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Corruption in the Telecommunications Sector in Ethiopia: A Preliminary Overview 349
• Inappropriate and unclear procedures for ensuring technical quality and
competitive pricing. The technical and commercial verification processes
as described above introduce significant additional risks of corruption
because additional approvals are required and because of the
judgment to be exercised in interpreting what constitutes a “big” technical
problem and whether prices “far exceed” “reasonable industry
prices.” These tests are vague, not least because it is difficult to make
like-for-like comparisons in the absence of detailed bids from competitors.
As such, the supplier seems to have no incentive to provide a
competitive price. The contract was awarded before agreement on
either the specification or price—and without a sufficient contractual
price protection mechanism.
• Difficulty in measuring technical compliance. By appointing one supplier
without competitive tender, the ETC has no opportunity to
assess the degree of technical compliance of the supplier’s equipment.
Although the supplier has agreed that all technology supplied
would be state of the art, there is no clarity on how this will be
assured or verified.
• Contract not in accordance with the ETC’s procurement procedure. It
appears that this contract was not awarded in accordance with the
ETC’s Procurement Policy Directives and Procedure Manual. The
manual specifies comprehensive and detailed procurement procedures
to ensure that the equipment to be provided by a supplier is in
accordance with the specification and that the overall price, quality,
and program offered by the supplier are evaluated as the best out of
a range of competitors. There is no evidence that such an exercise was
carried out in this case. It appears that there were no competitive bids
for the equipment supply and the specification, price, quality, and
program were only agreed upon after the contract had been placed
with the supplier. This contract was therefore a “direct procurement.”
Though the Procurement Act does provide for direct procurement in
some limited circumstance, the applicable factors were not present in
this instance.
It is a matter of public record in Ethiopia that there are problems with
the management of ETC equipment supply contracts. In 2008, the
FEACC undertook a review of the ETC’s procurement procedures and
issued a report to the ETC. The report states that procurement is