Another controversy has erupted in relation to the design and construction of the Specialty Hospital at Turkeyen, East Coast Demerara. This time, the government announced its intention to terminate the contract with Surendra Engineering Corporation Ltd on the grounds that the contractor had submitted a fraudulent document purported to emanate from the Central Bank of Trinidad. The government has also asked the police to investigate the matter and is pursuing legal action to recover some US$4.3 million it paid to the contractor.
Surendra Engineering has, however, rejected the allegations and accused the government of seeking to back out of its commitments and of being responsible for the stoppage of work. The contractor also stated that it was entitled to recover from the government amounts expended on the project that it was committed to see through to completion.
Events leading up to the
award of the contract
In January 2012, the Ministry of Health invited tenders for the design and construction of the Specialty Hospital. In violation of the Procurement Act, the ministry restricted the bidding process to contractors from India. Section 5 prohibits a procuring entity from imposing any criterion, requirement or procedure with respect to the qualifications of suppliers or contractors that discriminates against or among suppliers or contractors or against categories thereof based on nationality. This is reinforced by Section 7 which provides for suppliers or contractors to participate in 
procurement proceedings without regard to nationality.
Section 4 states that the provisions of the Act shall apply to all procurements unless they conflict with any provision of an international agreement. However, an agreement with another country’s bank (whether state-owned or otherwise) in not in the nature of an international agreement. The fact that financing of the project was secured from the Exim Bank of India in the form of a loan to the Government of Guyana is not a justification for restricting the tendering to Indian companies. This is the second discovered case of such a restriction in the bidding process in favour of contractors in the country from which financing is sought, the first being for the expansion of the East Coast Demerara Highway where financing was secured from a Chinese bank.
Of the 34 firms that expressed an interest, five were shortlisted to submit bids. By letter dated 13 April 2012, Guyana’s High Commissioner to India informed the potential bidders that: (a) the date of pre-bid meeting and site visit was set for 23 April 2012; (b) the bid opening would be on 15 May 2012; and (c) there would be no further extension to the bid opening date. However, the Procurement Act does not provide for a member of Guyana’s diplomatic community to be involved in public procurement.
The Ministry of Health in a letter dated 4 May 2012 announced the extension of the bid submission deadline to 26 June 2012 and provided additional information to bidders. The National Procurement Tender Administration Board (NPTAB) opened the bids on this date, and following an evaluation by a technical committee, review by the NPTAB and “no objection” from Cabinet, the Head of the Presidential Secretariat (HPS) announced the award of the contract on 22 August 2012 in the sum of $18.1 million.
Section 43 of the Act provides for the procuring entity to notify the unsuccessful bidders of the award, the name of the contractor and the contract price. This is to assist these contractors to ascertain the basis of the award and to ensure that they are reasonably satisfied that they were not unfairly treated. However, it is not publicly known whether such a notification was issued. Another section of the print media recently carried out a survey of more than 30 contractors and suppliers, and the concern expressed was that they never received acknowledgement of their applications in response to invitations to bid nor were they informed of the contract award if they were unsuccessful in their bids.
If I am permitted to highlight my own experience, I returned to Guyana in February 2012 as a remigrant to set up a public financial management consultancy and I had redesigned my residence at considerable cost to create the necessary office space. In response to a public advertisement, I had applied to the NPTAB over a year ago for the offer of consulting services as part of the institutional strengthening of the Audit Office under funding from the Inter-American Development Bank. To date, however, the NPTAB/Audit Office neither acknowledged my application nor a notified me of the award of the contract.
Sections 52 and 53 of the Act state that a bidder whose tender or proposal has been rejected may submit a written protest to the procurement entity within five business days following the publication of the award decision. If the procurement entity does not review the protest within another five business days, the bidder may submit a request for review to the NPTAB. When this happens, the Bid Protest Committee reviews the matter. The committee comprises one person appointed by the minister, one by the association appearing to the minister to represent contractors and one by the Attorney General. These persons are to be professionals who are particularly competent in the field of procurement. Within fifteen business days of the conclusion of the review, the committee issues its report, stating the reasons for its decisions and remedies granted, if any. The committee’s decision is final and binding on the procuring entity. Meanwhile, the final contract award is suspended during this period.
It is, however, not publicly known whether such a committee exists, who its members are, and whether any bid protest was ever made to the NPTAB that would have necessitated adjudication by this committee. One suspects that aggrieved bidders are not willing to go this route for fear of victimization in respect of future contracts.
On 30 August 2012, one of the bidders, Fedders Lloyd, whose bid price was $17.69 million after a discount of 23%, issued a letter of protest to the Ministry of Health, in which it cited a number of irregularities in the bidding and evaluation process, including the lack of experience of Surendra Engineering. The ministry did not respond within the five business of the announcement of the award, and it is unclear why Fedders Lloyd did not seek the intervention of the NPTAB.
On 5 September 2012, the HPS confirmed that Fedders Lloyd had lodged a protest and that the award would be re-assessed. However, the ministry released a letter the following day in which it disputed the charges and indicated that the bidder was disqualified on “administrative grounds”. The letter went on to state that: (a) neither technical nor financial compliance is of material value if bidder fails administrative compliance; (b) the fact that Fedders Lloyd worked in many areas and in several countries and was engaged in an assortment of activities was not a unique nor propriety feature of the bidder; and (c) while the information was useful, such information was not factored into the rigorous and detailed criteria used to assess the lowest evaluated bid.
A review of Surendra Engineering’s website confirmed that the company has no experience in the construction of hospitals. On the other hand, for the purpose of bidding for the project, Fedders Lloyd formed a consortium with NOUS Hospital Consultants which has expertise in building specialized hospitals and has commissioned about 90 hospitals and other healthcare facilities around the world. It should be said that the Procurement Act does not prohibit a bidder from forming a consortium with another firm or agency with the appropriate expertise for the purpose of bidding for a contract. In addition, the invitation to bidders for the Specialty Hospital did allow for joint venture of two or more firms as partners. The ministry’s statement therefore contradicts its own invitation to bidders.
Dispute over performance bond
The Procurement Act provides for contractors to execute a bond as a guarantee against unsatisfactory performance of works undertaken. Surrendra Engineering executed such a bond which had expired in March this year. The government requested the contractor to renew or execute another bond before any further payments are released. According to the government, the contractor produced a bond from a Trinidadian company which was not recognised by the Trinidadian government. It then presented another bond purportedly given by the Central Bank of Trinidad and Tobago. It was this bond that is the subject of a dispute in terms of its authenticity. Meanwhile, construction work on the Specialty Hospital ceased around mid-June.
Conclusion
The whole episode involving the award of the contract for the design and construction of the Specialty Hospital is an unfortunate one. In the first place, there should have been no restriction in the bidding process since the Procurement Act does not provide for this. Second, Surendra Engineering should not have been awarded the contract because of the lack of requisite experience vis-à-vis the other bidders. This raises serious questions about not only the functioning of the NPTAB and the various evaluation committees but also the appointment, competence and independence of their members.
Finally, to the extent that the Public Procurement Commission established by the Constitution in 2001 is not made operational, problems in public procurement will continue to occur. At the moment, there is no oversight of the work of the NPTAB. Cabinet’s involvement in terms of offering no objection to a recommendation of the NPTAB can hardly be considered an independent oversight mechanism since the Minister of Finance appoints the members of the NPTAB with reporting relationship to him. The minister is also a key member of Cabinet. In the final analysis, it is the taxpayer who has to foot the bill whenever costly mistakes are made and defective work is performed as a result of this flawed arrangement.
