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.

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