Ramjattan cites clause in specialty hospital contract as grounds for Fedders Lloyd MoU

A provision in the contract for the specialty hospital allows for government to employ a third party to complete the project in the event of fraudulent practices by the original contractor and it was under this clause that Fedders Lloyd was chosen to finish the project, AFC leader Khemraj Ramjattan says.

Under pressure to defend a Memorandum of Understanding (MoU) with Fedders Lloyd for the specialty hospital, government officials have trotted out a variety of reasons for the selection of the company without a tender process with Ramjattan’s statement in the AFC’s column in yesterday’s Kaieteur News being the latest.

Initially, the Ministry of Finance said that government had approached Fedders Lloyd “in the interest of time,” to undertake the completion of the project. Subsequently, 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.

Khemraj Ramjattan
Khemraj Ramjattan

However, the evaluation report obtained by Stabroek News shows that company was disqualified from the process and questions have been raised about why the Ministry would mislead the public since the evaluation report would have been available to the APNU+AFC administration.

The report said that only two bids were responsive: Surendra Engineering which was eventually awarded the project and later fired and Shapoorji Pallonji and Company Limited, which had built the Guyana National Stadium at Providence. Fedders Lloyd did not submit a list of equipment proposed for the project and was deemed unresponsive.

In the AFC’s Kaieteur News column yesterday, Ramjattan, who represented Fedders Lloyd during the earlier bidding process for the US$18m hospital and is now a Vice President and Minister of Public Security, defended the deal.

Every bidder

“The contract’s general conditions, which were given to every bidder so as to inform them as to what they possibly will enter into, makes provision for the Government of Guyana, called the Employer therein, to terminate the contract if any corrupt or fraudulent practice is discovered as carried out by the Contractor,” he wrote.

Ramjattan pointed to the “massive fraud” engaged in by Surendra Engineering and noted that the PPP Government subsequently sued the company and got remedies of termination and damages, after 24% of the contract monies, some US$4 million was disbursed to it.

“What the Employer under the contract’s general conditions can do upon such a termination is very explicit and without any ambiguity…Paragraph 42.2.4 says that upon such a termination: “The Employer may enter the site, expel the Contractor and complete the facilities itself or by employing any third party”,” Ramjattan wrote.

“This provision is what applies. And this method accords with best practice on any termination, especially when work has commenced and money to the tune of approximately 25% is spent on an incomplete project, as happened here,” the AFC leader argued.

“I know of no law which provides here that re-tendering has to be mandatory. Nor do I know of any reasoning which says that if such re-tendering is not done, but a good third party completes the work, that means that the completion process “reeks of corruption”,” he added.

Observers have noted that the contract provisions may clash with the procurement law.

Discount

The AFC leader also denied that there was a disqualification of Fedders Lloyd’s bid. He said Fedders Lloyd had offered a discount which made it the lowest bidder and there were specific rules in the Bid documents which provided for discounts, namely, paragraph 20.3 of the Instructions to Bidders. He denied that this meant that the company had sent in two prices when bidding.

Ramjattan also argued that “the quality of a Fedders Lloyd doing the completion job for $14 million US is a win for this Administration on all counts.”

Meantime, Fedders Lloyd says that its submission was complete in all respects and after the Surendra fiasco, the PPP/C administration was negotiating with it to complete the project.

In a statement to Stabroek News on Saturday, the company’s representative in Guyana, Ajay Jha said that in its bid, Fedders Lloyd had submitted a list of equipment and the submission was complete in all respects. He said that they also submitted a model at very high cost. According to Jha, 60% of the bid cost is equipment and questioned how his company could have ignored this. He said that he had submitted all documents and the Tender Board announced during the bid opening that everything was submitted.

Jha asserted that the company never submitted two bids and as per international norms and the bid document, they quoted a price and gave a discount on that price and this was read out during the opening of the bid.

Jha declared that Fedders Lloyd’s bid bond was as per the bid document and they deposited the money at Axis Bank, India. He said that Axis Bank contacted its counterpart Scotiabank which issued the bond. The Fedders Lloyd representative said that the company was never informed that they were disqualified and then Cabinet Secretary Dr Roger Luncheon said that they would reassess the bid in September 2012 but this was never done.

Jha also said that the PPP/C government was negotiating with Fedders Lloyd to complete the project. He said that in December 2014, then President Donald Ramotar directed then Attorney-General Anil Nandlall to deal with his company. “I met him many times and he always confirmed that he will hand this project to us,” Jha said.

According to him, based on Nandlall’s request, Fedders Lloyd submitted documents committing to complete the project with the remainder of money left from the Line of Credit. He said that when Ramotar visited India in January this year, he met him and the then President said that they regretted not giving the contract to Fedders Lloyd.

Jha asserted that having inked the MoU, Fedders Lloyd accepted the site as is and there is no point in evaluating as they have to complete the project with the remaining amount of money. In terms of the work done by Surendra, Jha said that anyone can go and find out how much work was done. He said that 1509 piles were driven while there is one temporary office and a few trucks of sand and “that’s it.” He said that the company will just accept and “take up” the approved design.

Indices

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.

When asked about the matter at last week’s post-cabinet press briefing, Minister of State Joseph Harmon said that he did not have all the details and he would make the Minister of Finance available to the press to answer questions. This has not yet happened.

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 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 AFC had previously pushed for a retendering of the project. In August 2012, the AFC played down concerns that Ramjattan was in a conflict of interest position given his legal representation of the company. 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.

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.

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