Contract award to St8ment Investment

The purpose of any Procurement Act is to ensure that projects funded by the public purse are awarded to companies that are in compliance and capable of executing the works within time and budget. To posit an absurd example, a duck farmer should not be hired to construct an aerodrome. The Act also aims to prevent corruption in the awarding of contracts and unfair and discriminatory treatment of bidders.

Guyana’s Procurement Act (No.8 of 2003) sets out in detail how ensuring that qualified companies are hired is to be achieved. The existence of Evaluation Committees further establishes the import of distinguishing the credible from the non-credible.

The requirements of the act include the following:

(1) Every supplier or contractor wanting to participate in procurement proceedings must qualify by meeting such of the following criteria as the procuring entity considers appropriate –

(i) that it possesses or has access to the technical competence, financial resources, equipment and other physical facilities, managerial capability, reliability, experience, and reputation, and the personnel, to perform the contract;

(ii) that it has legal capacity to enter into the contract;

(iii) that it is not insolvent, in receivership, bankrupt or being wound up, its affairs are not being administered by a court or a judicial officer, its business activities have not been suspended, and it is not the subject of legal proceedings for any of the foregoing; (iv) that it has fulfilled its obligations to pay taxes and social security contributions of its employees;

(v) that it has not, and its directors or officers have not, been convicted of any criminal offence related to its professional conduct or the making of false statements or misrepresentations as to its qualifications to enter into a procurement contract within a period of ten years preceding the commencement of the procurement proceedings, or has not been otherwise disqualified pursuant to administrative suspension or debarment proceedings in this or other jurisdictions over the last three years; (vi) that its past performance substantiated by documentary evidence would commend it for serious consideration for the award of the contract (emphasis ours).

Last week, it was announced that St8ment Investment, whose principals are the owners of the entertainment company Hits and Jams and football promoters Kashif and Shanghai, had been awarded a $346m contract for the construction of a Primary School at Bamia/Amelia’s Ward, Linden. To say that this award is a surprise would be a gross understatement.

The procuring entity in this case was the Ministry of Local Government and Regional Development (MLGRD). It is unclear what in the tender document constructed by MLGRD would have enabled St8ment to be awarded this contract. St8ment was only recently established and has not constructed anything much less a school. There is nothing known publicly about it that would explain how it could be qualified for a huge construction project and win the contract over other bidders. The Ministry should immediately publish the tender document so that the public could judge for itself the rectitude of the choice.

The Evaluation Committee of the National Procurement and Tender Administration Board (NPTAB) that presided over this process should also be required to provide an explanation. For years NPTAB Evaluation Committees have come under a cloud over concerns that they have been compromised and/or are subject to the direction of politicians and tenderers. This award immediately raises red flags and the NPTAB and the government should be concerned.

According to the Act, the Evaluation Committee is to comprise three individuals with ”appropriate expertise and experience”. This committee,  using only the evaluation criteria outlined in the tender documents, then has to evaluate all tenders, determine which tenderer has submitted the lowest evaluated tender, and convey its recommendation to the procuring entity within a reasonable period of time, but not longer than fourteen days.

According to the Act, the procuring entity shall, if it agrees with the Report of the Evaluation Committee, publicly disclose the name of the tenderer identified by the Evaluation Committee as the lowest evaluated tenderer. If the procuring entity does not agree with the Evaluation Committee’s determination, the procuring entity shall issue an advisory recommendation to the Evaluation Committee regarding which bidder should be the lowest evaluated bidder, “which recommendation the Evaluation Committee shall observe”.

There is a lot of room in these provisions for the selection to go awry and the Procurement Act is ripe, as are many others, for amendment. It should also be noted that St8ment was not the lowest bidder but no information has been provided on the quality of the bid by the lowest tenderer.

To make matters worse, if an aggrieved bidder wanted to appeal this award  there is no Public Procurement Commission in place or its tribunal thanks to the lethargy in Parliament. The bidder would have to try their luck in court with all the interminable delays that would likely entail.

The award to St8ment would surely rank in the order of the assignment under the Jagdeo administration of the Amaila Falls Access Road construction to Fip Motilall who had never done any road works before. That project was eventually terminated under the Ramotar administration way over budget with much work still to be completed. The principals of St8ment have also been prominent, longstanding associates of PPP/C governments and that in itself raises troubling questions.

The public purse is not to be trifled with and President Ali’s administration and those at the NPTAB should be acutely aware of this. The award of this contract to St8ment would be a joke if its possible repercussions weren’t so serious.

In his defence of the award of the contract, Kerwin Bollers of Hits and Jams Entertainment contended that St8ment was suitable as they are being advised by a noted geotechnical engineer. This means nothing as it is St8ment which is building the school and not the engineer. St8ment in its present form must be able to execute this contract. The Procurement Act is not to be overcome by subcontracting and the hiring of advisors. The Act expects that the bidder will deliver the goods and be held accountable otherwise it will be open season on public contracts.

Mr Bollers also cited a 2020 memorandum of understanding with the government for the construction of a 400-room Sheraton Hotel. That also has no bearing on this construction contract. The Sheraton project would constitute an investment arrangement which is quite different from the award of public monies for a major project.

This award to St8ment should be immediately reviewed though it is unclear by which avenue this can be achieved.