Govt. violated Procurement Act on ECD road project

…China Railway’s ability to deliver also in question – Goolsarran

Former Auditor General, Anand Goolsarran says that Government violated the Public Procurement Act, when it restricted tendering for the East Coast Demerara (ECD) road widening project to only Chinese bidders.

Former Auditor General, Anand Goolsarran

Government has argued that because the money was coming from the Chinese Export Import (EXIM) Bank, they were limited to using contractors only out of China.
According to Goolsarran, Section 5 (five) of the Procurement Act specifically prohibits a procuring entity from imposing any criterion, requirement or procedure with respect to the qualifications of suppliers or contractors that discriminates against, or among suppliers or contractors, or against categories thereof based on nationality.
“In addition, Section 7 (seven) provides for suppliers or contractors to participate in procurement proceedings without regards to nationality”
According to the Former Auditor General, restricting the bidding to only Chinese Companies “is not in keeping with the Procurement Act that prohibits discrimination against contractors and suppliers on the basis on nationality.”
Goolsarran, an anti corruption advocate, who also heads the local chapter of Transparency International, in his latest analysis addressed the award of a contract to China Railway First Group, a company currently involved in the construction of two sections of the Amaila Falls Hydro Electric Project.
He noted too, that of the four bids received, three were reportedly incomplete, including that of China Railway Group.
Because of this, the National Procurement and Tender Administration Board (NPTAB) had reportedly recommended that there should be a re-tender for the proposed works.
“It is, however, also not clear whether that recommendation was forwarded to Cabinet or whether on its own, the NPTAB decided to change its recommendation and to proceed with the bids received.”
Goolsarran observed that Government has since disclosed that the Evaluation Committee assessed the bids received and recommended that the tender be awarded to the third lowest bidder, China Harbour Engineering, at the tendered price of US$60.418 million.
The NPTAB transmitted the recommendation to Cabinet for its “no objection”.
He notes that the Committee’s justification was that, it had reservations about the lowest bidder’s ability to complete the works at the tendered price.
Cabinet withheld it’s no objection to the recommendation on the grounds that the lowest bidder had an established and demonstrated track record of road building in Guyana, and had a fleet of resident road building equipment.
In addition, the lowest bidder’s price was some US$13.4M lower than that of the recommended bidder. Cabinet therefore, returned the matter to the NPTAB for reconsideration. The Committee reconsidered the matter and revised its recommendation in favour of the lowest bidder. The revised recommendation was re-submitted to Cabinet which offered it’s no objection.
Cabinet’s principal concern was the absence of a basis for disregarding lower priced bids received from prequalified bidders.
According to Government’s explanation, once bidders are prequalified, they are evaluated to be capable of performing the works, and price competitiveness becomes the principal criterion.
According to Goolsarran, there is a difference between the lowest bid and the lowest evaluated bid.
The former Auditor General pointed to Section 36 of the Procurement Act which provides for all evaluation criteria outlined in the tender documents for the procurement of goods, works and services, in addition to price, to be quantified in monetary terms.
“The Evaluation Committee is then required to use only these evaluation criteria to determine which tenderer has submitted the lowest evaluated bid. Needless to mention, it does not necessarily follow that the lowest bid is also the lowest evaluated bid.”
According to Goolsarran, “In accordance with Section 39 of the Procurement Act, if the procuring entity does not agree with the Evaluation Committee’s determination, the procuring entity must issue an advisory recommendation to the Committee regarding which bidder should be the lowest evaluated bidder…The Evaluation Committee must observe that recommendation. In the case at hand, the Committee might have been guided by this requirement when it changed its recommendation at the request of Cabinet.”
He said too, that Government’s explanation also appears to ignore the Engineer’s Estimate which is the Government’s best estimate of the cost of the project.
“If the lowest bid is significantly below this estimate, this would suggest that either the estimate was faultily prepared or the lowest bidder has under-estimated the cost of the works.”
According to Goolsarran, “The NPTAB felt that the latter was the case since the lowest bid was US$10.4M below the Engineer’s Estimate…This is a reasonable position to take and would justify NPTAB’s reservations about the bidder’s ability to complete the works at the tendered price.”
Goolsarran observed too, that Head of the Presidential Secretariat, Dr. Roger Luncheon, acknowledged that adherence to the practice of awarding contracts to the lowest bidder has resulted in shoddy work being performed.
“That apart, experience has shown that when this happens, there is a tendency for contractors to recoup the additional costs through variation orders, and sometimes in the end, the project becomes more costly…If such costs are not recouped, there will be a tendency to execute the works below the specifications…This will result in substandard work being performed.”
According to Goolsarran, in situations where the NPTAB has reservations about the contractor’s ability to execute the works where the lowest bid is significantly below the Engineer’s Estimate, the next alternative is to go for the second lowest bid or that which is closest to the Estimate.
“In this case, the second lowest bid also happens to be the bid that was closest to the Engineer’s Estimate…It is therefore, not clear why the NPTAB overlooked this bidder in preference to the third highest bidder.”
According to Goolsarran Cabinet acted within its remit when it withheld it’s no objection to the recommendation that the third lowest bid be awarded the contract, “However, there appears to be a misunderstanding about the difference between the lowest bid and the lowest evaluated bid.”
He said too, that the NTPAB’s justification for not recommending the lowest bid has merit since the lowest bid was significantly below the Engineer’s Estimate.
“This raises doubt about the ability of the contractor to undertake the works at the bid price…It is, however, not clear why the NTPAB did not recommend the second lowest bid that was also closest to the Engineer’s Estimate.”