Supply contracts now subject to value for money audit review
THE Government has said all supply contracts are now subject to a value for money audit review before payments are made, a measure that has been introduced to curb overpricing and procurement malpractices by some suppliers.
Treasury recently suspended payments to Government contractors, Ministries, Departments and Agencies (MDAs) after it noticed that they were submitting invoices for goods and services priced using parallel market rates.
The MDAs are now required to seek approval from the Treasury for current and future contract pricing and share their due diligence on accepted contract prices. In a statement, the Minister of Finance and Economic Development, Professor Mthuli Ncube, said punitive measures shall be taken against officials found to be complicit to overpricing and procurement malpractices.
“Government through the Treasury, will be strict in enforcing measures to enhance economic stability and punitive measures shall be taken against officials found to be complicit to overpricing and procurement malpractices while suppliers will be blacklisted for future supply contracts.
“All existing contracts are now subject to a value for money audit review before payments are made. The Government of Zimbabwe remains committed to maintaining macroeconomic stability and the elimination of harmful and destabilising arbitrage conditions that have pervaded the economy at the expense of the generality of citizens.”
The minister said Government has noted with concern pricing of goods and services offered by suppliers to Ministries, Departments and Agencies as well as Parastatals and Local Authorities.
Prof Ncube said the pricing framework adopted by suppliers was characterised by a behavioural tendency for forward pricing models and benchmarking prices to front loaded parallel market exchange rates.
“These pricing models are leading to extortionist pricing of goods and services supplied to the Government Ministries, Departments and Agents not anchored on economic fundamentals.
Government has also noted with concern the fact that substantial differences in pricing are obtaining in the market for goods and services supplied to the Government as compared to other customers,” he added.
He said the MDAs through the various procurement management units, have also not been exercising due diligence and have been merely following procurement rules to the letter, without due regard to established value for money practices already enshrined in the procurement laws of the country.
Prof Ncube said the combined effect has resulted in the rapid erosion of budgeted resources hence the need for Government to come up with a raft of measures to deal with the menace.
“One of the key steps was the recent Treasury Circular issued to MDAs, which also followed the announcement by the Ministry of Finance and Economic Development of the establishment of a value for money audit process to be embedded into the procurement cycle for all goods and services,” he added.
Government continues to take relentless and significant steps to stabilise the exchange rate and control inflation as announced through the Presidential Policy Statement and subsequent supportive policy measures announced by both the Minister of Finance and Economic Development and the Governor of the Reserve Bank of Zimbabwe.