March 4, 2014

Amended Procurement Law Aids Local Industries

6Ugandan majority owned companies and locally manufactured goods will gain preference in the procurement process by government ministries and agencies under the amended procurement law.

The Public Procurement Disposal of Public Assets Act amendments that came into force yesterday provide for competent locally owned companies to be given a priority during the procurement process, so as to support the industry. Local businesses have sometimes lost out to foreign companies when it comes to awarding of contracts because sometimes they’re considered incompetent.

A locally owned company is one where 50percent of the shares are held by Ugandans.

Cornelius Sabiiti, the Public Procurement Disposal of Public Assets Authority (PPDA) Executive Director, notes that some sectors in the economy, and government agencies will be required to reserve the contracts for Ugandan majority owned companies and locally manufactured goods.

Often local companies have complained that when they submit bid documents with foreign companies, they are usually ranked as non-competitive.

Section (50) (1) of the PPDA Act 2003 reads; “Subject to the economic and social policies of Government and the international obligations of Government, preference shall be given to domestically manufactured goods and Ugandan contractors and Ugandan consultants, in order to promote their development, by giving them a competitive advantage when competing for public procurement contracts, with foreign manufactured goods, foreign contractors or foreign consultants.”

According to Maria Kiwanuka, the finance minister, Ugandan small businesses can benefit if they apply and win tenders. The government is Uganda’s largest spender by far, out-pacing the private sector expenditure.

The Act was amended as a result of continued fraudulent awarding of tenders and contracts, despite the existence of PPDA. Additionally, there were various cases of delayed projects as a result of administrative reviews by aggrieved parties. For instance, NSSF’s Pension Towers along Lumumba Avenue have been stuck at the ground floor and basement stage since 2012 because of appeals that lost out during the tendering process. The project has since been on hold due to these lengthy procedures.

Additionally, even after contracts are awarded and the Auditor General comes in, the value for money test is found. According to Kiwanuka, accounting officers in ministries and agencies, under this new amended act, will be held accountable even after the awarding of contracts and tenders.

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