Restricted bidding for new Demerara bridge raises red flags

An artist’s impression of the new Demerara Harbour Bridge (Ministry of Public Infrastructure rendering)

The Ministry of Public Infrastructure (MPI) says it will select bidders to finance, design, build and maintain the new Demerara Harbour Bridge through a restricted bidding process and only three shortlisted companies will be able to tender.

The decision has raised concern among observers with former Auditor General Anand Goolsarran and others saying that not only is the decision unlawful, but it seems calculated and also gives the perception that MPI seems to have already pre-selected who the contractor will be.

However, MPI says  that there is nothing sinister in its restricted tendering plan and that it was formulated based on its experience that major companies do not like bidding for projects when many others will tender.

“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,” MPI stated in response to questions from the Stabroek News.

Further, and through its Public Relations Officer, Desilon Daniels, the ministry added, “When you consider that it cost about US$250,000 to prepare a design-build 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. Not worth the money.”

The Ministry of Public Infrastructure has invited contractors to prequalify for the project to finance, design, build and maintain the New Demerara River Bridge and explains what the project will entail.

“The Government of Guyana through the Ministry of Public Infrastructure plans to construct a new bridge across the Demerara River. The selected location is approximately 2 kilometers north of the existing floating bridge, and the new bridge will span from Houston on the eastern bank of the Demerara River to Versailles on the western bank of the Demerara River. The new bridge will be an essential part of the road network and will also have a significant impact on marine traffic passing under the bridge,” the advertisement states.

“The project comprises of the construction of an approximately 1500m long fixed bridge with a movable span and two approach roads of a total length of 600m. It is envisaged that the project will commence in 2018 and will be delivered in 2020. The employer has conducted a feasibility study including initial surveys, and will provide in the tender the complete basic design as a reference design,” it adds.

 

‘Restricted number of bidders’

 

But what has raised concern is MPI saying that following the prequalification process only three companies will be allowed to bid for the project.

“The employer intends to procure the captioned works through public tendering with a restricted number of bidders. Procurement will be done in two (2) phases the current pre-qualification phase and the bidding phase. In the pre-qualification phase, three (3) contractors will be shortlisted and requested to submit designs and offer a fixed prime lump sum for the design and construction of the bridge and approach roads,” MPI stated.

“The shortlisting of the bidders shall be on the basis of the profile, track record, financial capacity of the applicant as well as on the merit of the technical, cost and financing proposals presented by applicants in their pre-qualification document,” it adds.

‘Unlawful’

Not only were  MPI’s plans to restrict prequalifiers deemed unlawful by the former Auditor General  but they were rubbished by the Heads of  two large scale construction companies and sources close to the procurement process among others .

“The arguments put forward by the Ministry are not valid. All contractors applying for prequalification must be assessed against the prequalification criteria. It they satisfy the criteria, they 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,” Goolsarran told Stabroek News.

“In accordance with Section 6 (5), 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. By Section 6(8), 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. This part deals with bid protests,” he explained.

Goolsarran said that MPI was wrong to advertise to prequalify contractions and then only select three from the pool without knowing which companies would bid and if all are competent and tried and tested contractors. He said, “If you have 25 companies for example and if all prequalify then so be it, all will have to tender. They are competent companies and your prequalification process will state that.  “The law does not talk about restricting they are imposing that clause administratively. You cannot do that. It stands to reason that all persons prequalified should be allowed to bid. There is nothing in the law that says otherwise and their explanation about experience is irrelevant. The law is the law.”

Cannot hold ground

Similar sentiments were expressed by other companies and persons close to the procurement process.

“What nonsense is that? Does Public Infrastructure expect any sensible person to listen to that nonsense? We see tenders published in your papers and other dailies nearly every week and it is with the big projects that you see the most bids submitted ,” the Chief Executive Officer of a well-known local firm said. The CEO asked not to be named because he said that most of the contracts for his company come from government and he is “not scared but a bit worried” of the fate of future tenders.

“You had 22 companies from around the world, we are talking companies that would have built bridges in Europe, the USA, Canada, Suriname and the Caribbean. You name it they would have built it and they submitted, showed an interest in carrying out a feasibility study and design for the said bridge and now you tell me what? Oh come on. Every company is seeking to maximize profits and make a name for themselves. It is the big projects that afford you that opportunity. So what study did MPI do to say only when a small amount bid  you get the bigger companies?” was another contractor’s input even as he named some of the said companies.

Another source, experienced with the tendering process and regulations, who also asked to remain anonymous, rained criticism on MPI’s assertions saying that in their years of working with and assisting in crafting of tender documents MPI’s logic “cannot hold ground.”

‘I don’t find that to be factual or acceptable. When you are going out for a big project like the bridge you want the best option. You want to ensure you are covering all of the process. You cannot state that you will just take three because that in itself is a way of chasing people away. It shows that they might probably already have a contractor for this job …,” the source said.

The procurement specialist explained that especially for capital projects, one should go to tender to ensure transparency for the spending of public monies while getting value for dollar.

“You go public for one reason and that is to get the best option and quality to ensure you are satisfied. The moment you start putting restrictions you are already telling competitive people, ‘you will not get it stay out’. I have to explain too that the procuring agency needs to explain where funding is coming from before any sort of limitations are made. Who is financing this bridge? If it is coming as the result of a loan you have to follow the agency guidelines. If you don’t know who is funding then you don’t know what rules apply. There are rules governing certain tenders depending on financing. That is to say that if a loan is from India’s Exim Bank then we already know that only Indian contractors might be able to bid. If it is China funded it has their guidelines and say for example IDB, it has to fall between a particular framework and all bidders must be IDB members,” the source explained.

Since the announcement of the sole-souring of the feasibility study for the said bridge, MPI has come in for strong criticisms. It has had to retract earlier claims that the feasibility study was IDB funded then said it was a mix up with the Wismar Bridge project.  However, it was later pointed out that while the Wismar Bridge was also to be IDB-funded that was also pulled because of a reformulation of the loan.

 

 

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