Bid waiver not managed in covid-19 fund spending by MHMS, NDMO & MID: OAG Report


THREE frontline ministries during Covid 19 pandemic have not managed their bid waiver process in the procurement process effectively.

This was found in a thematic audit released by Office of the Auditor General yesterday.

OAG audited the accounts of Ministry of Health and Medical Services, Ministry of Infrastructures Development and National Disaster Management Office (NDMO) through the Ministry of Environment, Climate Change, Disaster Management and Meteorology from April 2020 to December 2020.

The objectives of these audits were to assess whether these agencies managed COVID-19 Procurement in accordance with relevant laws, policies and regulations of Solomon Islands Government. These include the Public Financial Management Act 2013, the Interim Financial Instructions currently in force and the Solomon Islands Government Procurement and Contract Manual [PCAM].

According to SIG Procurement, in a normal cycle of procurement, up to $10,000, you have to provide one written quote.

From $10,000 to $100,000, you have to provide 3 written quotes with selection using a comparative bid analysis.

From $100,000 to $500,000, the bid will go through the Ministerial Tender Board competitive tender.

More than $500,000, to go through Central Tender Board (CTB) competitive tender.

However, procurement during State of Emergency, there will be a bid waiver.

Where competitive and simple tendering is not possible a bid waiver request can be used.

A reasonable reason needs to be justified.

CTB approve procurement with value of $100,000 and over and Accountant General is delegated authority for $10,000 to $100,000.

Auditor General David Teika Dennis said in February 2016 the Central Tender Board issued a Memo (CTB Memo) reminding Ministries all bid waivers of any value had to be approved by the Central Tender Board.

Dennis said this Memo explicitly overrode existing contradictory instructions or memoranda.

He said this meant that when the State of Public Emergency was declared the existing rules provided that bid waivers would be allowed under the SoPE and all bid waiver requests were required to be submitted to the Central Tender Board for approval.

“The results in all three audits showed that on many occasions non- competitive procurement had occurred before a bid waiver approval was received and, in some cases, there was no indication that a bid waiver approval was ever received.

“In several instances, procurement was completed before a bid waiver was even applied for, as if the approval of the bid waiver by the CBT was just a rubber stamp,” he said.

In other cases, Bid Waivers were approved by the Ministerial Tender Board or the Permanent Secretary of the Ministry in contravention of the CBT Memo.

“For example, significant refurbishment work was done at the King George VI School, as this was designated a quarantine centre on 27 March 2020. By 8 April 2020 all of the required work had been certified as complete.

“OAG examined 12 individual procurement activities for this refurbishment. The purchase requisitions for all of this work were signed in early May2020 and Bid Waivers were issued by the CTB for all 12 procurements on 5 May 2020, nearly a month after the work had been completed,” he said.

Dennis said all 12 contracts were signed on 11 May 2020, also more than a month after the work was completed.

Furthermore, one business provided various accessories for a quarantine site, and issued an invoice for these on 16 September 2020.

“A Purchase Requisition had been approved on the same day and a Payment Voucher was approved on 22 September.

“At this stage the goods had been provided and certified as such,” he said.

Dennis said a Bid Waiver was then approved on 29 October, well after the substance of the transaction was complete and six weeks after the items purchased were available for use.

Apart from that, Dennis said one contract for refurbishment of the Kiwi hostel at the NRH was for $625,123.

He said this contract involved significant construction and concreting work.

“A bid waiver request was submitted on 7 April 2020 at which time the work must have been substantially complete as it was certified as such just two days later.

“The contract to undertake this work was signed on 24 September 2020. The Bid Waiver was approved by the CTB on 17 September 2020,” he said.

Dennis said the approval to incur this expenditure on the Purchase Requisition was signed on 19 October 2020, 7 months after the expenditure had actually been incurred.

He said justification for the bid waiver was often that the provider was able to supply the goods or services and was willing to do so on credit.

“There was never any indication if the purchasing officer had found out if any other suppliers were willing and able to do the same.

“Officers responsible for procurement appeared to assume that the approval of a bid waiver was guaranteed, but even in this situation the officer is still responsible for at least a cursory check that the Government is getting good value of money,” he said.

“Phone calls to a few suppliers with brief notes on their responses would have provided accountability for these decisions but there was no evidence that this was even considered.

“The new Public Financial Management (Procurement) Regulations (2021) (PFMR 2021) state that a Bid Waiver applies in an SoPE if as a result of the SoPE, procurement by competitive tendering or simple procurement procedures is not possible. ‘Not possible’ is an absolute term and normal competitive or simple procurement would have been possible with all of the transactions reviewed in these audits,” he added.

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