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Chapter - 12
JORDAN

1.    INTRODUCTION

1.1    In the Hashemite Kingdom of Jordan, the considerable volume of public investment and its far-reaching impact on the country's budgets and macro-economic trends have highlighted the importance of the audit of public works and projects. In mis regard, there are some marked differences between public construction audits and those of public sector activities. It is generally accepted that construction projects are not governed by a single decision but are the product of many decisions made at different times throughout the various project phases : project design, bid solicitation, contract award, construction work and account settlement. All or any of these decisions may be audited by the Head of the Audit Bureau as'SAL

1.2.    There are no set rules or criteria on the technological aspects of public administration. Accordingly, there are no optional solutions for each construction project Each project requires the evaluation of a number of technological and economic alternatives to ensure maximum utility, structural practicability and good workmanship, together with the most suitable building materials and most efficient construction methods.

1.3.    The audit of public works and projects extends beyond financial considerations to include technical aspects of construction and performance. Technical aspects need to be understood in order to appreciate the chosen alternative, justify construction deviations and analyse modifications and new items. In this context, the audit of public works and projects is performed from the viewpoints of compliance, economy, efficiency and effectiveness.

2.    DEFINITION OF PUBLIC WORKS

2.1.    The Regulation of Government Works No.(71) of 1986 and amendments issued under articles (114) and (120) of the Constitution define public works in terms of the construction and maintenance of buildings, roads, engineering plants and projects, purchase or rent of transport, provision or handling of materials, equipment, supplies, machinery, vehicles and spare parts necessary for the study, operation, follow-up and supervision of works.

2.2.    The Regulation also defines technical services in terms of studies and drawings of works and projects, their implementation and operation, necessary equipment, materials, supplies and works including laboratory and site tests, surveying works and any technical or engineering consulting related to these works.

2.3.    The above Regulation details methods of implementing supervising and accounting for government works and technical services. The particular financial controller involved should ascertain that payments have been made according to the Regulation and other financial provisions. Therefore, the financial controller is required to know all aspects of construction activity to enable him to control internal audits efficiently and effectively.

The Government Tenders Department is attached to the Ministry of Public Works and Housing and performs the following duties :

1. examining the eligibility and qualifications of contractors and consultants in conjunction with government agencies, and maintaining related records of relevant information
2. collating and analysing government tenders for public works and technical services
3. providing secretariat services to the Central Tenders Committee
4. standardising and modernising tender conditions and procedures in accordance with the relevant laws, regulations and instructions in force
5. issuing period statements on the construction sector, prices of materials construction codes.

These works and services are implemented by the following means :

1. tenders by special invitation
2. the award of competitive tenders or negotiated tenders
3. direct execution where the Ministry of Public Works and Housing is made responsible for carrying out a particular departmental work by a decision of the Council of Ministers.

3.    GENERAL TENDERS

3.1.    Government works and technical services carried out by tender are subject to the principles of competition and equity so that equal opportunities are given to all capable and qualified contractors to carry out the work. Contractors and consultants should be given adequate time to study the contract documents and submit tenders based on contract conditions and prices. Tenders must guarantee the required quality standards and completion within the time period of the contract.

3.2.    The execution of public works and provision of technical services are generally restricted to Jordanian contractors and consultants, provided they satisfy the necessary conditions. However, in some circumstances it may be necessary to invite non-Jordanian contractors and consultants to make offers, especially when the work is financed by a foreign loan. In all cases, relevant Jordanian laws and the regulations of the Association of Jordanian Engineers, are followed. Also, the conditions of the tender must indicate preference for local industrial materials and products used in construction, provided prescribed specifications are met. Further, the relevant contracts must be written in Arabic but drawings, specifications, technical reports and correspondence can be in English. All relevant local laws, regulations and instructions in force are made applicable when drafting the contract. No contract can stipulate exemption from any financial commitment imposed by legislation, unless the Council of Ministers agrees to such exemption before signing the contract.

3.3.    In inviting tenders for the construction of public works and technical services, the following tender committees are formed for various purposes:

1. Central Tenders Committee
2. Department Tenders Committee
3. Local Tenders Committee
4. Governorate Tenders Committee
5. Partial Tenders Committee
6. Special Tenders Committee

3.3.1.    Central Tenders Committee

This committee consists of:

1. general manager of the Government Tenders Department
2. one representative of the Ministry of Finance (appointed by the Minister of Finance)
3. one representative of the Ministry of Public Works and Housing (appointed by the Minister of Public Works and Housing)
4. two representatives of the entity (ministry or department) inviting the tender (appointed by the responsible minister)
5. two persons appointed by the Council of Ministers on the recommendation of the Minister of Public Works and Housing.

This committee is responsible for the invitation of tenders, acceptance of bids and the assignment of tenders arising from the responsibilities of other committees defined in the Regulation of Government Works or any other tender entrusted to it by the Minister of Public Works and Housing on the recommendation of the responsible minister. Members are appointed to the Central Tenders Committee for a one-year term.

In every entity (ministry, authority, corporation, department) a tenders committee known as the Department Tenders Committee is formed by the Council of Ministers. Its composition is:

1. general secretary of the entity
2. financial manager of the entity
3. two engineers from the entity (appointed by the responsible minister)
4. one representative of the Ministry of Public Works and Housing (appointed by the Minister of Public Works and Housing)
5. one representative of the Budget Department of the Ministry of Finance (appointed by the Minister of Finance).

This committee is responsible for the invitation of tenders, acceptance of bids and the assignment of work tenders up to JD one million and of technical services tenders up to JD 30,000. The decisions of the Department Tenders Committee are subject to ratification by the responsible minister. Members are appointed to the Department Tenders Committee for a one-year term.

3.3.3.    Local Tenders Committee

In every department, a Local Tenders Committee is formed, comprising the general secretary of the department as chairman and four employees from the department appointed by the responsible minister as members with one-year term. This committee is responsible for the invitation of tenders, acceptance of bids and the assignment of work tenders where the contract sum does not exceed JD 100,000 and JD 1,000 in the case of technical services. The decisions of the Local Tenders Committee are subject to ratification by the responsible minister.

This committee consists of:

1. chairman of Department of Works and Housing in the Governorate (as chairman)
2. chairman of Municipal Engineering Department in the Governorate
3. chairman of Fiscal Department of the Governorate
4. chairman of any other department in the Governorate
5. one representative of the tendering department appointed by the responsible minister.

This committee is responsible for the invitation and acceptance of work tenders up to JD 100,000. The decisions of the Governorate Tenders Committee are subject to the approval of the governor who ratifies the contract involved.

3.3.5.    Partial Tenders Committee

On the recommendation of the general secretary of the ministry, the responsible minister is entitled to form as necessary one or more partial tenders committees in the headquarters of the ministry, or in the governorate or in the country. This committee comprises three members, one of whom is appointed by the minister as chairman. The task of this committee, the members of which are appointed for one-year term, is to invite and accept work tenders, the amount of which does not exceed JD 10,000. When the committee is formed in the governorate or in the county, its resolutions have to be approved by the governor who ratifies the contract.

The Council of Ministers, on the recommendation of the responsible minister, may form a Special Tenders Committee comprising a chairman and four members in order to handle a project of a special nature or one with financing conditions requiring special procedures for its undertaking. Before inviting and accepting the tender, this committee sets up the rules to be followed in the invitation and other procedures for the tender, subject to compliance with the provisions of the Regulation of Public Works and Instructions. Decisions of the Special Tenders Committee are subject to approval by the Council of Ministers which specifies the authority empowered to ratify contracts on behalf of the government for tenders assigned to this committee.

3.4.    Representatives of the Audit Bureau participate in meetings of all six types of tender committees detailed above, but have no voting rights at these meetings. Further, all procedures for tenders, provisions regarding contractors and their participation in tenders, the duration of the advertising period, financial guarantees required, the procedures for offer, evaluation and acceptance of bids, the rules concerning award of contracts and other provisions required to be defined in contract documents are governed by Instruction No. 71 of 1987 and the Instructions of Public Works based on Article 16 of the Public Works Regulation No. 71 of 1986.

4.    TENDERS BY NEGOTIATION

Contracts can be awarded by negotiation in the following circumstances:

1. in an exceptional or extraordinary situation to overcome an emergency or when it is necessary to act immediately without inviting tenders
2. where standardisation of vehicles, equipment and spare parts is needed to achieve savings and increase mobility
3. where spare or complementary parts, tools, equipment and supplies are not available from more than one source with the same degree of efficiency
4. when contracting for technical services or providing highly specialised scientific or professional services are involved
5. if the execution of the works takes place outside the kingdom
6. if official contracts exist with government agencies or scientific institutions at specified prices.

In all the above circumstances as many suitable tenders as possible should be invited.

5.    EXECUTION

5.1.    Public Works and Projects are executed according to the provisions of contracts which may be authorised:-

5.1.1.    By a resolution of the Council of Ministers based on the recommendation of the Minister of Public Works and Housing, if the tender relates to public works and housing or by the recommendation of the responsible minister, if the tender relates to other departments, subject to the condition that the amount of works in both cases does not exceed JD 100,000. In both cases, the ministerial recommendation should be supported by the advice of a technical committee of experts and specialists in the subject area of the tender.

5.1.2.    By a decision of the Minister of Public Works and Housing upon the recommendation of a technical committee formed by the general secretary or by a decision from the responsible minister upon the recommendation of the Department Tenders Committee, if the tender amount does not exceed JD 100,000.

5.1.3.    By a decision of the general secretary upon the recommendation of a technical committee formed by the Minister of Public Works and Housing or by the Governor upon the recommendation of the Govemorate Tenders Committee, if the amount does not exceed JD 30,000.

5.1.4.    The responsible minister can decide the implementation of public works or technical services, if the amount does not exceed JD 5,000.

5.2.    The financial controller is required to ensure that no modification, addition or variation takes place in the structure, quality, quantity or form of public works or in the volume of technical services during the execution of the contract. The contractor must adhere to the drawings, specifications and provisions of the tender for all works defined in the relevant contract documents.

5.3.    Additional work is considered to be any modification, addition or variation not included in the tender document of the signed contract, but necessitated by project circumstances. On the other hand, any increase in the actual quantities of works executed according to the drawings without the necessary variation order is not considered to be additional work.

5.4.    Where project circumstances require the introduction of new items not defined in the original tender document, the prices of such items are subject to the approval of the responsible minister. When it is deemed necessary to make any adjustment, addition or variation during the execution of the project, the ministerial resolution or other decision awarding the tender remains in force. The entity supervising the implementation of the tender should prepare a technical report justifying the additional work, its importance and necessity and its effect on the amount of the tender.

5.5.    Additional work and variation orders are carried out in accordance with the following authorisations:

1. by a decision of the supervisor engineer, if the total amount of additional work is less than 5% of the contract amount or JD 5,000, whichever is less
2. by a decision of the general secretary, if the total amount of additional work ranges between 5% to 15% of the contract amount or JD 30,000, whichever is less
3. by a decision of the responsible minister, if the total amount of additional work exceeds JD 30,000 or 15%, but does not exceed 35% of the contract amount or JD 500,000
4. by a decision of the Council of Ministers, if the total amount of additional work or increase in quantities during construction exceeds the amount or the percentage which can be authorised by the responsible minister.

The financial controller, when awarding tenders, considers the types of public works contractors available and their specialities. He also ensures that uniform provisos are written into tenders for special works and technical services and that provision is made where necessary for additional provisions and modifications.

6.    STAGES AND SCOPE OF AUDIT

6.1.    Pre-audit of Project Payments

Based on articles 12 and 24 of Law No. 28 of 1952, the Audit Bureau is entitled to conduct pre-audits of public works. The procedures followed in this regard are:

1. Attending tender committees. The Audit Bureau is represented on tender committees by auditors who observe the physical opening of bids submitted by contractors, sign the documentation of every bids and advise on the various offers. The Bureau's auditors ensure that fair competition is observed among contractors before a decision is made to accept a particular tender
2. Reviewing and auditing statements of monthly payments to contractors
3. Matching vouchers for contract payment with budgeted items. Such vouchers must be reconciled with the State General Budget before payment is approved
4. Participating in the initial taking-over of projects with committees formed for this purpose. The auditor encloses his comments with the taking-over report
5. Approving the final contract payment after the taking-over committee has furnished its report stating that all works has been completed in accordance with specifications. Payment is withheld until all defects and short-comings are rectified
6. Controlling the disbursement of retention moneys deducted from monthly payments to the contractor, which usually amount to 10% of completed work but paid after the expiry of the defects liability period specified in the relevant contract
7. Enquiring into any reasons or circumstances during the execution of the project which resulted in over-runs or under-runs of expenditure in the project budget or sub-standard work not in accordance with the specifications. Engineers or the staff of the Audit Bureau regularly inspect work sites to determine physical progress and investigate any work defects.

The Audit Bureau conducts post-audits of project payments in the following manner :

1. Reviewing vouchers and records to ensure the accuracy and legality of project payments and their compliance with the relevant laws, regulations and instructions
2. Checking the record of allocations disbursed by the budget of the entity administering the contract to ascertain whether expenditures match the appropriate items in the State General Budget
3. Participating in the final taking-over of the project after the expiry of the maintenance warranty period.

7.    FIELD INSPECTION OF PROJECTS UNDER CONSTRUCTION

Engineers of the Audit Bureau inspect projects under construction at actual works sites. On completion, the various stages of each project are audited and reports are prepared reviewing the progress of work from the date of commencement to the date of inspection.

8.    TECHNICAL COMMENTS OF AUDIT BUREAU

8.1.    In 1981, the Audit Bureau adopted the policy of assigning engineers to participate in the handing-over of completed public works and projects. This policy was followed in April 1993 by the establishment within the Bureau of a Department of Engineering Affairs to formulate a comprehensive and continuous planning strategy for the implementation of the technical audit of public works and projects.

8.2.    As the government is responsible for the planning, programming, construction design and maintenance of the National Projects System, the Audit Bureau as SAI could assist in :

1. Developing criteria for ranking projects in order of their potential utility
2. Upgrading the system of classifying consulting offices and contractors, and of regulating the client-consultant-contractor relationship, to ensure fairness and proper execution of public works and projects
3. Establishing standards for the rational assessment of tender bids for the award of contracts
4. Developing institutional structures and upgrading technical, managerial and financial efficiency in contract organisations
5. Providing more opportunities for local contractors, consultants and public enterprises in the construction of public works and projects.

9.    AUDIT REPORTS

The statutory audit of public works and projects may disclose matters which require inclusion in the annual report of the Head of the Audit Bureau to Parliament. Copies of this report on the final accounts and related matters of public sector entities are sent to the Prime Minister and the Minister of Finance. The annual reports of the SAI disclose any statutory breaches and financial malpractices of auditees. In addition, special reports may be submitted by the SAI to Parliament at any time to draw attention to important matters which need urgent consideration and action.