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99.3% of public contracts overshoot planned budgets

By Vision Reporter

Added 29th June 2013 06:56 PM

After the bidding process is completed, almost all government contracts are implemented beyond their original costs, a ground that is likely to increase the levels of corruption in the procurement sector, a report by the Inspector General of Government has revealed.

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By Mary Karugaba

After the bidding process is completed, almost all government contracts are implemented beyond their original costs, a ground that is likely to increase the levels of corruption in the procurement sector, a report by the Inspector General of Government has revealed.

The third annual report in tracking corruption in Uganda revealed that although the open-bidding method of procurement has improved, micro procurements are by far the largest in number and yet least transparent. This, according the IGG, increases the potential for corruption even though the method involves relatively small amounts of money.

The findings also indicated that the percentage of contracts implemented within their original costs has been on a declining trend since 2009 from 50% to a paltry 0.7% in 2012.

The IGG attributed the problem to inefficient market surveys done by the procurement departments resulting into poor estimates being made by entities as they plan for these contracts.

“Price increase during execution, through change orders in specifications or cost, may be grounds for corruption. This is a significant red flag of a possible entry point of corruption and calls for integration of risk management into public procurement,” the report says.

Also, the IGG noted that the percentage of contracts that are completed on time have been going down over the years with the highest percentage last recorded in 2009 at 57.9%.

By 2012, only 29% of the contracts were completed on time. According to the Public Procurement and Disposal of Public Assets Authority (PPDA), average time taken to complete procurements has been on the rise with procurements taking longer than planned, between 47-240 days longer than required.

The IGG noted that one of the greatest challenges faced by the Government is the failure by the respective departments to appoint contract managers to supervise contracts and ensure that the terms and conditions specified in the contracts are complied with.

The IGG was also concerned that during 2012, over 93% of procurements were undertaken using micro procurement and other non-open methods, which do not involve competition.

The report says these methods are particularly susceptible to corruption.

“Non-competitive methods of procurement are susceptible to corruption because they are less transparent and more discretionary,” the report reads.

Presenting the findings of the research at Uganda Bureau of Statistic recently, Dr. Xavier Mugisha, a senior research fellow with Economic Policy Research Centre, said the procurement sector was chosen as an area of tracking corruption trends in the country because public procurement is one of the key areas where the public and private sector interact financially and it’s a prime candidate for corruption and favouritism and as well as bribery.

“Corruption in procurement manifests in substandard work or unnecessarily expensive work the diversion of resources and unjustified or unexpected prices increases,” Mugisha said.

The report also indicates that Uganda has made some progress regarding award of contracts based on open bidding. During the year under review, open bidding procurements increased to sh1trillion from sh735b in 2010.
 

99.3% of public contracts overshoot planned budgets

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