SLR fraudulent tender award to fake company EXPOSE
Posted on May 7th, 2017


Sri Lanka has 758 unguarded level crossings which claim at least one human life each month. So far, the only solution to the problem was deploying the villagers who live nearby to guard these crossings under the co-ordination of Civil Defence Department.

Sri Lanka Railway first called for global tenders in November 2011 under No: SRS/F 6919, with the intent of acquisition of security systems for use at these crossings. However, the Tender Committee was in division regarding the bidder to be selected. As a result, the tender was eventually cancelled.

Another tender call

Two years later, again a tender was called for this purpose globally as per No: SRS/F 7089. The tender was roughly expected to be around Rs 850 million. The chief engineer of the signal unit of the Railway Department A.T.L.P. Samarathunga was the Chairman of the Seven-member Tender Committee. The members of the Technical Evaluation Committee were W.P.M. Fernando, L.A.R. Rathnayaka, P.R. Jinadasa, R.S. Mathiwathani and Mahesh Hewavitharana.

Five companies including M/S N-Able (pvt) Ltd & M/S Uni Consultancy Services, State owned local company of the University of Moratuwa bid for the tender.

To verify the standards of the supplies, government specified six criteria in the tender announcement.

Accordingly, the bidder had to provide a written submission on the producer’s financial and human resources capacity to supply, install, inspect and stabilize the production.

The companies should have successfully installed, inspected and handed over at least three security systems of the level crossings in the past five years.

The company should have the capacities of producing all components of the railway crossing security systems, installing them, inspecting and stabilizing them without support of other companies.

The suppliers needed to be on or above the international standard level of SIL/3 in terms of public security and also it should be ISO 9001-2000 standardized.

The producer must verify the production capacity in writing with the evidence for previous supplies. A printed manual of the main components and the technical details must be submitted.

The proposed railway security system must be functioned in the main railways for three years.

Wrong tender offer

As per the above requirements, seven companies were shortlisted. The lowest bid was submitted by the above mentioned local company belonged to Moratuwa University. They bid for Rs 837 million (US $ 6,478,190). The next lowest bid was from M/S Ingenieria Y Control Ferroviario Spain which was Rs. 866 million (US $ 6,698,331.72).

The Technical Committee decided the tender offered to the company belonged to Moratuwa University. However, all the bids were freight on board (FOB) which meant the price at producer’s end. However, the last price with shipping and all other costs is decided on cost and freight (CFR).

Accordingly, CFR of the M/S N-Able (pvt) Ltd & M/S Uni Consultancy Services was US $ 7,418,021 which was higher than M/S Ingenieria Y Control Ferroviario Spain’s CFR of US $ 6,783,831.72.

In this backdrop the offering of the bid to M/S N-Able (pvt) Ltd & M/S Uni Consultancy Services was fundamentally wrong.

Under the existing tender code of 2006, the tender committee must select the bidder logically based on economic benefit and technical quality.

Additionally, M/S N-Able (pvt) Ltd & M/S Uni Consultancy Services had not fulfilled any of the six criteria stipulated by the Tender Committee. The company did not have evidence for any previous experience in production, installation and testing, independent production capability, standard certificates and verification of its financial and human resources capacity. The company had mentioned in its bid that some components would be purchased from a Chinese company.

The main competitor, M/S Ingenieria Y Control Ferroviario Spain had fulfilled all these criteria in addition to bidding the lowest CFR.

The tender board rationalized the offering of the tender to M/S N-Able (pvt) Ltd & M/S Uni Consultancy Services stating it is a company that belonged to Moratuwa University and it is bidding for the lowest price which was not true.

The reality of the company

When investigating this company, no information could be found about any State or semi-State company called M/S N-Able (pvt) Ltd & M/S Uni Consultancy Services. The Chairman of the Technical Evaluation Committee cited that the company had installed testing railway security system many years back. However, the installation of this security system had no connection with this company. It was only limited to a foundation stone and the documents which had been submitted were fraudulent.

M/S N-Able (pvt) Ltd & M/S Uni Consultancy Services did not want ISO 9001-2000 because it was said to be a State company which belonged to Moratuwa University. However, the university authorities were unaware of such a company.

The secret behind this so-called company has now been exposed. The brother of the chairman of the tender board has taken the contract via this bogus company.

However, the tender agreement could not be signed during the specified period. The chairman of the tender board was transferred to another department. Railway Department received complaints on the tender and a committee was appointed to look into the matter.

The committee reported that M/S N-Able (pvt) Ltd & M/S Uni Consultancy Services was not qualified for the tender. The prices they had cited were also exorbitant. They could not show cause for that in the audit. According to the audit report, the supplier had submitted US $ 56,100 over expense. The tender was also offered at US $ 1,698,282 higher than the recommended cost of the technical evaluation committee.

Now, the Chairman of the relevant Tender Board who offered it to his brother is the Additional Secretary – Technical of the Ministry of Transport and Civil Aviation. He had been so powerful to get the Cabinet approval for this tender which had violated all the tender procedures.

FCID has also received complaint on this corrupt deal but so far to no avail.

One Response to “SLR fraudulent tender award to fake company EXPOSE”

  1. Sirih Says:

    Janaka, N-Able is a big systems integrator in SL and offshoot of MIT and I know the owners there and they are good people with great engineers.
    Re. ISO 9001, it is only poor countries after this and also its a massive racket with no measurable use. I know Sony Japan looked for this they thought it was a massive problem area for the company with bureaucratic compliances that has no value for the modern technology practice.
    SL does not have high powered engineering expertise and still live in the past and I have worked and helped with Moratuwa Uni to set up few high tech breakaway companies similar to Stanford and UK Uni’s and we need to support them.
    Issue here seems to be lack of understanding of Intellectual Property with proper SI cost.
    What ever you have written here does not give the full picture ? WHY?

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