Ministry breached procurement law in award of harbour bridge consultancy
-PPC investigation
The Ministry of Public Infrastructure (MPI) breached the Procurement Act in awarding a contract in December 2016 to Dutch firm LievenseCSO for consultancy services for the feasibility study and design for the new Demerara River Bridge, a Public Procurement Commission (PPC) investigation has found.
It was the latest procurement embarrassment for the Granger administration which while in opposition had accused the previous government of numerous breaches of the law. Despite having established the long-awaited PPC, the Granger administration has been cited for several major procurement breaches and questions have been raised recently about another contract with HDM Labs.
The report of the investigation said that MPI did not heed the advice offered by the National Procurement and Tender Administration Board (NPTAB) to retender the project after the first tendering process failed to procure a company and the process was annulled.
Leader of the Opposition Bharrat Jagdeo made available the report dated August 6, 2018 to the media yesterday at a press conference held at his Queenstown office. It was sent to the People’s Progressive Party/Civic’s Chief Whip Gail Teixeira who wrote to PPC Chairman Carol Corbin in September 2017 requesting a probe of the award of the contract.
Jagdeo told the media he will send the Special Organised Crime Unit a copy of the report on the award of the contract based on an unsolicited proposal which, “We don’t know how it ended up in (Minister of Public Infrastructure, David) Patterson’s ministry.
According to the report, MPI invited companies in an advertisement placed in local newspapers to submit expressions of interest (EOIs) to the NPTAB chairman by December 8, 2015.
Twenty-three foreign and local companies submitted EOIs. The evaluation committee appointed by NPTAB to evaluate the EOIs shortlisted 12 of the 23 companies. The MPI submitted their recommendation to NPTAB for ‘No Objection’ to the shortlist. NPTAB approved the shortlist and the MPI sent requests for proposals (RFPs) to the 12 companies.
According to the report, only two companies, China Railway First Group Co Ltd and MMM Group (Canada) in Association with CEMCO (Guyana) submitted RFPs by the March 15, 2016 deadline. The two RFPs were opened on March 16, 2016. On completion of the evaluation, “only MMM Group (Canada) in Association with CEMCO achieved the minimum technical score of 80 points set as a requirement to pass the technical evaluation.” Their bid price was US$848,950, which exceeded the budget of US$800,000 set for the project.
“Since the bid price exceeded the budget,” the report said, “a recommendation was made for the procuring entity to engage the consultant in direct negotiations to determine a suitable price.”
The NPTAB chairman wrote the Permanent Secretary (PS), MPI on July 27, 2016 supporting the recommendation for negotiations. The MPI entered into negotiations with the selected company but the negotiations failed. It informed NPTAB of its decision to annul the tender, and reshape the needs of the project with a view to retender at a later stage.
On November 3, 2016, the PS, MPI wrote the Finance Ministry seeking approval to reassign the funds approved for the project within the ministry’s work programme for that financial year. The Finance Ministry gave approval on November 10, 2016.
On November 21, 2016, the NPTAB chairman wrote the PS, MPI on November 21, 2016 advising of NPTAB’s support of the evaluation committee’s recommendation to annul the bidding process and granted approval for MPI to retender the project.
The MPI did not retender the project.
The report said, “The
PS, MPI informed the PPC that subsequent to annulment of the tender by the MPI,” LievenseCSO Engineering submitted an unsolicited proposal.
The report said, Patterson, by memorandum dated November 18, 2016 requested of Cabinet to consider and approve the use of funds from the Demerara Harbour Bridge Corporation (DHBC) (Asphalt Plant Accounts) “to study the feasibility and to commence a contractual engagement with LievenseCSO as of the 1st January, 2017.”
Cabinet considered the memorandum and on November 25, 2016 approved $161.5 million to be used from the DHBC (Asphalt Plant Accounts) to cover costs of the feasibility study for a new bridge across the Demerara River. According to the regulations of the Procurement Act, any consultancy project for MPI that costs in excess of $5 million must be administered by NPTAB.
DHBC General Manager Rawlston Adams who signed the contract with LievenseCSO Engineering on December 9, 2016, told the PPC that “the board of the DHBC was not a party to the decision to use these funds for this purpose, as approved by Cabinet, and further stated that he had not signed the contract on behalf of the DHBC, but only because he was requested to do so by the Minister of Public Infrastructure. He also advised the PPC that he was the designated project manager for the consultancy.”
Adams also told the PPC that the project was not included in the DHBC’s work programme and budget for the financial year in which the consultant was contracted.
Even though PS Kenneth Jordan told the PPC that the consultancy project, though funded by the DHBC was considered an MPI project, the PPC said, “The contract with the company LievenseCSO Engineering Contract BV identified the Demerara Harbour Bridge as the client.”
The PPC said the MPI did not place any advertisement for retendering the project, there was no evidence that any restricted procurement process was undertaken for the consultancy and there was no evidence in NPTAB’s records of a request made by the MPI to approve a single source award.
The PPC said that examination of records relating to the tender and discussions with the relevant officials indicate that “the procurement procedure used to select LievenseCSO to execute the contract did not meet the requirements of any of the methods described in the Procurement Act.”
There is no procedure that defines how a procuring entity should deal with “unsolicited proposals” such as the one reportedly received from LievenseCSO, the PPC said.
While Cabinet has the right to review all procurements exceeding $15 million based on a streamlined tender evaluation report adopted by the NPTAB, the PPC said, there is no evidence that the report to Cabinet was prepared by NPTAB but submitted by the Minister of Public Infrastructure directly to Cabinet which was a breach of the Procurement Act.
“The Procurement Act and Regulations make no provision for the Minister of Public Infrastructure to take a procurement request directly to Cabinet for approval of award of a contract,” the PPC said.
Among its recommendations, the PPC said that officials engaged in public procurement at all levels “must ensure that they execute their functions in accordance with all provisions of the Procurement Act.