Gov’t defends role in US$57M contract award

Government yesterday defended its role in the controversial assigning of the East Coast highway contract to China Railway First Group amid concerns that the intervention was unlawful and exemplified its determination to interfere in big procurement deals.

Insiders have told Stabroek News that the government’s intervention in the award of the huge US$57M contract was meant to retain China Railway’s interest in the stalled Amaila Falls Hydropower Project.

On Tuesday, Stabroek News reported that the government had sidelined a proposal from the National Procurement and Tender Administration Board (NPTAB) that the contract be awarded to China Harbour Engineer-ing Co. Ltd which is the contractor for the Timehri airport project as its bid met all of the requirements even though it was US$2M over the engineer’s estimate. Stabroek News was further told that a former senior member of the Jagdeo administration intently lobbied the government for the award to go to China Railway and this is what eventually happened.

The government in a statement yesterday put a different spin on the issue and asserted that its intervention was made with the intention of saving the country $2.8B dollars.

Saying that the Government at all times followed an “open and transparent process”, the statement said that since the East Coast Demerara (ECD) highway widening and improvement project was a candidate for financing by China Eximbank, Government invited ex-pressions of interest from interested Chinese companies in October, 2013. The government said that eight companies tendered ex-pressions of interest. After what it said was a “rigorous pre-qualification process” undertaken by technical officials, six companies were pre-qualified. The statement said that in February 12, 2014, the six pre-qualified companies were invited to submit bids.     The statement said that the tender closed on May 13, 2014 and at this point, four bids were received. The statement said that the bids were opened in the customary public manner and the tendered prices were reported extensively in the media. The statement noted that of the four bids received, China Railway First Group was the lowest at US$46,994 million. The statement then said it would be recalled that China Railway had already “established a track record of road building in Guyana”, being currently engaged on the building of the road to the Amaila Falls Hydropower Project. Criticism of the road has been rife among stakeholders.

The statement said “A technical evaluation panel evaluated the bids received and recommended that the tender be awarded, not to the lowest or even to the second lowest bidder, but to the third lowest (or second highest) bidder, China Harbour Engineering Co Ltd., who tendered US$60.418 million…

“The justification given by the evaluation panel for not awarding the contract to the lowest bidder was that the panel had reservations about the bidder’s ability to complete the works at the tendered price.”

Stabroek News had however been told that during the evaluation of the bids, three of the companies were found to have submitted incomplete bids and there were also errors in these. Initially, sources say, the NPTAB’s evaluation committee was of the view that the bid should be retendered. However, because of a number of factors, the NPTAB board made a recommendation to the Ministry of Public Works. It was also the view of the panel that the CHEC figure could be negotiated downwards.

However, sources told Stabroek News that it was at this juncture that the former senior government official intervened and the contract was steered in the direction of China Railway.

Transmitted

The government’s version of events is as follows:

“The …NPTAB transmitted the recommendation of the evaluation committee to the Cabinet for its no objection, whereupon the Cabinet withheld its no objection.

The Cabinet’s reservations were based on the fact that all of the invited bidders were pre-qualified and therefore judged to have both the financial and technical capacity to execute the works.

Also the lowest bidder had an established and demonstrated track record of road building in Guyana including in difficult terrain along with a resident road building equipment fleet, and the fact that the tendered price offered by the lowest bidder was some US$13.424 million  (equivalent to G$2.8 billion) lower than the recommended bidder. The matter was therefore returned to NPTAB in view of the withholding of Cabinet’s no objection, for reconsideration”, the statement said.

It added “The same evaluation panel then reconsidered the matter, and revised its recommendation in favour of the lowest bidder, and that revised recommendation was resubmitted to the Cabinet and received its no objection.”

The sources that Stabroek News spoke with were unaware of a reconsideration of the matter by the evaluation panel. The source however point out that once the government had dictated which direction it wanted the award to go it is unlikely that an evaluation panel appointed by the Public Works Ministry would continue to hold out.

The source noted however that it was this enormous influence in the procurement process and throwing around of its weight that reformed procurement laws and the long-awaited Public Procurement Commission (PPC) were intended to address. The PPC remains in limbo because the government wants to retain its no-objection power – as employed in this present case – something to which the opposition is vehemently opposed.

The government statement added: “Cabinet’s principal concern was the absence of a basis for disregarding lower priced bids received from prequalified bidders. Once bidders are prequalified, they are evaluated to be capable of performing the works, and price competitiveness becomes the principal criterion. In this instance, the fact of the matter is that the bidder with the lowest price from amongst all the prequalified bidders also happens to be the one with the most demonstrable track record.

“The Cabinet therefore acted perfectly appropriately in withholding its no objection in the first instance and, throughout the process, Government acted in strict conformity with the Procurement Act 2003”.

The statement went on to attack APNU spokes-man Joseph Harmon.

“What Mr. Harmon should publicly declare, instead, is whether he or any other MP from his party has ever travelled to any overseas destination and to Jamaica and China in particular, as a guest of or to meet with any of the companies that tendered on this project, and who met the costs associated with these trips”, the government statement said.

According to Section 54 of the Public Procurement Act, Cabinet cannot award a tender. The

Cabinet has a right to review all procurements in excess of $15 million based on a streamlined tender evaluation report.

Cabinet may only object to the award of a contract if the procuring entity has failed to comply with the applicable procurement procedures. It has 21 days to do so. If Cabinet objects to an award, the matter is referred to the procuring entity for further review. Yesterday’s explanation would still put Cabinet afoul of these provisions in the procurement act.

AFC leader Khemraj Ramjattan said that cabinet’s interference shows the favouritism of the PPP/C government to some companies and the laws they will circumvent to ensure those companies are given rewards in the form of contracts.

Ramjattan said that he believes that government prefers to take loans and do business with the Chinese because they are done in strict secrecy. “…This PPP/C loves to deal with China and Chinese because, one, there is no internal security of these countries. I am absolutely certain is the secrecy they like,” he said.

“When international companies misbehave there are international prohibition laws … China does not have that law that is why this government love to go to the Chinese they don’t ever want to ask other international countries,” he added.

APNU says it believes that government wants to maintain a role in the operations of the NPTAB so that it has a say in the award of contracts.

“This is why this government wants to maintain that even after NPTAB has deliberated on these contractors they have a say because once they are politically connected they can now be awarded a major contract such as in this case on the East Coast,” Harmon said.

The award of the contract to China Railway comes in the wake of the passing of state land to the company.

Government holding company, the National Industrial and Commercial Investments Limited confirmed last month that land had been gifted to China Railway at Liliendaal, as part of a deal for a fixed contract price for the Amaila Falls Hydropower Station and construction of a crucial section of the access road.

 

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