Chief Executive Officer of the Guyana Oil Company Limited (GUYOIL) Renatha Exeter yesterday defended the decision to terminate three contracts with a Trinidadian company and in a statement, GUYOIL last night assailed a Kaieteur News report on Sunday which alleged that a failed bribery attempt had been the cause of the rescinding of the contracts.
Exeter yesterday told Stabroek News that the decision to terminate three contracts with Trinidad and Tobago firm Commissiong and Company Limited last week was made by the state-owned company’s Board of Directors in accordance with extant tender rules.
Exeter also maintained that at no point was any single individual responsible for either awarding or terminating the contracts, which terminations she insists were made on the basis of the Trinidadian company’s failure provide a bank guarantee or bond through a local bank.
Exeter made these disclosures to Stabroek News yesterday in light of claims by Commissiong and Company Limited that the contracts were wrongfully terminated.
Nirmala Rambharat, Director of Commissioning and Company Limited, has accused GUYOIL of wrongful termination of the contract, and tarnishing her company’s name with claims of breach of contract. The company, she says, is preparing to take legal action in response.
Commissioning and Company Limited had participated in a tender process which saw it securing contracts for the: (1) ‘Supply and Delivery of one (1) Light Truck at Providence Terminal’; (2) ‘Supply and Delivery of one (1) Rigid Tank Wagon (RTW) at Providence:’ and the (3) ‘Supply, Fabrication, and Erection of two (2) 10,000 US Gallons Storage Tanks’. The three contracts are, together, said to be valued at approximately $169 million.
Tender process transparent
To shed light on GUYOIL’s tender process, Exeter shared that it is intentionally multi-layered to enhance scrutiny, and promote transparency. She explained that the initial stages of the tender process is managed by GUYOIL’s Board Tender Committee, which is comprised of, and chaired by members of the Board of Directors.
She further explained that once a contract is advertised, all bidders to said contract are invited to the opening of the bids, at which point each bid is evaluated by the evaluation team to ascertain which of the bids were made in keeping with the requirements. One of the members of this team, she said, is a qualified evaluator, a measure taken to ensure objective determinations are made.
After this exercise, the evaluators make their recommendation to the Board of Directors, which then collectively determines which of the bidders will receive the contract, as was the case in this instance.
It is also the Board of Directors, as opposed to any one individual, which must decide whether to terminate a contract already issues, Exeter said.
Bank to Bank guarantee?
In a letter addressed to Rambharat, Ilissa McTaire-Jones, GUYOIL’s Corporate Secretary and Legal Advisor, asserted that the company had “failed to perform its obligation as per clause SCC 61”, which requires the company to submit a “…simple receipt and bank guarantee for the equivalent amount in the form provided in the bid documents or another form acceptable to the Purchaser.”
These failures, GUYOIL contended, constituted contraventions of clause 10.1 of the first two contracts.
GUYOIL also said that clause 55.1 required the company to provide “an Unconditional Bank Guarantee in a form and by a bank acceptable to the Employer in amounts equal to the advance payment”, and the failure, in keeping with clause 59.4 of the third contract, rendered the circumstances inconvenient for GUYOIL to further engage in the contract, and entitled it to terminate the contract.
Rambharat, however, said that the need for a guarantee or bond from a local bank was never mentioned orally before the contract was signed, so that the company was unaware that this would be a requirement.
It must be noted that while the contract does not specifically require a guarantee or bond from a local bank, the term “…acceptable to the purchaser” stipulated in clause SCC 6.1 vests GUYOIL with sufficient discretion or latitude to make such a demand, while remaining within the terms of the contract.
Rambharat, has told Stabroek News that for the company to receive a guarantee or bond from a local bank, it must be registered here. Rennie Gosine, attorney-at-law for the company, in a letter dated September 11 2019 to GUYOIL, had said that since GUYOIL knew that the company had no asset base in Guyana at the time the contract was signed, and since advanced payment bonds would not be given to the company in these circumstances, it should not be now made to provide the bonds in Guyana.
Exeter, however, told Stabroek News that GUYOIL has transacted business with foreign firms before, on which occasions it has insisted on bank guarantees or bonds from a local bank. She went on to share that a foreign company does not need to be registered locally to be able to satisfy this requirement, as it can be, and some have in the past, satisfied this requirement by way of a bank to bank guarantee, between the company’s foreign bank, and a bank in Guyana.
Whereas a typical bank guarantee is a promise by a bank that it will cover any losses stemming from the default(s) of the contractor, a bank to bank guarantee, in these circumstances, would involve the foreign bank getting a local bank to put up the guarantee, which would be guaranteed by the foreign bank.
The practice, Exeter said, is not new. She said that Commissiong and Company Limited, after signing the contract, was asked on several occasions to provide the guarantee via a local bank, but that this was not done. After continued failure, Exeter said, the Board of Directors took the decision to terminate the contracts.
Rambharat says that in addition to the damage caused to the company’s reputation, it has suffered loss because it has already incurred expenses in preparing itself to perform its obligations under the contracts.
Chronology
Last night GUYOIL issued the following chronology of the events leading up to the termination of the contract and blistered the KN reportage.
Chronology
Invitations for Bids were publicly advertised on February 2, 2019 for the supply of one (1) Canter truck and the Supply, Fabrication and Erection of two (2) 10,000 gals tanks.
On February 17, 2019 an invitation for Bids was advertised for the supply of one (1) Rigid Tank Wagon (RTW).
Tenders for all three contracts were opened on February 25, 2019.
There were 4 respondents for the supply of 1 Canter truck and 4 respondents for Supply, Fabrication and Erection of 2 10,000 gals tanks which included Commissiong & Company Ltd. While there were 2 respondents for the supply of 1 Rigid Tank Wagon (RTW).
As per Guyoil’s Tender Policy, the Bids were evaluated by the company’s Evaluation Committee. The CEO of the company is not part of the evaluation committee.
Evaluation of the Supply, Fabrication and Erection of 2 10,000 gals tanks was conducted on February 7, 2019 while the evaluations for the supply of 1 Canter truck and 1 Rigid Tank Wagon (RTW) were conducted on March 2, 2019.
Commissiong & Company Ltd was the most responsive bidder for the Supply, Fabrication and Erection of 2 10,000 gals tanks. Therefore, the Evaluation Committee recommended Commissiong & Company Ltd be awarded this contract to the Board’s Tender Committee. The Board’s Tender Committee is a sub-committee of the Board.
Included in Commissiong & Company Ltd bid documents was a bid security from Furness Anchorage General Insurance Limited (Trinidad & Tobago Firm). The Board’s Tender Committee made the recommendation to the Board of Directors for the award of the contract to Commissiong & Company Ltd and this was ratified and approved by the Board.
Notification of Award and acceptance requires a Performance Bond submission.
Commissiong & Company Ltd submitted a Performance Bond from Furness Anchorage General Insurance Limited. Following this a contract was signed with Guyoil on May 24, 2019.
Tenders for the supply of 1 Canter truck and 1 Rigid Tank Wagon (RTW) were evaluated on March 2, 2019. In both cases all bidders were deemed non-responsive. As such, in the interest of time, the company invited bids using the restricted tender process on March 11, 2019. Bids were received on March 18, 2019. All bids were evaluated by the Evaluation Committee on April 10, 2019.
Guyoil received 3 bids for the supply of 1 Canter truck and 2 bidders for the supply of one Rigid Tank Wagon (RTW), in which Commissiong & Company Ltd were included for both submissions.
Commissiong & Company Ltd was deemed the most responsive bidder for both tenders.
Included in their bid documents, the company submitted local insurance bonds for both the bid security and the performance bonds.
After the signing of all contracts, an advance payment security is required. As per contract the company was required to submit an Unconditional Bank Guarantee in a form and by a bank acceptable to Guyoil, in amounts equal to the advance payments.
Guyoil’s Finance, Audit and Administration Committee (FAAC) (a sub-committee of the Board) recommended to the Board that the acceptable form for all Unconditional Bank Guarantees must be from a local entity. The Board approved the recommendation made by the FAAC.
Following the Board’s decision this was communicated to Commissiong & Company Ltd on July 18, 2019 via email by Guyoil’s Facilities Manager (ag).
Commissiong & Company Ltd subsequently responded on July 29, 2019 via their attorney stating that Guyoil had accepted international bonds for the bid security and performance for all the contracts they were awarded.
Guyoil on August 30, in response pointed out that an advance security is required after the signing of the contracts and the contract clearly stipulates that the contractor must provide “an Unconditional Bank Guarantee in a form and by a bank acceptable to the Employer in amounts equal to the advance payment”.
Therefore, the provision of international bonds will not be an acceptable form of advance security from Commissiong & Company Ltd after the signing of the three contracts.
There was no response from Commissiong & Company Ltd. After which a second notification was sent on September 10, 2019 giving the company 14 days to submit their local advance security.
Commissiong & Company Ltd through their attorney responded on September 11, 2019 and stated it is incorporated in the Republic of Trinidad and Tobago and all of its assets are based in Trinidad and therefore, they are unable to provide local advance security.
Commissiong & Company Ltd in their letter requested that Guyoil issue the advance payments within 14 days for all three projects. This was despite their failure to submit the requisite advance security to Guyoil.
As a result, the Board at its statutory meeting on October 2, 2019 took the decision to terminate all three contracts. The contracts were terminated in keeping with clause 10.1 (a) of contracts. Commissiong has failed to perform its obligation as per clause SCC 6.1. This clauses states that an advance amount is required to be paid upon the submission of a “…simple receipt and a bank guarantee for the equivalent amount and in the form provided in the bid documents or another form acceptable to the Purchaser”.
In keeping with clause 59.4 of contract, it was no longer convenient for Guyoil to engage in this contract as Commissiong has failed to meet its obligation as provided in clause
51.1. This clause states inter alia that Commissiong was required to provide “an Unconditional Bank Guarantee in a form and by a bank acceptable to the Employer in amounts equal to the advance payment”.
In light of the facts outlined above, GUYOIL says it categorically rejects the “malicious and slanderous” report by Kaieteur News.
