How firm lost Sh66 billion fuel marking deal

Dar es Salaam. One of the leading inspection and testing companies---Ms Intertek International Limited in association with Authintix Ink---will not implement a $28.8 million (Sh66.2 billion) fuel marking contract after the Public Procurement Appeals Authority (PPAA) nullified the tender given by the Energy and Water Utilities Regulatory Authority (Ewura).
PPAA cancelled the tender following an appeal by Ms SICPA, SA JV GFI (T) Limited, which was among four bidders that bade for the lucrative deal but disqualified because its bid price was higher compared to price quoted by Intertek.
“Given circumstances surrounding the whole evaluation process which was marred by irregularities, there cannot be a justifiable award to any of the tenderers including the appellant (Ms SICPA),” said PPAA in its recent decision.
The quasi-judicial body has directed Ewura to restart the tender process in strict observation of the law just two months after Intertek was awarded the tender.
Ewura floated the tender in November, 2019 for fuel marking services that saw four tenders received by December 2, 2019, the deadline for submission of the tenders.
After being subjected to evaluation, two tenders were disqualified during preliminary evaluation for not meeting requirements sent in the tender document.
The two remaining tenders---that of Intertek and Ms SICPA---were subjected to detailed evaluation but the two competitors remained neck and neck. Both seemed to have complied with the specified tender requirement.
At this stage, Ewura subjected them to financial evaluation where Ms Intertek International Limited in consortium with Ms Authentix Inc emerged the lowest evaluated tenderer.
It was recommended for the award of the tender at a contract price of unit rate of $3.20 cents per cubic meter.
Ewura claimed that Ms SICPA tender was not successful for the reason that its bid prices of $6.77 per cubic meter was higher compared to price quoted by Intertek.
SICPA challenges disqualification
Dissatisfied with the disqualification, MS SICPA applied to Ewura on 22 February, 2021 for administrative review of the tender. Three days later, Ewura issued a decision, dismissing the application, prompting the company to lodge an appeal at PPAA.
At PPAA, SICPA argued that the tender process was marred by allegation of corruption and that the process lacked integrity and probity.
It was their contention that the proposed successful tenderer (Intertek) did not meet criteria specified in the tender documents. The company argued specifically that general and special conditions of the contract allowed mobilisation period of 30 day after signing the contract.
“The second respondent (Intertek) has indicated on its tender that the commencement date would be 90 days after signing of the contract. That implies that mobisation period would be 90 days instead of 30 days specified in the tender document. The first respondent (Ewura) ought to have disqualified Intertek for non-compliance with requirement of the tender document,” argued the appellant.
On the other hand, Ms SICPA argued that Intertek partner in the deal, Authentix Inck lacked the requisite qualification to be awarded the tender. Further, SICPA submitted that Intertek International Limited attached as a proof of experience certificated of accreditation issued to Ms Intertek Testing Services E.A (PTY) Limited.
According to the appellant, Ms Intertek International Limited and Ms Intertek Testing Services E.A (PTY) Limited are two separate and distinct entities. “Ewura erred in claiming that the experience attained by Ms Intertek Testing Services E.A (PTY) Limited also qualifies Ms Intertek International Limited,” submitted SICPA.
SICPA also doubted whether Regulation 9 (10) (e) of the Public Procurement Regulations that requires each firm in the consortium to be evaluated separately with respect to its contribution to the proposed contract to be performed was complied with.
The appellant further argued that the Public Procurement Act and its regulation was clear that an award is to be made to the lowest evaluated tender and not the lowest quoted price as Ewura did.
It sought orders that Ewura be ordered to suspend the award process of the tender and review evaluation process of the tender and nullify the whole process.
Ewura’s response
In their response, Ewura said corruption allegation which indicated that the Head of Procurement Management Unit misled the tender board was reported in the midst of the then ongoing tender process, therefore, it was not prudent for it to respond to such informal report publicly.
With regard to claims that the Intertek did not comply with mobilisation period of 30 days, Ewura submitted that the claims lacked merit as it relied on incorrect information obtained from newspapers.
Ewura further submiteed that much as Intertek had indicated that execution of the contract would commence within 90 days from the contract signing date that does not necessarily means it would use 90 days for mobilisation.
“The second respondent (Intertek) might use a shorter for mobilisation than what it started in the tender,” argued Ewura.
With regard to experience of Ms Intertek International Limited, Ewura submitted that the firm has the requisite experience to perform the contract as required in the tender document.
According to Ewura, the appellant was disqualified for quoting the highest price of $ 6.077 VAT inclusive to mark one cubic meter of fuel compared with $3.20 price quoted by Intertek VAT inclusive to mark one cubic meter of fuel.
Tanzania’s annual consumption of fuel stands at 3 million cubic meters. With the proposed fuel marking contract expected to last for three years from the contract signing date, SICPA’s total contract price for three years would be $54,630,000 (about Sh125 billion) while the total contract price for Intertek was $ 28.8 million (about Sh66.2 billion).
“The difference between the price quoted by the appellant and that of the second respondent is Sh59.4 billion which is a substantial amount of money and cane served. In view of this, the appealnt does not qualify to be awarded the tender,” said Ewura.
PPAA cancels the tender
In its decision, PPAA sided with SICPA that Intertek contravened requirements of the general and special conditions of the contract which requires service provider to start carrying out the service within 30 days after the date the contract becomes effective.
Intertek had indicated that it expected to commence fuel marking services within 90 days.
PPAA also said Ewura erred in law for negotiating with the Intertek while it was crystal clear that Intertek’s tender was not responsive in as much as mobilisation period is concerned.
The authority also said Ewura ought to have disqualified Intertek for failure to comply with the experience requirements.
As a proof of experience, tenderers were required to exhibit five-year experience in works of a similar nature and at least two works performed in two different countries.
“Among the listed previous performed contracts by Intertek, only one undertaken with Chevron Fuel Marker in the Philippines can be termed to be of a similar nature to the tender in question,” said the authority.
PPAA also found that Ms Intertek Te3sting Services (EA) (PTY) and Ms Intertek International Limited were two different entities, thus it was not proper for the latter to use the experience of the former to justify its qualification.