Articles

Kalinago Territory Housing Scandal

Posted on by Mayra Bonilla Lopez in News/Developments

On 28th May 2021, the government of DOMINICA received tenders from five (5) contractors, invited in what the National Authorising Officer (NAO) of the European Development Fund cites as a negotiated [tender] procedure, for the construction of fifty (50) houses in the Kalinago Territory grouped in six (6) lots.

In an article dated 6th June 2021[1], Prime Minister Skerrit took ownership of the process stating, ““We got some monies from the European Union and as Minister of Finance, as Prime Minister, I am responsible for indicating along with the European Union, how we spend that money and where these monies are allocated for,” Skerrit said. “I decided … [that] I want all of the money spent in the Kalinago Territory and that is how we are getting the 50 homes in the Kalinago Territory for Kalinago brothers and sisters.””

DNO goes on to indicate, “The Prime Minister revealed that the contract has gone out to tender and the bids should be in and hopes that a contract can be awarded “in the next few days.” Construction works are expected to begin in July 2021.”

There are many interesting things about this tender that was actually “out” since April 2021.  (1) There was a previous tender properly undertaken under the rules to the European Commission which returned tender on the 24th July 2020. (2) The Government of the Commonwealth of DOMINICA through the NAO, attempted to secretly invite contractors to bid on this second round, (3) None of the three local contractors who formed the joint venture, which was positioned to be   awarded at least 3 of the lots in the first round of 24th July 2020, were invited and were refused documents for Round 2. (4) The procurement rules under the Public Procurement & Contract Administration Act #11 of 2012 (PP&CA Act #11 of 2012), which are still in force, were totally ignored.  (5) The Delegation of the European Union in Barbados seems quite conformable that funds from the European Union are being used in a procurement process that is engaged outside the national law and riddled with irregular and discriminatory practices.

 

  • Round 1 – The First tender for 50 Houses in the Kalinago Territory

This tender was conducted under the PRAG rules of the European Union and yielded returns on 24th July 2020 from five tenders, F& C Construction, NH International (NHI), CEI Ltd, Argos and ACE-JARS -STEWCO (2020) JV.  The results and analysis are presented in Table 1 and 1.1 below.   A few things are clear:

  1. That if all contractors met the post-qualification requirements for the respective lots, and appropriate discounts offered applied, the best possible award would be for a total of EC$ 26,643,253.94, VAT inclusive.
  2. ACE-JARS -STEWCO (2020) JV would be awarded lots 1,2 & 5, F&C C Lot 3, NHI lot 5 and Argos Lot 6.
  3. That NHI and CEI Ltd were on the average $1.25 M (38% higher) and $2.0 M (57% higher) respectively, than the two indigenously local contractors.

This event was cancelled because the total tender amount that could be awarded – pre-VAT of EC$23,168,046.90 – was cited as beyond the funding provided by the European Union.   It is interesting that the government and NAO had the option to negotiate with the contractors and did not do so.  One of the opportunities for negotiation was to reduce the scope of works, for example, reducing by deleting the accesses as was done for Round 2.  Another option was to inject funds from other sources, or proceed with fewer houses or lots in the first instant, allowing a second round for the balance, given that the Kalinago people had a critical need for housing post-Hurricane Maria in keeping with government reports that this part of Dominica suffered the hardest hit in terms of housing.[2]

 

  • The Secret Nature of Round 2 Tender – 28th May 2021 – and inherent discriminatory practices.

The NAO office administered the 2nd round of tenders in a clandestine manner, choosing not to publish the event or invite all the previous tenderers of Round 1, or more accurately deliberately denying the opportunity of three local contractors who formed the ACE-JARS-STEWCO (2020) JV to tender[3].  In fact, while the NAO refused opportunities to those who provided the economically most advantageous tender on at least three (3) of the six (6) lots, at the same time, the NAO sought the help of other government departments to find “suitable” tenderers.  Of those sought, at least one admitted that it could not meet the post-qualification criteria and did not submit tender, and it is questionable if any of the others, besides NHI, could meet the requirements for more than one (1) of the six (6) lots.   Published using the EU tender documents, the NAO called it a “negotiated procedure” – the definition of which is still being withheld – yet it had all the hallmarks of irregular and discriminatory practices that has been used to shut-out productive private sector entities from State-control or financed procurement events for goods, works and services.  The NAO did not respond to our follow-up email of 17th May 2021.

The only known difference in the scope between Round 1 & 2 is the removal of accesses and movement of one house from one lot to another.  The results of the 28th May 2021 submission and analysis is presented in Table 2 & 2.1 below.   A few things are clear:

  1. That NHI and F&C C were the only two tenderers who participated in both rounds, however F&C C submitted for Lot 3 in Round 1 and Lot 1 in Round 2.
  2. The difference in NHI prices per lot in Round 1 & 2 were on the average less than 2%, 1-5%, and less than 1% on the total tender sum without discounts for the two submissions a 10 months apart.
  3. That if all contractors met the post- qualification requirements for the respective lots[4], and appropriate discounts offered applied, the best possible award would be for a total of EC$ 27,290,739.35, VAT inclusive – approximately EC$ 647,500 more than the result of Round 1 – 10 months ago – 24 July 2020.
  4. If ACE-JARS -STEWCO (2020) JV had been invited and submitted tenders for the same lots as in Round 1, with prices within the margin of change of NHI (practically same pricing for a competitive event) and the accesses of Round 1 were removed in the pricing, then the best possible award would be for a total of EC$ 23,342,161.82, VAT inclusive – over $3M less than the result of Round 1 – 10 months ago – 24 July 2020.
  5. The Government plans to award contracts[5] above the initial budget allocation and at least 12.4% more than it would have on the face value of the tenders of 24th July 2020 which was for a large scope of works.

The Prime Minister and Minister of Finance is on record as saying, understandably with some level of advice after analysis of tenders, “Construction works are expected to begin in July 2021[6]” DOMINICA, it appears, to be suffering from mismanagement of external financing given to us through budget support, seemly as because the arch-goal of our development strategy is not in sync with our funding and financing agreements.   Other arch-goals seem to be at play which appear to deliver the following: (1) the effecting of corrupt payoffs through a complex system of irregular and discriminatory procurement practices, and (2) the denial of opportunity for participation and growth of those entities who have openly refused to participate in these illicit and corrupt practices.

  • The procurement rules under the 2012 Procurement Act, which are still in force, were set aside.

Section 33 (1) of the PP&CA Act #11 of 2012 mandates that, “A procuring entity shall procure goods, services or works by — (a) the open competitive bidding procedure; or (b) any restricted bidding procedure.”

Section 34 (1) provides that the normal method of procurement is open competitive bidding and prohibits discrimination against any bidder or groups of bidders[7].  Of course, in order to manipulate the situation and facilitate the private objects of persons in the current administration, the regulations and threshold required under section 34 (2) (a) have never been passed!  Nevertheless, the section states this important inexcusable preface: “Without limiting the generality of subsection (1), a procuring entity shall use the open competitive bidding procedure where –”.

None of the reasons provided for under Section 33 (3) [8] which would justify a procurement entity, the NAO delegated by the Financial Secretary in that case, to use a restricted bidding procedure could be reasonably cited as having existed.  (a) There was a first round which provided competitive bids from five contractors – the reason for cancelling was that the scope did not match the budget.  The second round showed that only marginal price reduction was obtained through the scope reduction (NHI 2021 vs NHI 2020).  (b) The value of the works are significant and therefore open competitive methods would normally give the best market value result. (c) Intrinsic in both rounds is a qualification process, few bidders will submit bids if they are aware that they are expressively not qualified to win a contract, as was seen by those who were invited for Round 2 but did not submit bids, and the limited number who submitted on the open procedure of Round 1. (d) The Current Administration and the Procurement Board has failed, after 6 years, (i) to compile the required lists under Section 10(1), or (ii) put any threshold or regulations in place, presumably making it easier for the unscrupulous to manipulate the process.

Section 41 (1)[9] to (4) of the PP&CA Act #11 of 2012 prescribes that a procuring entity, in this case the Financial Secretary’s office through the NAO, shall advertise all procurement opportunities except those related to national defense or national security or propriety information from single source restricted procurement.  This means even restricted bidding procedures ought to be elaborately and appropriately advertised.   It is no wonder that the current administration after illegally behaving in a way that proports to administratively repeal an act of parliament, moves to replace it with a shadow-of-a-skeleton excuse of a procurement bill 2021.

The Government of Dominica was made to enact the PP& CA Act #11 of 2012 as a precondition to obtaining financing through budget support by entities such as the European Union whose interest are managed by its delegations, such as the Delegation of European Union for Barbados and the Eastern Caribbean.   However, since the PP& CA Act #11 of 2012 came into force in January 2015, the facilitation of discriminatory and irregular procurement practices in public procurement events have been the norm, have been even more openly displayed, and have grown!

 

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