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Govt renegotiating contracts to weed out economic hitmen

ByEconomic Times

Sep 20, 2022

By ETimes

Government through the Treasury, said it is now very strict in enforcing measures to enhance economic stability after the persistent rottenness in the market regarding pricing by suppliers to government departments.
Treasury has vowed that the value for money process will now result in punitive measures being taken against any government officials found to be complicit to overpricing and procurement malpractices while suppliers will be blacklisted and excluded from future supply contracts.
As a result, all existing contracts are now being subject to a value for money audit before payments are made. There is said to have been resistance to this exercise but Accounting Officers and progressive suppliers have seen the merit of this exercise and there is now a reasonably high level of compliance.
Minister Mthuli Ncube said “Government has noted with concern pricing of goods and services offered by suppliers to Ministries, Departments and Agencies (MDAs) as well as Parastatals and Local Authorities. The pricing framework adopted by suppliers has been characterized by a behavioural tendency for forward pricing models and benchmarking prices to front loaded parallel market exchange rates.”
These pricing models have been said they are leading to extortionist pricing of goods and services supplied to MDAs not anchored on economic fundamentals.
“We have seen supply contracts with prices clearly determined using forward parallel market exchange rates some as high as $2000 per USD,” Minister Ncube added.
Treasury said it has noted that MDAs through the various procurement management units, have not been exercising due diligence, especially regarded the value for money in terms of pricing.


According to the minister, procurement units have merely been following procurement rules without due regard to established value for money practices already enshrined in the Procurement laws of the country.
In the past tenders have been awarded without due regard to price checks on the basis that prices have passed a competitive bidding process.
“Some examples are a tender for laptops which purportedly cost close to US$10 000 each which is way above general market prices for high specification laptops, whilst in other spheres a 2kg pack of chicken was claimed to be worth US$30 when market price is a maximum US$6 for the same.
“We have seen a bag of cement being priced at an equivalent of US$18 per bag on some construction projects. Such ladies and gentlemen is the extent of overpricing which is rendering the Government budget inadequate and our position as government is that this is not acceptable,” said Ncube.
According to Treasury, government started enforcing measures to enhance economic stability by suspending all inflated payments and ordering an audit exercise to revalidate all running contracts and renegotiate prices with various suppliers. – Harare

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