Cancel Fedders Lloyd MoU – Goolsarran

The Memorandum of Understanding (MoU) inked by government with Fedders Lloyd to complete the specialty hospital should be cancelled and the bidding process restarted, former Auditor General Anand Goolsarran has said even as he dismissed as “without merit,” the administration’s statement that it approached the Indian firm in the interest of time.

“Given the charges made by Fedders Lloyd of unfair treatment in the award of the (previous) contract (whether justifiable or not), and the Ministry of Health’s response, it would have been more appropriate for the works to be re-advertised to allay fears of the new Administration is taking sides in the dispute between the two parties,” Goolsarran wrote in his Accountability Watch column in today’s Stabroek News (see page 8).

“In any event, there is no provision in the Procurement Act for a terminated contractor to be replaced by the next contractor in line based on the original tender evaluation. The MoU with Fedders Lloyd should therefore be cancelled and the bidding process re-started. Indeed, the Government has the obligation to uphold the principles of transparency in the award of all public contracts in conformity with the Procurement Act. Any lesser arrangement should be frowned upon,” he said.

Government and Fedders Lloyd last Wednesday signed a 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 Leader of the Opposition Bharrat Jagdeo also said it should have been retendered after an independent evaluation of work done so far.

 

Defended

The Ministry of Finance has defended the arrangement and says that its actions are in accordance with the Procurement Act. The Ministry said that 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.

In his column, Goolsarran said that the previous PPP/C Adminis-tration erred badly in selecting Surendra as the contractor for the Specialty Hospital, and there is uncertainty as to the recovery of the amount paid to it, notwithstanding judgment in favour of the Government after the termination of the contract.

“However, in seeking to remedy the situation, it is not unreasonable to consider that, going forward, the new Administration will exercise the greatest degree of caution,” he said.

The former AG pointed out that in a joint statement, the government indicated that in the interest of time, it approached Fedders Lloyd to explore the possibility of the company completing the project, hence the MOU.

“However, the only provision in the Procurement Act that refers to time constraints relates to Section 28 dealing with sole sourcing where “owing to a catastrophic event, there is an urgent need for goods, services or construction, making it impracticable to use other methods of procurement because of the time involved in using other methods.” The Govern-ment’s explanation as to the reason for not going back to tender is therefore without merit,” he argued.

The ministry had 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, the Finance Ministry said, Fedders Lloyd remained “the second and only other bidder for the project.”

Jagdeo on Saturday, however, 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.

Meantime, former Speaker of the National Assembly Ralph Ramkarran has welcomed the signing of the MoU.

 

Subtracted

“There is absolutely no reason why a new bidding process must be undertaken when the contract is ready to be awarded. If the value of the works already done is subtracted from the contract price, a new contract price is arrived at. The government gets an advantage because the bid by Fedders Lloyd, the lowest at the time, is three years old. Prices have risen since then. A new bidding process is therefore to Guyana’s disadvantage. Taking into consideration the fact that only two entities came close, the friend of the then government, Surendra Engineering, and Fedders Lloyd and the qualifications and reputation of Fedders Lloyd together with the further delay that a new bidding process would occasion, the government made the right decision to sign the MOU with Fedders Lloyd and to proceed later without a new bidding process,” he wrote in his column in the Sunday Stabroek yesterday.

“There is no rule or principle which dictates that for a new contract, a new bidding process has to be undertaken. The government cannot take into account, but can certainly alert the public, that those who are now demanding a new bidding process tolerated for a decade or more the extraordinarily stringent pre-qualification conditions that ensured, contrary to Guyana’s interests, that only one entity was pre-qualified to supply drugs to the Ministry of Health. Those same folks who now cry foul presided over the giveaway of radio and TV licences worth billions without a bidding process,” he wrote.

Goolsarran, meantime, declared that to the extent that the Public Procure-ment Commission established by the constitutional amendment of 2001 is not made operational, problems in public procurement will continue to occur.

“At the moment, there is no oversight mechanism in place to monitor the work of the NPTAB, while Cabinet continues to be involved in the procurement process. The Chairman of the Public Accounts Committee (PAC), quite justifiably, has criticized the Govern-ment for signing the MOU with Fedders Lloyd. In the same breath, he should proceed with haste to have the PAC identify the five nominees to the Commis-sion and have their names submitted to the National Assembly for ratification. Had the Commis-sion been in place, it is unlikely that the present controversy involving the construction of the Specialty Hospital would have existed,” Goolsarran declared.

 

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