Dr. Chandana Jayalath

There is ha-ho of a corrupt deal in tendering for the construction of a 350 MW natural gas power plant at Kerawalapitiya. This allegation sparked some rethinking as to why the history repeats, despite of probity murmuring around our lifestyles since two years. I read an article that a top official of the subject ministry, who is also in the tender board, is influencing the tender to be given to a Korean company, the highest bidder. I do write this up assuming the subject tender is an open international competitive one on two envelops system to be run on Build Own and Operate modality. However, my arguments would not be dispelling even in any other procurement system to be adopted.

At the outset, this is public procurement and the amount of money going to be dealt with is colossal. Eight bidders have made submissions which were inspected by the CEB and a technical evaluation committee for their professional technical capabilities. What was heard is that the tender evaluation committee has disregarded influence by the ministry official and shortlisted three foreign companies, two foreign-local partnerships and a local company for a second round of evaluation by the tender board. There, the ministry official had intervened and tried to get only the tender paper submitted by the Korean company.

According to the ministry secretary Dr. B.M.S. Batagoda, the tender has been put off due to issues that have arisen due to the tender board’s refusal to accept unqualified bids. He claimed all bidders, excepting one, chosen by the technical evaluation committee have not fulfilled the tender requirements. The secretary said he would submit a report to the subject minister and the cabinet with regard to the differing views the technical evaluation committee, tender board and himself are having.

As a senior contracts specialist, I should mention, that the nature and level of communication permissible with bidders will be determined by the procurement procedure chosen. In order to obtain maximum value for money, it is critical to manage the bid process well. For instance, shortly after issuing the invitation to tender it is usual to hold a bidders’ conference to explain issues and take questions from the bidders. Written clarifications should be provided to all bidders; and it is typical to provide for a data room” open to bidders, where they can access detailed documents concerning all aspects of the project.  This is simply because the complexity of large scale industrial projects will normally require a high degree of interaction between the project management team, end users and the bidders. The terms and conditions for an interactive process, including the procedures, protocols and rules, should be included in the broader set of conditions, rights and obligations to which bidders consent.

The objective of developing this iterative process is to improve the quality of the proposals by fostering innovative solutions from different bidders; clarifying any technical, financial and commercial issues; and providing timely, direct and specific feedback to all bidders on key aspects of their bids. Meanwhile, the tender board and technical evaluation committee have to take particular care to protect each bidder’s commercial in-confidence material and intellectual property. More generally, the project management team will have to consider probity principles and rules as part of the implementation of the interactive process.

We all know that the role of technical evaluation committee is to evaluate bids in accordance inter-alia with the specifications as set out in the tender document and to conduct such an evaluation under a point system, as far as possible, whenever appropriate. This reduces idiosyncrasies of individual evaluators and helps take a more defined objective decision. A key consideration when evaluating a tender is to assess whether it has the capacity and know-how to render the required service efficiently or deliver the right product at the desired time. This is to ensure that suppliers who enter the bidding stage are ones that are indeed qualified to respond to procurement requirement.

As public entities move towards more complicated procurement scenarios, I have found it necessary to sensitize stakeholders on the role played by the Technical Evaluation Committees in public procurement. As the country embraces more reforms in procurement to improve the quality of services delivered and enhance accountability, it is imperative the foregoing sensitization adequately subsumes. The law places Technical Evaluation Committees at the fulcrum of public procurement decision making without which, procurement will grind to a halt, as what has now been exactly happened.

It is very true that procuring entity shall establish an evaluation committee for the purposes of carrying out the technical and financial evaluation of the tenders within the threshold of the Tender Board.  Meanwhile, the tender board shall not modify any submission with respect to the recommendations for a contract award or in any other respect. It should not reject any submission without justifiable and objective reasons. Where the tender board rejects the recommendation of the technical evaluation committee, the decision shall be reported to the head of the procuring entity or to the accounting officer.

In our case where the Tender Board declines the Technical Evaluation Committee’s proposal, or does not necessarily accept what the technical Evaluation Committee recommends, it is important for the public to know the reason behind. The tender procedures require the Chairman of the Tender Board to justify this allegation with proper facts and figures. I wonder whether it is possible. It is important for all of us to note that Technical Evaluation Committees are important in determining capabilities of the bidders by ranking them and recommending the bidder to be contracted. If the Tender Board rejects the report, it must give justifiable reasons and refer the matter back to the Technical Evaluation Committee. Generally, the Technical Evaluation Committee is mandated to do both technical and financial evaluation, deeply consider both the material and debatable deviations and recommend the bidder that best meets the fitness for purpose.

Bids will generally be assessed first on a number of pass/fail criteria before the single preferred bidder is decided on. For example, even if the evaluation score is not based on a technical evaluation, a determination must be made that the technical solution proposed by a bidder is feasible, deliverable and robust, that it is based on reliable technologies, that it meets all minimum technical requirements set and that the costs and financial structure are consistent with the technical solution. Also, it is important to look at the proposed project management: the bidding consortium must come across as a cohesive entity rather than just a collection of companies put together for bidding purposes. A key issue is the choice of the criteria for the evaluation and scoring of alternative bids and as per the tender procedures, there should be a statement to that effect in the tender document.

Occasionally, only one or two bidders will submit a tender (which is called substantially responsive bid, in tendering jargon) despite the Authority having issued the invitation to tender to several shortlisted candidates. Should that happen, in good procurement practice, the question of how to proceed should be considered case by case.  If it appears that the bid was made in the bidder’s belief that there would be a good level of competition (and this should be supported by the Authority’s advisers carrying out benchmarking of costs and in some cases by insisting on actual market testing of the costs of the major subcontracts), then the best solution might be to continue with the procurement and consider the sole bidder to be the winner, provided that the tender is fully compliant and meets all pass/fail evaluation criteria. Tender Board is given wide power to decide upon.

However, the question of probity and transparency cannot be overlooked at any circumstance. This is why a debriefing of unsuccessful tenderers is addressed under Article 218 of the government tender procurement, revised in August 1997. If I am not mistaken, the same rules apply mutas mutantis to any type of tender that involves public money. It will help minimize the level of complaints and demonstrate clearly the principles of probity and transparency. It is the evaluation criteria that forms the basis of debriefing and any judgment on technical, and financial concerns must be supported by relevant findings. It is essential to show how a decision was reached and justified and inform unsuccessful tenderers why they were not selected, without compromising commercial confidentiality. The price tendered will of course be a public record.

Let me quote an international example. An important issue relating to the PPP contract award concerns the new EU Remedies Directive (2007/66/EC), which was required to be transposed into national law by 20 December 2009. The two most noteworthy elements of this Directive are (Guidance 9) as follows: a minimum standstill period” of 10 days is required between the PPP contract award decision and the actual conclusion of the contract to allow rejected bidders time to conduct their review and decide whether they want to challenge the award.  More importantly, an aggrieved bidder can bring an action to have the PPP contract rendered ineffective if the Authority contravened EU procurement rules in a serious manner. Previously, the sole remedy that an aggrieved bidder could seek was to be awarded monetary compensation, but nowadays an aggrieved bidder could seek cancellation of the PPP contract. How the various rights and obligations of the parties will be determined in this case is left to national law.

What we need is to find the prospective contractor who is in the best position to render the contract in terms of time, cost and quality. In other words, we have to find the bid that gives the most competitive price and technically the most responsive proposal. In large scale project of this type, where natural gas projects are indeed rare, landmark and one time occurrence in the whole country, technical considerations definitely overweigh the cost.

In nutshell, if the Tender Board disagrees with the Technical Evaluation Committee or wishes to deviate critically from the technical recommendations, the implications and reasons should be cited. My experience is that the Tender Board, though final determinant, its role is mere cursory and administrative. Its influence on technical matters is none other than political bullshit.