ECX's
upcoming procurement bid
By Wondwossen Mezlekia
November 28, 2012
The
Ethiopia Commodity Exchange (ECX) is currently conducting a high-ticket
international procurement - the first of its kind since a multi-million dollar bid was busted in 2010 due to alleged fraud and
corruption during the bidding process.
The bid for the supply, installation, and maintenance of a
futures trading software that ECX floated back in 2010 was marred by dishonest
maneuvering, seemingly to favor the Sri Lanka based company, Millennium IT, and
World Bank withdrew
ECX's award proposal and cancelled the loan. The
loan was part of what the government had borrowed from International
Development Association (IDA) for the purposes of financing the Rural Capacity
Building project. [1] Strangely, the said futures trading software was
not needed to begin with and would have been running idle today had ECX
purchased it in 2010, because the government is, as it has always been, decidedly against price speculations
and hence would not allow Forwards and Futures trade operations that the
software was supposed to support.
ECX is once again preparing to
spend some of the money that the government has borrowed from the Investment
Climate Facilities for Africa Trust (ICF) and other donors on an online trading
platform at an estimated total cost of more than $10 million (exact amount and
details are withheld). Arguably, much like the futures trading software, the
merit of this investment is also questionable, especially in light of ECX’s and
the government’s current priorities, the details of which is for another
article. The purpose of this article is to equip concerned citizens with the
information and resources they need to be on their guard against corruption,
and to put on notice anyone who may be under temptation or illusion to
fraudulently benefit from the upcoming bid. Although there is no evidence so
far, it is better to prevent corruption than to prosecute it.
According to ECX's budget proposal
that was reviewed for this article, almost 76% of the budget for the online
trading project will be covered by funds from the World Bank's Rural Capacity
Building Project. ICF has agreed to cover the financing gap of about 24% of the
total estimated budget through a grant. The procurement is being conducted
under the auspices of the outgoing officers, Dr. Eleni Gebre-Medhin, Solomon
Edossa, and Ahadu Woubshet who only have an advisory role under a one-year
contract, even though the new CEO, Anteneh Assefa and other officers have already
assumed their positions.
The Invitation for Bid (IFD) for the procurement
of a core system for online trading, including its risk management,
surveillance, and clearing components (Procurement
Reference Number ECX-ICF/G/002/2012) was
advertised on November 1, 2012 on national papers and online, including
on dgMarket. [2] Accordingly, the
bid will be opened in two phases: the technical bid will be opened on November 30, 2012 at 10:30 am local time at ECX
Media Room, and the opening date for the financial bid will be announced thereafter.[3] The bidding will be conducted in accordance with the open International
Tendering Procedures contained in the public procurement guidelines of the
Government of Ethiopia, the ICF Guidelines[4], and the International
Competitive Bidding (ICB) procedures.
The past record of
the government in detecting or prosecuting suspected fraud and corruption is
dismal. On the other hand, donor's guidelines have proved to be reliable sources
of defense in past disputes involving
international procurement bids. Among these,
ICF's guidelines appear to be by far clearer and strictly dictating how the
borrower and bidders alike should behave during the bidding process. For
example, ICF not only offers to provide assistance of audit services and
monitoring (Article 1.6), but also explicitly states the steps that it takes to
fight fraud and corruption (Article 1.7).
Review, Assistance, and Monitoring
1.6 ICF
and auditors appointed by ICF shall review the Grant Recipient’s selection
process for the selection of suppliers proposed by the Grant Recipient in the
Procurement Plan to ensure compliance with the Grant Agreement and these
Guidelines. The Grant Recipient shall retain all documentation with respect to
each contract during project implementation and up to two [y]ears after the
closing date of the Grant Agreement. This documentation would include, but not
be limited to, the signed original of the contract, the analysis of the
respective proposals, and recommendations for award the record of
justification, the capabilities and experience of the suppliers, for examination
by ICF, auditors appointed by ICF or by its suppliers.
Fraud and Corruption
1.7 It
is ICF’s policy to require that Grant Recipients, as well as suppliers and
their subcontractors under ICF-financed contracts, observe the highest standard
of ethics during the selection and execution of such contracts. In pursuance of
this policy, ICF will reject a proposal for award, cancel the portion of the
Grant allocated to a contract; sanction a supplier if it at any time determines
that the tender process was marred by corrupt, fraudulent, collusive, coercive,
or obstructive practices. In addition, ICF will have the right to require
that, in contracts financed by an ICF grant. a provision is included requiring
suppliers to permit ICF to inspect their accounts and records and other
documents relating to the submission of proposals and contract performance and
to have them audited
Articles 2.1, 2.15,
and 2.21 of ICF's guidelines also require borrowers to conduct bidding by
following a two-tiered approach and based on Quality and Cost Based Selection
(QCBS), which uses a competitive process that takes into account the quality and
the cost of the services in the selection of the winner. The guidelines
prohibit evaluators of technical proposals from having access to the financial
proposals until the technical evaluation is concluded.
The Selection Process
2.1
QCBS uses a competitive process among short-listed firms that takes into
account the quality and the cost of the goods and supplies in the selection of
the successful supplier. Cost as a factor of selection shall be used
judiciously. The relative weight to be given to the quality and cost shall he
determined for each case depending on the nature of the assignment.
Evaluation of Proposals: Consideration of
Quality and Cost
2.15
The evaluation of the proposals shall be carried out in two stages: first the
quality, and then the cost. Evaluators of technical proposals shall not have
access to the financial proposals until the technical evaluation is concluded.
Financial proposals shall be opened only thereafter. The evaluation shall be
carried out in full conformity with the provisions of the RFP.
Articles
2.11 and 2.12 if IFC's guidelines even go as far as to dictating the minimum
time that grant recipients need to allow between the different stages of the
procurement process. For example, the minimum time-limit for receipt of proposals
should not be less than 40 days from the date of the advertisement, except in
emergency situations.
While these and other Articles of ICF's guidelines
appear to provide reasonable controls around each segment of the procurement
processes, any control is only as strong as the people applying them. It is
thus imperative that concerned citizens and bidders get engaged and attentively
monitor all international bidding processes conducted at ECX and other
institutions in order to prevent misappropriations of foreign aid in Ethiopia.
Report suspected
fraud and corruption to Investment Climate Facility for Africa at info@icfafrica.org
or projects@icfafrica.org; the World Bank Group's
Integrity Vice Presidency at investigations_hotline@worldbank.org; or Transparency International at transparency@transparency-usa.org.
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[2] http://www.dgmarket.com/tenders/np-notice.do~8547811
(dgMarket is an international
portal for tenders and procurement opportunities from governments and
international organizations)
[3] The
time elapsed between the date of advertisement and the bid opening date appears
to be shorter than
the minimum time limit set under Articles 2.11 and 2.12 of ICF's Procurement
Guidelines
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Read more about ECX
at http://poorfarmer.blogspot.com/p/ecx-watch.html
Contact the writer at
poorfarmer@gmail.com