REO halts signing of $573M school project awarded on Dec. 31st

Jan 05, 2020 News

– after contractor complains of irregularities at NPTAB

A contract awarded on the last day of 2019, for more than $500M for the construction of a secondary school on the Essequibo Coast, has come under scrutiny.

Region 2 REO, Denis Jaikaran

Region Two’s Regional Executive Officer, Denis Jaikaran, has written to the Public Procurement Commission (PPC) seeking guidance, after he received a complaint from attorney-at-law Glenn Hanoman on behalf of a contractor, Builders Hardware General Supplies and Construction.
The REO’s refusal to sign after he was served a letter of complaint from Hanoman, came days after the Auditor General warned REOs and Permanent Secretaries of last-minute contract signings for 2019.
According to documents seen on December 30, Executive Director of Builders Hardware, Rakesh Samaroo, wrote the Public Procurement Commission (PPC), which regulates state contracts, complaining over the tenders for the construction of Abram Zuil Secondary School, in Region Two.
The contract for $573,226,990 was awarded on December 31, last, by NPTAB to S&K Construction and Consultancy Service and General Supplies
It is a Ministry of Communities project with 10 bids coming in. Builders Hardware was the lowest.
Builders Hardware said it submitted a tender on October 8, 2019 to the National Procurement and Tender Administration Board (NPTAB).
He said that based on the information published via the NPTAB website and media houses, it was clear that Builders Hardware was the lowest financial bidder.
The contractor said that his company queried about the tenders and was told that the Evaluation Committee, which completed and submitted the report at the end of November 2019, had been dismissed for not recommending another contractor, S&K Construction.
Builders Hardware claimed that from indications, there were questionable actions from a senior ranking official of the NPTAB, who seemed insistent on S&K Construction being awarded.
“Another evaluation Committee was subsequently appointed to furnish an independent report and the same results were derived.
“This information was brought to my attention by my company’s banking facility who would have informed me that the procuring entity was making inquiries to the bank on the basis of the authenticity of the line of credit accessible by my company of which authorization had to be given by myself.”
Builders Hardware also complained that it has since learnt of a possible conflict of interest situation where a senior official of S&K was a former Regional Engineer for the Essequibo Coast.
Persons that would have to supervise the works are former colleagues.
“This would definitely create an avenue for conflict of interest and possibly questionable standard of works should this bidder be declared eligible for this award. I have taken this action to involve the Commission in this matter at this time as I am not certain that my company would be provided with a notification of intention to award by the ministry, and opportunity to protest the award would be futile,” the letter to the PPC said.
Meanwhile, Hanoman in his letter to the NPTAB said that Builders Hardware was convinced that there were questionable actions from the board with a number of irregularities relating to the tender.
“Our client has been informed that the primary reason his bid was rejected was that the Line of Credit of $180M submitted along with the bid did not state that it represented 30% of the bid price.
“The bid price submitted by our client was $392,099,340- as such, the bank’s Line of Credit clearly covers in excess of 45% of the bid amount. Moreover, none of the standard bidding documents supplied by the procurement entity in relation to this project required a statement that 30% of the bid price was to be covered.”
Rather, the lawyer pointed out, Section 15.1 of the ITB (Instructions to Bidders) states that the bid security shall be two percent of the contract price.
Hanoman told the NPTAB that his client has been informed that S&K Construction has been selected and a cheque issued before the award of the contract.
“This blatantly contravenes not only public procurement law in Guyana, in general, but also sections 30.1 and 30.3 of the ITB which provides that within 14 days of the conduction selection of the successful bidder, the employer will notify both the successful bidder as well as the other bidders, in addition to publishing a notice in the Public Procurement Bulletin indicating the name and address of the successful bidder and the bid price quoted by him.
“There is no indication that this has been complied with, which prevents other bidders from challenging the bid through the ordinary administrative process.”
Hanoman said that from the details, it is clear that there will be a conflict of interest situation created by the selection of S&K Construction.
“It also remains to be seen if this bidder declared this potential conflict of interest required by the ITB. We therefore wish to raise this issue with NPTAB urgently, before any contract award is made, as it appears that the entire selection process has been compromised.
“We look forward to your soonest response in order to avert the possibility of a legal challenge being initiated.”
Late last month, a few days before the year closed, the Audit Office had warned Government’s accounting officers to beware of last minute spending.
Auditor General, Deodat Sharma, also advised against attempts to split contracts to avoid delays in procurement process.
In the past years, the Audit Office, in its annual reports, has been finding cases of a rush in late December for regional administrations and ministries to issue contracts and spend remaining money budgeted for the year.
Under best practices, remaining money has to be sent back to the government’s treasury or Consolidated Fund.
According to the official, Permanent Secretaries and Regional Executive Officers must be reminded that December 31 is when all transactions have to be closed with no cheques for the year to be cut after that date.
“Government operates on a cash basis and not accrual. They are supposed to be cutting no cheques after December 31.”
Sharma said that especially with elections due on March 2, there may be attempts to deviate from procurement and other financial procedures.
“In a time when we are heading towards elections, any deviations will have serious implications.”