Legal representative for Fedders-Lloyd Corporation, Khemraj Ramjattan says that government should “retract and rescind” the contract awarded to Surendra Engineering to build a specialty hospital as it falls short on technical expertise and financing.
Ramjattan and his client have charged that the procurement process was fraudulent and plan to raise the issue with the Government of India and the India’s Export Import (EXIM) Bank as well as the National Procurement and Tender Administration Board (NPTAB) here. EXIM bank of India is the bank responsible for the line of credit under the Indian government to build the specialty hospital. They have the power to undertake their own evaluations and advise government on how they want to proceed.
On Saturday, Minister of Health Dr Bheri Ramsaran evaded questions from reporters about whether procurement rules had been broken when Surendra Engineering’s bid was accepted although its security bid was to be provided from a foreign bank rather than a local one.
Yesterday, Ramjattan also raised the questions of technical expertise and the cost and also addressed several other issues. He said that Fedders-Lloyd’s bid was superior in terms of the two main components: technical expertise and cost. The firm, he said, has built about 90 specialty hospitals worldwide. “These people know about specialty hospitals,” he said. “They have the expertise and that is the expertise we want.”
Vice President of Fedders-Lloyd, Naresh Chandra Soral had told Stabroek News last week that the firm plans to protest the contract award since Surendra did not meet the specified criteria to participate in the bidding process. The Health Ministry Permanent Secretary, Leslie Cadogan on Saturday said that Fedders-Lloyd had failed an aspect of the bid‘s evaluation process but declined to divulge any details.
Ramjattan yesterday said that the process was “rife with …unfairness to Fedders-Lloyd.” According to the attorney, Surendra Engineer-ing did not even qualify in the first stage of the process and it was only following the lobbying of certain officials, that they were pre-qualified. Ramjattan said on the basis of two issues: that the firm had never built a specialty hospital and that their bid bond was not with a local bank; that company should have been disqualified. “They are not making mention of the fact that Surendra does not have any technical expertise,” he said. “They ought to make technical expertise a big thing.”
“They should take (the contract) away from Surendra Engineering and give it to the people who genuinely win,” he added.
Last week, Soral had pointed out that one of the requirements was bid bond security from a local bank and Surendra Engineering did not have this. The Health Minis-try’s Permanent Secretary Leslie Cadogan, who is also the Chairman of the evaluative committee for this contract in response had said that it was Fedders-Lloyd which misunderstood the requirements as the bid bond was supposed to be from an Indian and not a local bank. Section 13.2 of NPTAB’s rules and instructions to bidders, however, would not seem to confirm this.
Section 13.2 reads: “The bid security shall at the Bidder’s option, be in the form of either a letter of credit or a bank guarantee from a reputable banking institution, or a bond issued by a surety selected by the Bidder and located in any country. If the institution issuing the bond is located outside the Employer’s country, it shall have a correspondent financial institution located in the Employer’s country to make it enforceable.” The employer in this contract is the Ministry of Health, Ramjattan noted.
Declined to respond
When asked if NPTAB’s instructions and the oral okay given to bidders to use bond security from India only was in breach of the country’s procurement rules, both the PS and the minister declined to respond. Cadogan would only say, “I am not going to go into such a detail at this stage,” and kept repeating that the tender document specifically states that it should be from an Indian bank.
The US$18,180,000 ($3,689,616,400) contract to design, build and equip the specialty hospital was awarded to Surendra Engineering. Of the companies that bid for the contract, Fedders-Lloyd had submitted a bid of US$17,679,000 (or $3.4 billion) and a bid bond of US$500,000, which was obtained from the Scotia bank. The other bidders were the contractor that built the national stadium, Shapoorji Pallonji (US$42,473,600 or $8.4 billion), Jaguar Overseas Limited (US$15,658,000 or $3.05 billion) and the Vydehi Institute of Medical Sciences and Research of India (US$19.5 million).
Ramjattan referred to a report in another section of the media which quoted a government official as saying that the authorities had frowned on Fedders-Lloyd’s apparent “sleight of hand” in which it had proposed to build the hospital for US$17.69M after a 23 percent reduction of its original price of US$22.96 million. The attorney said that discounts were provided for in the bid documents and pointed to paragraph 20.3 of the bid documents. “It is written into the bid documents,” he stressed. Ramjattan said that it is now being misconstrued as being two bids and rejected this. “The people did it in accordance with the Instructions to Bid,” he said.
In awarding the contract, the attorney said, there were two core issues: technical competence and the financial component. “On both scores, Fedders-Lloyd was miles, miles ahead of Surendra,” Ramjattan said. He contended that the firm’s partner, Nous Hospital Consultants has expertise in building and obtaining specialized hospital equipment.
Ramjattan said that the firm has been seeking answers from the Ministry but has so far been unsuccessful. He pointed out that in paragraph 30 of the Instruction to Bidders, it is stated that the employer, the ministry, is obliged to give reasons to the other bidders as to why they did not win. Article 31.2, he said, provides for, after the publication of the award, that the unsuccessful bidders may request in writing to the employer a debriefing seeking an explanation as to the grounds on which their bids were not selected. He noted that the ministry must respond promptly in writing to any unsuccessful bidder.
Favouritism
There are many questions surrounding the contract, Ramjattan said. He accused the government of showing favouritism to Surendra Engineering. He said that since September, the company -which built the Enmore Sugar Factory – was blacklisted by the Guyana Sugar Corporation for providing defective equipment and spares. A boiler explosion there had led to the death of a GuySuCo employee. Negli-gence by Surendra and GuySuCo contributed to the accident, the Commission of Inquiry set up to investigate the matter had found.
Ramjattan also said that GuySuCo has been holding back 30% of the contract fee from the company. He said that a number of pieces of equipment and spares have also not been supplied.
Ramjattan also noted that the company was last year being evaluated by GuySuCo to take over the management of the Skeldon factory but was eventually rejected after the AFC and others raised questions. Further evidence of what he termed an “incestuous” relationship, he said was that the government wants to name the nephew of the owner of Surendra Corporation, as Consul General for Guyana in Mumbai. The nephew, who he named, has been coming to Guyana on business for Surendra, the attorney said.
“The whole thing should be scrutinized now,” Ramjattan said. He noted that the EXIM Bank requires that bidders observe the highest standard of ethics and if it is determined that any bidder got the contract under fraudulent circumstances, they will be rejected.
Questions had been earlier raised by the public about how a sugar factory spare parts dealer was awarded a billion-dollar contract to build a hospital over a company, Nous Hospital Consultants of which Fedders-Lloyd is a part- which specializes in hospital and health care projects.
