The Gas Transmission Company Ltd (GTCL) has signed a contract with Fernas Construction Company Inc for setting up a 60-km pipeline from Bakhrabad to Siddhirganj amid allegations of irregularities and favouritism.
The state-run company awarded the Tk 460 crore work to the Turkish firm on October 21 after it came out as a substantially responsive bidder in the technical evaluation.
Insiders alleged that GTCL leniently conducted the evaluation to make Fernas Construction look technically qualified by overlooking some key factors under pressure of a former minister.
The GTCL board told to The Daily Star that it found no gross irregularities in the bid evaluation of the firm by the technical evaluation committee (TEC).
There is an allegation that the committee even ignored the “conflict of interest” with regard to the so-called lowest evaluated bidder.
GTCL advised the TEC to clarify their position, take legal opinion from renowned attorney Dr Kamal Hossain and to submit a comprehensive report in its board meeting on May 22-23, 2011. The TEC prepared an explanation but did not take legal opinion from Dr Hossain. It referred remarks of the legal department of GTCL that, no conflict of interest took place in the bidding.
GTCL thereon issued letter of intent (LOI) in favour of Fernas Construction. As per the LOI terms, Fernas was required to submit performance guarantee within 28 days. But insiders said Fernas submitted a performance guarantee from the account of Fernas Insaat Ltd, which GTCL sent back and requested the firm to submit the guarantee under the name of the original bidder, Fernas Construction Company Inc.
Besides, during the negotiation with GTCL on September 28 and 29, 2011, Fernas proposed changing its specialist subcontractors for horizontal directional drilling (HDD) and gas metering station / city gate station / regulating and metering station.
Insiders said Fernas qualified for the job due to the credentials of those specialist subcontractors. Now if it changes them, they will be liable for disqualification for not complying with the minimum prerequisites.
Fernas proposed PLN Construction as its specialist subcontractor for HDD. PLN Construction is a wholly owned subsidiary of Punj Lloyd Ltd, which participated in the same tender as a principal bidder. Thus both the bidders were “in a position to have access to information”, which caused the conflict of interest. GTCL, however, ignored the issue.
As per tender rules, all the partners of the bidding must have valid ISO certificate. Fernas Construction does not have the certificate. The one it submitted was under the name of Fernas Insaat Ltd. GTCL also overlooked this deviation, said insiders.
They further said Fernas did not submit its mobilisation plan, construction schedule and methodology for HDD river-crossing with its technical bid. These are considered crucial for taking the procurement decision in a turnkey project of this scale.
“Despite all these shortcomings GTCL was compelled to evaluate the bid of Fernas and declare it technically responsive due to the pressure from a vested interest,” said an insider.
Upon getting concurrence from the donor, GTCL issued award letter to Fernas and invited it for a negotiation. During the negotiation GTCL requested Fernas to submit the missing items in their bid in order to regularise the inadequacies in the technical and financial bid.
This time Fernas took unusually longer time to submit the missing items, including construction and mobilisation schedule, telecommunication and scada design with technical details and HDD river crossing methodology, the insider said.
On receiving the documents, GTCL wanted to review, verify and validate those in line with the tender terms and technical offers of other qualified bidders. However, the vested interest mounted enormous pressure on GTCL to strike the deal on the same day without the completion of the reviewing process.
Md Aminur Rahman, managing director of GTCL, said the technical evaluation committee did not relax any rules to help Fernas win the work.
"We are not aware of any such flexibility in terms of the technical evaluation. We have evaluated their papers in a proper way and there is no reason to favour anybody," he said.
On conflict of interest, he said, "These are all old issues. They are settled and the World Bank has approved the process. However, we have received some complaints but these have been examined and ruled out by the competent authority including the World Bank."
Rahman also said the winning bidder can change its subcontractor, subject to acceptance by the GTCL. "Many hurdles need to be overcome step by step in a contract signing process. We can talk about silly things if we want to.”
He claimed that the bidding process was fair and transparent and that the evaluation committee was under no pressure from any quarter in awarding the work to any particular bidder.
GTCL invited bids in June 2010. As many as 30 firms bought the bidding documents but 10 of them submitted bids by the deadline of 15 December 2010.