Former auditor general Anand Goolsarran says the government’s handling of the procurement process to salvage the MV Barima could adversely affect public confidence and raise concerns about preferential treatment if Netherlands-based KMS B.V. is selected.
Goolsarran was responding to questions from Kiskadee Watch about the government’s initial invitation to the Dutch company to submit a proposal and its subsequent participation in the competitive tendering process.
“Yes, I believe that public confidence is likely to be adversely affected, and if KMS B.V. is selected, there may be concerns about apparent preferential treatment,” he said.
Goolsarran said it appeared that the government initially intended to use single-source procurement when it invited KMS B.V. to submit a proposal. However, the administration later adopted a two-stage tendering process, under which KMS B.V. submitted an expression of interest and subsequently advanced to the financial-bid stage.
“The government should have adopted the single-source procurement or open tender via the two-stage tendering approach. It cannot use both methods of procurement,” he said.
He added that there was adequate justification under the Procurement Act for the use of single-source procurement, given the scale and urgency of the maritime disaster.
Kiskadee Watch previously reported that KMS B.V. had been invited by the Maritime Administration Department (MARAD) to participate before the public procurement process was launched.
In an August 7 statement, MARAD denied that any company had been selected or was being considered outside of the public procurement process. It said the contractor would be chosen through a transparent and competitive exercise.
However, MARAD did not say whether KMS B.V. had been approached before the public invitation for expressions of interest or whether a preliminary proposal from the company informed the subsequent procurement exercise.
Goolsarran explained that Section 28 of the Procurement Act permits single-source procurement in several circumstances. These include where goods, services or construction works are available from only one supplier or contractor; where highly complex services are available from only one source; or where a catastrophic event creates an urgent need that makes other procurement methods impracticable because of the time involved.
“I believe that the government wanted to use this method of procurement when it invited KMS B.V. to submit a proposal,” he said.
“Having done so, it would appear that the government changed its mind and adopted the two-stage tendering approach, with KMS B.V. again submitting its expression of interest.”
Goolsarran also pointed to Section 41 of the Procurement Act, which prohibits negotiations between a procuring entity and bidders.
On the question of disclosure, the former auditor general said Section 38(1) of the Act requires tenders to be opened publicly. At that meeting, the names of the tenderers and the prices submitted must be disclosed.
He said, however, that the legislation was not clear on whether the identities of companies submitting expressions of interest in a two-stage process must also be made public.
“In the second stage, that is, the tender stage, disclosure of the names of the tenderers and their prices is mandatory,” Goolsarran said.
The financial bids were opened by the National Procurement and Tender Administration Board on September 8. The three companies were Industrial Fabrication Inc, BK International Inc and KMS B.V.
BK International submitted the lowest bid at $1.034 billion, while Industrial Fabrication tendered $1.895 billion. KMS B.V. submitted the highest bid at $2.0351 billion.
The lowest price does not automatically determine the successful bidder. The submissions must also be assessed against the technical requirements, including the companies’ proposed recovery methods, experience and ability to preserve and document evidence for the Commission of Inquiry into the sinking.
The MV Barima capsized and sank off the Essequibo Coast on July 18 while travelling from Georgetown to Port Kaituma. Seventy-three bodies were subsequently recovered and 76 persons rescued, while others remain unaccounted for.
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