MDAs accused of bypassing contracts unit in deals

Various government ministries, departments and agencies (MDAs) have been accused of flouting new budget guidelines and policy by failing to submit all contracts for vetting by the Government Contracts Negotiation Unit (GCNU).

The development has led to fears that following huge financial scandals where billions of taxpayers’ money has gone down the drain either through direct embezzlement or overpricing, the various MDAs and departments are still finding loopholes for abuse.

Head of the GCNU Janet Banda said in an interview on Monday that various MDAs are not submitting contracts to the office as required.

She said the non-compliance is a worrying trend and part of three weaknesses that need to be addressed for the office to become effective.

Said Banda: “I can name three at the outset. The first is the reluctance by most MDAs to submit contracts for vetting. This results in government entering costly and substandard contracts. The second is the noncompliance with own rules by those agencies who are tasked with vetting and reviewing different aspects of government contracts. This promotes inefficiencies in contract management and implementation.

“The last one is lack of adequate funding to facilitate auditing of contracts during implementation and after to ensure value for money. If these were addressed, it would go a long way in improving the manner in which contracts are negotiated and implemented.”

According to Banda, the unit was created to seal loopholes in contracting that saw government losing taxpayers’ money needlessly.

She said: “I believe government created the GCNU to remove inefficiencies in contract negotiation and implementation and to promote optimal contract and concession performance, value for money, timeliness and cost effectiveness for the betterment and benefit of citizens. At the moment, the unit is focusing on ensuring quality contracts and concessions as the basic step to creating efficiencies.”

According to Banda, GCNU is currently working with the Chief Secretary’s office and the Secretary to the Treasury to put in place mechanisms that will ensure that MDAs follow laid-down procedures before entering into contracts that bind government.

“Among these is the requirement of the three-pronged vetting approach by three agencies: the office responsible for procurement, Ministry of Justice and our office. Noncompliance with this, means Secretary to the Treasury will not honour payment,” said Banda.

But Treasury spokesperson Davies Saddo expressed surprise in a separate interview that MDAs are not complying with the policy directive, saying Treasury has been reminding the MDAs through budget briefings of the requirement.

“It’s a clear policy directive which is also in the budget briefing that all MDAs should always send contracts to the unit but also to Ministry of Justice for vetting. Even recently, the minister, during budget consultations with ministries, emphasised the same point. The unit is important for government to get value for money from all contracts,” he said.

Saddo said Treasury will review the matter and consider appropriate measures, but emphasised that the ministry reminds various MDAs of this obligation from time to time.

Reacting to the development, Malawi Economic Justice Network (Mejn) executive director Grace Kumchulesi said the development demonstrates lack of seriousness in ensuring prudent public finance management.

She said: “It signifies that government is not serious with public finance management.  If government says it shall only commit itself to financing and implementing any contracts after they have been thoroughly vetted, scrutinised and certified as reasonable, advantageous and having value for money by the GCNU, but does not put measures to ensure that there is compliance, no one can take government seriously.

“If Malawi does not strengthen its public finance management through means as open contracting, we will continue losing money through corrupt practices and we will be trapped in poverty for years to come.”

GCNU is one of the several agencies under the Chief Secretary in the Office of the President and Cabinet.

It is responsible for vetting and reviewing government contracts, agreements and concessions which various MDAs enter into on behalf of government and the people of Malawi. It is also responsible for monitoring or auditing contract implementation for compliance with contract terms and conditions.

It was established in 2012 to improve efficiency.

According to a circular from the OPC at the time, GCNU comprises experts from fields, including engineering, economics, law and accounting.

However, it appears that there has been divergence of policy since then. President Peter Mutharika in 2014 unveiled plans to establish an independent contract negotiating unit specifically focusing on the extractive industry.

According to Mutharika, who announced the plans in the State of the Nation Address marking the opening of the 45th Session of Parliament, the unit would ensure that mining contracts are properly negotiated to maximise benefits for the country. Mutharika’s announcement coincided with the unveiling of plans by Group of Seven (G7) Summit in Brussels the same year dubbed Strengthening Assistance for Complex Contract Negotiations (Connex) aimed at strengthening the ability of developing countries’ governments to negotiate complex contracts, particularly in the extractives sector.