The Ministry of Finance is pushing back against criticism of the government’s decision to sign a Memorandum of Understanding with India’s Fedders Lloyd company for the construction of the Specialty Hospital.
Fedders Llloyd had presented the second lowest bid when the project went up for tender under the former PPP government. The company that won the bid, Surrendra Engineering, was later fired by the same PPP government over several irregularities and suspected fraud.
In a statement on Saturday, the Ministry of Finance said its decision to sign the MOU with Fedders Lloyd is consistent with the Procurement Act. The explanation is in response to growing criticism from the main opposition PPP and the Transparency group over the MOU, as they both expressed a desire for the reopening of the bidding process.
The Finance Ministry points to the Procurement Act Chapter 42:05, to justify its decision. That section of the Act states that “If the supplier or contractor whose tender has been accepted fails to sign a written contract, if required to do so, or fails to provide any required security for the performance of the contract, the appropriate board shall refer the matter to the Evaluation Committee to determine which of the remaining tenders is the second lowest evaluated tender based on the evaluation criteria outlined in the bid documents subject to its right, in accordance with section 40(1), to reject all remaining tenders.”
According to the Finance Ministry, “in the Public bidding done for the Specialty Hospital under the PPP/C government, four tenders were received. Two were deemed to be rejected, leaving the remaining two – Surrendra Engineering and Fedders Lloyd Ltd. – in contention.”
It said that “in spite of the protestations of Fedders Lloyd, the PPP/C government selected Surrendra Engineering, leaving Fedders Lloyd as the second and only other bidder for the project.”
The Finance Ministy now explains that it did not award a contract to Fedders Lloyd; but “merely entered into a MOU with the second and, indeed, the only other qualified bidder.”
It said the advantages of proceeding in this manner, rather than going out for a new tender are many, including the fact that Fedders Lloyd expressed in the MOU its intention to hold its prices expressed in its original bid made some four years ago. “In addition to being time consuming, a new tender will result, obviously, in price escalation due to inflation.”
The statement further noted that “Fedders Lloyd intends to examine works already done by the previous contractor and to integrate those works within its proposed current design options, so as to lessen the burden of loss of funds already spent.”
And the company also intends to complete the designs and finalize the list of equipment (which was not completed by the previous contractor) to the satisfaction of the Ministry of Public Health and to hold the overall cost of the project within the available balance of the Line of Credit from Exim Bank of India.
“It is the intention of the MOF that should the conditions in the MOU be satisfied by Fedders Lloyd, then the Tender Board will be invited to make an award of contract to Fedders Lloyd”, the release said.
The Finance Ministry said that procedurally, there is no impropriety in the method used by government in entering the MOU with Fedders Lloyd with the intention of leading to an award should the conditions stipulated in the MOU be met by Fedders Lloyd and the decision to utilize the instrument of the MOU, safeguards the procurement process and seeks to optimize the use of Public Funds, in this case a loan, in the most beneficial way.