Tuesday, August 7, 2018

Contracting Issues Not Limited to Only the US

Sometimes we become very insular and begin to believe that contracting problems are limited to the United States. Probably because of the shear size of our procurement budget, no other country loses as much to fraud, waste, and abuse. But as a percentage of procurement budgets, its likely that other countries lose more that the US. There are probably cultural reasons for this but we don't believe that many countries have the level of oversight that the US enjoys (or not enjoys, depending upon your perspective).

Here's an example.

A audit report our of Nigeria identified a procurement agency that mismanaged about $3.6 million by making payments without evidence that work was performed, overpaying for abandoned projects and not getting value for their money on many other projects. Most of the funds were siphoned through ghost contracts, overpayment of mobilization fees, poorly executed/abandoned projects and unpriced work. In some cases, contractors were overpaid for work not completed or haphazardly done. Many payments were made without receipts and many projects were simply abandoned.

Here are a few examples.

  1. A significant amount of payments for contract for the construction of water supply structures were made after the project was abandoned.
  2. A contractor was paid 15 percent of the contract price to for mobilization effort but never mobilized and the project abandoned. No one ever asked for the money back.
  3. Another water supply contract was awarded and paid for but then another contract for the same exact project was awarded and paid for again. When the auditor visited the site, there was no evidence that work had been performed on either contract.

Hearing things like these should make us, as taxpayers, appreciate contract oversight.

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