Witness harps on importance of budget

The Commission is currently discussing transactions of area councils.

“What is the significance of the procuring organisation’s budget vis-à-vis the procurement that they are going to conduct?” the witness was asked by Lead Counsel Yakarr Coxx

Mr Sanyang said in response that the budget will show that the procurement in question is being budgeted for and the funding is available for it.

“What happens where the procurement is outside this budget? Is it possible to commence procurement proceedings?

Mr Sanyang said: “A budget is an estimate based on market research to determine an estimated cost. During the implementation, what prevails on the ground may differ from what is being budgeted for. In that case, the procuring organisation would update the budget based on the existing, market price.

Witness Sanyang added: “According to the law, it should be plus or minus 15%. If the budget is more than 15%, then it means that it is far above the budget, and probably institutions should not go ahead with it.

He clarified that this is when bidding is done and the offers by suppliers or contractors are more or lower than 15%. “In cases like that, it is regarded as being far above the budget or below the budget. When it is below the budget, the conclusion is that the contractor may underperform,” he said.

“So what happens where the bid is more than 15% or below 15%? If all the bids are like that, if all those offers are like that, would they have to adjust the budget and retender?” the lead counsel asked again.

The witness answered: “Let me begin with the under-budget. Now the institution can engage the contractors or suppliers to find out why it is being grossly under-budgeted, and there are possibilities. For example, there is a procurement at a certain place like Basse, and bidding is done at a time when there is a contractor who already has all material mobilised to Basse and is on the ground. But that is just an example.

“So in this case, that supplier may not need any resource mobilisation again because the materials are already there. So in cases like that, that particular contractor or supplier may bid far below what is expected. So in cases like that, that supplier may be considered.”

However, he said, when such occurs in all the bids, then the procuring institution may contact all of the bidders. He stated that when the bidder's estimated cost is far more than the budget, what should be considered is whether the procuring institution could afford it and where are the added expenses coming from.

Meanwhile, he also reminded the Commission that the budget is just an estimate, and it could be that the procuring organisation did not do adequate market research. “We have seen instances where all the bidders speak the same language, where their bids are far more than the budget. Then in such instances, he said the procuring institution may revisit its budget.