The Ministry of Finance last evening defended its selection of Indian firm Fedders Lloyd to undertake a review to restart construction of the specialty hospital, even as Opposition Leader Bharrat Jagdeo charged that the move was a “massive act of corruption.”
Government and Fedders Lloyd last Wednesday signed a Memorandum of Understanding (MoU) that will see work resuming on the construction of the hospital, at Turkeyen, East Coast Demerara, using the remainder of a US$18 million line of credit that had been granted by the government of India for the project.
There was no public tendering for the project and Fedders Lloyd had been represented during the earlier bidding process by now Vice President and Minister of Public Security Khemraj Ramjattan.
President of Transparency Institute of Guyana Inc (TIGI) Calvin Bernard last week said the circumstances warranted retendering the project and Jagdeo yesterday also said it should have been retendered after an independent evaluation of work done so far.
“So, the rational thing , the right thing, the only thing, the transparent thing, was to hire an independent company to evaluate how much work was done and what needs to be done, what are the new bills of quantity and then go out to tender,” Jagdeo told a press conference yesterday.
However, the Finance Ministry, in a statement issued last evening, stood by the arrangement, while pointing out that its actions are in accordance with the Procurement Act.
It said Fedders Lloyd qualified to be selected by virtue of the firm having been one of the two bidders that were in contention for the original project under the former PPP/C government. The other was Surendra Engineering, which won the award but ended up being sued over fraud by the former government.
The ministry noted that the government could proceed to the second bidder in accordance with Section 42(5) of the Procurement Act, which states, “If the supplier or contractor whose tender has been accepted fails to sign a written contract, if required to do so, or fails to provide any required security for the performance of the contract, the appropriate board shall refer the matter to the Evaluation Committee to determine which of the remaining tenders is the second lowest evaluated tender based on the evaluation criteria outlined in the bid documents subject to its right, in accordance with section 40(1), to reject all remaining tenders.” As a result, it said Fedders Lloyd remained the “the second and only other bidder for the project.”
Jagdeo, however, yesterday challenged the assertion that Fedders Lloyd can qualify as the second bidder. He said the company was disqualified from the bidding process and never formally objected. “They are arguing that they are going with the second rank person, the one that did not get the bid. But they have a duty to release the evaluation report used by the last government… The first thing they should do is release the evaluation report to the public on the basis of why they are going ahead with the contract… because that report will show that this company was disqualified, so it was not the second ranked company, they were disqualified,” he said.
Jagdeo flayed the government for using the company and charged that its rationale does not have merit. “We believe this is a massive act of corruption,” he said.
He said that in January of this year, when then President Donald Ramotar met Indian President Narendra Modi in New Delhi, he was assured that there was a US$50 million line of credit in wait for Guyana for development projects.
“There was always funds to finance this hospital and other activities, if we wanted. So when the government says now that ‘We had cancelled this project but because the Indian government said you can have money to do a few other hospitals including this one, then that is why we decided to proceed with it,’ that is a fallacy. They always had money to do other things because the line of credit was always there to do this hospital and other things,” he said.
“They make it seem like the Indian government held a gun to their head and said ‘You have to [go] with this hospital,’ so that is why they reconsidered from five months ago… Is what they are saying now [that] they don’t agree with this hospital but since the Indian government force them to go with it, they will go? That is absolutely not true. The Indian government did not force them. They are backpedaling on the need for the hospital,” he added.
He suggested that the company’s affiliation with Ramjattan was the only reason for its selection. “Every person in this room knows the role that Ramjattan played as a lobbyist for Fedders Lloyd when the company failed to get the contract,” he said.
No contract awarded as yet
In its statement yesterday, the Finance Ministry, however, emphasised that it did not award a contract to Fedders Lloyd; it said the ministry entered into an MoU with the firm.
“The advantages of proceeding in this manner, rather than going out for a new tender are many, including the fact that Fedders Lloyd expressed in the MoU its intention to hold its prices expressed in its original bid made some four years ago. In addition to being time consuming, a new tender will result, obviously, in price escalation due to inflation,” it said.
The ministry added that Fedders Lloyd intends to examine works already done by Surendra and to integrate those works within its proposed current design options, so as to lessen the burden of loss of funds already spent.
Further, it said Fedders Lloyd intends to complete the designs and finalise the list of equipment—which was not completed by the previous contractor—to the satisfaction of the Ministry of Public Health. It also intends to hold the overall cost of the project within the available balance of the line of credit from Exim Bank of India.
According to the ministry, once the conditions in the MoU are satisfied by Fedders Lloyd, then the Tender Board will be invited to make an award of contract to the firm.
“Procedurally, therefore, there is no impropriety in the method used by government in entering the MoU with Fedders Lloyd with the intention of leading to an award should the conditions stipulated in the MoU be met by Fedders Lloyd,” it said.
“The decision to utilise the instrument of the MoU safeguards the procurement process and seeks to optimise the use of Public Funds, in this case a loan, in the most beneficial way,” it added.
Meanwhile, an official of Fedders Lloyd, who asked not to be named, told Stabroek News yesterday that less than US$500,000 in work was done at the project site. The former government had issued an advance payment of US$4,285,440 to Surendra Engineering for, among other things, site establishment.
The official said the company on Friday did a preliminary evaluation of works done at the Turkeyen site.
However, he explained that with some $14.7 million that remains from the original line of credit issued for the project, Fedders Lloyd will commence works immediately and surveying of the site started. The official said the company would not collect on the $14.7 million until a substantial amount of work is evident and done to the desired specifications.
Questioned why the company would want to undertake a project at a loss, the official explained that it would not be a loss. He said the company would break even and have the opportunity to build its credibility as “an honest and transparent company giving value for money.”
Jagdeo, however, yesterday said it was not proper for the company to pronounce on the value of work done at the site.
“…They took Fedders Lloyd and so Fedders Lloyd would decide how much work was done there. So if we say… $4 million [on works already done] and they said, ‘we assess it for half a million,’ then the country gets duped out of $3.5 million… because there is no independent evaluation… Imagine, the previous contractor did some work. We don’t know what is the cost of the work they did yet,” he said.
The former government, in its lawsuit against Surendra, accused the company of breach of contract and fraud and sought the recovery of the US$4.2 million in advance payments for the project. It eventually secured a default judgment against the company, which failed to enter an appearance in the action. By that time, Surendra no longer had a presence in Guyana, which limited the administration’s ability to enforce the judgment.