Edward Mumbuu

Both the Central Procurement Board of Namibia and the Namibia Training Authority approved the contract termination for the construction of the Okakarara Vocational Training Centre, but new NTA board chairperson Jerome Mutumba has other ideas.

Mutumba, New Era understands, is adamant that the construction work resumes and the contractor [Octagon Construction (Pty) Ltd] be given an extension and requisite support to see the project through. The Mutumba-led board’s wish is to see the project’s completion in record time, without exposing the NTA to additional costs. “Our prayer as the board is, let’s resolve this issue so that we can complete this project in the fastest possible time so that we can access the facility. Because the longer we go, the more we are going to cost the taxpayers… Our country is already deprived of resources. We can’t afford to let the cost escalate. “That’s really the interest of the board. The rest is for the technical people,” Mutumba said last week. He also rubbished claims that he has vested interests in the project, or has ties with the financially struggling Octagon.

“I don’t even care who the contractor is. I didn’t even know the contractor,” he retorted. It is Mutumba’s position that most of the NTA’s capital projects, including the one in Okakarara, have struggled mainly due to a lack of decisive, prudent leadership.

The NTA has been without a substantive CEO for almost five years now.

“If we had proper leadership, the people of Okakarara could not have been disadvantaged like they are now… The Okakarara story is a sad story that must never be allowed,” he stressed. At a time when unemployment is estimated to be over 50%, Mutumba finds it unfathomable that a VTC – which de facto transfers skills for self-employment – should continue hanging in the balance.

“We have an unemployment crisis in this country… you know the skills that young people could have gained from this institution [and] the role of leadership the NTA could provide in the bigger economy. Those are the things that keep me awake at night. That’s where my passion comes from as the board chairperson. “I want to change the NTA to become a much more responsive and better organisation that responds to the needs of young people in the country,” he continued.

Conflict

Mutumba’s agenda could come into conflict with the Procurement Act, and open up the NTA to lawsuits from previous bidders who lost out to Octagon. This is despite Octagon being in clear breach of its contractual obligations and abandoning the construction site. The company was supposed to execute the construction over a period of two years.

At the moment, the centre aimed at upskilling Namibians in the fields of tourism and hospitality lies dormant in Okakarara, at 90% completion.  The project, documents show, faced several challenges, including poor workmanship, inexperienced site personnel, failure to obtain a valid performance guarantee on time, and inadequate financial resources.

According to sources briefed on the project, Octagon failed to secure funding from both the Development Bank of Namibia and Bank Windhoek due to liquidity issues.

“In the current challenges of cash flow, the contractor is unable to put cash or other resources upfront for the performance guarantee. They suggested that a portion of the current retention fund be used as performance guarantee,” reads a portion of a submission by the project manager.

Simply put, Octagon can only complete the project if the NTA buys the materials, as the former is in no financial position to do it.

Cash

At the moment, the value of the remaining works is N$17.4 million, based on escalated price rates. The current retention payable to the contractor is N$3.1 million, taking the total funding required to N$21 million.

Should the contract be given to another contractor, it would cost the NTA N$27.3 million, excluding the cost of retention payable to the contractor, which is N$3.1 million. “More so, the termination of contract could cost more in legal fees in the event of litigation, all of which we are not in a position to estimate and include in this reporting,” Nkosi Mashila from Jack Mutua Architects stated.

But there is a problem.

“While the client has informed willingness to continue with the current contractor, such action may be contrary to the provisions of the Procurement Act, as they go against the contract. This may equally lead to litigation, with the previous bidders challenging the decision in that it goes against the spirit of competitive bidding,” Mashila warned earlier this month. As a consequence, Jack Mutua Architects – the project manager – strongly “recommended that this contract be terminated (GCC 57) and a new contractor appointed to complete the works in line with the Procurement Act.”

So far, Namibian taxpayers have forked out N$46.2 million on the project. The initial sum total of the project was N$64.3 million.

However, the latter amount stands to increase should the current contractor have his way by way of an extension, or if the contract is given to a new contractor, as proposed by the CPBN and the NTA’s former acting CEO, Muvatera Ndjoze-Siririka.

The construction tender was awarded to Octagon on 24 April 2019. It was due for completion on 24 April 2021, before the date was revised to 30 June 2021.

Additionally, Octagon submitted a catch-up plan to conclude the project in September 2021. This, too, was unsuccessful.

“Instead of the project being completed, the progress on site once again deteriorated, and the main contractor (MC) cited inadequate financial resources to procure materials,” Ndjoze-Siririka informed CPBN boss Amon Ngavetene on 1 February 2023.

As of 4 April 2023, the project’s progress was late with 1 416 days, a trove of
documents seen by this paper show.

Despite the delay, when CPBN and NTA officials met in December last year, they agreed to afford Octagon the opportunity to complete the project after considering the extra cost and time to appoint a different contractor to complete the work.

“The board approved the contract termination of Octagon Construction (Pty) Ltd for the upgrading of the Okakarara Vocational Training Centre in the Otjozondjupa region,” CPBN’s acting administrative head Ngavetene wrote to Ndjoze-Siririka on Valentine’s Day this year. On 15 March 2023, Octagon’s final termination notices were extended for 30 days. He added that the appointed consultants (including civil/structural engineer, electrical engineer, mechanical engineer and architect) would conduct a thorough assessment of the building to determine remaining works and any remedial works to prepare a bill of quantities (BoQ).

Contract breach

According to the agreement between the NTA and Octagon, fundamental breaches of contract include but are not limited to the contractor – Octagon in this case – stopping work for 28 days, the employer or contractor being made bankrupt or going into liquidation, and a payment certified by the project manager not being paid by the employer to the contractor within 84 days of the date of the project manager’s certificate.

When the architects inspected the site earlier this year, there were no workers manning it or executing the works.

“The project is basically abandoned,” Mashila from Jack Mutua Architects informed Octagon’s executive director, Indileni Kandele. “Due to rains, water had ingressed into the building through the roofs, doors and openings on and around windows, causing damage to floor screeds, tiles, wall paints and other installations already completed and paid for by the employer [NTA]… The buildings and all their components are deteriorating due to incompletion and an apparent lack of attention from your office,” Mashila added.

What is, however, perplexing is how Octagon is being treated with kid gloves, despite showing no cause to complete the project. “We are disturbed about how the NTA capital project has been, in our opinion, very supportive towards the non-compliance by the contractor [Octagon] to specific contractual matters, especially by the line manager. This leaves grounds for possible conflict of interest between the contractor and the NTA,” Mashila said in March.

Kandele, however, did not respond to questions sent to him.

“I will come back to you later,” he said.

Covid-19

However, in a document seen by this reporter, he blames Octagon’s failures on Covid-19.

“Due to the adverse effects of value engineering on our financial projections and cash flow, the project could not recover time-wise because the cash flow could not allow us to increase manpower on site, but to execute work at a bare minimum,” Kandele is quoted as saying.

On the pandemic, he said: “Due to the pandemic, prices of materials shot up by over 200% within a space of two years. Even the world’s greatest economists could not have anticipated this. The impact on the project was worsened by the fact that our profit areas were stripped off from the project by value engineering.” In the aftermath of the pandemic, he added, suppliers now
require full payment, or at least a 70% deposit before they can order materials.

Double standards

Late last year, businessman Yasser Alphather Shangadi – whose contract to construct the Nkurenkuru VTC was terminated – also apportioned blame on Covid-related lockdown regulations for his company’s failure to complete the construction.

He likewise argued that his contract was terminated with a year still remaining, while other contractors, pointing to Octagon at the time, have had their contracts extended and even the NTA’s financial backing.

Shangadi, through his company
Neu Olulya CC, was awarded a N$35.6 million tender to construct phase B of the Nkurenkuru VTC. The project was supposed to be completed within two years. The tender was awarded in July 2020, with a revised completion date of 2 October 2022.  However, 385 of 748 days later, Shangadi’s contract was terminated for non-performance.
At the time of the contract’s termination, only 13% of the total work was completed, for which close to N$5 million was paid through the NTA. The contract’s principal agent was Bernard Mutua Architects, now rebranded as Bernard Mutua Scriba Architects. “My contract was terminated a year before the completion date. But there are other contractors who are receiving preferential treatment while their contracts are a year behind. So, why are others being favoured?” Shangadi asked at the time. He particularly took issue of Octagon, saying they were Exhibit A of how some contractors are more important than others.

- emumbuu@nepc.com.na