Ministry misled public over Fedders Lloyd bid

- company was eliminated in original tender process for failure to provide list of equipment

Under pressure to defend a MoU with Fedders Lloyd for the Specialty Hospital, the Ministry of Finance on November 28 stated that the company was the second best bidder and this is why it was approached, however the evaluation report obtained by Stabroek News shows that company was disqualified from the process.

When the contract was controversially awarded in 2012 under the PPP/C administration to Surendra Engineering Corporation Limited (SECL), it had been stated by various government officials that Fedders Lloyd’s bid had not been considered as it was unresponsive. Despite this publicly stated position, the APNU+AFC’s Ministry of Finance in its statement on November 28 sought to justify the MOU with Fedders Lloyd on the grounds that it was the number two bidder and that the procurement legislation permitted recourse to such a bidder in the event of failure surrounding the first-ranked bidder.

The tender evaluation report however said that only two bids were responsive: SECL and Shapoorji Pallonji and Company Limited, which had built the Guyana National Stadium at Providence.

This evaluation report would have been available to the APNU+AFC administration so it is unclear why it would have misled the public over the decision behind the Fedders Lloyd selection.

The government has been strongly criticised for its decision to select Fedders Lloyd and this is likely to raise concerns about its commitment to fairness in such awards and could impact on indices such as those put out annually by corruption watchdog Transparency International.

Former Auditor General Anand Goolsarran has been among those who have criticised the government over its decision to clinch a MoU with Fedders Lloyd which MoU is likely to pave the way for the company to build the facility. Goolsarran in his Accountability Watch column in Monday’s Stabroek News had called for a new tender process for the Specialty Hospital.

“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 taking sides in the dispute between the two parties,” Goolsarran said.

“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 stated.

The handpicking of Fedders Lloyd has also raised concerns since now Vice President and Minister of Public Security Khemraj Ramjattan had provided legal representation to the company when it had protested the award of the contract to SECL in 2012.

When asked about this in August of 2012, the AFC played down concerns that Ramjattan was in a conflict of interest position over his legal representation of Fedders Lloyd .

Ramjattan’s role as lawyer for the Indian firm had been greeted with accusations by the then PPP/C government that the company and the AFC leader had political rather than legitimate motives for objecting to the US$18.1 million contract for the design and construction of the hospital being awarded to Surendra Engineering.

Speaking at the AFC’s weekly press conference in August of 2012, party Chairman Nigel Hughes had urged Guyanese not to be distracted by personality, but focus on whether Fedders Lloyd’s rights were breached.

“The real issue is whether or not the procedures that were set out in the tender documents were adhered to. There is no rule in the profession that stops Mr Ramjattan, who is a practising attorney, from plying his trade as a lawyer,” Hughes told the news conference.

The AFC Chairman said he would expect the contract to be awarded on the basis of merit. “If awarded the contract, I would assume and hope that it is after a very transparent process of retendering, where everyone who has been invited to tender and the process of evaluation is transparent,” he said.

“It’s certainly not the AFC’s position that Fedders Lloyd must get the contract. What we are saying is that the process was flawed and Guyana, as a country, cannot be inviting international tenders to build anything and then by our own act breach the same rules and regulations that we have invited them to come and tender under,” Hughes had added.

Despite the concerns by the AFC then over the tendering, it has gone ahead now as part of the new government using the original tender process as the basis for clinching the MoU with Fedders Lloyd.

Five

As financing for the hospital was coming from India’s Exim bank, only Indian contractors were considered even though this was a breach of local procurement laws. Though 15 construction companies from India were approved to bid, only five did so when tenders were opened on June 26, 2012.

The five bidders were SECL, Shapoorji Pallonji, Fedders Lloyd, Jaguar Overseas Limited. and Vydehi Institute of Medical Sciences and Research Centre. The five were then evaluated on 13 grounds for administrative compliance. SECL which bid US$18.1 million and Shapoorji Pallonji which bid US$42.4 million were the only two bids that met all of the requirements. Fedders Lloyd did not submit a list of equipment proposed for the project. The other two bidders also had shortcomings. As a result, the evaluation committee ruled that Fedders-Lloyd’s and the other two bids “are deemed non-responsive and they shall not be evaluated further”.

The evaluation committee comprised then Perma-nent Secretary in the Ministry of Health Leslie Cadogan, Senior Engineer of the Ministry of Agriculture, G Vaughan of the Ministry of Public Works, Stephen Garnett, Manager, Biomedical Department, GHPC. Missing was Zulficar Ally, Head of the Multilateral Department, Ministry of Finance.

In its November 28 statement last week, the Ministry of Finance had defended the MoU with Fedders Lloyd. It had cited several grounds:

“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.

“Fedders Lloyd intends to examine works already done by the previous contractor and to integrate those works within its proposed current design options, so as to lessen the burden of loss of funds already spent.

“Fedders Lloyd intends to complete the designs and finalize the list of equipment (which was not completed by the previous contractor) to the satisfaction of the Ministry of Public Health.

“Fedders Lloyd intends to hold the overall cost of the project within the available balance of the Line of Credit from Exim Bank of India.”

The ministry then said that it was its intention that should the conditions in the MoU be satisfied by Fedders Lloyd, then the Tender Board will be invited to make an award of contract to Fedders Lloyd.