Last week, former Nigerian oil minister, Diezani Alison-Madueke, appeared in court in London charged with receiving bribes in the form of cash, luxury goods, flights on private jets and the use of high-end properties in Britain in return for awarding billions of dollars in oil contracts. She was Nigeria’s minister for petroleum resources between 2010 and 2015. Alison-Madueke is the second high-profile Nigerian politician to face prosecution in Britain in recent years, following James Ibori, a former state governor who was convicted of fraud and money-laundering in 2012 and received a 13-year jail sentence. Nigeria is Africa’s top oil producer but has suffered systemic corruption involving ruling politicians, hampering development and preventing oil wealth from benefitting wider society. See https://saharareporters.com/2023/10/06/exclusive-uk-court-documents-detail-how-nigerias-ex-petroleum-minister-alison-madueke#:~:text=Court%20documents%20from%20Central%20London,return%20for%20awarding%20oil%20contracts.
In our article of 25 September 2023, we raised the issue of ExxonMobil’s disputed pre-contract costs of US$214.4 million being reduced to US$11 million. We expressed surprise that this could not have been done, considering that the auditors had issued their final report more than two years ago after a series of comprehensive and exhaustive reviews by the Guyana Revenue Authority (GRA), and the latter’s acceptance of the auditors’ report. We also questioned how it was possible for Exxon to now submit additional documentation in support to the disputed expenditure. We then called on the Authorities to clarify to the public what really happened. The Minister of Natural Resources responded by stating that both he and the Vice President were under the impression that that the information provided to them on subsequent reductions emanated from the GRA. He sought to lay blame on the Ministry’s Petroleum Unit for engaging in what he described as an unauthorized examination of documents submitted by Exxon. We then referred to an earlier letter from the GRA to the Minister stating that it had no objections to the auditors’ report on the disputed costs. Faced with this embarrassing situation, the Vice President announced that a probe into the matter would be undertaken.
We had expressed the view that such a probe should be carried out by a person(s) who is/are not in any way involved in what transpired. To our surprise, the probe was apparently overseen by the Minister who issued a statement identifying a member of the Ministry’s staff as the person responsible for the unauthorized reduction in the disputed costs. He stated that in July 2023, the staff member met with the Vice President and himself and reported the reduction in the disputed costs. But, did it not occur to the Minister and the Vice President that such costs could not be reduced as this would undermine the work and credibility of the auditors? And, if they had any reservations about the auditors’ findings, why is it that they did not commission another independent audit to revisit the matter? As it stands, there are more questions than answers as to what really transpired. In the final analysis, citizens are perplexed as to whose interest is being protected by our elected representatives – the country’s interest, or that of Exxon?
And what of Exxon’s involvement in attempting to submit additional documentation after the audit had closed and the findings discussed with the U.S. oil giant. Should the U.S. Department of Justice and Securities and Exchange Commission not investigate Exxon under the Foreign Corrupt Practices Act 1977 for being part of an arrangement to deprive Guyana of US$107.2 million in oil revenue. This is not to mention the unconscionable Petroleum Sharing Agreement (PSA) it entered into with the Government of Guyana which include, among others, a mere two percent royalty; exemption from various forms of taxation; the Guyana Government paying Exxon’s corporate tax; and the absence of ring-fencing provisions. There is also the bridging deed that links the 1999 PSA with that of 2016, resulting in all costs incurred since 1999 being considered recoverable against oil revenue, thereby reducing Guyana’s share of profits.Calls for a renegotiation of the PSA to ensure that Guyana gets a higher share of the oil wealth, have so far been rebuffed by the present Administration despite an election promise it had made that it would do so if elected to office. Former President Donald Ramotar came out in support for a renegotiation but was given a tongue-lashing by the current President, reminiscent of rebuff another former President, the late Janet Jagan, received when she spoke out against the withdrawal of government advertisements from the Stabroek News.
In today’s article, we discuss the approval of the award of a contract by the National Procurement and Tender Administration Board (NPTAB) for the construction of a sluice and pump station at Belle Vue on the West Bank of Demerara.
Background
Member of Parliament, David Patterson, has requested the Public Procurement Commission (PPC) to investigate whether the award of a contract to construct the above-mentioned sluice and pump station was above board. Mr. Patterson contended that the contractor, Tepui Group Inc., was not eligible for the award since it does not have the requisite experience stipulated in the bid documents, that is, successful completion of projects similar in nature and size within the last three years. Tepui Group was formed in August 2022.
In response to a public advertisement last May for the construction of the sluice and pump station at Belle Vue, there were 26 bids. The highest bidder was Nabi Construction Inc. with a bid price of $1,181, 867,183 while the lowest bidder was Gavco Construction & Supplies Inc. with a bid price of $740,584,800. Tepui Group’s bid was $865,543,500. Seventeen other bidders had bid prices lower than that of Tepui. The Engineer’s Estimate was $779,198,584. Included in the advertisement were requests for the submission of bids for three other pump stations at Meten-Meer-Zorg and Poudroyen in Region 3, and Jimbo Bridge at Grove, East Bank Demerara. These attracted 27, 23 and 29 bids, respectively, while the Engineer’s Estimates were $918,231,386, $945,179,772 and $865,182,752.
Response from NPTAB
Following Mr. Patterson’s disclosure of the letter to the PPC, the NPTAB issued a statement contending that: (i) 13 of the 26 bids were deemed non-responsive and were therefore not considered; (ii) the lowest and second lowest responsive bidders were awarded the contracts for the construction of the pump stations at Meten-Meer-Zorg and Jimbo, respectively; and (iii) Tepui was the third lowest responsive bidder and was awarded the contract for the construction of the pump station at Belle Vue. There was, however, no mention of the Poudroyen pump station, and it would be of interest to learn who was awarded the contract and the basis for doing so. Was it awarded to the fourth lowest responsive bidder from the tenders received in relation to the Belle View pump station?
Lowest responsive bid and lowest evaluated bid
There is a distinction between lowest responsive bid and lowest evaluated bid. Section 39(4)(c) of the Procurement Act 2003 provides for the Evaluation Committee to consider a tender as responsive only if it conforms to the requirements set forth in the tender documents. Minor deviations do not affect the responsiveness of the tender if they do not materially alter or depart from the characteristics, terms, conditions and other requirements set forth in the solicitation documents or if the tender contains errors or oversights that are capable of being corrected without touching on the substance of the tender. The lowest responsive bid is the lowest bid after setting aside bids that are not considered responsive, having regard to the requirements set forth in the bidding documents. It would therefore also be of interest to learn who the 13 bidders are, and the grounds for the Committee’s assessment that their bids were non-responsive. On the other hand, by Section 39(2), in the evaluation of all tenders, the Evaluation Committee is required to use only the evaluation criteria outlined in the tender documents to determine which tenderer has submitted the lowest evaluated tender. Section 39(6)(a) also requires all evaluation criteria in addition to price to be quantified in monetary terms. The contract is to be awarded to the lowest evaluated tenderer.
Analysis and conclusion
Considering the above, the NPTAB erred when it stated that the above three mentioned contracts were awarded on the basis of the bidders being the lowest, second lowest and third lowest responsive bids. It is not clear which bidder the Committee considered to be the lowest evaluated bid in relation to the Belle Vue pump station. In any event, Tepui’s bid should have been rejected in accordance with Section 39(5)(a) since it did not have the requisite experience.
As indicated above, the advertisement of May 2023 solicited bids for four sets of works: (i) construction of pump station at Meten-Meer-Zorg; (ii) construction of sluice/pump station at Belle Vue; (iii) construction of sluice/pump station at Poudroyen; and (iv) construction of pump station at Jimbo Bridge. Each of these had its own Engineer’s Estimate and attracted separate bids of varying amounts. It follows that the evaluation of the bids for each of these works should have been undertaken separately to arrive at the lowest evaluated tenders.
The Evaluation Committee ought not to evaluate the bids for one set of works (in this case, bids for the construction of the sluice/pump station at Belle Vue) and apply the results to the others works, notwithstanding that they may be similar in nature and complexity. In fact, there is no support in the Procurement Act for such an approach. The Act is clear that only the lowest evaluated bid is to be awarded the contract. It is only when the lowest evaluated bidder fails to demonstrate his/her qualifications if requested to do so that the Committee will determine which of the remaining tenders is the second lowest evaluated tender for the purpose of the award of the contract. This is provided for under Section 39 (9) of the Act. It is evident from the above analysis that there has been a violation of the Procurement Act as regards the award of the contract for the construction of sluice/pump station at Belle View as well as the other two pump stations at Meten-Meer-Zorg and Jimbo Bridge. As regards the Belle Vue pump station, the system appeared to have been manipulated to facilitate the award of the contract to Tepui Group Inc. The functioning of the NPTAB needs to be critically examined to ascertain to what event its decisions are influenced by political considerations. The Board currently comprises seven members appointed by the Minister of Finance from among persons of ‘unquestioned integrity who have shown capacity in business, the professions, law, audit, finance and administration’, and with reporting relationship to him – not more than five from the Public Service; and not more than three from the private sector after consultation with their representative organisations. In several of our articles, we pointed out that the Chairman holds two full-time positions – one as Chairman of the NPTAB, and the other as the Head of the Project Cycle Management Division of the Ministry of Finance responsible for monitoring the implementation of the Public Sector Investment Programme. This arrangement may present a conflict of interest. The Chairman also has a casting vote. Additionally, there have been credible allegations that some of the Board’s members are politically aligned. In the circumstances, it would be appropriate for the Procurement Act to be amended to allow for the Public Procurement Commission to appoint members of the NPTAB. In the meantime, the current Chairman should be relieved of his position and replaced by another member who is a representative of the private sector.
