The Caribbean Development Bank (CDB) declared misprocurement in the Yarabaqua River Defence Project because Reliable Construction Services Ltd., the firm to which the contract was assigned, did not have the required financial information, access to financial resources, or specific experience.
The bank gave its explanation in an April 9 letter to head of the Tenders Board, Edmond Jackson.
“Having reviewed the documents, a number of points of concern were noted, including that the tender document requires a submission of three years of audited balance sheets. However, RCS’s bid states that the company was only registered in 2017 and, therefore, only financial documents for that year was provided,” Daniel Best, the CDB’s Director of Projects said in the letter.
“For earlier years, RCS provided financial statements from a different company, Reliable Rides and Parts, which their bid claims is a sister company despite the tender document clearly stating that the financial information must reflect the financial situation of the bidder or partner of a JVCA [Joint Venture, Consortium or Association] and not a sister or parent company. It also appears that the financial statements for RCS were not audited as required,” said the letter, from which Prime Minister Ralph Gonsalves read at a press conference in Kingstown on Tuesday.
The second reason the CDB gave for declaring misprocurement was that the tender document required an average annual turnover of $1 million within the previous three years.
However, given that Reliable had only been operating for one year at the time of evaluation, this requirement could not be met, Best said.
Gonsalves, however, said that in its evaluation reports submitted to the CDB, IBI Group, the Canadian consulting firm that evaluated the bids for the project, had noted that Reliable had said in its bid document that they had been doing work as Reliable Construction but they were not formed as a company.
He said that Best’s letter further said that the tender document requires that the bidder must demonstrate access to or availability of financial resources such as liquid assets, unencumbered real assets, lines of credit and other financial means other than any contractual advance payments to meet the cash flow requirement of $500,000 and the overall cash flow requirement for this contract and its concurrent commitments.
Best said that Reliable Construction’s submission does not demonstrate this, but included “what seems to be a personal mortgage of an unnamed person and a letter from a property development company confirming that they are negotiating a contract with RCS with no further details”.
Gonsalves said: “Well, why he didn’t ask Edmond Jackson or ask the consultant. But when Edmond then asked the consultant, the consultant said that on reviewing the thing I state my own opinion from before.”
The fourth reason for declaring misprocurement was that “the tender document requires specific experience relating to participating as a contractor, management contractor, or sub-contractor in at least one contract similar to the proposed works of a value of at least $1 million that has been successfully and substantially completed in the last three years. The only experience submitted by RCS that meets the required monetary value related to a period before RCS came into existence as a company and is, therefore, not eligible for consideration.”
Gonsalves said: “In other words, RCS, not yet a company, but they had done the work. Well, the consultant says, ‘Well listen to me, is the same people who have been doing this and they had that and they put that down in the document.’”
He said that the points stated by Best did not point to any new information, which under the CDB rules would justify the misprocurement.
“And at the very least, they should have sought from the tenders board — they should have sought clarification,” he said of the CDB, adding that Best’s letter was written after the CDB declared misprocurement.
“This is telling Edmond Jackson that there is misprocurement and he is giving the reasons. But all the reasons he gave are in relation to the very bid document itself where there was no new information and there is that document on which they had earlier offered the no objection. That is the point which we are making…”
The letter further said that in accordance with the CDB’s guidelines, misprocurement can be declared by the CDB after the CDB’s no objection to the evaluation report, permitting award of the contract where the no objection was issued on the basis of incomplete, inaccurate or misleading information furnished by the recipient of CDB financing.
“Well, please could you tell me on the basis of the very four things what is incomplete there, what is inaccurate or misleading?” Gonsalves said.
The CDB, after an investigation following a complaint by Bally and Bally Investments Ltd., one of the tenderers, cancelled financing for the “Yarabaqua River Defence” project and ordered that Kingstown repay any money already withdrawn for the project.
The decision by the CDB to withdraw financing for the “Natural Disaster Management – Rehabilitation and Reconstruction (December 2013 Trough Event) related-project, came after an investigation triggered by a Sept. 14, 2018 letter of objection to SVG’s Chief Engineer.
In his letter of objection, Cameron Balcombe, managing director of Bally and Bally Investments Ltd. complained about the award of the contract to Reliable Construction Ltd., another Vincentian firm.
There were seven tenderers, with bids ranging from EC$1.31 million to EC$2.17 million. Reliable Construction Ltd.’s bid was $1,421,576.
Gonsalves said that Balcombe had said in his letter that there would have either been a false declaration of undue influence.
“There was no false declaration because all the issues raised by Daniel Best here in the letter — the director of the projects department — came from the very documents themselves,” Gonsalves said.
He further noted that Minister of Finance, Camillo Gonsalves, who also spoke at Tuesday’s press conference, made the point that the CDB’s procurement guidelines are not incorporated in the financing agreement in the contract which it signed with the government in relation to the money.
“You cyar mek this thing up as you go along, you know,” the prime minister said.
“But, I am saying all ah these things to reinforce the point that a, the tenders board didn’t act unreasonably or wrongly, the government is entirely blameless, international consultants, when they had an opportunity to take a second look at it, reconfirmed their position, and then misprocurement precipitately.”
He pointed to the statement issued by the CDB on Aug. 14, in which it says that even after issuing a “no objection” to the award of a contract, the bank may still declare misprocurement in certain limited circumstances, including where it subsequently receives key information in relation to the process.
“Well, what new information did they get? Because everything that Best said he misprocured on, Reliable had put it down in their document,” Gonsalves said.
The bank also said in the statement that there had been “no finding by the bank of fraud or corruption in declaring the misprocurement”.
In his protest letter, Balcombe had pointed out that among the criteria for the award of the contract are that the bidder must meet minimum experience requirements in the key activities of gabion wall construction, reinforced concrete construction, and river training.
He noted that SVG is a small archipelago “and it is unlikely that major works costing over one million dollars would go unnoticed.
“I [am] confident, from my own knowledge and inquiries, that Reliable Construction Limited has not done any gabion basket or river training works of that magnitude or at all in this State or elsewhere to even qualify under the assessment as substantially responsive,” Balcombe wrote.
“Therefore, there has either been a false declaration made in their forms or unlawful and unfair intervention by someone of influence on their behalf,” the letter continued.
Gonsalves has said that his government will finance the project and keep Reliable Construction as the contractor.
This is an instance where those longstanding smoke and mirrors just did not work! No amount of puerile justification from the PM or his son, could give cover for the apparent back room skulduggery and gross cronyism, which we have all now taken to be so endemic in high places in SVG.
It is there plain and simple. The successful firm did not qualify and yet they were awarded the contract above a qualifying applicant! How was that “duty of care” owed to us, the Vincentian people, being discharged?
Moreover, if these unfit contractors are being retained to carry out the necessary work, how is the said “duty of care” to be discharged?
The only way Gonsalves can make wrong right in this instance is by paying the peoples money to a firm rejected by CBC.
Disgusting and unacceptable.
Gonsalves taken position in this instance is a slap in the face for CBC.
Thank You MR BEST for transparency and clarity…
Transparency Disarms UNTRUTHS!
I find this whole issue baffling as a manager of a political subdivision in the USA.
I cannot understand the level of authority given to the bank financing this project (CDB). Maybe no one can or will answer a few of my questions
1. If the government of SVG is committed to repaying the loan why is the bank involved in reviewing the contract proposal?
2. When did the government give up or signed away its right to manage it own affairs?
3. If the CDB has final approval rights over who is awarded the contract why was it not done before the award was made?
4. If such a review was done and the award was how can they stop or cancel the after the work was started?
5. Who is now going to pay this company for loss of profits as a resulting from the cancellation of this contract through no fault of their own?
6. Did the tender document not have a clear appeal time limit which ended before the award was made?
Just a few questions on my mind at this time I have many more but will be satisfied if I can get these answers.
Over the last 20 years I have been involved in borrowing hundreds of millions of dollars and at no time did I ever give up my rights to make the decision on who was awarded the job.
My response to the explanation given by the bank through this article are all unacceptable to me as a manager and my only response to the bank would have been thanks for your concerns but “none of your business. We are in a position to repay your loan under the terms and conditions we signed off on let me do my job managing my country”.
Sometimes I have to wonder why? And accept the fact that I’ll never be given a logical explanation.
Horace I do not believe a word you have written. Every lender has rules on which the borrower has to agree if they wish borrow for any reason whatsoever. If you go into a bank and borrow money to buy a car and then you go and spend the money on several holidays instead the bank will ask for their money back, and more than likely then dump you as a client.
CDB receive their funding from governments, the EU, USA, IMF, and World Bank. They have a duty of care to those funders to see that the money when lent to Caribbean countries is done in such a way as is transparent and corruption is cut out by tight controls. The controls that CDB require is that whoever is awarded a CDB funded contract is not subject to cronyism and is properly qualified to cary out such a contract.
This means that an ice cream vendor with a cart in the market who happens to give for free an ice cream to a politician. Is not rewarded with a contract to lay a section of road with drainage and services.
In the case of the contractor in question was originally a car parts company who through answerable means was awarded a contract to protect a river outlet. This company should have never got past the first stage when they applied to be included in the list of bidders. They obviously knew they were not qualified and the government agency knew they were not qualified.
Horace, please prove to us any contract for millions that you have ever been involved in where the lender simply gave you the money with no conditions. So Mr Horn-Blower, go blow your horn.
I am sure the Comrade will reward you in your common quest to make wrong right.
such empty deceits – having disarmed principalities and powers, He made a public spectacle of them, triumphing over them in it….WOW…..Mr.Best you’re the Best!
Reliable Construction did not qualify for the job. There is something missing from this entire issue that needs to be investigated. Who is the unknown partner mentioned that was to help Reliable to meet its financial objectives?
Mr. Best did a fantastic job by pointing out that Reliable didn’t have 3 years financial data and pointed to a sister company financial information to prove it can qualify. This is definitely corruption coming through the back door.
Now if the bank refuses to fund the project, then why is Ralph using tax payers’ money to hire this incompetent company that doesn’t meet the requirements to do the job? Is there a case that can be brought against the government for abusing it power to by-pass legitimate abjections to this company?
There is more to this story than meet the eye!
Ask Julian, senior member of the Dynasty.
tell them P.M …….. you cyah just mek this thing up as you go along !! lol
the bottom line to all this is…. NO FRAUD WAS PERPETRATED BY THE GOV ON THE BANK
Horatio it is called the “Terms of Reference.” The standard terms upon which the lender advances the Loan to the potential borrower. It is in no way unusual and it is something that I am quite familiar with!
Skeckpalmer, when one family ah run things in ah dis yah yard, yo ha fo keep ah mind pon Patrick Lafcadio Hearn, three mystic apes in his Glimpses of unfamiliar Japan.
Or shall ah gal say dem day three monkeys, with Mizaru, covering im eyes, because im sees no evil; Kikazaru, covering im ears, because im hears no evil; and Iwazaru, covering im mouth, because im speaks no evil. Ah so yo ha fo stay!
Cover over yo eyes, kark-up yo ears, an put yo han over yo mouth, caarse dem pickney want clothe, an yo ha fo find food fo de table. Plantation time nah done yet!