HOW TO USE AUDIT REPORTS TO OVERSEE PUBLIC

HOW TO USE AUDIT REPORTS TO OVERSEE PUBLIC PROCUREMENT Hilda K. Mwesigwa – Ag. Director, Procurement Audit & Investigations- PPDA EAAPAC AND SADCOPAC ACCOUNTABILITY CONFERENCE 3 RD – 11 TH MAY 2013 1

Content • • Historical perspective Scope of PPDA Act & Procurement Audits Conduct of procurement audits Procurement Audit recommendations findings and • Follow-up on Audit recommendations • PPDA linkages with oversight and enforcement agencies • Way Forward 2

Historical perspective of PPDA • The process of procurement reforms in Uganda started in 1997 and in 2003 Uganda was among the first countries in Africa to enact a procurement law. • The Public Procurement and Disposal of Public Assets Authority (PPDA) was established under the PPDA Act as the Regulator in February, 2003. • Regulate Procuring and Disposing Entities (PDEs) are estimated at 312 (180 CG PDEs & 132 LG PDEs). 3

Scope of PPDA Act Ø Public Finances of a Procuring and Disposing Entity; Ø Resources for national programmes under development cooperation agreements such as: Counterpart transfers and Co-financing; Ø Procurement and disposal activities of Entities of Government within and outside Uganda; Ø Procurement and disposal activities of Entities not of Government but which benefit from public funds. Ø Only Exception is where the PPDA Act conflicts with an international agreement. 4

Scope of Procurement Audits • Section 7 (j) [iii] of the PPDA Act, 2003, mandates PPDA to conduct procurement and disposal audits in all government PDEs. • The types of procurements audits include: o Procurement and Disposal Audits during the bid preparatory process; o Contract audits in the course of the execution of an awarded bid; o Performance audits after the completion of the contract in respect of any procurement or disposal • Sinception, PPDA has conducted 437 audits. 5

Procurement Audits: FYs 03/04 – 12/13 100 90 84 91 91 Number of audits 80 70 60 54 57 50 40 34 30 16 20 10 2 4 4 0 FY 2003/4 FY 2004/5 FY 2005/6 FY 2006/7 FY 2007/8 FY 2008/9 FY FY 2009/10 2010/11 2011/12 2012/13 6

Conduct of procurement audits • The auditing process is guided by the Procurement Audit and Investigations Manual of April 2010. The process entails: - ØPlanning phase ØAuditing phase ØReporting phase ØFollow-up phase 7

Conduct of procurement audits 8

Common Audit findings • Conducting of procurements outside the procurement plan. • Delayed initiation of procurement requirements leading to poor implementation of the procurement plan • Use of the direct method of procurement without sufficient adequate justification. • Poor evaluation including non notification of bidders of corrections of arithmetic errors in their bid proposals and conducting only financial comparison of prices without evaluating the preliminary and technical stages. • Failure by Contracts Committee to approve Evaluation Committees and short lists of bidders. • Contracts Committees grant retrospective approvals. • Use of wrong evaluation methodologies / criteria 9

Audit findings cont… • Lack of appointment of Contract Managers and poor contract supervision of projects • User Departments usurping functions of the PDU by soliciting for bids. • Non approval of contracts above UGX 50 m/= by Solicitor General. • Missing contract management records namely; Contracts, contract implementation plans, delivery notes and payment receipts. • Signing of contracts without sufficient funds leading to stalling of contracts especially schools and health centres. • Awarding contracts using the Engineer’s estimates and disregard the contract price by the bidders. • Non appointment of boards of survey to identify obsolete 10 items for disposal.

Key Findings from Procurement Audits • District Stadium where the contractor was paid UGX 11, 328, 000 for a non-existent fence

Key Findings from Procurement Audits • Abandoned site in a District but contractor was paid

Key Findings from Procurement Audits • Construction of market abandoned after digging foundation

Key Findings from Procurement Audits • Payment for wrong specifications at same cost

Key Findings from Procurement Audits • Bridge abandoned

Key Findings from Procurement Audits • Fencing of a slaughter slab paid for at UGX 2 m

Key Findings from Procurement Audits • Abandoned works for a coffee huller shed ILI- 9 th April 2013 17

Key Findings from Procurement Audits • Abandoned works of a. VIP Latrine ILI- 9 th April 2013 18

Key Findings from Procurement Audits • Problems in disposal …. . 19

Trend – Proc Audits CG PDEs 100 High risk 90 80 Medium risk 70 Low risk 60 Satisfactor y 50 40 30 20 10 0 FY 2006/07 FY 2007/08 FY 2008/09 FY 2009/10 FY 2010/11 FY 2011/12 20

Trend – Proc Audits LG PDEs 100 90 80 70 60 High risk 50 Medium risk Low risk 40 Satisfactory 30 20 10 0 FY 2007/08 FY 2008/09 FY 2009/10 FY 2010/11 FY 2011/12 21

Common Audit Recommendations • All procurements should be subjected to competition. • Bidders should be notified of arithmetic errors. • Contracts Committees should ensure that the necessary approvals are undertaken. • The Accounting Officer(s) should ensure independence of functions within the Entity. • Contracts Committees should not award contracts using Engineers’ estimates. • The User Departments should ensure that contract management records are filed on their respective files once the procurement has been concluded. • Accounting Officers should appoint boards of survey to identify obsolete items for disposal. 22

PPDA Recommendations to Competent Authorities • Suspension of Officers concerned. • Replacement of the head/member of the PDU. • Replacement of the Chairperson/member of the Contracts Committee. • Disciplining of the Accounting Officer. • Transfer of Procurement & Disposal function to a third party provider or another PDE. • Withholding funds of the PDE. Ø The PPDA Act also stipulates Offences and penalties e. g. for failure to produce books/records, influence peddling & fraud etc 23

Trend – Implementation of Audit Recommendations 90 80 79 78 79 76 70 60 50 40 30 22 21 21 24 20 10 0 FY 2009/10 FY 2010/11 Implemented FY 2011/12 FY 2012/13 Half Year Not Implemented 24

Implementation of PPDA Recommendations q. Implementation of PPDA recommendations – Out of a total of 1, 371 PPDA recommendations made to 138 PDEs, 1, 065 (79%) were implemented and 306 (22%) were not implemented. • Recommendations not implemented relate to taking disciplinary action, records management and contract management. 25

PPDA linkages with Oversight & Enforcement Agencies • Office of the Auditor General (OAG) • Inspectorate of Government IGG) • Directorate of Criminal Intelligence and Investigation (CIID) • Directorate of Public Prosecutions (DPP) • Inter – Agency Forum of Anti- Corruption Agencies (IAF) • Anti-Corruption Court • Head of Public Service • Secretary to the Treasury 26

PPDA submissions to OAG • Since PPDA does not report to Parliament, all the audit reports are submitted to OAG for onward submission to PAC. • During FY 2010/11, OAG reported that: Ø Procurements worth UGX 24, 346, 888, 735 in LGs did not follow PPDA Law. Ø The direct method of procurements was used to purchase goods worth 680, 846, 051/= in Oyam DLG without justification; Ø Wrong method of procurement (selective) was used to contract a firm for road works worth UGX 310, 955, 000 in Rukungiri District. Ø Iganga DLG failed to implemented PPDA recommendations for FY 2008 -09 noting that the District continues to operate outside PPDA Law. 27

PPDA submissions to IGG The Authority refers corruption cases to the Inspectorate of Government for further investigations, for example, cases referred include: ØProcurements worth UGX 261, 201, 285 in Amudat DLG with corruption related tendencies. 28

PPDA submissions to CIID • The Authority refers missing files and cases of a criminal nature to the Criminal Intelligence and Investigations Directorate for further investigations, for example: Ø Procurements worth UGX 261, 201, 285 did not have any documentation in Kotido DLG; Ø The District Engineer of Amudat DLG indicated that construction works worth UGX 397, 354, 540 had been completed. However, some works were not done at all while others were partially done; Ø Ministry of Health failed to avail documentation for procurements worth UGX 1, 331, 764, 294=. Ø Ministry of Health failed to show evidence of 58 double cabin pick-ups, 14 -seater Omini Bus, 3 station wagons, 2 delivery trucks and 110, 000 bicycles 29

PPDA submissions to DPP • The Authority refers cases of a criminal nature to the Directorate of Public Prosecutions for prosecution. Examples include: v. Gulu Regional Referral Hospital: Capital Development Fund of 7. 5 billion shillings. v MOLG – Procurement of 70, 000 bicycles for Chairpersons of parishes and village councils. 30

WAY FORWARD Increased frequency and scope of Procurement Audits with emphasis on PDEs with high spend are critical for service delivery. Enhance capacity building of Entities. Focus on results from the procurement process and not only on compliance with procedures in order to ascertain value for money and minimize possible financial loss. Incentive scheme for good performers e. g WB municipality conditional grants and publication of poor performers. Stronger collaboration of oversight agencies with Parliamentary Accountability Committees. 31

THANK YOU FOR YOUR ATTENTION 32