Tendering lapse leads to costly contract termination

Two jobs on the 80.58km Dalbari-Dagapela highway are to be retendered 

MoWHS: In what could incur losses up to a billion ngultrums and substantial delay, the works and human settlements ministry (MoWHS) has terminated and would retender two of the three contracted works on the 80.58km Dalbari to Dagapela secondary national highway.

The ministry’s engineers are assessing and compiling the compensation that the government needs to pay the contractors for the work done and other contractual terms and conditions.  Once this is complete, the government would float new tenders for the works, officials said.

The cabinet decided to terminate the works in December last year after the Anti-Corruption Commission wrote to the cabinet to redo the tendering process, according to the works and human settlement minister.

The commission investigation came after the lowest bidder, who was disqualified for failing to meet the requirements, complained to the ministry and later to the commission.  ACC’s investigation however ruled out corruption.

MoWHS minister Dorji Choden said the commission’s findings found that it was a case of misprocurement, which is considered a huge lapse in terms of procurement rules and regulations.

“So, following the recommendation of the commission, the cabinet decided to terminate the present works and retender the works,” she said.

The highway passes through five gewogs of Tshendagang, Goshi, Dorona, Gesarling and Deorali and its construction began on September 29 last year.  Some 30 contractors competed for the work and work on all three packages began simultaneously.

The first package A of 29km long road is constructed by a joint venture between Kalika, a Nepalese company, and Yangkhil, which is ongoing.  It starts from Dalbari, 8km from Lhamoizingkha towards Dagana, and ends in Odalthang.

The 20km package B worth Nu 398M (million) between Odalthang and Gesarling was awarded to Tundi, a Nepalese company.

The package C between Gesarling and Dagapela, stretching more than 31km worth Nu 356M, was contracted to a joint venture between Gaseb Construction company and SPML from India.

The Netherlands government and the government are funding the construction, which is estimated to cost Nu 1.5B (billion).  Around 200 households were also affected by the road construction, and most of them were paid monetary compensation close to Nu 17M, while a few settled for land substitution.

The contract period was about 33 months, excluding a yearlong defect liability period, and a three-year maintenance period.

Lyonpo Dorji Choden said the contractors have raised concerns with the ministry.  Kuensel learnt that one of the companies has established offices in Kathmandu, Nepal and Thimphu, and could claim compensation for those set up too, which could amount to a substantial amount.  The companies have bought machineries on loan and hired labour, which could also be claimed for compensation, sources said.

“The contractors would be paid for the work done and other contractual requirements, where the government needs to compensate,” lyonpo said.  However, she said it was not definite on how much the decision would cost the government.

The minister said the ministry’s survey team is about to complete the assessment and is expected to complete the whole process before monsoon.

MoWHS officials said that the commission pointed out lapses in the procedure of awarding the contracts according to international competitive bidding (ICB).

“The commission said that due diligence or, in other terms, a second chance should have been given to the lowest bidder,” a road official said.  The official said the department has been following the same procedure all these years with other external projects, but there were no issues raised until now.

“By that argument, even the first package, which is not terminated, should be considered illegal and be treated like the other two packages stopped,” the official said.

Lyonpo Dorji Choden said there were other reasons for the decision. “The cabinet saw major reasons to relook at the process,” said the minister.

The government of Netherlands, which is funding the project with a grant of 11.3M euros, has been informed and the minister said the Netherlands government would be happy with the decision, because the cabinet was being transparent.

“It was a big and a difficult decision for the cabinet,” she said. “We’re trying to correct the system.”

Lyonpo Dorji Choden said that no accountability has been fixed for the lapses, but the cabinet directed to review the system of ICB.

ICB is a complex process and the expertise on the system in the country is scarce.

“So it boils down to how you interpret some clauses, understand and apply them,” she said. “If people have done it with the best intentions, then it’s difficult to pinpoint anybody. It ‘s the system that we need to look at, on where we went wrong.”

The minister said the process is stringent, tricky and officials undergo a lot a pressure during the process.  If officials relax the rules in the interest of value for money, or achieving better results, they would be accused of corruption.  On the other hand, if they do it strictly, they would be asked why they didn’t consider options of accomplishing better quality.

“So our engineers and committees are lost in the jungle of procurement process interpretation and understanding the clauses,” she said.

Meanwhile, once the road is through, it’s expected to cut short the distance by a day between Dagana and Phuentsholing; and Tsirang and Phuentsholing.

The distance between Lhamoizingkha and Phuentsholing is estimated to be just a little over hundred kilometres, according to road officials.

The farmers of Dagana, Tsirang, Sarpang and parts of Wangduephodrang would reap the benefits, especially during mandarin seasons. They need not route their products all the way from Thimphu, mainly during the Assam strike.

By Tshering Palden

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