Escom in security contract breach

Electricity Supply Corporation of Malawi (Escom) allegedly ignored advice from government procurement regulation agencies to award a contract to Masters Security Company to provide security in the organisation’s premises.

Instead, Escom deployed 170 police officers to beef up its 100-strong permanent guards to man its premises which a procurement expert has described as illegal and a waste of money the organisation would have used to improve its services.

Escom’s decision to ignore the winning bidder in favour of the more expensive police security has resulted in the parastatal spending over K213 million monthly on security from August last year to date, instead of K51.5 million it would have been paying had it hired Masters Security Company as directed and recommended by the Public Procurement and Disposal of Assets Authority (PPDA) as well as the Government Contracting Unit (GCU), respectively.

Escom board chairperson Fredrick Changaya in an interview on Thursday could neither deny nor confirm if his board directed management to hire the police officers saying their role is to provide oversight on management decisions and referred Weekend Nation to the parastatal’s spokesperson Innocent Chitosi who has not responded to our questionnaire since November 10 last year despite several reminders.

But two other Escom officials, one from the power utility’s Security Department and another from Procurement, who asked for anonymity, confirmed the orders in separate interviews.

They also corroborated that their organisation did not award the contract to Masters Security after a Cabinet minister allegedly instructed Escom board not to do so because the owner of the firm, Alfred Gangata, was believed to be sympathetic to the Democratic Progressive Party. 

National Police spokesperson James Kadadzera confirmed the Escom deal with the Malawi Police Service (MPS) for guarding services at the rate of K30 000 per day for each officer. 

A letter we have seen shows that initially Escom requested to hire 170 police officers for August 2021 only. After the police officers were deployed Escom asked for a reduced rate of K11 500 per officer per day. But in a letter dated August 12 2022 signed by Service administration officer Kelvin Muleza, DCP, MPS rejected the request insisting that K30 000 was the standard rate for private hiring. Mulezo, however, requested Escom to discuss the matter for a waiver with Secretary to Treasury as the custodian of Account Number One where the service fee is deposited.

Mulezo explained in the letter that out of the K30 000, the first K10 000 is the service hire charge which is deposited in Account Number One while the remaining K20 000 is paid as an allowance to the officer carrying out the assignment.

“Historically, the Office of the Inspector General has not negotiated this rate. It will thus be difficult for the Service to engage or instruct officers to carry out their duties at a lower rate especially that the assignment is halfway through.”

Although Escom initially wanted to hire the police officers for August 2022 only, our two sources from Escom say the police officers are to date still guarding the organisation’s premises.

Our analysis shows that at the rate of K30 000 per day from August to December last year, Escom has spent over K1 billion hiring the 170 police officers instead of K257 million over the same five months had the corporation outsourced security from Masters Security Company.

On February 22 2021, Escom issued an open tender to outsource security services under procurement reference number ESCO26/NCB/S/FY2020-2.  The last day of submission for bids was March 22 2021 and the successful security firm was supposed to start providing the services on August 1, 2021 to July 31, 2022.

After undergoing all procurement formalities Masters Security Company emerged the successful bidder after PPDA and the GCU vetted and passed their contractual proposal to Escom.

A response from PPDA to Escom, which we have seen, granted Escom a No Objection to engage Masters Security Company at a cost of K51.5 million per month to provide guarding, alarm and response services in Escom’s units across the country.

“You may now proceed to publish a notice of intention to award the contract in accordance with Section 48 of PPDA Act,” said the letter in part dated June 7 2021 and signed by Irene Mlewa who was PPDA’s acting director general.

PPDA public relations officer Grace Thipa  said the No Objection is only valid for 90 days from the date of granting it. Ninety days elapsed and Escom was supposed to seek a fresh submission before the expiry of the given period, according to PPDA official. The deadline for the previous contracts was July 31 2021 but by that date, there was no new contract in force.

The two Escom sources corroborated that the directive to hire police officers came from the board. But two board members we engaged said they were not part of the decision and wondered why they were not invited to the meeting if indeed there was one.

Procurement expert Philip Kamangira said in an interview that legally, what once a contractor has been certified and approved, there are terms of reference under which a contract is bound and when one party breaches any of those, the breached person can seek legal redress.

“So, this is illegal, Escom should have followed the procedures, especially by proceeding to award the contract to the person who was approved by PPDA and GCU.”   

Gangata said in an interview he was aware that PPDA awarded the contract to his firm but refused to comment on his next course of action.