K55 billion prison fight

…PPDA rejects, Ministry insists.                                           

…MCP, UTM gurus fight for contractors

A potential K55 billion prison construction project has set tongues wagging, with allegations of bribery, improper influence and the Ministry of Homeland Security senior officials challenging the public procurement authority to insist on its choice of a contractor.

At stake is the cash windfall in commission, finders’ fees and even bribery to some senior officials accused to pushing a more expensive contract and flouting procurement procedures, The Investigator Magazine has found out.

We have also found out that factions comprised of politicians aligned with the ruling Malawi Congress Party (MCP), Ministry of Homeland Security, contractors and some middlemen including foreign nationals are working around the clock to force the Public Procurement and Disposal of Assets Authority (PPDA) to reverse its earlier rejection of the South African based Stefanutti Stocks (PTY) Limited.

The Investigator Magazine has found that unholy alliances of politicians and contractors from both the MCP and its alliance partner UTM is threatening to spill into an open civil war, with recorded voice notes of “gossip”, “wild allegations” and promises for a “bigger cut” being captured by different factions.

There are two contractors linked to politicians doing their bidding, that the simmering civil war would necessitate cancellation of the whole tender that an independent and professional procurement can be achieved, said an official from the Ministry who indicated that even the top brass is split on the matter.

The New Prison; Chitedze Maximum Prison

In 2022 The Ministry of Homeland Security advertised for construction of the long awaited new maximum-security prison for Lilongwe after Maula Prison located in the heart of the city was found congested and with no space to allow expansion.

The Investigator Magazine has been informed that even before the new prison is constructed, the Maula Prison has already been allocated to several businesses by officials who have been collecting bribes. (We will publish a full story soon).

Land was identified at Chitedze which is located west of the capital and the project would be known as Chitedze Maximum Prison.

The new prison will include purpose-built classrooms, chapel, court yards and will have two storey structures among other facilities.

Nine contractors passed the technical evaluation stage with pricing ranging from K29 902 493 778.81 as the lowest and the K49 983 003 889.89 as the highest. This happened on the 15th of December 2022, according to a copy of evaluation report we have seen.

The war began immediately, as according to the PPDA some were erroneously disqualified after already passing the technical stage which is the critical assessment of capabilities to contract which is expected to be executed within 156 weeks.

The nine contractors

The Investigator Magazine found that two out of the nine contractors are the ones fuelling the fight and one exerting pressure on the PPDA to reverse its professional opinion with others using the name and their links to President Lazarus Chakwera to get their way.

The Investigator Magazine can outrightly rule out any direct involvement of President Lazarus Chakwera and his Homeland Security Minister Ken Zikhale Ng’oma who was appointed after the civil war had already started, but he refused to comment.

The bids that were selected for final construction were the lowest being a Chinese firm Jiangxi Construction Engineering Group which was the lowest bidder at K29 902 493 778.81, Einstein Construction at K31 267 880 091.67, Plem Construction bid K31 909 049 294.13 and a joint venture of Dec and Rays Construction K33 262 467 666.23.

The bid results

A joint venture between Digital Base and SICO Civils pegged their bid at K33 830 479 761.18 while another one between Union and Blithe Building Contractors asked for K34 103 795 923.36 and the last joint venture on the list being Built-City Building Contractors whose bid is worth K34 730 000 000.00.

Paramount Holdings Limited who have become an all rounder in different fields were the second most expensive at K35 088 531 520.15.  Stefanutti Stocks (PTY) Limited was the highest priced bidder at K49 983 003 889.89.

The Ministry of Homeland Security proceeded to award the contract to Stefanutti Stocks (PTY) Ltd which a South African building giant operational in most SADC countries. The PPDA refused to give the no objection to the contract.

PPDA say no, reevaluate the tenders

The PPDA whose legal authority includes authorisation of award of contracts threw out the Ministry of Homeland Security application to have Stefanutti Stocks (PTY) Ltd, accusing the Ministry’s Internal Procurement and Disposal of Assets Committee (IPDC) of failing to follow the set standards.

The PPDA refused to give the no objection to the contract.

“I write with reference to your letter Ref. HA/02/347 dated 27th April 2023 in relation to the subject above. Kindly be advised that based on the information provided your application is rejected. The Authority has withheld its No Objection for you to proceed awarding a contract to Stefanutti Stocks (PTY) Limited for the construction of Chitedze Maximum Prison at a total contract of MK55,842,828,889.79 (Fifty-Five Billion Eight Hundred Forty-Two Million Eight Hundred Twenty-Eight Thousand Eight Hundred Eighty-Nine Kwacha Seventy-Nine Tambala),” reads a latter dated 2nd of June 2023 from PPDA Director General Edington Chilapondwa.

Dr. Chilapondwa wrote to Secretary to Homeland Security Oliver Kumbemba telling him that his IPDC used wrong bidding documents.

“You used a wrong Bidding Document for the procurement of works. Bidding Document for Works do not contain scoring evaluation methodology for both Technical and Financial evaluation. Works procurements are expected to follow Pass/Fail evaluation methodology,” said the PPDA chief.

The use of wrong bidding documents would automatically cancel the whole procurement process, said our procurement specialist.

The PPDA faulted the Ministry for disqualifying some bidders whom it had passed the first stage which was evaluation of the technical capacity. The PPDA was not also amused with disqualification reasons for other bidders based on the fact that they were a joint venture.

“This means that those that were invited for the second stage were deemed responsive and capable of handling the works being procured. As such, there is no justification for disqualifying a bidder that qualified at first stage,” said the PPDA.

The PPDA rapped the Ministry further on disqualifying bidders based on joint ventures, “Your evaluation criteria did not prohibit a bidder from entering into a joint venture with a party that has never been in a joint venture before. It is therefore not acceptable to disqualify a bidder on the basis that the bidder’s counterpart in a new inexperienced joint venture. You may wish to be reminded that the principle of joint venture is that bidders come together with a counterpart for a specific procurement.”

The PPDA stated clearly that the contract awards decision was “arrived following an erroneous methodology,” including “lowest best evaluated bidder” which it said is not provided for in the public procurement regulatory framework.

“In view of the foregoing, you are advised to re-evaluate the bids following the right methodology and basic principles applicable to public procurement for works,” advised Chilapondwa who added that the focus should have been on financial evaluation, “The post-qualification should basically aim at confirming what the bidders were requested to submit to be qualified for the work in order of their ranking.”

Ministry refuses to back down

The Ministry of Homeland Security refused to backdown after receiving the rejection and opted to ask for second opinion from the PPDA which was highly unusual as the authority as clear the process should restarted.

Secretary for Homeland Security Oliver Kumbemba wrote back the same day explaining his offices second consideration “as time is running out.” The real reason Homeland Security IPDC and others have vested interest in the project.

“The use of a wrong bidding document for the procurement of works, be advised that the bidding document which was used is equally to the one which we used when procuring works for the construction of New Blantyre Police, it was submitted for review at your office and a no objection was awarded,” wrote Kumbemba directly challenging the PPDA.

Kumbemba said no bidder was disqualified at the stage the PPDA referred to adding also that the authority missed its own approvals as it had already been included in the initial no objection.

“The ministry is aware of that but if you can check the pre-qualification document and its criteria evaluation document which was submitted to your office it clearly stated that the technical results will have an impact on the financial evaluation which you also grated a no- objection, the ministry is of the view that by granting it a no- objection meant that we can proceed and be advised that no bidder was disqualified at this stage,” he adds.

He also challenged the PPDA that no bidder was disqualified for joint venture experience, but the IPDC only made observations that some of the bidders lacked experience to work as joint venture “that looking how complex the works are it was not valid to pick joint ventures which had not ever work as joint ventures before.”

He said the Ministry’s evaluation team had already obtained pre-qualification document approval and that the PPDA already approved the same for Blantyre Police.

The political battle

Despite the clear PPDA misgivings, intense political pressure is being used to make sure the contract is either awarded or cancelled that has led to the whole process being stalled.

Allegations of bribery, corruption and potential exposures are now part of the contract that has been dirtied as agents for various contractors are claiming to have paid MCP, UTM and other government officials to influence the contract.

“There is a Mr. Chinga, a Zambian national who claims to have control of everyone in the Ministry that the contract will be awarded to his company,” said a source in the Ministry saying the pressure was forcing people to avoid each other.

Another source pointed at a company that is affiliated to a UTM official as having been the one influencing the cancellation of the process, saying this was a political battle for the control of the resources.

“The difference between the lowest bidder and the highest bidder is K20 billion. That does not make sense. The project is massive, and its values is well over K100 billion. These companies bid low deliberately to raise the prices once they get the contracts,” alleged another one.

Secretary for Homeland Security Kumbemba could not be reached for a comment and questions sent to the Ministry were not responded to. Zikhale Ng’oma said Ministers are not responsible for procurement hence he could not competently answer for the procurement team and that the matter is internal.

However, it has become common knowledge that public financed projects are being overpriced to cover cuts for politicians, senior government officials and others.

We have contacted all those mentioned by various parties, and we will publish their responses later next week in our second part of the story- Following the Prison Bribes.

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