The award of the contract in the sum of $566.9 million to Kares Engineering Inc. for reconstruction of the North Ruimveldt Secondary School has generated much criticism. The company was the third lowest from among nine tenders received. According to the National Procurement and Tender Administration Board (NPTAB), the two lower tenders were deemed non-responsive, making Kares Engineering the lowest responsive tender. However, by Section 39(2) of the Procurement Act, a procurement contract must be awarded to the lowest evaluated tender and not lowest responsive tender.
Lowest evaluated tender versus lowest responsive tender
The Act does not provide a definition as to what constitutes the lowest evaluated tender. However, following the bid opening ceremony, the procuring entity (Ministry, Department or Region) must transmit to the appointed Evaluation Committee all tenders received from contractors or suppliers. The Committee shall evaluate the tenders using only those criteria outlined in the tender documents, which have to be qualified in monetary terms, in addition to prices.
Evaluators normally use a two-step approach when conducting evaluations, and this approach is supported by the Procurement Act. The first is an assessment of the responsiveness of the tenders which is a non-technical evaluation. This involves checking to ensure that all the documents listed in the solicitation request have been included in the tender submission, in addition to assessing whether the tenderers have met the qualification requirements set out in Section 5 of the Act. The latter includes ensuring that:
Obligations to pay taxes and social security contributions of employees have been fulfilled;
There is no disqualification, debarment or suspension over the last three years in Guyana and elsewhere;
There is legal capacity to enter into the contract;
There is no evidence of insolvency, receivership or bankruptcy etc.;
Directors or officers have not been convicted of any criminal offence relating to professional conduct or the making of false statements or misrepresentations as to qualifications to enter into a procurement contract within a period of ten years preceding the commencement of the procurement proceedings; and
Past performance substantiated by documentary evidence would commend the tenderers for serious consideration for the award of the contract.
A tender is still considered responsive if ‘it contains minor deviations that do not materially alter or depart from the characteristics, terms, conditions and other requirements set forth in the solicitation documents or if it contains errors or oversights that are capable of being corrected without touching on the substance of the tender’.
As Quantity Surveyor, Donald Rodney pointed out in a recent letter to the Editor:
Responsiveness refers to deliverables, being documentation NPTAB expressly requires of all intended bidders. The responsiveness test is best seen by readers as a procedural pre-evaluation review of submitted bids to screen out bids which do not have the deliverables required, carried out to facilitate the speedy execution of substantial evaluation of bids…The responsiveness test should be done on a fail or pass basis, with ‘failed bids’ being set aside and taking no part in the substantive evaluation, whatsoever.
In the second stage, the evaluators proceed with the technical evaluation of only tenders that are considered responsive. This involves assessment against the criteria set out in the tender documents which have to be quantified in monetary terms using a combination of points and weightings, including prices. A key criterion relates to the possession of, or having 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. The tender that receives the highest score based on the technical evaluation is considered the lowest evaluated tender.
It is the responsibility of the Evaluation Committee to determine which tenderer has submitted the lowest evaluated tender and to convey its recommendation to the procuring entity. If the procuring entity does not agree with the Committee’s determination, it must issue an advisory recommendation to the Committee regarding which tender should be the lowest evaluated tender, which recommendation the Evaluation Committee must observe.
Considering the above, it is clear that the lowest responsive tender is not the same as the lowest evaluated tender.
Kares Engineering matter
In 2012, Kares Engineering was awarded a contract for the construction of the Kato Secondary School in Region 8 in the sum of $728 million. However, the school was not completed until 2015, and an inspection of the works by Rodrigues & Associates found significant defects, requiring some $144 million in remedial works. While the company subsequently completed the defects at no additional cost to the Government, the supervision of the works undertaken by Vikab Engineering did cost the Government $29.2 million, not to mention the opportunity cost resulting from the delay in completion of the works. The school was not officially commissioned until March 2019, seven years after the contract award.
In 2008, Kares Engineering was reportedly awarded a contract for the construction of the Olympic swimming pool.
It, however, defaulted on the agreed deadlines, and the quality of work being done was not in conformity with the specifications. As a result, the works had to be re-tendered, and Kares’ involvement was considerably reduced.
Debarment proceedings should have therefore been instituted against Kares Engineering. Former President David Granger is on record as having stated that the company would no longer be awarded any future contract with the Government. Despite this, there is no evidence that the company was debarred.
Responsibility for the debarment of contractors and suppliers
Prior to the establishment of the PPC in 2016 after a 13-year delay, the responsibility for adjudicating debarment proceedings was that of the NPTAB. Considering that the contract for the construction of the Kato Secondary School was awarded in 2012 and the works completed in 2015, it would have been the responsibility of the NPTAB to institute debarment proceedings against the company.
In 2019, the Minister of Finance issued Regulations regarding the procedures to be followed by the PPC in relation to the suspension and debarment of contractors and suppliers for various offences and/or violations committed. These include: offences relating to procurement; violations of certain provisions of the Environmental Protection Act and Anti-Money Laundering and Countering of Financing of Terrorism Act; default in tax obligations; breaches in the Procurement Act; providing false or misleading information; and collusion with others to win a procurement contract. A contractor or supplier who had been debarred from participating in the procurement in another jurisdiction or by an international organization is automatically debarred from participating in public procurement in Guyana.
A procuring entity or any person may submit to the PPC a proposal for debarment of a contractor or supplier. Where the PPC considers that there are grounds for debarment, it must inform the contractor or supplier who is required to make a written representation and to request a hearing. A copy of the representation must be submitted to the procuring entity or the person requesting debarment. Having regard to the representation made and the outcome of the hearing, the PPC decides on when or not the supplier or contractor should be debarred. The period of debarment ranges from one to ten years. The contractor or supplier has the right of appeal against the decision of the PPC to the Public Procurement Tribunal.
Procuring entity’s responsibilities
Section 5 of the Act sets out the responsibilities of the procuring entity in relation to the criteria to be used in determining the qualifications of contractors and suppliers. Included in the list of criteria is the requirement that past performance substantiated by documentary evidence would commend the concerned contractor or supplier for serious consideration for the award of the contract. The Ministry of Education therefore had the obligation of ensuring that Kares Engineering met this criterion before consideration of its tender.
NPTAB’s position on the matter
NPTAB defended the award of the contract, contending that its hands were tied since unsatisfactory performance was not one of the evaluation criteria. However, past performance is one of the qualification requirements that determines the responsiveness of tenders. NPTAB must have been aware of Kares Engineering’s unsatisfactory performance on two previous contracts and should have brought the matter to the procuring entity’s attention for appropriate action to be taken.
NPTAB is not a passive player in the procurement process. It is responsible for exercising jurisdiction over tenders the value of which exceeds such an amount prescribed by regulations, appointing a pool of evaluators for such period as it may determine, and maintaining efficient record keeping and quality assurances systems. NPTAB comprises seven persons of ‘unquestioned integrity who have shown capacity in business, the professions, law, audit, finance and administration’, including a full-time chairperson and one other full-time person. It is also supported by a Secretariat comprising professional staff of ‘proven experience and capabilities’ and headed by the Chief Executive Officer. The current chairperson is a senior official of the Ministry of Finance responsible for the monitoring the timely execution of the Government’s public investment programme and therefore this aspect of the Act has not been adhered to. It is not clear who the other full-time person on the Board is.
NPTAB further argued that the responsibility for debarring contractors and suppliers for unsatisfactory performance or fraudulent practices rests with the Public Procurement Commission (PPC) and not NPTAB. Prior to the establishment of the PPC in 2016 after a 13-year delay, the responsibility for adjudicating debarment proceedings was that of NPTAB. Considering that the contract for the construction of the Kato Secondary School was awarded in 2012 and the works completed in 2015, NPTAB would have been responsible for instituting debarment proceedings against the company.
Involvement of the Cabinet
By Section 54 of the Procurement Act, all proposed contracts in excess of $15 million have to be referred to the Cabinet for the grant of ‘no objection’ based on a streamlined evaluation report setting out the basis for the proposed award. The Cabinet can object to the award of a contract if all the procedures have not been followed. When this happens, the matter is referred to the procuring entity for further review. The Cabinet should have objected to the award of the contract to Kares Engineering on the ground that the Ministry of Education failed to adhere to the requirements of Section 5 of the Act dealing with qualifications of contractors and suppliers.
As a side consideration, upon the establishment of the PPC, the Cabinet’s involvement was to have been progressively phased out in favour of a decentralized system. Sub-section 6, however, states that the Cabinet’s involvement shall cease upon the constitution of the PPC. The first PPC was established on 28 October 2016 but there is no evidence that the Cabinet has given up its role in the procurement process.
Conclusion
All the parties involved in the procurement process – the procuring entity, NPTAB and Cabinet a – have failed in their duty to protect the public interest and to safeguard public resources by taking appropriate against a contractor who had performed unsatisfactorily on two previous occasions. While the Regulations governing the debarment of contractors and suppliers for violations of the Procurement Act and other forms of legislation or for providing false or misleading information, the first line of action as it relates to Kares Engineering was for the Ministry of Education to disqualify the company on the basis of unsatisfactory performance in the past. Kares Engineering’s tender should have been deemed unresponsive and excluded from the technical evaluation.
In the final analysis, it is the taxpayer who has to foot the bill when works are not performed to the required standards and within the time period specified.
