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Right of reply: Landfill project award based on competitive bids – Ministry of Megapolis & Western Development
View(s):In response to the story titled ‘Chinese company gets huge contract for solid waste landfill project’ in the Sunday Times of January 28, 2018, the Ministry of Megapolis & Western Development (MMWD) clarifies that the project to design and build the solid waste sanitary landfill in Aruwakkalu, Puttalam, and transfer stations was not an unsolicited proposal and that there were competitive bids called from local and international design and build contractors.
Seven eligible bidders submitted their proposals by fulfilling one of the following requirements specified in the bidding documents. The MMWD says exact cost calculations cannot be done in design-and-build contracts particularly as, in this project, there was no detailed design done by the time of tender. The bid price increased from the estimated construction cost because, among other things, in the feasibility studies, only the approximate quantities involved for the construction were considered without procurement method. Because of the urgent requirement of the project, the employer called bids on EPC/turnkey basis (design-and-build) in which method the risk involved in construction has to be borne by bidders.
The cost rose also because of restricted time given to bidders to complete the project within 18 months; constraints imposed to prospective bidders to complete part of the sanitary landfill in such a way to accept 600 metric tonnes per day of garbage within the first eight months; risk factor associated due to the limited time allowed for designing and to submit the bids; cost being calculated on very limited investigation; and enhancements made to equipment specifications as per discussions with the World Bank. The increase in the bid price was analysed by an independent expert and justified.
On directors of MMWD Minister and Cabinet, the Standing Cabinet Appointed Procurement Committee (SCAPC) directed the Technical Evaluation Committee (TEC) to open the financial proposals of five unsuccessful bidders in the presence of SCAPC Members. The SCAPC instructed evaluation of the financial proposals with technical marks already calculated for the unsuccessful bidders giving 80-20 weighted average for the technical and financial proposals respectively to know the overall responsiveness of the bids.
The calculations clearly showed even with the consideration of technically disqualified bids, M/s. China Harbour Engineering Company Limited (CHEC) scored the highest combined total. The TEC further made calculations assigning different weightages appropriately to the technical and financial bids. Even then the CHEC secured the highest score among all the bidders.
According to the Procurement Appeals Board, KOLON-HANSOL Joint Venture was non-responsive and the PAB has never given any direction to retender. MMWD says only one bidder submitted their bid as per the eligibility criteria specified in the bidding documents, but its liner system, which is one of the major design components in a landfill, did not technically satisfy the employer’s requirements. The local bidder has clearly stated that they are not complying with the said requirement mentioned in the Request for Proposal (RFP). The deviation was verified and confirmed by the independent expert representative.
Claiming that “CHEC had submitted a letter indicating its intent to establish a consortium for the project with Southwest Municipal Engineering Design & Research Institute, it was valid only for three months and had expired at the time of evaluation” is a misinterpretation of the content in the Letter of Intent submitted by the CHEC and totally incorrect. The TEC carefully scrutinised the content of the Letter of Intent (LoI). Under Section 2, ‘Negotiations’, the parties to intent to form the consortium writes to the client saying that: “We agree to negotiate to determine if the consortium will be appropriate for the parties, within a period of 1 month. Provided, however you agree to not negotiate or enter into or continue discussion with any other person or company or solicit or encourage, directly or indirectly, or furnish information to any other person or company, with respect to a similar business arrangement, during the 3 months, following the date this letter is accepted by you.”
This implies that if the client accepts the bid and LoI to form the consortium, and conveyed such acceptance, the bidder shall form the legal consortium entity to perform the contract subject to the condition that client shall not decide/proceed on awarding the same contract to some other party within 3 months of such acceptance. Hence, the TEC confirmed the validity of the Letter of Intent had not expired at the time of evaluation and also at the time of awarding the Contract to CHEC. Nobody has referred to the Supreme Courts the award of the contract to CHEC.
Reporters note: The Sunday Times story did not state that this was an unsolicited proposal. Neither did it contest the cost of the contract. All other facts were reported on the basis of available documents, particularly the conclusions of the Procurement Appeals Board of which this newspaper received a copy.