Private sector operators have exposed challenges in the public procurement process, calling for a thorough review of the laws to ensure fairness in the implementation of contracts related to public tenders.
Some of the issues include delays in paying contractors as well as loopholes in some provisions, which undermine the efficiency in public procurement.
These were highlighted during a meeting in Kigali on October 14.
The was organised by Rwanda Public Procurement Authority (RPPA) with the private sector and stakeholders, mainly those involved in public tenders such as infrastructure and construction.
The aim was to discuss and agree on the best way to overcome noted issues and gaps identified in the procurement of works.
The current procurement law was enacted in 2018.
Punishing a contractor, not a procuring entity
The law provides for punishment against a contractor who has not done works on time.
However, business operators say that it is silent in case a public entity has not done the works it is supposed to, on time – such as delaying to expropriate property and people to pave the way for the project implementation.
Indeed, article 181 on penalty relating to delay in contract execution stipulates that the successful bidder incurs a penalty equivalent to one thousandth (1‰) of the total value of the contract for each day of delay.
But, it adds, such a penalty shall not exceed 5 per cent of the value of the contract.
Delay to pay contractors
According to the current law, all invoices for the executed activities should be paid within 45 days.
But, the law does not provide for what happens when that period is not observed by the procuring entity.
Bidders said that this period is long especially for short contracts, citing those whose period is not more than three months.
Enock Byiringiro, a Senior Researcher at Transparency International Rwanda, said the delay to pay contractors has a far-reaching impact on them and the economy.
"A point might reach where contractors are not interested in bidding for public tenders,” he said. "In the framework of transparency, if an item is needed but the budget for it is not readily available, but the tender will be paid after one year, you should indicate so that the person bidding for it makes an informed decision.”
The performance security issue
The law provides that the successful bidder is required to give performance security – not exceeding 10 per cent of the contract price – in accordance with the procurement regulations.
It must be submitted by a successful bidder before signing the procurement contract.
Bidders argued that this performance guarantee rate is high, especially for projects involving huge budgets – it is, for instance, Rwf1 billion for Rwf10 billion worth of tender.
Jeremy Nsengiyumva, Director of Global Business and Construction Company, said that the law should provide room for other ways whereby this percentage is covered by deducting a given percentage from payments for contractor’s invoices in instalments.
"This can be helpful in terms of easing contractors’ payment of performance security, and providing a guarantee to the procuring entity in case the contractor does not complete works,” he said.
Temporally banning a company from public tenders
Among reasons for temporarily debarring a bidder from public procurements, there is providing false information regarding the company, its documents or its capacity. The temporary debarment lasts for seven years.
Some members of the private sector argued that there are factors that should not result in blacklisting a company from bidding for public tenders, citing false information in the company’s profile or CV.
Instead, they said, the company can lose the specific tender, but be allowed to bid for future ones.
Talking about the debarred persons, the law stipulates that even if one of the joint venture companies is found responsible for a fault resulting in debarment, every company is jointly punished with the defaulting company.
And, the bidder shall not cite the fact that faults were committed by the staff or any other person employed by him/her to avoid debarment.
Sadate Munyakazi, Director General of a company called Karame Rwanda said that Rwandan entrepreneurs were given opportunities to form joint venture companies so that they help one another develop, pointing out that blacklisting one company over the malpractices committed by the other was a discouragement.
"The company that committed malpractices should be liable for them, personally. The innocent company, and their owners, should not be the victim of that,” he said.
Also, members of the private sector questioned the feasibility studies that are made but the implementation of related projects delays which make it difficult to execute them as the allocated budget is inadequate because of currency depreciation.
Joyeuse Uwingeneye, the Director-General of RPPA, said that the review of the procurement law is likely in response to the wishes of the private sector which are in matters related to the delay in paying them and the penalties imposed on them.
"We are listening to their views so that we make amendments accordingly,” she said.
It is to note that on March 2, 2021, the Chamber of Deputies requested Prime Minister to amend the law governing public procurement in a bid to address challenges in the execution of public tenders.