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Purchase of Public Works Department Vehicles Without Using Proper Tender Procedures [1998] VUOM 21; 1998.21 (20 November 1998)

REPUBLIC OF VANUATU

OFFICE OF THE OMBUDSMAN

PUBLIC REPORT

ON THE

THE PURCHASE OF PUBLIC WORKS DEPARTMENT VEHICLES WITHOUT USING PROPER TENDER PROCEDURES

20 November 1998

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PREAMBLE

'The thoughts of the righteous are right, but the counsels of the wicked are deceit'

Proverbs 12 v 5

This report illustrates yet again how any or every law can be made ineffective and useless if personal advantage or maladministration are allowed to take priority over justice. All the Comprehensive Reform Program has ever devised can be brought to nothing if there is no determination to act uprightly, and if friends are given priority over fairness.

SUMMARY

This is a report issued by the office of the Ombudsman based on the conduct of the former Director of Public Works Department, Mr Benoît Saint Omer ('St Omer') and the former Minister of Transport, Mr Amos Bangabiti ('Mr Bangabiti'). The report focuses on the purchase of Public Works Department vehicles without using proper tender procedures.

On 18 July 1994, the Director of Public Works Department, Mr Saint Omer, requested the Ministry to buy 2- 3 lorries for the Tanna PWD subdivision. He submitted the request with a list of quotations obtained from various companies. The Council of Ministers sat on 18 August 1994 and decided to award the contract to a company (Company 'A') for 3 Hyundai trucks for Vt.14,177,940. After informing Company 'A' of their decision, the Council of Ministers met again on 27 September 1994 and revoked their decision of 18 August 1994. They decided to offer the contract to another company (Company 'B') for 3 Toyota trucks for Vt.16,500,000.

The normal procedure is:

∑ Minister of Transport must approve the project

∑ Then the tender board handles the procedure and recommend to whom the contract is to be awarded in according in precise procedures (advertisement, etc...) outlined in the Financial Regulations.

The Ombudsman’s investigation revealed that procedures outlined in the Finance Regulations were ignored by the Director of PWD, Mr Omer and the Minister of Transport, Mr Bangabiti, the Central Tender Board was not contacted to handle the matter for both the first and the second contracts. The Council of Ministers failed on both occasions to ensure that all required tender procedures were completed before they approved the contracts.

We therefore found serious breaches of laws and procedures which could have led the contract to be considered as null and void as stated in a recent Magistrate judgment: Rolland v Director General of Finance (Civil Case 25 of 1998).

In her report the Ombudsman recommended that:

1) all government departments, ministries and other public institutions be required to observe and follow the Finance Regulations when purchasing public vehicles. The Director Generals ensure that all ministries and departments have got a copy of the Finance Regulations
2) the current Director of Public Works Department familiarise himself with the relevant laws and provide training to his staff to ensure that similar breaches do not occur in the future.

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TABLE OF CONTENTS

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1. JURISDICTION

1.1 The Constitution and the Ombudsman Act No 14 of 1995 allow me to look into the actions of the government and other organisations that the government has interests in. I can also look into defects in the law or the administration of the law, discrimination and breaches of the Leadership Code. This includes defects of procedures set out in the Finance Regulations.

1.2 The Ombudsman Act still applies to this case even though it has been repealed recently as the investigation began while the Act was in force. (Interpretation Act [CAP 132] s. 11).

2. PURPOSE, SCOPE OF INVESTIGATION AND METHODS USED

2.1 The purpose of this report is to present my findings as required by Article 63 of the Constitution and Section 24 of the Ombudsman Act.

2.2 The scope of this investigation is to establish whether the approach taken to purchase trucks by Mr Saint Omer and Mr Bangabiti was in accordance with the requirements of the Finance Regulations. It is also to determine whether the conduct of Mr. Saint Omer and Mr. Bangabiti in arranging for the purchase of the trucks without the Tender Board was proper.

2.3 This Office collects information and documents by informal request, summons, letters, interviews and research.

3. OUTLINE OF EVENTS

Date Event

14.06.94 The Public Works Department (PWD) requested different companies to supply quotations for the PWD to purchase 2 - 3 lorries for Tanna. PWD did not contact the Tender Board and did not follow any formal tender procedures.

18.07.94 The Director of PWD, Mr Benoît Saint Omer, wrote to the Minister of Transport, Mr Amos Bangabiti, requesting the purchase of 2-3 lorries. His letter included quotations received from four companies:

18.08.94 The Council of Ministers (COM) met and approved the contract offer made by Company 'A' for Vt.14,177,940. (see appendix A). The COM comprised:

Mr Maxime Carlot Korman Mr Paul Telukluk

Mr John Sethy Regenvanu Mr Cecil Sinker

Mr Willie Jimmy Mr Romain Batick

Mr Thomas Broti Faratia Mr Edward Tambisari

Mr Charley Nako Mr Serge Vohor

Mr Amos Bangabiti

26.08.94 The Director of PWD informed Company 'A' of the decision of the COM to accept its tender.

31.08.94 Mr Bangabiti, informed Mr Saint Omer that he would like to change the COM decision to purchase 3 Hyundai Lorries to 3 Toyota Lorries. He instructed him to postpone the ordering of the lorries from Company 'A'.

01.09.94 The Director of PWD advised Company 'A' in writing of the postponement of the ordering of the 3 lorries.

01.09.94 This same day, the sales Manager of Company 'B' resubmitted the pro forma invoice to the Director of PWD for VT 16,500,000.

5.09.94 In a letter from Director of PWD to the Minister of Transport, Mr. Saint Omer confirmed the Minister’s order to PWD postponing the purchase of Lorries from Company 'A'. (see Appendix B)

27.09.94 The COM sat again, revoked their decision of 18 September 1994 and decided to offer the contract for the lorries to Company 'B'. (See appendix C)

27.09.94 The Secretary General of the COM, wrote to the Minister of Transport advising him that the COM had revoked their decision of 18 August 1994 and that the contract for the supply of lorries was to be awarded to Company 'B' for VT.16,500,000.

4. RESPONSES TO THE PRELIMINARY REPORT

4.1 The preliminary report in this matter was issued on 23 July 1998 to enable persons complained of an opportunity to reply to the preliminary findings.

4.2 Responses were received from:

Mr. Amos Bangabiti

Mr. Cecil Sinker

Mr. Charley Nako

Mr. Thomas Broti Faratia

Mr. Benoît Saint Omer

4.3 Mr. Bangabiti acknowledged that proper procedures may not have been followed. He stated his decision purchase the vehicles from Company 'B' was a benefit to the people on the island because the vehicles are well maintained until today.

4.4 Mr. Cecil Sinker and Mr. Charley Nako said that they were part of the Council of Ministers so they voted along with the other members just to endorse what Minister Bangabiti and his technical officers had decided on. Mr Sinker said that it was the Minister’s responsibility to ensure that the law was followed.

4.5 Mr. Thomas Broti Faratia said that the Attorney General was present at the Council of Ministers’ meetings and he should have advised them of the proper procedures.

4.6 Mr. Saint Omer said that he did not think that government money was misused in this matter and that whatever procedure was to be followed, the technical and financial choices were satisfactory.

4.7 The above answers did not contradict our statement that Financial Regulations had been breached. As stated recently in a Magistrate Court case, the unlawfulness of a contract with a Government can made that contract null and void and this judgment stated that Ministers must comply with Financial Regulations.

5. RELEVANT LAWS AND REGULATIONS

5.1 PUBLIC FINANCE ACT (CAP 117)

POWER AND DUTIES OF THE MINISTER AND ACCOUNTING OFFICERS

POWERS OF MINISTER

2(1) The Minister shall so supervise the expenditure and finances of the Government as to ensure that a full account thereof is made to Parliament and that control by Parliament is upheld and for such purpose, shall, subject to the provisions of this Act, have the management of the Revenue Fund and the supervision, control and direction of all matters relating to the financial affairs of the Government which are not assigned to any other person by or under any Act.

(2) The powers, duties and functions of the Minister under this Act may be exercised by any officer, agent or trustee, authorised by him in writing to the extent of the authority contained in such writing.

DUTIES OF ACCOUNTING OFFICERS

3. Every accounting officer and every other person concerned with or responsible for the collection, receipt, custody, issue or payment of public or other monies, stores, stamps, investment, securities or negotiable instruments whether the property of the Government or entrusted to the Government or to any public officer in his official capacity either alone or jointly with any public officer or any other person, shall be subject to this Act and any order made hereunder and shall perform such duties, keep such books and render such accounts as may be prescribed by or under this Act or by instructions issued by order of the Minister in matters of accounting or financial procedures not inconsistent therewith.
   

FINANCE REGULATIONS

PURCHASE OF GOODS AND SERVICES

PROCUREMENT PROCEDURES

361 (3) Where the cost of a specific work or service exceeds 1 Million vatu, at least three (3) written tenders must be obtained. These tenders must be submitted to the Central Tender Board for its evaluation and for the awarding of the contract.

5.3 Finance Regulations 361 to 367 require that formal tender procedures must be followed where more that 1 million vatu is involved. Tenders should be called by open competitive bidding, sealed in envelopes. Tender notice should be given out within two weeks by radio announcement, press advertisement and also the Government Gazette for tenders over Vt.500,000. Tenders should be submitted to the tender board’s secretary. The formal tender procedure also emphasises the tender notice requirements, procedures for opening tender submissions and procedures for evaluating and awarding of the tenders

5.4 The members of the Tender Board should comprise of the Director of PWD or his representative, the Director General of Finance or his representative and a representative of the Ministry of Transport. Two thirds of the members can constitute a board meeting.

5.5 The reason why the Tender Board is given the power to decide to whom a contract is awarded is because the Tender Board is made up of technical officers who know what they are dealing with. Technically detailed documents are submitted to the Tender Board and the members of the Board (technical officers) are therefore in a better position to make decision on the merits of each case and the best interest of the Government as a whole because they are specialists. Ministers of state are not qualified to do this. They are politicians.

Power of the Council of Ministers

5.6 Interim Financial Regulation 368 (1) and (2) Provides:

(1) Upon receipt of the technical officer’s report, the Board shall reconvene and accept the lowest, evaluated tender. If this is not done, the minutes of the Board meeting shall include a full explanation of the reasons why this did not happen.

(2) All tenders exceeding 3 million vatu must be approved by the Council of Ministers before they are awarded.

5.7 The COM does not have the power to make a decision purporting to award a contract to any particular contractor. The power given to the Council of Ministers in relation to tender procedures is the power merely to approve or disapprove the award of the contract to that particular contractor whom the Tender Board has already decided on. This COM’s power is more or less a procedural requirement requiring the COM to give their final 'blessing', when the contract concerned particularly involves an amount of money which is excess of VT3 million.

6. FINDINGS

The conduct of the Director of PWD, Mr Benoît Saint Omer, the Minister of Transport, Mr Amos Bangabiti and the Council of Ministers was contrary to law.

Council of Ministers

Mr Maxime Carlot Korman Mr Paul Telukluk

Mr John Sethy Regenvanu Mr Cecil Sinker

Mr Willie Jimmy Mr Romain Batick

Mr Thomas Broti Faratia Mr Edward Tambisari

Mr Charley Nako Mr Serge Vohor

Mr Amos Bangabiti

The purchase of trucks for the Public Works Department without following formal tender procedures was in breach of 361(3) of the Finance Regulations and hence contrary to law. This purchase was undertaken by the Director of Public Works Department Mr Saint Omer, authorised by the Minister of Transport Mr Bangabiti and approved by the Council of Ministers. For both occasions, the first and the second contracts the central tender board was not contacted to handle the matter as required by regulation 361 of the Finance Regulation. Tenders were not called by open competitive bidding sealed in envelopes. Tender notices were not advertised.

7. RECOMMENDATIONS

7.1 Recommendation 1: All government departments, ministries and other public institutions observe and follow the requirements of the Finance Regulations when purchasing public vehicles. The Director Generals ensure that all ministries and departments have got a copy of the Finance Regulations.
7.2 Recommendation 2: The current Director of Public Works Department familiarise himself with the relevant laws and provide training to his staff to ensure that similar breaches do not occur in the future.

8. CONCLUSION

8.1 To comply with Article 63(2) of the Constitution and Section 22 of the Ombudsman Act, the Ombudsman requests the Prime Minister and his Director General, Minister of Transport and the Director of Finance to consider these recommendations and to put them into effect.

8.2 The Office of the Ombudsman must be notified of the decision and proposed steps to implement these recommendations within thirty (30) days of the date of this report.

Dated the 20th day of November 1998

Marie-Noëlle FERRIEUX PATTERSON

OMBUDSMAN OF THE REPUBLIC OF VANUATU

9. INDEX OF APPENDICES

A Council of Minister's decision of 18.08.94

B Saint Omer’s Letter to Bangabiti confirming the postponement

C Council of Minister's decision of 27.09.94 cancelling the first contract

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