Attracting the best: Why some experienced consultants and drilling contractors are no longer willing to work for district local government

This is the third in a series of four blogs entitled Professional Borehole Drilling: Learning from Uganda written by Elisabeth Liddle, and a RWSN webinar in 2019 about professional borehole drilling. It draws on research in Uganda by Liddle and Fenner (2018). We welcome your thoughts in reply to this blog below.

Several recent reports have raised concerns over the quality of the boreholes that are being sited and constructed in rural sub-Saharan Africa (UNICEF/Skat, 2016, Bonsor et al., 2015; Anscombe, 2011; Sloots, 2010). If high-quality boreholes are to be sited and constructed, skilled experienced personnel are needed to conduct this work. Recent research in Uganda, highlights that a number of the most experienced consultants and drilling contractors in Uganda (those who have been in business for fifteen – twenty years) are no longer willing to bid for district local government contracts (Liddle and Fenner, 2018). This is concerning, given that district local government projects accounted for 68% of new deep boreholes drilled in the financial year 2016/17 (MWE, 2017).

In this blog I outline why these consultants and drilling contractors are no longer willing to work for districts.

1. Low prices

 

A number of the consultants and drilling contractors interviewed are simply dissatisfied with the prices that district local governments are willing to pay compared to that of non-governmental organisations (NGOs). The consultants interviewed, for example, stated that districts are typically willing to pay UGX 1 million – UGX 2 million (US $276 – $552[1]) for siting and supervision, while NGOs are typically willing to pay UGX 2.5 million – UGX 3.5 million (US $691 – $967) for the same work. The price districts are willing to pay is reportedly not realistic, and as a result, these consultants would have to take shortcuts in their work. The same issues were reported among the drillers who are no longer willing to work for the district local governments. These consultants and drillers are not willing to undertake sub-standard water points for communities, take shortcuts in their work, nor tarnish the reputation of their companies.

2. Misuse of ‘lump sum, no-water-no-pay’ payment terms

 

As explained in blog “Turnkey contracts for borehole siting and drilling”, drilling under a turnkey contract was found to be common during this research: 26 of the implementing agencies interviewed in Uganda (n = 29), for example, were procuring the private sector for the implementation work, 19 of whom were using turnkey contracts for the siting and drilling work and paying the driller via lump sum, no-water-no-pay payment terms. Typically, under these combined ‘lump sum, no-water-no-pay’ payment terms, if a borehole is unsuccessful (is dry or low-yielding), the driller is not paid. If the borehole is successful, the driller should be paid the full lump sum price, regardless of the costs incurred on-site. A number of districts, however, are deviating from lump sum, no-water-no-pay payment term norms. Instead of paying the full lump sum as they should do, they are only paying for the actual work done and materials used (known as BoQ payment or admeasurement payment in Uganda). While this may be specified in the driller’s contract, it is concerning given that the whole premise behind lump sum no-water-no-pay payment terms is that, while drillers will lose money on unsuccessful boreholes, they will be able to recover these costs from the full lump sums they are paid for the successful boreholes. Without full lump sum payment, drillers are unable to their losses..

3. Bribes during the bidding process

 

Demands for bribes are reportedly common when bidding for district local government contracts. When a bribe is demanded, consultants and drillers struggle to account for this cost: if they account for this in their quote, their quote will be too high, thus, they will not win the contract. If, however, they do not account for the price of the bribe in their quote, the consultant or driller will then need to recover this cost at some stage, usually through taking shortcuts on-site. If consultants and drillers do not want to take shortcuts in their work they will not bid.

4. Late payment

 

Receiving the full payment from districts for completed works can be challenging, with several drilling contractors reporting that in some cases, they had to wait over a year to receive their full payment. This makes business difficult; it is much easier to only work for NGOs who are known for paying on time.

The following quotes help to exemplify the above issues:

“But I tell you, for the last few years I have not bided for a district job because the bidding process is just so silly. You know, they will already know who is going to win the contract before they even advertise…And the terms and conditions in the contract are very unfavourable to the driller… So I have not drilled for the district for the last five years as there is no guarantee that they will pay us, this is not a viable business model for us…They only pay on time 50% of the time. Even when the borehole is successful, they will say, oh we don’t have any money, we’ll have to pay in next quarter. Sometimes this has gone on for a whole year. It was with a district that it took 14 months for me to be paid once… The guarantee of receiving payment is frustrating” (Drilling Contractor).

“I strongly believe bidding is just a procedure for most projects. In most cases the districts are giving contracts after they [the bidder] has paid them for the contract. So, say it is a contract for 100 million, they will want 20 million during bidding. This problem is with district, not NGOs, not the ministry… So I have stopped drilling for districts, it was too expensive” (Drilling Contractor).

“I don’t like working for the district. To be honest they are simply corrupt. It is very hard to get a contract from them, you’ve often got to bribe to simply get the contract. They’ll always ask for extra money. It is disturbing. If you don’t agree to pay them, they will find a way of explaining why you did not get the contract” (Consultant).

Districts are now beginning to notice this issue as well, as explained by one district water officer below:

“So many of them [drillers] are so business orientated that even during the time of bidding they under quote so they can win the contract…now because of that they have made serious drillers pull out of district work as they cannot win government contracts. Most of the serious drillers are now dealing with NGOs because they know the procurement process is much more transparent and they will be able to get the money that they need to do a good job. But for local government, they cannot. So we have lost some really good drillers because of this, because they cannot compete and most times most local government want to select the lowest bidder… So we have a big challenge here because we don’t want government to lose money by selecting the more expensive driller but this means the really high quality ones have left district work” (District Water Office).

These quotes highlight the long-term consequences for district local governments who are known for engaging in practices such as paying low prices, offering unfavourable payment terms, soliciting bribes, and making late payments. Finding solutions to these problems is essential to ensure that experienced consultants and drilling contractors are willing to support district work going forward.

What do you think?

So what do you think? Do you have experiences of unrealistically low prices (or the opposite), unfavourable payment terms, bribery in the procurement process or late payments. Or can you share any particularly promising practices with us? You can respond below by posting in the reply below, or you can join the live webinar on the 14th of May (register here).

References

Anscombe, J.R. (2011). Quality assurance of UNICEF drilling programmes for boreholes in Malawi. Lilongwe, Malawi: Ministry of Agriculture Irrigation and Water Development, Government of Malawi, Available from http://www.rural-water-supply.net/en/resources/details/509

Bonsor, H.C., Oates, N., Chilton, P.J., Carter, R.C., Casey, V., MacDonald, A.M., Etti, B., Nekesa, J., Musinguzi, F., Okubal, P., Alupo, G., Calow, R., Wilson, P., Tumuntungire, M., and Bennie, M. (2015). A Hidden Crisis: Strengthening the evidence base on the current failure of rural groundwater supplies, 38^th WEDC International Conference, Loughborough University, UK, 2014, Available from https://wedc-knowledge.lboro.ac.uk/resources/conference/38/Bonsor-2181.pdf

Liddle, E.S. and Fenner, R.A. (2018). Review of handpump-borehole implementation in Uganda. Nottingham, UK: BGS (OR/18/002). https://nora.nerc.ac.uk/id/eprint/520591/

MWE (2017) Sector Performance Report 2017, Ministry of Water and Environment, Government of Uganda, Available from https://www.mwe.go.ug/sites/default/files/library/SPR%202017%20Final.pdf

Sloots, R. (2010). Assessment of groundwater investigations and borehole drilling capacity in Uganda. Kampala, Uganda: Ministry of Water and Environment, Government of Uganda, and UNICEF, Available from http://www.rural-water-supply.net/en/resources/details/133

UNICEF/Skat (2016). Professional water well drilling: A UNICEF guidance note. St Gallen, Switzerland: Skat and UNICEF, Available from http://www.rural-water-supply.net/en/resources/details/775

[1] May 2017 exchange rate.

Photos

photo #1: “Bidding process poster on display in a District Procurement Office” (Source: Elisabeth Liddle).

Acknowledgements

This work is part of the Hidden Crisis project within the UPGro research programme – co-funded by NERC, DFID, and ESRC.

The fieldwork undertaken for this report is part of the authors PhD research at the University of Cambridge, under the supervision of Professor Richard Fenner. This fieldwork was funded by the Ryoichi Sasakawa Young Leaders Fellowship Fund and UPGro: Hidden Crisis.

Thank you to those of you from Makerere University and WaterAid Uganda who provided logistical and field support while I was conducting the interviews for this report (especially Dr Michael Owor, Felece Katusiime, and Joseph Okullo from Makerere University and Gloria Berochan from WaterAid Uganda). Thank you also to all of the respondents for being eager and willing to participate in this research.