MoU with Fedders-Lloyd above board -gov’t says

THE Ministry of Finance has cleared the air on the award of entering an agreement with Indian construction firm Fedders-Lloyd to build the Specialty Hospital, noting that procedurally, there is no impropriety in the method used by government in entering the Memorandum of Understanding (MoU) with the company.

The agreement was entered into with the intention of leading to an award should the conditions stipulated in the MoU be met by Fedders-Lloyd. According to the ministry in a statement, the decision to utilise the instrument of the MoU safeguards the procurement process and seeks to optimise the use of public funds, in this case a loan, in the most beneficial way.  At a press briefing yesterday, Opposition Leader Bharrat Jagdeo said: “There is no transparency,” in the recently signed MoU. Transparency International Guyana has also criticised the agreement.  But the ministry said the MoU for the review of works for the Specialty Hospital Project is consistent with the Procurement Act Chapter 42:05:
“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,” the Act states.
Jagdeo also claimed that Fedders-Lloyd was disqualified during the bidding process. “I don’t want to justify anything… so have them release the document,” he said.  However, the Ministry of Finance noted that 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 Limited – in contention. In spite of the protestations of Fedders- Lloyd, the PPP/C government selected Surendra Engineering, leaving Fedders-Lloyd as the second and only other bidder for the project.
Surendra’s services were eventually terminated by the previous government.  The ministry explained that therefore, in accordance with Section 42(5) of the Procurement Act, the government can proceed to the second bidder. The Ministry of Finance did not award a contract to Fedders-Lloyd. The ministry merely entered into a MoU with the second and, indeed, the only other qualified bidder.
Jagdeo, a former President, contended that the project should have been re-tendered, and an assessment of the work done so far should be done by an independent firm and not Fedders- Lloyd.  But the ministry pointed out that the advantages of proceeding with the second highest and only qualified bidder, 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; 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; Fedders-Lloyd intends to complete the designs and finalise the list of equipment (which was not completed by the previous contractor) to the satisfaction of the Ministry of Public Health; and Fedders-Lloyd intends to hold the overall cost of the project within the available balance of the Line of Credit from Exim Bank of India,” the ministry said.
The ministry noted that it is the intention 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.