ACC indicts tender committee

MoWHS: The Ministry of Works and Human Settlement’s (MoWHS) tender committee violated the principles and process of public procurement in awarding contracts for the 80.58km Dalbari-Dagapela road worth Nu 1.7 billion, according to the Anti-Corruption Commission.

The ACC reviewed the tendering process of the secondary national highway worth 33,478,525 euros, after the lowest bidder for the package C of the road, complained against the committee for ‘unfairly rejecting his bid.’

A joint venture between Rinson Construction company and Jai Prakash Associates from India bid the lowest of more than Nu 336 million (M) a difference of more than Nu 21M from the SPML-Gaseb joint venture, which was awarded the work.

Rinson Jai Prakash’s bid passed the opening round of evaluation and was included in the responsive list.

But according to the roads department’s director, Karma Galay, their bid was disqualified for failing to furnish bank guarantee (credit line) with figures, for not submitting the bank reference letter for their financial resources to meet 40 percent of the concurrent work, and for not fulfilling the key personnel requirements.

Rinson Construction company’s managing director, Shacha Rinchen Dorji, said that they had attached a list of 27 people, while the requirement was only nine.

“They rejected the bid because we didn’t fill the form, and instead wrote on it that a list of the required personnel was attached with it,” he said.

But director Karma Galay said that, while a long list of names and CVs were attached, the personnel did not meet the requirements.

“Most of them have been involved in specialised fields, such as hydropower, railways, tunnels, steel mills, but very little on road construction,” his letter to the company stated.

Shacha Rinchen Dorji argued that, since they submitted more than the required number, it could be substituted with any alternative candidate, which is the normal procedure in bidding evaluation process.

The tender result was declared on August 19 last year, while he and the roads director exchanged several letters, one seeking clarifications and the other clarifying.

Shacha Rinchen Dorji also said that his credit line did not have figures, because there was a rule in place that prohibited banks from issuing one.

On August 22, the president of the Financial Institutions’ Association of Bhutan, Kipchu Tshering, informed the roads director through a letter stating that Rinson Construction company’s credit line was valid.

On August 26, the finance minister also wrote to the MoWHS minister, asking her ministry to honour the bank guarantee of the company.

Subsequently, on August 29, lyonpo Dorji Choden wrote to the roads’ director to resolve the issues urgently.  The parties met but the issue remained unresolved.

Shacha Rinchen Dorji then approached the prime minister and the ACC.  When ACC started investigation, the works were already awarded to SPML Gaseb joint venture.

In October, the ACC report stated that the tender committee hadn’t followed the procedure.

Following the report, the Cabinet decided to retender the two packages of the project which would connect Lhamoizingkha to Dagapela.

Among other issues, the ACC questioned, whether the procuring agency (DoR) could deviate from the memorandum of understanding, and use the World Bank’s International Competitive Bidding without endorsement from the competent authority (finance ministry).

That details of Rinson Jai Prakash JV appeared in the Bid Evaluation Report proved that their bids were substantially responsive and had qualified for evaluation, the report found.

The Bid Evaluation report, states that, “of the total nine bidders who submitted the bids, eight were determined as substantially responsive to the requirements of the bidding documents.”

“By logic, if a bid is substantially responsive and had qualified for evaluation, clarification clauses must be exercised and exhausted to arrive at a logical conclusion,” the report stated.

The clarification clauses, 27.1, 30.1 and 30.2 of Instruction of bidders (ITB) should have been implemented and clarifications sought before the bid was rejected.

The ACC review revealed that the evaluation committee had disqualified the lowest and second lowest bidders for Section C, M/s. Rinson Jai Prakash JV and M/s. ABCI & SCPL JV.

“The need for clarification assumes importance since there was confusion on credit lines with or without figures,” the ACC’s report stated.

The ACC report stated that, had the bid submitted by M/s Rinson Jai Prakash JV been reasonable, clarification on the credit line should have been sought as required by the clarification clauses. By the same argument, a clarification on who would take what responsibilities from among the details of 30 technical personnel should also have been done.

“This lopsided method of evaluation of bids, beyond compromising reasonable prices, created the perception that fulfilling paper requirements are more important than securing reasonable price or value for money,” the report stated.

Once the bid price is found reasonable, the ACC report stated that other requirement must be secured through clarifications, provided that they do not result in material deviation or reservation. “The contract firm is the lowest bidder and it deserves this opportunity to clarify.”

According to DoR officials, the evaluation committee had disqualified the firm using section 3 of the bidding documents.

But the ACC report stated that clarifications clauses and Section III must be interpreted and applied in harmony, not in isolation.

The report also highlighted that the tender committee failed to verify that the bid security submitted by Tundi Construction pvt ltd, Nepal, from Global IME bank had no correspondent financial institution in the country.

The company had bid for all packages and won section B.

Meanwhile, engineers say that the bottom line of floating a tender is to get value for money. DoR officials said that should this tender be considered invalid, many past tenders would also be considered misprocurement, as the same procedures and interpretation were used.

Similar cases of not following due diligence in tendering processes mainly in construction works were raised several times in the past. The Royal Audit Authority report of 2013 too pointed out the implementation of projects show failure to exercise due diligence by those entrusted with the responsibilities.

The ministry says it’s the system that is to blame for the lapses. However, the ACC did not recommend taking any actions against the committee for failing to use the relevant procurement process and application of clauses.

But in a similar case of the Supreme Court construction, where the tender committee was found guilty of procedural lapses, the Supreme Court asked the ministry to take administrative action against those involved.

By Tshering Palden

 

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