Defence Ministry violated Public Procurement Act — Auditor General's report

The 2011 Auditor General's Report has cited the Ministry of Defence for varying contract sums beyond 10 per cent in contravention of the Public Procurement Act.

The report indicated that between January 2009 and December, 2010, the ministry awarded contracts amounting to GH¢16.6 million but the initial cost was revised to GH¢25 million.

That resulted in a variation of GH¢8.4 million or 50.6 per cent without proper assessment of the works to be carried out.

According to the report, no structural changes were made on those projects to merit the variation.

"We noted that the contractors failed to execute their contracts before the one-year expiration period. Some had only executed 41 per cent of the job," it said.

The report, therefore, asked the ministry not to pay variation where the contractor had failed to complete the job on schedule.

Additionally, it reminded the Ministry of Defence that informing the Ministry of Finance about the variation in the contract sum did not absolve it from complying with the Public Procurement Act.

PAC's caution

The Minister of Defence, Dr Benjamin Kunbour; the Chief of Defence Staff, Air Vice Marshal Samson Oje; the Chief of Staff of the Ghana Armed Forces (GAF), Brig General Sampson Kudjo Adeti, and other commandants of the GAF yesterday appeared before the Public Accounts Committee (PAC) to answer queries related to the issue and other matters raised in the 2011, 2012 and 2013 Auditor General's reports.

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The PAC reminded the army chiefs that variation of contract sums beyond 10 per cent constituted a violation of the Public Procurement Act.

It said the penalty for the violation was a jail term not exceeding five years.

Ministry's response

Dr Kunbour said the reported variation of the contract sums happened at a time when he was not the Minister of Defence and the current military chiefs were not at post.

However, he said the ministry and the GAF would look for all the contract documents to establish the circumstances that led to the variation of the contract sums.

Wrongful payment of interest

Another finding of the 2011 Auditor General's Report was the payment of interest and fluctuations to contractors.

It said the ministry paid interest at the prevailing bank rate on certificates submitted for payment to contractors who were engaged to put up houses for GAF under the Social Security and National Insurance Trust (SSNIT) Housing Project.

The report indicated that interest payments amounted to GH¢602,779.25, while fluctuation payments totalled GH¢2,301,857.60.

"Also, because contractors were awarded two or more jobs simultaneously, they failed to meet the deadline," it said.

Delayed payment

The Defence Minister explained that the increases in interest payments was due to the delay in the payment to contractors.

He denied that contractors were given simultaneous contracts, and indicated that there was no direct correlation between the quantum of the contract and the delivery.