Procurement of consulting services and prequalification procedures

Another iceberg about four and a half times the size of Manhattan and measuring some 103 square miles in surface area, has broken off Antarctica. It occurred in the interior section of the glacier, and scientists are theorising that it could be the result of warm ocean water attacking the ice from below causing instability. Were the glacier to melt in its entirety, sea levels could rise by over one and a half feet. Earlier this year, a similar occurrence took place when an iceberg about the size of Delaware broke off Antarctica.

A recent Washington Post-ABC News poll revealed that 55% of Americans now believe that the severity of hurricanes is the result of climate change, compared with 39% in 2005 following Hurricane Katrina. The Paris Agreement on climate change aims to curb the use of planet-harming fossil fuel and to strengthen the global response by keeping global temperature rise this century to well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit it even further to 1.5 degrees Celsius.

According to Newsweek, impacts are still expected at 2 degrees of warming, but at least some of the world’s coral reefs could survive. Beyond this level, coral reefs, which a quarter of the world’s marine life and half a billion people depend on, are expected to be completely wiped out. Newsweek further stated that “The terrifying math of climate change shows us that in order to stay within the 2-degree safety limit, the majority of the world’s existing fossil fuel reserves need to stay in the ground and not be burned. At six degrees of warming, which we could get if all remaining fossil fuels were burned, falling oxygen levels could be a threat to the survival of life on earth”. Several major banks, including the African Development Bank and Asian Development Bank, have already decided not to invest in oil and gas exploration.

Now for today’s article. The proposed construction of the new Demerara Bridge between Versailles and Houston has attracted much attention. The first relates to the recently completed consultancy study for the feasibility and design of the new bridge. The study recommended a low-level bridge instead of a fixed high-level one considered the best option in a 2013 pre-feasibility study. The former will still require daily closing and opening to allow ships to pass, resulting in a build-up of traffic and hence the dreaded traffic congestion that we are experiencing daily on the East Bank. It is evident that the problem being experienced with the operations of the current bridge is being transferred closer to the city. If funding is not available to construct a fixed high-level bridge, it stands to reason that we should delay the construction until we are able to garner the necessary funds. That apart, there is concern relating to the basis of selection of the consulting firm to undertake the feasibility study.

The second concern relates to the Government’s announcement about the prequalification procedures it proposes to adopt in the selection of the contractor. In this article, we discuss the requirements of the Procurement Act relating to these two areas and assess whether there has been any violation of the Act.

Requirements relating to consulting services

The procurement of consulting services is governed by Section VI of the Procurement Act. A procuring entity shall issue a Request for Proposals (RFP) from consulting services firms, which have been included in a short list. Short lists are to be prepared on the basis of expressions of interest received in response to an invitation to express interest published in the newspapers of wide circulation.

When foreign firms are expected to be interested in providing the services, the notice shall also be published in a newspaper of wide circulation or in an appropriate trade or professional publication of wide international circulation. The RFP shall include: (a) the manner in which the proposals are to be prepared and submitted; (b) the evaluation criteria and the manner in which they are to be applied; (c) the minimum qualifying technical score; (d) a statement informing the consultants that they may be excluded from future participation in procurement of goods, works, services or consulting services resulting from the assignment for which the RFP was issued; and (e) the draft contract.

The Evaluation Committee shall evaluate the proposals based on technical quality of the proposal, including such considerations as the consultant’s relevant experience and the expertise of its staff, the proposal work methodology and the price of the proposal. The method of selection stated in the RFP may be based on either: (a) a combination of quality and price, according to the relative weights stated in the RFP; (b) the quality of the technical proposal within a predetermined fixed budget specified in the RFP; or (c) the best financial proposal submitted by a bidder that has obtained the minimum qualifying score.

Where the consulting services are of an exceptionally complex nature, will have a considerate impact on future projects, or may lead to the submission of proposals which are difficult to compare, the procuring entity may select the consultant based exclusively on the technical quality of the submitted proposal.

By Section 49, the procuring entity may engage in single source procurement where the services to be procured require that a particular consultant be selected due to its unique qualifications or where it is necessary to continue a project with the same consultant. However, the contract is awarded only if the selected consultant agrees to be subjected to cost verification during the performance of the services. The contract shall indicate the accounting obligations of the consultant, including the obligation to present appropriate accounts or documents allowing the determination of the cost of the services. The procuring entity may also negotiate the terms of the contract with the selected consultant but under no circumstances may engage in negotiations with more than one candidate simultaneously.

Feasibility study and design of the new bridge

Following public advertisement for the above consultancy, 22 firms submitted expressions of interest, of which 12 were shortlisted. However, only two firms submitted bids, of which one was deemed valid while the other bid exceeded the budgetary allocation. The Ministry of Public Infrastructure (MPI) explained that qualified consultants were sought worldwide, and LievenseCSO was recommended. Accordingly, the MPI selected LievenseCSO through sole sourcing with the “knowledge of the National Procurement and Tender Administration Board, which also granted permission for its engagement with Lievense CSO”. The Ministry further stated that the firm’s bid was subsequently found to be the best, technically and financially. (Note: It is not within the authority of the NPTAB to grant permission for the use of a particular method of procurement since the Procurement Act is clear as to the circumstances under which each form of procurement is applied.)

Was there a violation of the Procurement Act? The Ministry did solicit RFPs but found the proposals of the two respondents lacking – one invalid, and the other exceeding the budgeted amount though it is not clear by how much. The Ministry might have reflected on the time it would take for the procurement process to be completed and whether the outcome would be different. Accordingly, it decided to apply Section 49 which allows for sole source procurement in circumstances where the services of the consultant are required due to the consultant’s unique qualifications. The only concern is whether Lievense CSO’s qualifications are unique having regard to the nature of the services. It is also unclear why this firm did not submit a proposal in response to the public advertisement.

 

Prequalification of suppliers/contractors

 

“Prequalification” refers to the application of specific procedures in order to identify, prior to the submission of tenders, suppliers and contractors that are qualified to participate in the procurement proceedings, either as part of an annual registration process, or for specific contracts. The main purpose is to reduce the administrative burden associated with evaluating a large number of bids after invitations to tender are issued. A procuring entity may engage in prequalification proceedings by way of an invitation to prequalify to be published in newspapers of wide circulation and posted in public places. Such solicitations shall reach the area impacted by the procurement. The procuring entity shall provide, on payment therefor, a set of prequalification documents to each supplier or contractor that requests them in accordance with the invitation to prequalify. The prequalification documents shall include the following information:

 

(a)  instructions for preparing and submitting prequalification applications;

(b)  a summary of the required terms and conditions of the contract to be entered into as a result of the procurement proceedings;

(c)   any documentary evidence or other information that must be submitted by suppliers or contractors to demonstrate their qualifications;

(d) the manner and place for the submission of applications to prequalify and the   deadline for such submission, expressed as a specific date and time and allowing sufficient time for suppliers or contractors to prepare and submit their applications,  taking into account the needs of the procuring entity; and

(e)  any other requirements that may be established by the procuring entity in conformity with the Act and the procurement regulations relating to the preparation and submission of applications to prequalify and to the prequalification proceedings.

 

The procuring entity shall make a decision with respect to the qualifications of each supplier or contractor submitting an application to prequalify. In reaching that decision, the procuring entity shall apply only the criteria set forth in the prequalification documents. The procuring entity shall promptly notify each supplier or contractor submitting an application whether or not it has been prequalified and shall make available to any member of the general public, upon request, the names of all suppliers or contractors that have been prequalified.

Only suppliers or contractors that have been prequalified are entitled to participate further in the procurement proceedings. The procuring entity shall, upon request, communicate to any supplier or contractor that has not been prequalified the grounds therefor. Should the procuring entity decide that a supplier or contractor does not satisfy the prequalification requirements, the supplier or contractor may, upon request, obtain a review of that decision pursuant to Part VII dealing with bid protests.

Proposed prequalification of contractors for the construction of the Bridge

The Ministry announced that only three firms would be shortlisted following the receipt of applications to prequalify. It explained that “in a design build tender process, experience has shown that the shorter the shortlist the better and more competitive are the bids. With three firms on the shortlist, the probability of a firm winning the tender is 0.333. If there are six firms on the shortlist, the probability is 0.17… When you consider that it cost about $250,000 to prepare a design bid tender for this magnitude of a project, many of the good firms will not participate when the list is longer than 3 or probability less than 0.33…”

The above explanation, apart from being too simplistic and lacking in technical justification, is irrelevant. The issue is not about the probability of winning a contract using the most elementary school arithmetical formulation nor is it akin to that of a lottery. Rather, it is about a professional and technical assessment to determine, first the responsiveness of the tenders, then the lowest evaluated tender which is the tender that has been ranked lowest using criteria in addition to price that are quantified in monetary terms. It follows that contractors applying for prequalification which satisfy prequalification criteria must be invited to submit tenders. The Ministry cannot place any restriction as to the number of contractors that it will prequalify as this is against the Procurement Act. Any aggrieved contractor can file a bid protest if the contractor feels that it was excluded without justification.

Finally, it is wrong to ask contractors applying for prequalification to be asked to waive their right to file a bid protest. An agreement to do so cannot set aside the requirements of the law.

 

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