$1B over the engineer’s estimate…Court rules in favour of Govt in GPL US$23M contract case

Feb 19, 2017 News

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Months of battle in the press and now in the court has ended with the High Court on Friday

evening discharging a temporary order halting a multi-billion-dollar state project to run new low and medium transmission lines and introduce over 25,000 smart meters.
The discharging of the order means that Chinese contractor, China National Machinery Import (CMC) and its partner Export Corporation and China Sinogy Electric Engineering Co. Limited Consortium can now collect its advance and start work.
However, the court case will continue to raise lingering questions about the procurement laws after it became clear that the track record of the Chinese contractor was not taken into account during the evaluation of the bidders.
That and the fact that it was decided after tenders were opened that the Chinese contractor will be paid more than $1B over the engineer’s estimate.
At least two independent reports have criticized the work of CMC with regards to seven sub-stations and a submarine cable it has built, to the tune of US$40M.
The bids for the contract were opened since February last year. After months of questions, Government finally admitted late last year that Cabinet has granted its no-objections to the contract.
The award was objected to by Fix-It Depot which teamed up with Colombian-owned Enrique Lourido for the contract
During the emergency session on Friday, Chief Justice Yonette Cummings-Edwards in a late evening session discharged the Order Nisi issued in favour of Paul James of Fix It Depot who had asked the court to grant orders to quash a decision to award a contract for the rehabilitation of 328 km of GPL’s electricity distribution network.
The court had previously, on Monday, issued the Order Nisi halting the award decision with a

return date of March 6, 2017.
Less than 24 hours after the order was issued, the Court brought the matter forward to Thursday, February 16, 2017 ordering the parties to serve their respective affidavits by Friday, February 17 and putting the matter down at 4 pm.
Attorney General Basil Williams himself appeared for the state and urged the court to discharge the order, alleging that the application had no merit, that Fix It had failed to disclose that the Procurement Act does not apply, but rather IDB procurement rules apply; that Fix It should have challenged the bid rules before the submission of the tender and that Fix It failed to write the IDB in accordance with the established rules.
He stated that the matter was extremely urgent as the contract at challenge had already been signed and that the monies were about to be disbursed and if the contract was about to go forward Guyana would lose the money allotted and blackouts would continue.

Illegal Changes
Attorney Devindra Kissoon, who appeared for Fix It, in rebutting the state’s argument, argued that there had been full disclosure that the IDB procurement rules applied, and that those rules applied because of the Procurement Act.
He insisted that the process of awarding the tender was flawed since not only did the tender document not contain specific and objective weighting criteria as was required by the IDB procurement rules, but that qualification criteria were changed after the tender had closed.
He stated that by failing to specify weighting criteria as was required by the rules, the tender evaluation process was left open to impermissible subjectivity- Fix It being disqualified because it did not have sufficient projects of the “nature and complexity” of the project at hand.

He argued that the terms, nature and complexity were not defined and since no objective criteria were specified the tender was awarded in breach of the IDB rules and without the required transparency and fairness necessary to make the decision legal.
According to Kissoon, the criteria of annual revenue for the companies were changed post-tender without letting Fix It know, rendering the process unfair and illegal.
He also cited numerous cases where contract awards were quashed in identical cases, and case law which said that Fix It could not challenge the tender and until reasons were given for its disqualification, any challenge would be premature.
He also stated that Fix It did not know in advance that the evaluation criteria would be changed post-tender and therefore could not challenge the tender at the inception.
He argued that the illegality of the process of evaluation was of national importance, and that taxpayers would be harmed by an unnecessary excess expenditure of more than $1B, for work by a company which was alleged to have done substandard work.

Discretion by Court
However, the Chief Justice in her swift judgment said that after hearing arguments by both sides, she had observed that there were contested facts.
She stated that the court was concerned with the evaluation process but in light of the interests of justice given the fact that the contract has already been signed and that the funds were about to be disbursed she would exercise her discretion to discharge the Order Nisi.
She ordered both parties pay their own costs.
The contract was funded by the European Union (EU) and the Inter-American Development Bank (IDB) with the latter’s rules of procurement governing the choice of a contractor.
Named as respondents in the case brought by Fix-It Depot were the Guyana Power and Light Incorporated (GPL); Minister of Public Infrastructure, David Patterson; the Ministry and its Permanent Secretary, Balraj Balram, and the National Procurement and Tender Administration Board (NPTAB).
The Attorney General (AG) explained that the matter was one of urgency since the Government was anxious to move forward with the project, especially with the recent blackouts the city has been experiencing.
“So it’s very important that we got the loan to enable GPL to go about doing its work,” he said.
The AG further explained that the basis, upon which the order was made, was that the procurement clause be applied, but in fact, in these international agreements the law of the international donor takes precedence, and this is recognised also by the local Act that speaks to conflict with the local law procurement and the international law.
“So the Chief Justice decided that she deals with the matter urgently and she did and she asked us to come… she has given that decision and the Order Nisi is absolute taken into consideration that the contract had already been awarded, the monies are to be paid, and of course recognising the nature of the agreement, that is the need to upgrade the electricity sector and something that would affect the Guyanese people, lack of electricity,” the AG reiterated.
He said that if the decision had gone any other way, and the orders were made absolute, the applicant had nothing to gain because it meant that it would have required the contract to be retendered and that process would have taken six months to a year and Guyana could have certainly lost the loan.
The project is part of a bigger one to improve the efficiency of GPL and has been generating attention locally, not only because of the billions of dollars involved, but with questions raised over the procedures to evaluate the bidders.
The award to the Chinese company had raised eyebrows, since the company was involved in the construction of seven sub-stations, running new high powered transmissions along the coastland and the laying of two submarine cables across the Demerara and Berbice Rivers.
The cable which was laid across the Demerara River was damaged in July under unknown circumstances. This left the East Demerara and Berbice areas without additional power being supplied by the new Vreed-en-Hoop power station for a number of months. The cable was only fixed, recently.
A key report by CEMCO, the local engineering company that supervised that project, had criticized the quality of work of CMC, including the laying of the submarine cable in the Demerara River.
CMC was described in the CEMCO report as a spare parts company.
Another recent report of Siemens has also raised concerns over the operations of the sub-station.
None of the reports were taken into considerations by the evaluation.

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