIATION TEAM Name Position Department Eng. James Okiror Director Projects Projects Eng. Luswata M. Buzibwa Project Engineer Projects Eng. Michael Ochola Project Engineer Planning Marvin Baryaruha Legal Counsel Legal Chambers Member Contracts Mr. ZaituniNakonde Committee

2.27 On 11th September 2013, the CC reviewed the negotiations plan and deemed it appropriate. The Contracts Committee also approved the negotiations team. The CC directed the PDU to carryout due diligence on the projects submitted by the bidder to demonstrate their past experience.

2.28 On 2nd October 2013, supplementary negotiations were held between the appointed UNRA negotiations team and M/s EUTAW Construction. The negotiations concluded that a price of UGX. 165,272,156,814 was sufficient to carry out the works.

2.29 On 10th October 2013, the HPDU submitted the conclusions of the negotiations to the Contracts Committee for approval. The HPDU recommended for the award of contract for the Civil Works for the upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga road from gravel to paved standard to M/s EUTAW Construction Company Inc. at a contract price of UGX. 165,272,156,814 inclusive of taxes. The HPDU also recommended for due diligence to be conducted on the bidder’s information concurrently with approvals.

2.30 On 17th October 2013, the Contracts Committee reviewed the recommendations of the HPDU with reference to both the negotiations with M/s EUTAW Construction and the draft contract agreement. The Contracts Committee approved the minutes, recommendations of the negotiations and draft contract agreement with changes.

2.31 On 23rd October 2013, the HPDU approved the Notice of Best Evaluated Bidder (NoBEB). The NOBEB was displayed from 23rd October 2013 to 5th November, 2013.

10 Investigation Into The Alleged Irregularities In The Award Of A Contract For The Upgrading Of Mukono-Kyetume-Katosi/Kisoga-Nyenga Road From Gravel To Paved Standard 2.32 On 25th October 2013, the AO wrote to the Solicitor General seeking approval of a draft contract to be awarded to M/s EUTAW Construction Company for Civil Works for the upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga Road from gravel to paved standard at a negotiated price of UGX. 165,721,156,814.

2.33 On 7th November 2013, the Solicitor General wrote to the Accounting Officer approving the draft contract document for civil works for the upgrading of Mukono-Kyetume- Katosi/Kisoga-Nyenga road from gravel to paved standard at a renegotiated price of UGX. 165,721,156,814 awarded to M/s EUTAW Construction Company Inc.

2.34 On 7th November 2013, the AO wrote to M/s EUTAW Construction Company Inc. informing the bidder that the bid with the corrected amount of UGX. 165,721,156,814 had been accepted. The AO also asked M/s EUTAW Construction to furnish the entity with the performance security within 28 days in accordance with conditions of the solicitation document.

2.35 On 8th November 2013, M/s EUTAW Construction wrote to the HPDU acknowledging receipt of the Bid Acceptance from the entity and also confirmed acceptance of the offer to commence work as soon as the contract was signed.

2.36 On 14th November 2013, the Hon. Minister for Works and Transport, Hon. Abraham James Byandala wrote to the Accounting Officer UNRA directing him to implement the contract for the Civil works for upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga road from gravel to paved standard immediately while due diligence was still being carried out by the UNRA Technical team.

2.37 On 14th November 2013, the Legal Counsel UNRA, Mr. Marvin Baryaruha wrote to the Accounting Officer advising him that the contract with M/s EUTAW Construction could be signed while due diligence tests were still continuing. The Legal Counsel noted that under PPDA Regulation 34, due diligence could be carried out on a provider at any time during the procurement process.

2.38 On 15th November 2013, the contract between M/s EUTAW Construction Company Inc. and Uganda National Roads Authority for Civil Works for Upgrading of Mukono- Kyetume-Katosi/Kisoga-Nyenga was signed at a price of UGX. 165,272,156,814 inclusive of taxes.

2.39 On 13th February 2014, the Authority received a letter from the Inspectorate of Government. In the letter, the Inspectorate of Government alleged that the award of contract to M/s EUTAW Construction Company for Civil Works for Upgrading of 11 Investigation Into The Alleged Irregularities In The Award Of A Contract For The Upgrading Of Mukono-Kyetume-Katosi/Kisoga-Nyenga Road From Gravel To Paved Standard Mukono-Kyetume-Katosi/Kisoga-Nyenga was done in a dubious manner and that the costs were unrealistic. 2.40 On 27th March 2014, the Authority wrote to the Uganda National Roads Authority informing the entity that it had instituted an investigation into the award of contract for the for Civil Works for Upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga road from bituminous to paved standard.

3.0 LAW APPLICABLE

i. The Public Procurement and Disposal of Public Assets Act No. 1 of 2003 ii. The Public Procurement and Disposal of Public Assets Regulations No. 70 of 2003. iii. The Public Procurement and Disposal of Public Assets Procurement Guidelines iv. The Solicitation Document for the Procurement referenced UNRA/WORKS/2009- 10/00001/18/06

4.0 OBJECTIVES

i. To determine whether the award of contract to M/s Eutaw Construction Company Inc. for the upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga road was done in a dubious manner; and ii. To determine whether the costs for the upgrading of the Mukono-Kyetume- Katosi/Kisoga-Nyenga road were unrealistic.

5.0 FINDINGS OF THE AUTHORITY

5.1 To establish whether the contract awarded to M/s Eutaw Construction Ltd. for the construction of Mukono-Kyetume-Katosi/Kisoga-Nyenga road was carried out in a dubious manner;

It was noted that after one year after approval of the cancellation by the CC was done, the PDU on 4th July 2013 submitted a request for the withdrawal of the cancellation made on 17th may 2012. The PDU argued that although the CC approved cancellation, the AO did not communicate the decision to the bidders, expecting a possible allocation of funding 12 Investigation Into The Alleged Irregularities In The Award Of A Contract For The Upgrading Of Mukono-Kyetume-Katosi/Kisoga-Nyenga Road From Gravel To Paved Standard for the project. The PDU further noted that the funding had been earmarked for the FY 2013/14 hence the need to have the cancellation decision rescinded. The Authority noted that the submission by the PDU to CC requesting that the decision be rescinded was done well knowing that the bids had long expired.

In conclusion therefore, the Authority notes that it was irregular for the Entity to resurrect a process which had been cancelled by the CC a year earlier and whose bids had long expired. The action by the PDE amounted into a direct procurement without regard of the provisions under the Forth Schedule Clause 6 of the PPDA Act. What the Entity did was totally contrary to the basic procurement principles enshrined in the PPDA Act Section 6 of 2003.

In light of the above findings, the Authority finds merit in the complaint raised.

5.2 To determine whether the costs for the upgrading of the Mukono-Kyetume- Katosi/Kisoga-Nyenga road were unrealistic;

The Authority noted that the UNRA directorate of planning initiated the procurement of civil works for the upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga road from gravel to bituminous standard on 22nd July 2010. The directorate of planning prepared BoQs from which the estimated value of the procurement was derived amounting to UGX.184,357,246,540. It was noted that the Contracts Committee approved the solicitation document to be used on 2nd November 2010.

The Authority noted that the Evaluation Committee submitted the Evaluation report on 19th January 2011 for approval by the Contracts Committee indicating M/s Eutaw Construction Company Inc. as the Best Evaluated Bidder at a price of UGX 182,983,576,600 after which supplementary negotiations were held between the appointed UNRA negotiations team (see Annex) and M/s Eutaw Construction. The negotiations concluded that a price of UGX. 165,272,156,814 was sufficient to carry out the works.

13 Investigation Into The Alleged Irregularities In The Award Of A Contract For The Upgrading Of Mukono-Kyetume-Katosi/Kisoga-Nyenga Road From Gravel To Paved Standard Indeed, on 7th November 2013, the AO wrote to M/s Eutaw Construction Company Inc. informing the bidder that the bid with the corrected amount of UGX. 165,272,156,814 had been accepted. M/s Eutaw Construction wrote to the HPDU acknowledging receipt of the bid acceptance from the entity on 8th November 2013, and also confirmed acceptance of the offer to commence work as soon as the contract was signed.

The Authority noted that the reduction in price from UGX 182,983,576,600 to UGX. 165,272,156,814 after negotiations was irregular and contrary to the requirements of PPDA Regulation 219 (3).

In light of the above, the Authority finds merit in the compliant.

6.0 OTHER OBSERVATIONS

i. Performance security It was noted by the Authority that there was no evidence that the BEB, M/s EUTAW Construction Company Inc. furnished the entity with the performance security contrary to sub clause 4.2 of the specific conditions of the Contract Document.

ii. Expiry of bids Regulation 151 requires the HPDU to seek an extension of bid validity in cases where the prescribed validity period is not long enough for the entire procurement to be completed. The Authority noted that the Entity entered into a contract with M/s Eutaw Construction on 15th November 2013, basing on a bid that had expired on 8th April 2011. iii. Correction of arithmetic errors Regulation 181 requires the Evaluation Committee to seek clarification on arithmetic errors during the Evaluation process. It was noted that the EC sought clarification from M/s EUTAW Construction Co. Inc. on 11th January 2011, after the initial Evaluation Report had been submitted to the CC for approval on 23rd December 2010 contrary to Section 192 of the PPDA Act 2003.

iv. Solicitor General’s Approval The Authority noted that the Accounting Officer wrote to the SG seeking clearance of the draft contract document on 25th October 2013 before the expiry of the NoBEB. The NoBEB was displayed on 23rd October 2013 and was due to expire on 5th November 2013.

14 Investigation Into The Alleged Irregularities In The Award Of A Contract For The Upgrading Of Mukono-Kyetume-Katosi/Kisoga-Nyenga Road From Gravel To Paved Standard v. Negotiations The Authority noted that there reduction in price from UGX 182,983,576,600 to UGX 165,272,156,814 after negotiations. This was irregular and contrary to the requirements of PPDA Regulation 219 (3). The Authority also noted that the minutes of the negotiations were missing from file and could not ascertain the exact terms that were negotiated upon.

7.0 CONCLUSIONS

The Authority concludes that there is merit in ground one; the dubious award of the contract to M/s EUTAW Construction Com. Inc., and there merit in ground two; irregular costs of the works. The Authority noted irregularities such as seeking of clarifications of arithmetic errors retrospectively after evaluation has already taken place and the signing of the contract with M/s EUTAW Construction Company Inc. basing on bids that had already expired.

In light of the above findings the Authority in accordance with Section 9 of the PPDA Act 2003 recommends as follows:-

8.0 RECOMMENDATIONS

i. The Accounting Officer should take responsibility for signing a contract basing on expired bids; ii. The Accounting Officer should caution the Contracts Committee for approving negotiations that were irregular. iii. The Authority shall carryout a Contract Audit of the civil works for the upgrading of Mukono-Kyetume-Katosi/Kisoga-Nyenga road from gravel to paved standard to ascertain that basic principles are being achieved as enshrined Section 6 (a) of the PPDA Act 2003.

15 Investigation Into The Alleged Irregularities In The Award Of A Contract For The Upgrading Of Mukono-Kyetume-Katosi/Kisoga-Nyenga Road From Gravel To Paved Standard