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…with major changes in the e-tool evaluation criteria

The Cabinet has approved the revision of criteria that is used to secure a work in the procurement process. Most reforms that the Ministry of Works and Human Settlement (MoWHS) proposed comes into effect from June next year.

The issue

It was found that while the e-tool system to evaluate bids enhances transparency, it does not add value to the procurement process. The e-tool does not give importance to bid capacity and experience. Bid capacity is a contractor’s financial and technical competence to deliver quality job on time.

MoWHS secretary, Phuntsho Wangdi said the current score system in the e-tool gives leeway to contractors to manipulate their capacity. “Today, any aspiring contractor can become a class A contractor just by fulfilling three things-credit line, equipment and labour,” he said.

Currently, technical and financial competency of a bidder is judged by allocating 10 points for work experience, 10 points for bid capacity, 10 points for average performance score, 20 for credit availability, 25 for the availability of manpower and 25 for access to equipment. The minimum threshold a contractor needs to fulfil is 65.

Phuntsho Wangdi said equipment could be hired from everywhere; letter of credit is easy to get from the bank as it does not require any collateral and contractors only submit the CVs, appointment letter and academic certificates. “Just by doing these, a contractor easily get 70 points,” he said. “That way we have inexperienced contractors bidding low and carrying out works. Good contractor are pulled down as there are no incentives.”

Serious contractors, he said couldn’t build their capacity because if they hold on to manpower, overhead cost rises and if they hold on to the equipment, depreciation costs increased.

Reforms

The minimum threshold for technical bid score is increased from 65 to 70 with due consideration to bid capacity. “Even new contractors fulfilling 100 percent on other criteria would get the opportunity but only serious contractors would be awarded the job,” Phuntsho Wangdi said.  “If it’s set at 75 then there is no chance for new contractors. We want to be fair to everyone,” he said.

Within this, score on credit line facility is slashed from 20 to 5 because contractors simply used the credit line to get 20 percent of the score and not used to avail loan to mobilise resources.

During the engineering conference held last June, it was pointed out that all bidders appeared financially sound and seemed to manage the required cash flow by hoodwinking the client as there appears to be 100 percent dependence on the client for every penny required.

The score on bid capacity is now increased to 25 from 10.

On work experience, the secretary said that a contractor who has completed the job three years ago may not have the same people working with the firm, yet their experience is counted. “Now, unless contractors have the same experienced people employed for the new work, their experience will not be counted,” he said.

With these things in place, he said that ‘works in hand’ would be automatically controlled by the bid capacity. For example, with resource, manpower and equipment engaged at one site, the contractor couldn’t bank on the same resources for another job. If contractors have additional resources at their disposal, then they would be eligible to bid for other works.

In the present system, large contractors can execute not more than five works with a cap on the contract amount. It is four for medium and two for the small contractors.

“Now there is no limit, but the bid capacity will not allow contractors to go beyond three works at a time unless the contractor has full capacity,” he said. “With these changes, we are being just to all and at the same time addressing issues with quality.”

The secretary also said that currently there is no termination clause based on the progress and most contracts are terminated on the expiry of terms or at the last milestone. “This makes it difficult to re-award the works because the remaining work is not substantial for a new contractor,” he said.

The ministry is introducing a milestone contract where the contractor will have to prepare periodic work plan from the date of signing the agreement. “We will monitor the work plan they submit.”

For example, if the contract period is 20 months there would be about three to five milestone contracts. A contractor failing to meet three milestone contracts would lead to termination of the work.

The ministry is also looking at addressing the problem of terminated contractors getting works over and over again. Phuntsho Wangdi said that the debarment rule is with the Anti-Corruption Commission and it only applies when there are criminal charges.

“We want to debar contractors who have failed because they are the ones who quote low and don’t deliver,” he said.

Those contractors completing their work on time without extending into liquidity damage period and delivering quality would be awarded certificate A. Those completing works on liquidity damage period will be given certificate B while those competing with penalty will be given certificate C. On their next bid, a score of 10, 5 and 0 will be given in accordance with the type of certificate they are awarded.

Today, the same certificate is given to all contractors irrespective of the quality of work and time taken to complete the work.

However, there is no change in the mobilisation advance, which is 10 percent, although instances of diverting this fund is common practice.

Tshering Dorji

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