Uganda: ID Deal Not Approved, Says PPDA

11 April 2010
Kampala — The Procurement Authority, PPDA, did not approve the award of the sh185b deal to supply the National Security and Identification system to the German firm, Mühlbauer Technology Group, documents obtained by The New Vision revealed.
In a letter of March 12, the authority advised that the procurement be subjected to an open and competitive bidding process in order to ensure transparency and value for money.
"The unique strength and advantages of the provider in order to justify the exclusion of any fair, equitable and competitive selection process of any form, is absent," read the letter to Stephen Kagoda, the Permanent Secretary of the internal affair ministry.
"The fear of causing delays to the electoral processes of the 2011 can be mitigated by the use of a shorter bidding period to be granted by PPDA on request by your entity," said the letter, signed by PPDA director Edgar Agaba.
Agaba also warned the permanent secretary to take full responsibility for the project in case he opted to ignore his advice.
"In the event that the above position is not acceptable to your entity and you decide as the accounting officer to proceed under national security concerns, you should take full responsibility for the conduct of the procurement process."
The ministry, according to documents, did not follow the advice. The permanent secretary subsequently signed the sh185b contract with the German firm on March 19, one week after the letter of PDDA.
PPDA in the letter noted that the formal application for deviation from the procurement rules did not give enough details of the project.
The application was silent on the cost and source of funding for the project. "It is important to know the extent of financial responsibility involved," the letter stated.
Agaba indicated that the law prohibits the initiation of any procurement proceedings for which funds are not available or adequate.
The scope, objective, time frame and output of the project were also not provided, as required by procurement rules.
"This information is crucial for the development of the statement of requirements and evaluation criteria to be used in the development of a comprehensive solicitation document and resulting contract," PPDA noted.
The ministry was also silent on the details of the firm that was to be awarded the contract or whether it met the requirements for participating in public procurement.
The performance track record of the firm, including completion of similar projects in the region was not known, and there was also no result of any due diligence test on the firm.
The Procurement Authority also said the National Security Council, headed by internal affairs minister Kirunda Kivejinja, never agreed with PPDA on the items that are to be on the restricted list in any procurement.
The National Security Council is empowered by law to manage its procurement and disposal. However this is done on the basis of a list of items to be procured, agreed upon annually with the PPDA.
The contract
It is not known how the Government arrived at the decision to award the contract to Mühlbauer. The process started when President Yoweri Museveni on April 2 wrote to the internal affairs minister to revive the ID project and give guidance on the process of issuing identity cards.
The ministry, acting on the President's letter, identified Mühlbauer and signed a contract which put the total cost of the project at 64m euros (sh185b).
This cost, however, does not include the cost of implementing the project. The contract also exempts the company from paying taxes, including VAT or import duties.
Kenya will pay sh53b and Tanzania sh41b for more sophisticated identity cards, yet they have larger populations, according to The Observer.
Under the terms of the contract, the ministry of ICT has to implement the project.
It is not known whether the ministry, which is already overwhelmed with the national backbone infrastructure project, has the capacity to do so.
In a letter of March 21, Kagoda directed the permanent secretary of the Ministry of ICT to put in place measures, mechanisms and procedures to implement the project.
"As a matter of urgency, put in place measures, mechanisms and procedures to ensure that all actions agreed are executed on time," wrote Kagoda.
Payments
A down-payment of 23m euros (sh64.4b) was made to the firm within seven days of signing the contract. This month, the Government is expected to pay another 18m euros (sh51b) for enrollment of the project.
By July, a third payment of 9m euros (sh25b) needs to be made for software and databases.
The Ugandan Government also needs to pay 13m euros (sh36b) to clean the voter register by August and 631,000 euros (sh1.7b) for maintenance support.
Blank ID cards using the barcode technology will cost the Government 22.5m euros (sh63b) for 15 million cards, amounting to $2 per card.
Yet, experts say for that money, the Government could have gotten a card with micro-chip technology which can accommodate a lot more information, such as driving licence, medical history, criminal records, education data and social security status.
Micro-chip technology can also authenticate fingerprints and photographs, which are additional safeguards against fraud and forgeries.