alexa Why the hurry to sign a multi-billion shilling deal just before the elections? - Daily Nation

Why the hurry to sign a multi-billion shilling deal just before the elections?

Tuesday February 5 2013



Why rush to commit the government to a Sh17 billion project just before the elections?

I think the new national surveillance, communications, command and control system for the police service should be postponed until after.

We all know that large and complex ICT projects with multiple components, and which involve the supply of new equipment and computer software, will not end without allegations of corruption being made by Parliament and the media.

To minimise public scrutiny, political rent-seekers will collude with permanent secretaries, ministers and procurement officials to delay committing the government to such deals until just before the elections when all eyes are focused on campaigns, and when public watchdogs and oversight bodies such as Parliament are not sitting.

Whether the situation I describe is what is driving the push to sign the gigantic project before the elections is not easy to say.
My point is that the timing is not right and that transparency standards must be higher than usual at this juncture.

Away from the limelight, the project is the subject of an explosive battle between two Chinese technology suppliers – ZTE Corporation and Huawei Corporation.

Huawei want the courts to reverse plans by the Ministry of Internal Security to exclude it from participating in the deal. And since the matter is still in court, I will not comment on the substance of the dispute.

But there are several pertinent public policy issues which this case brings to the fore. Regardless of what public procurement procedures say, is it fair to the taxpayer to sign a multi-billion shilling deal with a vendor without comparing his prices with offers by others?

In the court of public opinion, it is grossly unfair to allow a small group of civil servants sitting at the Office of the President to negotiate prices with one party under the excuse that other vendors did not pass the technical evaluation stage.

If they wanted to act in the public interest, they should have declared the tender unresponsive the moment they found that they were going to end up with one financial offer.

The whole purpose of international competitive bidding is to compare prices. It does not matter what the Public Procurement Administrative Review Board or the courts say. The taxpayer must be satisfied that he is paying the most competitive price.

Why is the Internal Security ministry rushing to conclude the deal when we know that government finances are not in good shape?

According to the government’s own figures, revenues are below what had been projected at the beginning of the financial year by a massive Sh43 billion.

Secondly, the government has had to incur additional expenses within the financial year, including salary awards to teachers, lecturers, health workers and the police, amounting to Sh30 billion.

Combined with expenditure on security operations in Somalia, and the implementation of the Constitution, additional expenditures which have arisen since the beginning of the financial year come to Sh100 billion.

Is borrowing from the domestic market an option? The answer is no.

The borrowing requirement assumed when the budget was being read in June has been surpassed by a large margin though the end of the financial year is months away.

Cumulative domestic borrowing as at the first five months of the financial year had passed the target by a massive Sh31 billion. At the Central Bank of Kenya, the overdraft facility is at Sh25 billion, the highest allowed by the law.

Mark you, according to the law, this overdraft must be cleared within this financial year.

There are other pressures on the domestic debt front. The practice has been that when payment of interest and bonds are due, the Central Bank automatically pays and puts the account into a suspense account until the government gets the money to clear.

From what I gather, this suspense account is at Sh23 billion. All this money must be paid back within this financial year.

The government should suspend signing the police communications project so that it can be transparently procured by the next administration.