Mohmand Dam contract: Serious deviations committed in bidding process

ISLAMABAB: In a shocking disclosure, serious deviations have been committed in Mohmand Dam bid by Wapda high ups to manipulate the whole bidding process to award the contract to ‘favourite’ joint venture CGGC-Descon by misusing the Chief Justice’s directive on construction of Diamer-Bhasha and Mohmand dams.

Firstly the single bidder CGGC-Descon missed the penstock head loss, secondly its single bid price is much higher than the price of approved PC-1 and thirdly CGGC-Descon did not offer any supplier credit as required by tender document. More importantly, it is also disclosed that Wapda’s top mandarins also used the unique way to block many potential bidders from participating the bids by first setting up the highest qualification criteria in the tender documents, but all the said tough requirements got relaxed and ignored after acceptance of single bidder CGGC-Descon. So the whole bid evaluation process is total managed and controlled to favour one bidder Descon.

It is international practice of World Bank and Asian Development Bank that the requirement for qualifications shall be reasonable and efficient and must not necessarily create the constraints that limit the number of bids or the possibility of maximising the competition. For Mohmand Dam Wapda set the requirement at 88%-136% of the project value which is against the World Bank and ADB’s common practice that is usually from 50% to 80% for mega value project.

In addition, tender document also required bidders to include tough jobs such as security arrangements in FATA area wherein Mohmand Dam is located by contractor itself and supplier credit arrangement by the contractor also blocked many potential bidders to compete the bidding. But astonishingly all the tough curbs were relaxed and ignored by Wapda to authorities after acceptance of bid by CGGC-Descon JV. Had these strict clauses been relaxed before bidding, more bids would compete with better price.

All this has been mentioned in the correspondence of the senior Wapda member to Chief Justice of Pakistan, Prime Minister of Pakistan, Chairman NAB, Islamabad and Chairman Public Account Committee, National Assembly. The said senior Wapda member has been the part of the contractors’ bids evaluation for Mohmand Dam.

Wapda Chairman General (R) Muzammil Hussain when contacted simply said; “It is all incorrect.’’ He said: “The information that The News has about the clauses in the tender document pertaining to value percentage, supplier credit and security are all incorrect.’’

However, Wapda spokesman later on in its calculated response to the questionnaire of The News said that Wapda initiated and processed the Procurement of Works for Construction of Civil Works including Design, Supply and Installation of Electrical and Mechanical Works and Hydraulic Steel Structures of Mohmand Dam Hydropower Project strictly adhering to the transparent best practices in line with Public Procurement Regulatory Authority (PPRA) rules and Pakistan Engineering Council (PEC) provisions. The whole process was completed on merit without favour and fear.

As per the guidelines of the World Bank and the Asian Development Bank, the perspective bidder should have minimum participation of about 80% of the estimated value of the subject contract for the specific construction and contract management experience. The criteria for qualification in case of Mohmand Dam was 57% which is lower than the bank guidelines to encourage participation of bidders. Therefore, the allegation relating to setting extremely highest qualification criteria in tender document to discourage the maximum number of bidders is baseless and contrary to the facts.

For credit and security arrangements, the addendum was issued on May 14, 2018 relaxing the said conditions. The addendum was sent to all bidders who purchased the bidding documents. Since, the addendum was issued much earlier than proposal submission deadline of June 26, 2018 therefore; it is incorrect that the condition relating to supplier’s credit was relaxed after the submission of bid.

M/s CGGC-DESCON JV, Wapda spokesman said, met substantially the requirements of Eligibility and Qualification Criteria (Section III of Bidding Document). However, Head Loss in Penstock was declared by the consultants as a minor deviation and proposed to resolve it during pre-award meeting. He further said that price bid is under evaluation. Successful evaluation will lead to award of contract followed by mobilisation of the contractor.

However, the Wapda official who wants not to be named said that Head Loss in Penstock is not a minor deviation rather it is a serious deviation. He said that Wapda says on the issue of security arrangement and supplier credit arrangement, it has relaxed the pertaining clauses. He said that in June 2018, contractors submitted the bids. The process to prepare the bids takes 8-9 months with cost of $4-5 million. Many potential bidders who purchased the documents, didn’t come up with positive mind keeping in view the strict clauses mentioned in the tender document, but relaxing the said clauses in May 2014, a month before submission of bid in June did not provide the ample time to prepare the bids as preparing the bids with change in qualification criteria a month ago has actually discouraged many potential bidders on account of short time. However, relaxing the condition a month ago was certainly a manipulative move to clear the way for favourite joint venture of CGGC-Descon.

The document available with The News also mentions that it is known to all that ECNEC in April 2018 approved Mohmand Dam with condition of Wapda’s proposed financing plan wherein contractor was required to bring supplier’s credit on its own balance sheet.

It also unfolds that on January 7, 2019, Wapda opened its single bid of CGGC-Descon’s financing bid which however, didn’t include any letter of intent either from any financing bank or insurance agency. “So as per the tender document, bid should be declared non-responsive,’’ says the document.

Engineer Mohammad Jamil, country manager of SMEC International, the lead consultant of the joint venture that evaluated the contractors’ bids under single stage two envelope bids mechanism for Mohmand Dam and declared CGGC-Descon winner, when contacted said that contractually SMEC cannot share any information with anybody without Wapda.

Mazharul Islam, expert in contract management from Pakistan Engineering Council said that he has already written a letter to Wapda chairman with cc to Secretary Ministry of Water Resources asking them to go for re-bidding of the project of paramount importance as the whole bidding process has become questionable. He said that Wapda needs to go for re-bidding of the project with provision of levelling field to all potential bidders for competitive price as under the current questionable bid, CGGC-Descon has come with bid at higher side which is equal to Rs309 billion.