Pacific Games Village Contract
This is adaptation of excerpts from
A Chinese company, China Railway Construction Engineering (CRCE) PNG, was awarded a contract worth more than K263 million to build the 2015 Pacific Games Village at University of PNG, despite the job being valued at only K190m.
Documents provided to The National show that CRCE was not in the top three of the 10 companies that bid for the contract, however, was approved ahead of the rest at an additional cost of more than K73 million to Papua New Guinea.
Sports and Pacific Games Minister Justin Tkatchenko, when contacted for comment, said there was “nothing sinister” about the awarding of the contract to CRCE.
A government source said a professional New Zealand engineering consultancy firm, Warren and Mahoney, did the scoping and estimation for the project which it said was worth K190m.
Moreover, the tender evaluation committee (TEC) of the Central Supply and Tenders Board (CSTB), disqualified CRCE from further evaluation, however, it was somehow awarded the contract.
The 10 companies that bid and their respective prices were:
- China Railway Construction Group PNG (K149, 549, 896.90),
- China Railway Construction Engineering PNG (K263, 973, 822.56),
- Associated Builders (K389, 699, 629.50),
- J4J Construction & Hardware Supplies (K179, 550, 813.20),
- China Harbour Engineering Ltd (K153, 307, 006.19),
- PNG Construction Ltd (K223, 437, 500),
- Digara Construction Ltd (K226, 479, 798.16),
- Fletcher Morobe Construction (K191, 453, 653.80),
- JIC Niugini Engineering (K173, 236, 504.02), and
- China Railway Group (K189,033, 309.98)
Fletcher Morobe Construction was recommended by the tender evaluation committee (TEC) of the Central Supply and Tenders Board (CSTB) to be awarded the contract at a cost of K191, 453, 553.80.
The other two top companies after that were China Harbour Engineering Ltd (K153, 307. 006.19), and JIC Niugini Engineering Ltd (K173, 236, 504.02)
“Members of the TEC assessed individual bids according to the evaluation criteria for technical scores out of 100, and average totals established to determine the ranking of the bids,” according to the TEC report.
“Emphasis was placed on technical scores for ranking individual firms, while financial capacity was assessed based on the available working capital.
“China Railway Construction Engineering failed to meet the annual turnover requirements and his (sic) failure to provide the working capital, liquid assets and/or credit facilities information, and no certificate of compliance to confirm payment of tax to the IRC, disqualifies him for further evaluation.
Fletcher Morobe topped with 84 out of 100 followed by CRCE (77.3), China Harbour Engineering (77.2), JIC Niugini (76.7), China Railway Construction Group (76.5), China Railway Group (74), PNG Construction (63.5), J4J Construction & Hardware (70.5), Digara Construction (61.3), and Associate Builders (61.2).
While currently there is no evidence of deliberate misdoing, we wonder:
- What process and criteria was applied to the selection
- Why other companies which did meet the qualification criteria and with lower prices were not accepted
- Under what circumstances does the government consider it necessary to ignore the recommendations of the CSTB
This case is still evolving. Clear risks are that:
- company is a unable to deliver on time
- the CSTB and its processes are bypassed
- later it transpires that inducements were involved
- later a “shelf” company with little or no capacity wins a contract for say 270 million and then sub contracts back to one of the real companies which put in a bid for 200 million. The shelf company then collects the 70 million for basically doing no work.