Most important provisions of Roads Authority Act are honoured more in breach than in compliance—Board of Inquiry

Area 18 Interchange

* Contractor ZCCC was under investigation for the bad execution of the Karonga-Songwe road but they were given Mzimba-Mzalangwe-Ezondweni road

* Mota Engil was found to have issued exorbitant claims on the Area 18 Interchange

* It was then given Mzimba Street project under questionable circumstances from China Civil

* Initially won the contract in the same way that they got the Area 18 contract from China Civil 2017

By Duncan Mlanjira

The summary of findings, which the Board of Inquiry that was constituted by Minister of Transport & Public Works, Jacob Hara  observed that most important provisions of the Roads Authority Act (RAA) are honoured more in breach than in compliance in relation to sections 10, 14, 15, 24 and 26.

It also says that the financing for the Annual Roads Program (ARP) did not comply with sections 24(3) of the RAA and section 26 of the RFAA in the financial year 2020-2021.

This comes from the Inquiry examination of some specific contracts (20) such as the Area 18 Interchange, Presidential Way, Kaunda, Road, Kamuzu Procession Road (M1) as well as the following roads: Area 25-Tsungwi-Dzenza; Mkanda-Kapiri; Kaphatenga-Nkhotakota-Dwangwa (M5); Nkhotakota-Msulira (Nkhufi); Nkhata Bay-Mzuzu (M5); Karonga-Songwe (M1); Livingstonia-Njakwa; Rumphi-Nyika; Mzimba-Mtangatanga (M1)-Mzalangwe-Ezondweni; Jenda-Embangweni.

It also examined Blantyre Ring Road; Clock Tower-Kameza roundabout; (M1); Chiradzulu-Miseu 4; Muloza-Chiringa; Thyolo-Makwasa-Makhanga; East Bank; Nsanje-Marka (M1); Chikwawa-Chapananga road & bridge and Mwanza-Neno.

The Inquiry report says in general, the RA has got no leverage over budgeted development funds despite the fact that these are supposed to be part of Annual National Roads Program (ANRP) together with the Annual Roads Programme agreed with RFA under sections 23 and 24 of the RAA.

On Roads Fund Administration Act (RFAA) number 4 of 2006, the implementation of section 24(2) of the RAA is hampered by the implementation of Flagship Projects — which are normally political in nature resulting in the RFA’s failure to adequately finance any agreed programmmes of the RA as required under section 24(3) of the RAA as read with section 25 of the RFAA.

The RFA does not fulfill its obligations under section 25(5) for the purpose of having an integrated Annual National Roads Programme and on Public Procurement of Disposal of Assets Act (PPDAA, number 27 of 2017, it is the finding of the Inquiry that there is a difference in interpretation or understanding of the meaning of the word lowest evaluated bidder under section 44(7) between the RA and the PPDA and was shown in the award to Motal Engil of the Mzimba Street project in the city of Lilongwe.

The use of standard documents developed by the Director General under section 45 are not suitable for infrastructure projects and although some amendments have been made by the incorporation of FIDIC Rules and SATTC rules in a piecemeal manner has created its own problems in that most of the international contracts have used loopholes found in the contracts to the detriment of the Malawian tax payer, e.g;

a. Interest claims on advances by Kharafi and Sons and China Rail 5;

b. Interest claims by consultants and contractors stemming from the lack of proper specification of day e.g. claims by Mota, ZCCC, China Rail # 5, China Rail # 20, Commercial case No. 154 of 2020 and Mackinnon Phiri T/A EMC Jatula associates and Austin Mkandawire-V- Roads Authority and roads Funds Administration.

The different in interpretation under section 44(3) on non-material deviation and non-responsiveness of the bid between the RA and PPDA in respect of the key component of a contract, resulted in an award to Motal Engil on the Mzimba Street without the levelling of the playing field on ZCCC.

The stance by the PPDA to continue awarding contract to consultants and contractors and investigation for shoddy execution of works gives an impression of corruption, particular when the same PPDA are responsible for ensuring proper conduct of contractors under section 56 of the PPDA.

The example is that of ZCCC, who were under investigation for the bad execution of the Karonga-Songwe road but they were given Mzimba-Mzalangwe-Ezondweni road.

Mota Engil is found to have issued exorbitant claims on the Area 18 Interchange and then given Mzimba Street project under questionable circumstances from China Civil, who initially won the contract in the same way that they got the Area 18 contract from China Civil 2017.

Internal Audits

The Inquiry recommends that all technical and forensic audit on any project must be tabled at the Board meeting whether done at the instance of RA, RFA or the Treasury or the National Audit Office (NAO) so long as Management is copied.

External audits must, as part of their technical audit of the annual accounts of the RA, choose a sample for audit which involves the three directorates of Planning and Designing, Major Projects and Maintenance and Rehabilitation and their report must be tabled at the Board at which their presence must be a given.

Contract claims and interest

All contracts from henceforth must desist from including clauses on interest claims on advances and contract escalations brought about by addenda without Board authority.

Procurement

The number of days before interest currently paid at 28 in the contracts should be revised upwards or 45 to 56 as under the FIDIC rules in order to the interim certificates to progress made on the ground.

Approval Processes

Special Conditions of Contracts should incorporate section 53 (1)(f) as eligibility criteria for all infrastructure projects, which must incorporate mandatory testing of infrastructure projects through the Central Materials Laboratory by Supervising Consulting Engineer and RA.

The bidding documents used by Roads Authority should be revised to reflect the Malawian local conditions and taking the best practices under FIDIC rules and SATTIC rules and the local rules of procurement.

General Conditions of the Contract which are silent on the number of days as to when a contract can start charging interest should be amended to include the grace period when interest can be applied.

RA and RFA Relationship

The Road Fund Administration internal audit report must be given to the TAC bi-monthly. The procedures agreement required under section 26 of the Roads Authority Act (RAA) are agreed with the Roads Funds Administration every 3 years that the approval processes concerning the chairpersons of the administration and authority are strictly adhered to and that the same are presented to the Minister before publication to the general public.

The Board should take charge of the annual roads program and annual national roads program by liaising with the RFA and the Minister must ensure that his approval is followed by the financing agreement between the RA and the RFA in order to minimize contractor cost overruns and interest claims which have so far paralysed RA operations.

Regulatory and Disciplinary Issues

The National Construction Industry Council Act (NCICA) must be reviewed to give teeth as overall regulation to the construction industry in Malawi in particular relating to matters of joint venture agreements.

Local participation in the industry and enforcement measures where breaches occur and monitoring and compliance powers and its interface with professional bodies on disciplinary matters and also its interface as overall regulator with some regulators such as professional bodies, the councils, the Roads Authority, MERA, the mining and the water sectors.

On internationally-awarded, contracts the Inquiry recommends the amendment of the National Construction Industry Council Act and rules on sub-contracting to refer to joint venture-rules and local participation.

The Inquiry recommends enhancement of transparency standards in procurement like the principles the OECDE principles of integrity in public procurement to be formulated by the PPDA in liaison with the ministry for compensatory inclusion in all public procurements.

“In order to strengthen the proper procurement in all infrastructure projects, it is recommended that the PPDA be amended by the introduction of the section 45A to specifically cater for the infrastructure project procurement.

“Consideration should be given to the amendment of section 44(5) of the PPDA for the discontinuous of any deviation base on the most important item of the projection a bid by a bidder during evaluation to be classified as non-responsive to the bid.

“The amendment section 44(7) and 37(6) to include provision for evaluation of joint venture bids satisfaction in line with the NCIC rules on local participation in addition to marginal of preference.

Amend section 10 on meetings to be held every quarter instead of bi-monthly

“The Ministry must come up with regulations in liaison with the Board as mandated by section 30 of the RAA. The Board comes up with minimum standards as mandated under section 25(4) for the Minister to promulgate in order to comply with the Environmental Management Act.”

The Inquiry further suggests the amendment of section 56(2) to include “past non-performance as a ground of debarment of suppliers, contractors, consultants and any bidder” and recommends to amend section 44(7) and section 47 of the Public Procurement and Disposal of Assets Act (PPDAA) “to sort out the confusion of a successful bid being the lowest evaluated bidder as opposed to the least opposed bidder and success of a bid being premised on price”.

“Amend section 49 of the Public Procurement and Disposal of Assets (PPDA) that letter of no objection will only be issued under the infrastructure projects unless there is a Board approval of the Roads Authority in line with its duties.

On Ministerial Policies, the Inquiry recommends that the Ministry should develop and harmonize its policies on disciplinary matters focusing on the role of professional bodies and NCIC as well as standards in the various road agencies.

“To alleviate political interference allegations, it is recommended that all major roads be designed in advance in light of the National Transportation Masterplan and the MW2063 Vision,” says Mhone in presenting the report to Minister Hara.