Ghc10m Metro Mass Transport contract diverted

The Entity Tender Committee of Metro Mass Transit Limited (MMTL), headed by the Board Chairman, Osabarima Ansah Sasraku III, stands accused of diverting over GH?10 million contract for the supply of tyres to a company that did not win the bid.

The evaluation report of a National Competitive Tendering process dated May 2014 recommended that MMTL negotiate with Rana Motors for award of contract of GH?10,690,200 for delivery on call basis for fully complying with all requirements of the tender.

The evaluation report went on further to say that C. Woermann, which placed second in the tender, would be granted the opportunity should Rana Motors turn down the offer.

However, documents in possession of The Finder indicate that the Entity Tender Committee, headed by the Board Chairman, Osabarima Ansah Sasraku III, abandoned the evaluation report recommendation and directed the Managing Director to award the contract to Allied Home Stores Limited.

The committee based its position on value-for-money principle, saying awarding the contract to Allied Home Stores Limited would save MMTL about GH?1 million.

However, MMTL Managing Director, Ing. John Noble Appiah, in his response dated July 16, 2014 and addressed to the Entity Tender Committee Chairman and its members, rejected the attempts to divert the contract to Allied Home Stores Limited.

In his letter, Ing. Appiah explained that the evaluation report was clear that Allied Home Stores Limited failed to submit audited accounts in its tender documents as stated in the tender invitation and was disqualified in line with section 22 of the Public Procurement Act, Act 663.

“A failure to comply with the requirements of the tender invitation document in a competitive tendering process such as this renders such a tender non-responsive in line with the provisions under section 58 (1) of Act 663.

“Section 57 (2) of Act 663 clearly states that no change in a matter of substance in the tender, including changes in price and changes aimed at making an unresponsive tender responsive, shall be sought, offered or pending or permitted.

“Therefore requesting bidders to submit audited accounts after tenders have been opened will run contrary to section 57 (2) of Act 663,” he said.

Ing. Appiah’s letter cautioned that the quest to make a non-responsive tender responsive is not the best way of seeking to achieve value for money as a competitive procurement process has mechanisms for bring out value for money including financial capacity on the basis of the competitive nature of the procurement process so as to mitigate risks on the award of contracts.

“If the basis for value for money was limited to pricing, which is what the report suggests, then I would have expected the lowest price tender to have been recommended by the Internal Audit manager. The Value For Money report is therefore flawed, inconsistent, and contradictory.

“Is as suggested in the value for money report, cost saving as the main criterion, then in all fairness and objectivity, the least cost tenders, in this case CFAO Ghana Limited, Somotex Ghana Limited and CAITEC Delta, should have been recommended for the award of contract,” he stated.

He explained that the evaluation process that made the above companies non-responsive is the same that was used in the case of Allied Home Stores Limited, adding that to recommend Allied Home Stores Limited for the contract purposely based on cost savings would be problematic and subject to all manner of interpretations.

He therefore insisted that the conclusions and recommendations drawn in the evaluation report should form the basis for the award of contract for the supply of tyres.

Bent on giving the contract to Allied Home Stores Limited, Osabarima Ansah Sasraku III, the board Chairman, who was also the chairman of the Entity Tender Committee, reported the matter to the entire board.

In a memorandum dated July 9, 2014 signed by Emmanuel Amoah, Board Secretary, and addressed to the Managing Director, the entire board directed that the contract be awarded to Allied Home Stores Limited subject to the submission of audited financial statement.

The Managing Director duly offered the contract to Allied Home Stores Limited.

When the contract was awarded, Allied Home Stores requested a price increase of 28% over what was stated in its bid but was offered 15%.

In a letter dated September 3, 2014, Allied Home Stores said “we regret that we are unable to accept your offer of 15% increase in the original tender prices.”

Allied Home Stores also requested approval to submit insurance bond in lieu of bank guarantee, which also raises questions about the financial capability of the company.

In another letter dated October 7, 2014, Ing. Appiah parried accusations of overstepping his bounds in the running of the company.

He said he acted prudently, proactively, and decisively in the best interest of the company as an audit conducted did not find any malpractice or fraud.

In the letter, the MD explained that capital expenditure, even though approved in the budget, require further approval of the board before expenditure.

On the other hand, running costs, which refer to items such as fuel, spare parts, tyres, batteries, and road tolls, which once approved in the annual budget, do not require the board’s approval to spend.

For example, the letter said as part of practice in MMTL, deport managers have the mandate to procure diesel of any value which many times exceeds GH?200,000 without recourse to executive approval.

“My understanding and experience is that since the board had approved the running budget at the beginning of the year and procurement processes followed a transparent system, and expenditures were within the thresholds in the budget, the executive had the mandate to authorise such expenditure,” the letter emphasised.

The query letter indicates the MD implemented the 2014 procurement plan before presenting it to the board. The MD’s explanation was that at the time the procurement process was going on, the Tender Committee had not been constituted and he took a strategic decision to authorise the procurement of the spare parts for six reasons.

These include the fact that the items to be procured were approved in the 2013 operating budget as a recurrent expenditure by the board, the tender committee had not been constituted, it was very prudent to take a decisive action than keep buses grounded for lack of spare parts and there was an evaluation team chaired by Ing. John Awuku Dzuazah, Deputy MD.

The rest are the process had been certified by audit department as meeting the practices and traditions in MMTL and acceptable accounting and procurement standards and he was aware that monthly Management Reports to the board would reflect the status of recurrent expenditure and thus engage the board’s attention to it accordingly.

On extension of contracts, the letter said MMTL entered into long-term contracts with Rana Motors and Somotex for the supply of tyres before he assumed office, but he endorsed that action because it is the modern practice in the industry.

The MD’s letter explained that in September 2013, the quantity of tyres under the contract with Rana Motors had been fully supplied and he decided that until a new tender is conducted, Rana Motors could supply additional tyres provided it would be at the 2012 prices and the supply would be on call basis as MMTL had a budget for the procurement of tyres and this had been approved by the board.