Effective next financial year, which begins in July, construction firms will be required to bid for public works according to newly established categories.

Officials at the Rwanda Public Procurement Authority (RPPA) say they are in the process of putting all construction firms in categories depending on their financial, logistical and human resource  capacity.

 The move, according to RPPA director general Augustus Seminega, aims at streamlining operations, eliminating unfair competition, and reducing on possibilities of corruption, breach of contract, among other ills.

There will be six categories from A–F, he said.

The highest category is A, and firms that fall here will be allowed to bid for tenders that are worth over Rwf2 billion.

The last category is F, and companies under this category will only bid for contracts whose value is less than Rwf100 million.

"RPPA has received 850 applications and the categorisation process will be completed by June; from July, this year, uncategorised companies will not be able to bid for public tenders. A non categorised foreign company will be awarded a tender only once and must be categorised for another. However, we shall be revising the categories annually, making it possible for a company to move to the upper or lower category depending on their capacity at a given period of time,” Seminega said.  

In separate interviews with The New Times, various engineers and construction firms welcomed the move, saying it was a step in the  right direction.

The head of RFM Engineering Ltd and president of Institution of Engineers Rwanda (IER), Fred Rwihunda, said the categorisation will help reduce challenges encountered in awarding tenders and its annual revision will keep engineers accountable so as not to slip into a lower category.

"This is important because the engineering domain needs specialisation. Some unqualified people have been winning tenders at the expense of professionals but I am optimistic the categorisation criteria will weed them out,” he said.

According to the categories, companies can only go for tenders that fall in their category and two categories below it.  

Seminega added that categorisation of contractors will help mitigate "bad practices” in public procurement.

"One of the major causes of bad practices in public procurement is the lack of categorisation of companies. This categorisation will reduce bad practices and promote competition,” he said last week.

RPPA banned over 90 companies from participating in bidding for public tenders over irregularities in 2013.

Responding to worries that big companies are likely to take most of the tenders because they are allowed to bid in two lower categories, Rwihunda said small companies often win tenders over big ones because big companies tend to propose higher prices, yet the lower price bidder is preferred in awarding the tender.

The ongoing categorisation follows discussions which started in 2011, involving representatives of various public institutions, including five ministries.

The move was later backed by the association of the local construction companies.

Between July and December 2014, during several consultative meetings with RPPA’s officials and other public institutions, the Association of Construction Companies (AEBTP) and more than 100 representatives of construction companies, contributed to the finalisation of the categorisation criteria.

RPPA’s team of engineers reviewed and updated them. Gentil Kangaho, the General Manager of Real Contractors, said categorisation comes as a relief to bidders and an entry point to the international market.

 "We have been competing for the same tenders yet we have different capacities. And at the end of the day, you end up losing after wasting a lot of time and effort. With categorisation, tenders will specify which categories are allowed to bid, helping others not to waste their efforts bidding. It will also make companies in the highest categories trusted globally because the category certification will serve as a sign of competence,” Kangaho said.

The heads of professional bodies also commended the move which they said will help boost professionalism and improve quality of the engineering industry.

The Chairperson of Rwanda Surveyors body and Managing Director of NPD-COTRACO, Charles Rugira, told The New Times that, once effective, the categorisation will benefit both government and companies in the construction sector.

 "There have been several cases of breach of contracts and abandonment resulting from awarding tenders to the wrong contractors. But now everyone will bid for something they can carry out and this will promote efficiency,” he said.

Rugira added that the reforms will help attract more foreign investors who will trust local companies due to their skilled manpower, ownership of equipment, significant turnover which will be documented in the ongoing rating process.

However, Rugira said the exercise would be useless if RPPA puts companies in the categories they do not deserve.

The latest report of the Auditor General (AG) faulted public entities over flaws in  awarding tenders worth Rwf6.5 billion during the 2012-13 financial year. Notable among those tenders was the one awarded by Rwanda Transport Development Agency (RTDA), worth Rwf5.3 billion, for the rehabilitation of the Kigali-Ruhengeri road.  

The AG’s report also indicated that 46 cases were noted where contracts, worth Rwf23.7 billion, were delayed and nine contracts, worth Rwf0.9 billion, abandoned.

Categorisation criteria

The criteria proposed for the categorisation of the companies are based on the technical, financial and management capacities, including the personnel of the company, equipment, technical references, turnover and available deposits.

Category A requires an average turnover worth Rwf1.5 billion in the last five years in construction works, three A0 civil engineers with three years of experience, owning engineering equipment, including a crane, a bulldozer, a 1,500 m2 metal scaffolding, three concrete mixers, a 45 m3 dumper truck, water tanks, welding machines, among others.

The lowest category, F, requires at least one A2 technician with three years of experience in the domain but no executed tender reference is required because this category includes start-up and other small companies.