16 December, 2018

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Investor Confidence At Risk: Ministers Ignore President’s Procurement Appeals Board Directives

Strong concern is being expressed by foreign missions, overseas investors, and local contractors over a clear breakdown of Sri Lanka’s Procurement Appeals Process for large scale, Cabinet level Procurements related to Standing Cabinet Appointed Procurement Committees, (SCAPC), Cabinet Appointed Procurement Committees (CAPC) and Cabinet Appointed Negotiating Committees (CANC).

Mahinda Samarasinghe

According to sources one of India’s largest port operations and marine services companies, Ocean Sparkle Ltd (OSL), had last week made representations to the government and to the Indian High Commission in Sri Lanka itself about their disappointment over the Appeals process and its outcomes.

OSL, backed by reputed equity investors like IFC Washington, Standard Chartered and Kaup Capital, owns and operates one of the largest fleets of harbour crafts in India and overseas — over 100, comprising mainly tug boats, PSVs, pilot boats, mooring boats, dredgers and barges.  It has operations in all 12 major ports in India (including JNPT, Mumbai Port, Tuticorin, Ennore, Chennai, Goa etc.) as well as commercial and private ports.  OSL provides comprehensive port Operations and Management Services in three of India’s four LNG terminals and is Petronet’s service provider in Kochi and Dahej.

OSL had provided specialised harbour towage services at Colombo Port between 2010 and 2016 and had recently taken part in a tender for charter hire of tug boats for another period of three years. “Their bid was the lowest cost, most responsive bid amongst the three bids that were received. OSL were also the only bidder to have firsthand knowledge and experience of operating at Colombo Port. However, their bid was rejected saying OSL had not met some procedural criteria and they appealed against that decision to the Procurement Appeals Board (PAB),” a source close to the PAB appeal process for OSL said.

OSL engaged President’s Counsel Sanjeeva Jayawardena, who filed a written submission with the PAB in support of OSL’s appeal. Through Mr. Jayawardena’s submissions and the subsequent PAB hearing, OSL strived to prove that they were the lowest evaluated substantially responsive bidder and that the procedural criteria that were given as the reasons for the bid being rejected, were not even requirements to be satisfied by any bidder at the time of bid submission. “Based on the documentation they provided and their own documentation, the Technical Evaluation Committee (TEC) and the CANC both agreed that OSL were the lowest cost bidder and the most responsive other than for the procedural issues that were then dealt with at the PAB hearing. They not only agreed once, but on three separate occasions as the record will show,” the source, who requested anonymity, said.

The PAB had decided the CANC erred in rejecting the OSL bid on the procedural matters that dealt with whether or not at the time of bid submission, a 100 percent, wholly owned subsidiary of OSL, registered in Sri Lanka to satisfy another criteria that said the tub boats must be Sri Lankan flagged, must undertake in a ‘letter of intent’ to enter into a joint venture agreement with the parent company OSL.

Arjuna

The PAB had conveyed their decision to the Secretary to the Ministry of Ports and Shipping, L.P. Jayampathy with a copy to the cabinet office as mandated by the Procurement Guidelines.

According to sources from the Ministry of Ports and Shipping, the PAB decision has been ignored by the Secretary and a cabinet memorandum was drafted to show that the PAB itself had erred in deciding which bid was the lowest bid.  “This was never in contention with both the TEC and CANC agreeing at the hearing that the bid submitted by OSL was the lowest. Therefore, PAB had no role in deciding which bid was the lowest. The PAB simply restated the amounts that were agreed to by both the TEC and the CANC at the hearing and gave their opinion that the procedural issues raised by the CANC as factors for disqualification were not applicable,” a ministry source indicated.

The draft cabinet memorandum alleging that the PAB had erred in their decision and standing by the original decision to award the bid to Sri Lanka Shipping Company, a subsidiary of Hayleys, whose majority shares are held by magnate Dhammika Perera, had been sent by Secretary, Jayampathy to the Ministry of Finance for observations.  However, Ministry of Finance officials had noted that the PAB decision was not attached to the memorandum and had requested Jayampathy to forward the same on Thursday, 26 July, before observations can be made before the memorandum being sent to the cabinet.

According to the National Procurement Commission’s most recent guidelines on the appeal process, the Procurement Appeals Board (PAB) appointed for Cabinet level procurement operations is an independent body directly reporting to the Cabinet of Ministers with their decisions and deliberations copied to the Secretary to the Line Ministry(SLM) in the event any cabinet level procurement is disputed or appealed against. The current PAB operates out of the Presidential Secretariat.

“In effect, the PAB is akin to the Appeals Court where there is no legal authority other than the Cabinet of Ministers who can change a decision made by the PAB. The cabinet is also supposed to challenge PAB decisions only on national interest issues and procedural grounds involving the decision itself,” a procurement specialist told. “A breakdown in this process where decisions made by the PAB are subverted without the cabinet being appraised of the true facts of the case is causing a huge loss of credibility to the governance processes of this beleaguered nation,” the specialist, who prefers anonymity, said.

This is not the only such case where PAB decisions had been ignored by line ministries. “Despite a presidential directive and a cabinet subcommittee directing the Petroleum ministry to take immediate action to repair and rehabilitate the dilapidated pipelines carrying petroleum products from the Colombo Port to the refinery and storage facilities in Kolonnawa, the Petroleum Ministry also ignored a PAB directive to award long extended tender to repair the pipeline to the lowest bidder or to cancel and recall a limited tender with only the technically qualified bidders from the previous tender allowed to participate. It has been more than four months now since the PAB decision was copied to the Secretary to the Ministry of Petroleum Resources, Upali Marasinghe, but there is a deafening silence from the Ministry,” the procurement specialist told. (for more on the pipeline tender click here)

Prior to his retirement earlier this month, former Secretary to the President, Austin Fernando, confirmed that the decision of the PAB regarding the pipeline tender had been conveyed to Secretary Marasinghe. “We have done our work and conveyed the decision. I believe the PAB requested the tender to be cancelled and recalled, but I don’t have full details on hand,” Fernando told. Fernando confirmed that the decision had been conveyed in April itself.

According to highly placed sources, Marasinghe is handicapped in carrying out the PAB decision as political interference in the tender process is strong. “It appears that political pressure is being applied now to provide housing for the people who are illegally occupying the land area through which this pipeline runs. The tender envisaged tunnelling underneath the land without disturbing the dwellings above, but now this has become a political project to provide housing and get votes,” a source indicated. ( By Gayatree Goonaratne) 

Related posts:

Investor Confidence At Risk: Ports Minister Arjuna Accused Of Violating Tender Rules

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Latest comments

  • 2
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    This comment was removed by a moderator because it didn’t abide by our Comment policy.For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2/

  • 2
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    the problem looks Sri lanka doe snot have GOOD PRACTICES IN HAND. Then every one can criticize. that is why procedures are reqauired and good practices are required. Here in this, it looks, a journalist has jumped in and is criticizing it whether the journalist knows it what is happening or not. that is sri lanka every one talks but no one wants to work.

  • 9
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    People had come to know that long before foreign investors.

    Govt. members are just a set of clowns.

    • 5
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      RR:

      It is because 99 PERCENT Sri Lankans are anyway clowns in front of foreigners

      • 4
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        Fathima

        Probably, Including you?

        • 4
          3

          RR, yes including me but excluding you though you’re not in that 1 PERCENT exception – happy?

  • 14
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    Very soon, very very soon the carnival for these corrupt, aimless, uneducated, brainless, disloyal, contemptible bunch of CLOWNS will end. Very soon. They will eat, drink and sleep in the vomit they have made. May the wrath of God be upon them all.

    • 5
      3

      Their end is inevitable but another similar, if not worse will be replaced is also inevitable – Because next time also, Sri Lankans going to vote!!!

  • 2
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    There appears to be a contradiction in terms. Lowest responsive means the lowest among the responsive bids. Quoting from the article itself, “most responsive other than for the procedural issues” is the key to the question. We, outsiders, are not privy to tender documents to determine which of the conditions to be satisfied mandatorily and which are not to express an impartial opinion regarding the issue whether the tender concerned is the lowest responsive. If the Cabinet is the ultimate authority in deciding, including over-riding the PAB, who must inform the Cabinet of the issue? It is the line Ministry and its Minister, where the Secretary of the Ministry plays a vital role in preparing the necessary documents. So what is wrong in submitting the Cabinet Paper concerned questioning the decision of the PAB? But in the process all the material facts must be placed and there can be no instance of misleading or party accurate details. We would be naïve to think that individual politicians are out of this but on paper, as per the information given to us in the article, they are out of it. Particularly after the “Sil Redi” judgement, junior officials and authorities do question the “legitimacy” of the superior authority on something or the other. One therefore wonders how there can be any order in the system. Chances are that Ministry bureaucrats may accuse in private that the PAB fellows may have counted money in hotel car parks without a hitch. It is correct to say in general that individual ministers don’t take the president for a tuppence, but the example quoted does not produce any evidence towards it.

  • 4
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    Dr Ranil’s Cabinet backing Dammika and Haleys is a good move..
    They both operate reputable Businesses. And the former is a reputable Business person.
    If he runs the Tug Boat Business the way he runs his Bank there wouldn’t be any issues.
    What these Business People like Dammika have to worry about is Dr Ranil and Mallika’s ETCA.
    Mallika is burning Mid Night Oil to sign it before Santa Comes to Colombo.
    This is according to the Press Trust of India.
    India sells USD 4.5 Billion and imports USD 770 Million.
    What a Trade Balance?
    That is under the FTA which they already have.
    This new ETCA is for Hindians to export their Services and Investment Funds as well ,with no restrictions.
    I heard Dammika saying Colombo Elite will be on USD 12.500 by 2020.
    Good on them.
    Hopefully this ETCA wouldn’t drive the rest to become Slum Dweller mini Satellite Town inhabitants around Pacha Chamapaka’s Mega Port City… .

    • 2
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      KASmaalam K A Sumanasekera

      “India sells USD 4.5 Billion and imports USD 770 Million. What a Trade Balance?”

      Because the stupid Sinhala/Buddhism cannot produce anything that foreigners want to buy. They want variety, quality, cost effective, new products,……….. …..

      Did your Sinhala/Buddhist Mahasangha design and produce any new/old consumer or industrial products such as IPhone, Computers, ………….. apart from using all the new consumer durable manufactured abroad and being politically pain in the neck to ordinary people ? Remind them all expensive motor vehicles are being manufactured outside the island.

      When are you going to stop moaning and groaning and do something to motivate people to integrate with rest of the world in the pursuance of excellence. You a key member of the noisy bigoted minority along with other stupid lot not only preventing progress but dragging them to hit the bottom.

      ” Hopefully this ETCA wouldn’t drive the rest to become Slum Dweller mini Satellite Town inhabitants around Pacha Chamapaka’s Mega Port City… .”

      It won’t but you sure will.

      Wake up.

  • 3
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    Poor Sri Lanka ..
    Corruption is dominating it from all sides; from sky; from sea and from land and on land ..
    Why is it ..
    Human sins?
    Poltiicans sins ?
    People sins ?
    Law agents sins?
    Whose sin is it for public to suffer ?

    • 4
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      Lankan:

      It is our own sin to being born here :-)

      • 2
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        Fathima

        There’s a remedy, just clung in a foreigner & he’ll do the rest to make you a citizen in his country.

        The problem will be that if sb else, I mean an unexpected sex inside the toga, it’ll be a problem,

        • 0
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          RR, that is proven trick for some Sri Lankans here. These days with an online ad, some cling as single ladies and some as married couple looking for 3some – tried or still in SL? But that doesn’t go well with my culture and religion as you know it.

  • 4
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    DEFECTIVE PROCUrEMENT methods used by the National Procurement Commission from the defunked Former NPA with the inability of the present Commisioners to understand even the correct definition of Procurement is creating all these unwanted Procurement problems. I say that the main sources of Corruption in SL, and I say this with confidence as I tried my best to help them via Speaker of the National Assembly who is the Head of the Constitutional Council. SL spend over Rs. 600 billion on Procurement but as everyone who handles Procurement seems to be an Expert they even ignore the defective Procurement guidelines. I wrote many letters to President Sirisena with no response as he still trying to get over his GS mentality. If SL need to clear it’s image of Corruption this government should get this very valuable commodity call Procurement correct.

    • 3
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      Hey Upasiri I know you in Aussie land. We have met a foodfare in Sydney.

      How come you go as Dr now?

  • 5
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    Whats holding it from being awarded to Hayleys they are conglomerate and have the resources to achieve the objective. We do not want Indians running our businesses …. go else where!

  • 1
    1

    This comment was removed by a moderator because it didn’t abide by our Comment policy.For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2/

  • 3
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    First priority should be given to Sri Lankan companies who kept people in employment
    and drove the economy forward during the ‘difficult times’ . Of course proper procedure has to be followed at all times.

    • 7
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      And Indian companies should be chased away immediately. These buggers saw some prosperity and opportunity after the war, and their businesses of different sizes are popping up everywhere. Usually you don’t see Indians in troublesome countries even as aid workers

    • 4
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      The Oracle,
      For Raa-nil, anything foreign is better than local. I heard that a local investor was keen to take over Edirisinghe Trust Investment that collapsed but the Government decided to sell it to a shady company in Singapore.

  • 1
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    When Devinegumba was brought in illegally by Younger Brother Prince, CJ SB didn’t have any saying on that. Trying over made her fired.
    These are comedies. PAB, the appeal board has no jurisdictional authority, but only consulting. So why don’t they allow the rogue minister buy whatever they want, instead of a lot of money wasted on tender procedures; an additional cost to taxpayer. Now, for three years, Swamynathan is looking for a large commission on homes. He was sued by TNA at the court for wrong procedure of tender on the 65,000 Iron Cages case. He then gave the contract for Chinese Railway Company, which did not even submit a tender, ignoring all other tenders.

    They are arresting complainers for the crimes in North. The Aava Kuzhu celebrated its leader’s birth with 2000 participants, in an island ferried by navy boards. It is said he is celebrating his birthday three times a day. Media is reporting the names openly the politicians working with these groups.

    Yahapalanaya Army was bringing a leopard, probably to scavenge left over human flesh. When it was blamed for the crimes in North it unleashed the leopard in the middle of the village. Villagers were attacked and they complained. Wardens went there refused to capture the leopard (, apparently on Rapist Army’s order?). Villagers beat it to death and celebrated relief from fear. It is the villagers arrested and charged killing the Army’s pet, not the Rapist Army unleased the leopard, not the warden left the scene endangering the public.

    Old Royal wanted to take in UNP Duminda. So they shot Premachandra. His daughter went to UNP.

    Everywhere Sinhala Only Justice prevail.

  • 1
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    Does the Ministers assume the President is like a square peg in a round hole???

  • 2
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    Foreign investors will look out as to whether the culture of corruption/nepotism/impunity can be penetrated or not. Esoteric names like Standing Cabinet Appointed Procurement Committees, (SCAPC), Cabinet Appointed Procurement Committees (CAPC) and Cabinet Appointed Negotiating Committees (CANC) will mean nothing. The investor will watch where some in the cabinet go after work.
    Gullible foreigner may invest through proxy. An Australian investor found out the quality of our legal system through a compatriot Gamanpilla, who the investor says was OFFICE Peon!
    .
    Our bane the culture of corruption/nepotism/impunity. We now accept that it cannot be eradicated. Can it be controlled?

  • 2
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    This is not the first time this kind of thing happened in the ministry of petroleum. We urge the Colombo telegraph investigative journalists to look and investigate and report on the Jet Fuel Fuel Hydrant system for BIA tender in 2016/17 period. From the beginning CPC was trying to offer it to the favored company and finally PAB made a recommendation to offer the contract to the most responsive lowest bidder (Amanapipelines from UAE) at 50M USD.and there was a cabinet reshuffle and new minister came, cancelled the tender stating a very weak point and cabinet agreed to cancel tender. then the retendering was done and offered at 70M USD. Colombotelegraph this your turn to find the truth and tell the people of this country

  • 1
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    Sunil,

    Perhaps Upasiri has a got a doctorate Mervyn Silva style

  • 0
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    Mallaiyuran

    By killing an innocent lepord and becoming overjoyed the Tamils showed to the whole world who they really are.

  • 0
    0

    Why beat about the bush? The real impediment is the acceptance of the culture of corruption/nepotism/impunity.

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