Preferred supplier system – one of government’s wallet-holes


Government’s preferred supplier system is one which is wrapped in controversy despite its purported creation with good intentions.

Not for its initial purpose of bringing about efficient service for government to the people, but rather, for notions of corruption, abuse and exploitation.

And, like other reported similar activities in loopholes in the titanic government machine, while it is practised both openly and discreetly, it is hushed and no one talks about it – more so to a journalist.

In December last year, the issue of a corrupted preferred supplier system was brought to the floor of parliament for the first time, by a newly elected member of parliament (MP) presenting his maiden parliament speech.

Two constituency development officers have agreed to speak on condition of anonymity, a rare success in a journo’s attempt to crack through a tightly-knit network of Solomon Islands’ elite and their cronies.

The Ministry of Rural Development (MRD) is responsible for implementing the preferred supplier system.

A well-placed source had also agreed to speak on condition of anonymity.

However, while this seemingly patriotic public servant was keen to exonerate the preferred supplier system, there were some compromising information that was kept from the journo.

The preferred supplier system was designed to help government services be more efficient, enabling government to make use of trusted, legally registered companies to supply goods and services to citizens.

Companies vying for a place in government’s preferred supplier list have to go through a stringent process whereby their integrity and capacity are scrutinised. Once having passed all these checks, a company can be given a one-year licence to be a government preferred supplier.

This year 67 companies successfully convinced the MRD that they were worthy of being government’s preferred suppliers for 2023, a slight increase from last year.

Every year the number of preferred suppliers increases, the source says.

Among the preferred suppliers, there are certain companies which have been there ‘since day-one’ and are unofficially referred to as the ‘traditional suppliers’. They are the ones who have proven themselves every year. One can say they never disappoint.

Once selected, a preferred supplier company can be used by either a member of parliament (MP) for the constituency programmes or a government ministry for any project.

Now, this sounds good, until whispers of abuse suggest otherwise.

Just before Christmas, 2022, West Kwaio MP Claudio Tei’ifi, having just won his constituency’s by-election in October of that year, displayed the traits of the innocent newby, horrified by realities of corruption in the country’s government systems.

One of them was the preferred supplier system.

Addressing the Sine Die motion in parliament, MP Tei’ifi said he was “shocked to note that prices of materials and goods accepted between MRD and the Suppliers in the Preferred Supplier Agreement or PSA are either doubled or tripled more than the normal price for over-the-counter purchases or sales by some hardware companies in the PSA.

“For example, a hardware in Honiara is selling a Makita plane for 1,980 dollars as displayed on the price tag in the shop.

“That same Makita plane when it is acquired by the constituency under the PSA is charge 4,180 dollars, a difference of 2,200 dollars. More than enough for another Makita plane

“Basically, the government under the Preferred Supplier Agreement is agreeing on and contracted to purchase and implement a project at a cost of two or three projects. This is not a joke and is not sustainable for use of public funds to benefit the people of this nation. This is a total rip off and day light robbery of public funds, in a scheme that is seen as normal and legalised through government contracts and agreements.

“If this scenario or scheme is applied to all government funded projects, it simply means the government is budgeting for a project at a cost of two or three similar projects. The same for government recurrent expenditures.

“Where is the tax incentives, remissions, and exemptions applied to government expenditures in this?

“No wonder, we appropriated billions of dollars for projects over the years and yet nothing much achieved.”

The two constituency development officers who spoke to the paper in confidence, verify MP Tei’ifi’s concerns. [Constituency Development Officers are seen as the MP’s right-hand. They act as the MP’s secretary, liaison person between MP and constituents, manage and implement constituency projects and programmes]

“Some MPs use preferred suppliers as ATM machines,” one CDO said.

“For example, my boss [MP] would give a list of constituents to collect hardware materials from the preferred supplier, and inside this list, there are ghost names, sometimes, names of his children, grandchildren, nephews, nieces, etc. And, he would go and collect the cash equivalent of the listed material amounts, and also give the preferred supplier their cut.

“I’ve accompanied my boss [MP] on a few occasions to do this, he goes by himself other times.”

A constituent of one of the small constituencies, Mead [not her real name], shared her experience with a preferred supplier, which stood out to her as a symptom of corruption, but she could not openly express her disappointment to her MP for fear of being left out of little assistances she receives from him.

“I was given a $5,000 voucher for the constituency’s preferred supplier at Kukum. I had made a list of goods that I wanted to get, which I had estimated based on the shelf prices, totaling near $5,000.

“However, the preferred supplier after going through my list, reduced the items before giving them to me, saying my initial list had surpassed $5,000 worth of goods. He did not provide prices for each item.

“When we returned home and went through the items and the new list, we found out that they only totaled near $4,000 by estimate, according to prices of the same goods in other shops in Honiara. Which means that we have been cheated of $1,000.”

Management and staff of this particular shop declined to comment. The CDO of Mead’s constituency declined to comment.

During MP Tei’ifi’s speech in parliament on the matter, he noted that a contributing factor of government losing funds through the preferred supplier system is that the responsible ministry, MRD, channels 76 percent of constituency funds (CDF) through the preferred supplier agreement (PSA).

“I was puzzled and surprise to know that more than 76 percent of the CDF grant is disbursed through the Preferred Supplier Agreement or simply say to the hard wares for acquisition of hardware materials and goods.”

Tei’ifi suggested that government “seriously and quickly consider redirecting the use and accounting for CDF grants by developing a blue print and improving the CDF Act”.

Prime Minister Manasseh Sogavare told parliament when closing the sine die motion that he was ‘shocked’ to hear of Tei’ifi’s revelations implying some MPs and cronies benefiting out of government’s procurement system.

Mr Sogavare assured the nation then that he would ‘follow up’ on these allegations.

To date it is unclear whether he has actioned this promise.

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