Findings of a new study have exposed weaknesses in the management of public contracts, leading to cost overruns and 93 percent being implemented without the legally required vetting by the Office of the President and Cabinet (OPC).

The study jointly conducted by the Lilongwe University of Agriculture and Natural Resources (Luanar), Economics Association of Malawi (Ecama) and Oxfam in Malawi has since proposed the enactment of a legal framework to regulate public contract management to protect public funds from abuse.

Some public works face overruns due weak management

The report released in Lilongwe on Thursday further indicates that out of 191 sampled public contracts, only 48, representing 25 percent, went through the required vetting process, with the rest flouting the procedure.

The study further shows that most contracts went through the Internal Procurement and Disposal of Assets Commitees (IPDCs) and the Public Procurement and Disposal of Assets Authority (PPDA), but bypassed both the Ministry of Justice and the Government Contracting Unit (GCU).

Reads the study report in part: “In terms of the contracts’ governance structure, from the sampled contracts, the study found that very few contracts were sent to the Ministry of Justice for vetting [six percent] whereas only seven percent were reported to be submitted to the GCU.”

Ministry of Justice is responsible for the drafting of contracts while GCU placed in the OPC vets contracts to ensure that there is value for money.

According to the report, most government ministries, departments and agencies (MDAs) bypassed the GCU for fear of delays to have contracts vetted timely and meet the implementation schedules and also to avoid having the contract stopped due to some specification issues.

Presenting the findings, Luanar Associate Professor Kennedy Machila, who was the principal investigator, called for a new legislation to give the GCU more powers over public contracts.

“We need legislation to give GCU more authority over public contracts. The fact that most MDAs are unwilling to submit contracts for vetting should worry us; this lack of accountability is suspicious. We need a law that should deal with non-complying MDAs,” he said.

Reacting to the findings, GCU contract management adviser Dr. Alfred Nyasulu admitted that few MDAs are willing to submit contracts for vetting, arguing that most contracts that go through the GCU have no issues.

He said: “Most issues of contracts reported in the media do not go through GCU. If you talk about the fertiliser contract issue, which was in the media, it was never vetted by GCU…

“What I am saying is there is more benefit in having contracts

representative in Malawi Dr. Neema Rusibamayila Kimambo as having said disruption in the sanitation systems threaten progress made in controlling the cholera outbreak as evident in a downward trend in recent weeks.

She said: “As WHO, in collaboration with Unicef [United Nations Children’s Fund] and other partners, we are supporting the Ministry of Health to safeguard the gains we have acquired in responding to the current cholera vetted by GCU. Severaltimes, we have had contract sums revised downward after vetting. This helps.”

However, Nyasulu said the GCU is in the process of developing a policy framework that will enable government to only pay, through the electronic payment plat form Integrated Financial Management and Information System (Ifmis), contracts that have been duly vetted by the GCU.

The study also sampled 3 669 public contracts implemented between the years 2012 and 2020 and found that 3 418 or 93 percent of those contracts were completed and handed over with a cost overrun of above 10 percent.

Reads the study: “Public contracts in the finished status, the study noted cost overruns of 10 percent. Unexpectedly, the study found a huge negative variance [-390.0] with a 4.4 percent.

“It should be noted that despite the contracts being in finished status, the study identified losses. This implies that the government continues to fund contracts that were way above their budgeted values as per indicated with variance.”

Ac cor d ing to the study, the cost overruns partly came about due to variations in specifications of work once contracts were awarded and there were delays in implementing the projects.

In his analysis on low bid award system in public sector construction procurement, Bredford Thomas of the University of Toronto in Canada said there are “definite benefits and drawbacks to the low bid award system”.

The new study is part of a project managed by Luanar, Ecama and Oxfam in Malawi aimed at promoting good governance in public finance management through evidence-based research.

The current Public Finance Management Act was passed in 2003 and was amended in 2006, 2010 and 2018.

But despite the modifications, several corruption and abuse of public funds scandals have occurred on its watch, including Cashgate, the plunder of public resources at Capital Hill exposed in 2013.

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