THE National Council for Construction (NCC) has proposed increasing the minimum subcontracting threshold for large-scale construction projects from 20 percent to 30 percent to create more business opportunities for local contractors.
The Council also wants the requirement extended to all Grade One and Two contractors, whether foreign or Zambian.
Speaking during the PPDF Infrastructure Technical Working Group meeting, Wednesday, NCC Director for Registration and Regulation Chance Kaonga said the proposed changes would help build the capacity of local contractors and strengthen the construction industry.
Kaonga explained that the current 20 percent subcontracting requirement under the public procurement framework mainly applied to foreign bidders, leaving out large Zambian-owned contractors.
“We wish to state that we are broadening the scope from what the Public Procurement Act provides. The 20 percent minimum subcontracting provision in the Public Procurement Act, SI No. 30 of 2022, Section 20(1), is instructive but restrictive as it only addresses the foreign bidder/supplier and excludes Zambian citizen-owned large-scale contractors. In order to expeditiously generate sustainable capacity in the local construction industry, our position is that the subcontracting threshold should be increased to a minimum of 30 percent of the value of the project. Further, this must extend to all large-scale contractors in Grades One and Two, that is, both foreign and local. With regard to the 10 percent provision in Section 60 of the PPP Act, we do not agree with the position espoused therein. It is, in our view, confusing to have different quotas of measure for the same cause, that is, the subcontracting threshold. Further, our position is that subcontracting must relate to the ‘value of works’ as opposed to the ‘total works’,” he said.
“We are of the view that there is no legal injury because we are not going against the Public Procurement Act but rather enhancing it. The foreign bidder/supplier threshold as prescribed in the PPA is being enriched to cover large-scale contractors, both foreign and Zambian. However, there is definitely some harmonisation that would need to be addressed in relation to Section 60 of the PPP Act. The variance in thresholds addressing the same subject is undesirable and must be synchronised as it is a source of confusion”.
Meanwhile, Kaonga proposed nine measures to strengthen subcontracting, including specifying subcontracted works in the tender documents.
“We wish to recommend as follows: That the solicitation documents specify works that would be subcontracted; allow the subcontractor to directly price the specified works to be subcontracted. The reason is that experience has shown that the main contractor has deliberately underpriced the works they intended to subcontract, making those works unprofitable and unattractive to the subcontractor; that the procuring entity should furnish the Council with details such as names, contact details, contracted values and project duration of the subcontractors awarded projects,” said Kaonga.
“That the main contractors maintain their traditional role and provide supervision and superintendence over the works of the subcontractor with their deserved attendance fees; the subcontractor should be responsible for acquiring all necessary project securities as prescribed in the instructions to bidders. In order to satisfy the subcontracting threshold, more than one subcontractor may be engaged on one project; the number of contracts awarded to any subcontractor shall be prescribed; punitive measures should be imposed on a subcontractor who assigns their subcontract to another contractor; each procuring entity should assign a responsible officer to manage the subcontracts”.
