Government’s promise of small contractors accessing at least 20 percent of all state contracts may be one step closer to fulfillment as the Ministry of Business prepares to roll out a pilot of the project next month.
“Next year is the year for the small business programme,” Minister of Business, Dominic Gaskin told Stabroek News recently. The Ministry of Business, through its Small Business Bureau, is charged with formulating a plan that would see this government initiative implemented.
“We are doing it and I am a lot more satisfied now than a year ago, because then we were still waiting for it to be put into action and now that is being done,” Gaskin stated.
Sarkis Izmirlian is claiming Baha Mar’s main contractor would have cost him $169 million in “grossly over-valued bids” had he not intervened in its procurement process.
Baha Mar’s original developer, in his $2.25 billion damages claim against China Construction America (CCA) and its affiliates, alleged that the Chinese state-owned contractor “misused” and failed to properly control the $4.2 billion development’s tendering system. Mr Izmirlian, and his family’s BML Properties vehicle, are instead claiming that CCA used the project’s Tender Event Schedule (TES) to “improperly” advance its interests by submitting bids on Baha Mar work ‘packages’ that were “far higher” than the project’s budget and market rates.
“In light of CCA’s failures, Baha Mar was forced to seek its own savings in procurement,” Mr Izmirlian alleged. “Baha Mar had to intervene on certain packages as CCA’s initial recommendations or bids were grossly over-valued or proved to be uncompetitive.
“If Baha Mar had not acted to protect its interests and those of BML Properties, CCA would have placed orders for works approximately $169 million over the amount it should have paid.”
CCA, as Baha Mar’s main contractor, was responsible for breaking the multi-billion dollar project down into work ‘packages’ that would then be awarded to sub-contractors.
This meant CCA was responsible for determining the scope of each ‘work package’, pricing it, putting it out to tender, and then hiring the best bidder. Mr Izmirlian, though, alleged that the Chinese state-owned contractor sought to retain most of the work for itself so as to maximise profits.
“CCA exhibited at all relevant times a lack of willingness to provide non-self perform procurement strategies or bid processes for the project,” Mr Izmirlian and BML Properties alleged.
“Baha Mar was forced to insist that CCA prepare, and continue to provide, a traditional procurement process in line with any self-perform/commercial offer to ensure market value was proven.
“For example, in the case of the Building Envelope, Baha Mar had to perform a bid process of the windows and sliding doors work package to safeguard the project schedule, which resulted in a saving of approximately $2 million against the similar scope within CCA’s self-perform offer.”
Mr Izmirlian alleged that CCA only reduced its bids when confronted by Baha Mar on its price, or threatened that the developer might perform the work itself.
“Evidencing the failures of the bidding system, and as a result of CCA’s plan or inadvertence, CCA continuously submitted bids that were far higher than the budgets and the market,” the original Baha Mar developer alleged.
THE absence of a transparent public procurement system has increased the Bahamas’ cost of doing business, the Chamber of Commerce’s chairman said yesterday, at the launch of the Government’s e-tendering system.
The system, which will also feature a supplier registry, is targeted to come online in February 2018 in a bid to enhance ‘value for money’ for taxpayers, improve tendering competitiveness and openness, and create an equitable playing field for all bidders. Mike Maura, speaking at the launch, said government procurement – the bidding and awarding of public sector contracts – has been the subject of persistent mismanagement complaints for decades.
“The absence of a transparent procurement system increases the cost of doing business and the cost of building in the Bahamas. The consequences associated with poor procurement include higher taxes, higher public debt, widespread inefficiency and a higher total cost for all of us,” said the Chamber chairman.
K Peter Turnquest, the Deputy Prime Minister, said enactment of the Public Procurement Bill 2018 was scheduled for early in the New Year. It is designed to strengthen the regulatory and enforcement framework around government procurement.
Through the bill, a Public Procurement Department and a Public Procurement Board will be established.
A Public Review Tribunal will also be established “to give recourse to persons who believe there have been an injustice rendered to them during the tendering process”.
Mr Turnquest said the new system will offer transparency. “There will be complete visibility,” he added. “All qualifying Bahamian businesses will be able to register to do business consistent with qualifications.
“Moreover, all persons visiting the portal will be able to view business opportunities, know all the offers available, monitor the process, see who is awarded contracts and at what price, and the justification behind the award.”
Mr Turnquest added: “There is tracking of every decision along the procurement chain. All bid forms are item stamped, which prevents interference following the close of bids, and every action taken by government personnel within the system is tracked.”
The National Insurance Property Development Company Limited (Nipdec) has been ordered to disclose documents related to the tendering process for a contract to supply 35 buses to the Public Transport Service Corporation (PTSC) in 2013.
Delivering a 17-page judgment in the Port-of-Spain High Court last week, Justice Eleanor Donaldson-Honeywell ruled that Nipdec could not prove it was exempt from disclosing the documents to Wescan Trinidad Agency, one of the companies that was unsuccessful in the tendering process.
In 2012, Nipdec was engaged by PTSC to procure 100 CNG-powered and GPS-capable buses in three phases over five years.
Following the award of contracts to impugned Trinidad and Tobago company Western Scientific, the Ministry of Public Health has put on hold the company’s bids for two other contracts.
The suspension of the bids followed questions raised about how Western Scientific could be used for sole-sourcing by the Public Health Ministry after damning conclusions were made about the company by a Board of Inquiry (BoI) that investigated procurement practices at the ministry.
“I am aware that two contracts were signed this week and Western Scientific was issued with those contracts, which signals a green light for them to supply…,” Procurement Officer of the Ministry of Public Health Phillip Bryan told Sunday Stabroek on Friday.
“…And there is a bid for two other contracts, and those contracts we will not be going ahead with because that is the instruction I have, but I can’t speak to what items exactly,” he added, before explaining that he did not have the information at hand.
In mid-August, government had announced that the company had secured a contract for the procurement of Sysmex reagents for the National AIDS Programme Secretariat (NAPS) to the tune of US$154,154 (equivalent to $31,937,626). This immediately raised eyebrows as the BoI, established by the Ministry of the Presidency into allegations of mismanagement and malpractices in the procurement of pharmaceuticals at the Ministry of Public Health, had recommended in January that the company’s representative should be barred from future tenders.
The recommendation came on the heels of information that an employee of the Public Health Ministry had conspired with the Western Scientific representative to gain insider information.
Additionally, the BoI had said that the Trinidadian company was hostile to the BoI and failed to appear before it. The BoI also recommended that legal advice be sought over the reviewing of contracts awarded to the Western Scientific representative.
Western Scientific has also been blacklisted by the Inter-American Develop-ment Bank for five years over alleged fraudulent practices here.
The employee of the company cited by the IDB was the same one impugned by the BoI in January of this year. Given all of this, the Public Health Ministry would have to explain why it went ahead with Western Scientific and with single-sourcing when the items were likely available from multiple sources.
Western Scientific was also one of a number of companies that Minister of Public Health Volda Lawrence had told Parlia-ment in June this year had delivered expired or nearly expired drugs to the Ministry.
Lawrence assumed control of the ministry in January and vowed to revamp procurement systems. She will now face questions as to how Western Scientific was used for single-sourcing despite its track record. Single-sourcing is supposed to be limited to situations where only one company is able to supply certain goods.
Sources also say that the ignoring of the BoI recommendation by the ministry will call into question the purpose of dozens of audits and Commissions of Inquiry convened by the APNU+AFC government. In a number of cases, recommendations have not been acted on and Western Scientific is a prime example.
