Tender twisting in mega Colombo Port deal

Sri Lanka’s top blue chips, bidding for the mega Colombo South Container Terminal, are furious over a possible manipulation of the tender process to favour some parties and are threatening legal action if this happens.Fears that they may be rejected have risen as a shortlist of the selected companies, based on a likely doubtful process, may be announced around August 11. The project is worth over a half a million US dollars.

These company sources who declined to be named, said the markings in the tender process were being twisted to suit ‘some parties’ and shut out others in a process lacking in transparency and against all accepted tender norms. Five companies or consortiums are bidding for the rights to build and operate the Colombo Port’s newest terminal which would accommodate larger ships that can carry 10,000-12,000 containers or more.

These are the new category of ships coming into the global shipping scene and the Colombo Port, although long overdue, is gearing for this change. The five companies are Hutchison Port Holdings Hong Kong, Hanjin Shipping, Aitken Spence with the Port of Singapore Authority, Hayleys-Carsons combined with a unit of French Global Carrier CMA-CGM and JKH-SAGT along with another foreign party.

“It seems that some of the markings (for each item in the tender) look skewed to favour some parties,” one source said. The Sunday Times learns that JKH-SAGT, Hayleys-Carson Cumberbatch and Hanjin Shipping are contemplating legal action and are preparing the groundwork for this if these changes are made.

“We don’t want to take this course and hope that saner counsel will prevail. This is a development project the country needs but it’s sad that corruption is seeping in and we don’t want that to happen in the selection process. The process should be fair,” the source said. Bids closed on June 4 and were extended to June 11 with expectations that a shortlist after technical evaluation would be announced in two months (August 11).

But government officials involved in the tender process are rejecting these concerns.“No there is no change in the marking. What was listed out in the Request for Proposals stands as it is. There is nothing to fear,” said Tilak Collure, Secretary to the Ministry of Ports & Aviation, in his capacity as a member of the Cabinet Appointed Negotiating Committee (CANC) of the terminal project.
The Colombo South Harbour Expansion Project also includes the development of the breakwater to accommodate larger ships. In this project funding from the Asian Development Bank (ADB) has been agreed and Mr. Collure said the ADB was being kept informed of the entire process including the terminal tender.

“There may be some delays in making a decision on the successful tenderer but the terms and conditions as listed in the Request for Proposals (RfP) have been unchanged,” Mr. Collure assured. ADB officials declined to comment on the issue. The ADB earlier –before approving funding for the long-delayed expansion project – had raised concerns of transparency and governance in port issues. Ports Authority Chairman Saliya Wickremasuriya, also a member of the CANC, was unavailable for comment.

The blue chip companies say they were alert to some ‘hanky panky’ going on through a report in the media about this project. “We then did our own checks and found this to be true,” the source said. Among the concerns is that while the RfP clearly lists the evaluation criteria as “total turnover of US$200 million” meaning the full turnover of a company that would be doing business other than port operations, this criteria is being twisted to mean this turnover in port operations only.

The terminal layout has also been changed from the original RfP while additional marks are to be given for those that could complete the terminal in ‘one go’ instead of two phases as clearly stated in the RfP.“The irony is that we could have qualified in all these changes if they were contained in the original RfP and accordingly prepared our bids but it is suddenly being changed to suit some parties,” the source said.