Maravi

Dora in another tender scam

Dora in another tender scam
Written by Amos Malupenga and George Chellah
Friday, February 13, 2009 7:59:28 AM

Communications and transport minister Dora Siliya has overruled the Zambia National Tender Board (ZNTB) and cancelled a duly awarded contract for the supply, delivery, installation and commissioning of a Zambia Air Traffic Management Surveillance Radar system (ZATM-RADAR) at Lusaka and Livingstone international airports.

Highly placed sources within ZNTB yesterday revealed that Siliya's cancellation was meant to accommodate SELEX Sistemi Integrati, a company from Italy, which has been single-sourced, contrary to professional advice from officials in her ministry, National Airports Corporation (NAC) and ZNTB.

The source said the tender for the purchase of ZATM-RADAR was initiated and recommended by a technical team comprising officers from NAC and Ministry of Communications and Transport. This was after SELEX offered in February 2008 to supply the equipment at a fixed total price of Euro13.7 million following its inspections of the facility at the airport and recommendation that the facility was obsolete and required replacement.

The source said according to their information, sometime in February last year, the Ministry of Transport and Communications requested for funding from the Ministry of Finance for the purchase of the new radar at Lusaka and Livingstone international airports.

In April last year, the secretary to the treasury, in principle, supported the acquisition of this new radar equipment but felt that there was need to consult the ZNTB on whether or not the ministry should single source.

“The following month, the permanent secretary in the Ministry of Communications and Transport wrote to ZNTB director general seeking advice on the best preferred method of procurement for the ministry to pursue. The director general directed that the radar equipment should be procured by open tender, or formal tender if you like, through the ZNTB,” the source said.

The source said on the strength of this advice, the permanent secretary in the Ministry of Communications and Transport in June submitted bidding documents to ZNTB director general for subsequent advertising on international competitive bidding.

“If you go into the archives, you will notice that we first advertised this tender in national newspapers in June last year and we continued to advertise up to September,” the source said. “All this time, the Ministry of Communications did not have any physical contact with the prospective bidders because the tender was above their threshold of K2.5 billion. We did all clarifications with the bidders on behalf of the ministry.”

The source added that bids were received by ZNTB and were publicly opened in the presence of bidders or their representatives. After that, an evaluation committee was composed from institutions that would be responsible for the equipment who prepared technical specifications.

The source said at the time the tender was opened on September 26, 2008, six bids were received from Hua-Jiang Investments with option number one at US $18.9 million and option number two at US $16.8 million, Intelcan at Euro 12.9 million, China LES at US $18.9 million and Ramet C.H.M at Euro 14.9 million. Other bids were from Thales Air Systems S.A with two options: option one was at Euro 9.050 million with option two at Euro 12.6 million. SAAB Systems Limited also put in a bid at Euro 15.8 million.

The source said at the end of the evaluation process, Thales Air Systems SA was successful as ZNTB's Central Tender Committee authorised to award the contract for Euro 9,050,168; the company's first option.

The source further said that on December 11, 2008, the then permanent secretary in the Ministry of Transport and Communications Dr Eustern Mambwe wrote to Thales Air Systems SA of France notifying them that they had been awarded the contract for the tender to supply, deliver, install, and commission the ZATM-RADAR at Lusaka and Livingstone airports.

The source said Dr Mambwe even requested Thales Air Systems to acknowledge receipt of the notification for the award of the contract and acceptance of the sum total for option number one. Dr Mambwe is said to have further stated that his ministry, together with justice and finance ministries were open for negotiations on the special conditions of the contract with regard to terms of payment prior to signing of the contract.

However, on the same day Siliya wrote to ZNTB director general David Kapitolo cancelling the award of the contract to Thales Air Systems claiming the tendering process did not inspire confidence.

“REF: TENDER - RADAR. I wish to make reference to the above subject matter and the letter addressed to you and copied to myself on the same subject,” Siliya's letter to Kapitolo read in part. “I wish to advise that as a result of the same, I have instructed the procurement department at my ministry to immediately suspend the current tender so as to restore confidence in the process.

“I have also instructed that a new tender process be initiated which will allow for only manufacturers of radars to participate. In this regard, I have instructed the procurement department to selectively invite manufacturing companies to submit bids.

“As you are aware, I gave an assurance on the floor of Parliament that we had identified a company to provide a tender to the Zambian government and it was on that basis that we requested for the funds from the Ministry of Finance. It is my intention to expedite the process and ensure that the tender is purchased as soon as the budget is passed. You are aware that this will not happen unless a transparent process is initiated immediately. By copy of this letter, the procurement department will go ahead and invite selected radar manufacturers to submit bids.”

But on December 12, 2008, the chief purchasing officer in the Ministry of Transport and Communications wrote a memo to Siliya advising her to abide by the lawful decision of the ZNTB to award the contract to Thales Air Systems.

“I wish to advise that the Ministry of Communications and Transport has a Category 'B' Procurement and Supplies Unit with a threshold of K2.5 billion, hence any purchase which is above the stated value should be procured by Zambia National Tender Board (Central Tender Committee),” the memo read in part. “In this case, the controlling officer (Permanent Secretary) should submit a formal request to the Director General of Zambia National Tender Board for consideration by the Central Tender Committee.

“Some of the two major functions of the Central Tender Committee are to invite and examine and authorise all procurement of goods and services for both government and parastatal bodies whose value is above the limit authorised in these regulations for tender committees established by regulation 7, 11 or 16.

“While one of the similar functions of the ministry's Tender Committee is to invite and accept tenders relating to the procurement of goods and services for its ministry within the limits authorised by the Zambia National Tender Board, in this case K2.5 billion (Refer Regulation 18 of CAP 394, Zambia National Tender Board Act), I wish to mention that the tender in question was not invited and awarded by this ministry as it was above the threshold authorised by the Zambia National Tender Board for the Ministry Tender Committee.

“Kindly note that the method that was used to identify the first suppliers was not acceptable to ZNTB as it did not meet the prescribed method of sourcing in accordance with the tender regulations (Refer attached letter TB/10/3/1 dated 22nd May 2008).

“However, in this regard, I wish to advise that the Ministry of Communications and Transport through its Procurement and Supplies Unit has no authority to undertake such a high value procurement which is not within its threshold. Please note also that Selective Tenders (Special Formal Tenders) are those which should not be advertised in the Gazette or any other publications as per Zambia National Tender Board Act 394, regulation 42.”

The chief purchasing and supplies officer further stated that a selective tender maybe authorised where: (a) there is a proclamation in force declaring a state of emergency or threatened emergency under the Constitution, (b) it is in the interest of public order, public safety or public security, (c) building works of a specialised or complex nature are involved, or equipment to be obtained is highly specialised, (d) the goods and services to be rendered by an educational or training institution, (e) services are to be rendered by an educational or training institution, (f) evidence is furnished that there are no other competing institutions or organisations in respect of the goods or services to be supplied or rendered and that the supplier is the sole franchise holder, (g) the goods or services to be supplied or rendered are to be used in, or are in the nature of research work, (h) equipment to be supplied is technical and is of a nature that requires standardised and inter-changeability of parts; or (i) there has been no acceptable tender from all formal tenders previously invited.

“It should be noted that the firm [Thales Air Systems SA] that had been selected for the award of contract is a reputable manufacturer of radar equipment hence there should be substantial justification and reasons to request for the cancellation of the award of contract and invite other manufacturers who did not respond to the invitation for bids that was floated by the Zambia National Tender Board,” the chief purchasing and supplies officer advised Siliya. “The ministry should further provide evidence that the procurement process and decision that was undertaken by the Zambia National Tender Board (Central Tender Committee) was not transparent. Furthermore, it should be proved that the firm that had been selected for award of contract had interfered or has engaged in corrupt or fraudulent practices in competing for the contract in question.

“Zambia National Tender Board (Central Tender Committee) to arrive at a decision of authorising the award had established that the criteria in the evaluation was fully consisted with the information that was given in the tender document and that bids were scrutinised for completeness in accordance with sub-paragraph 2 of paragraph 39 and 41 CAP 394 of the ZNTB Act.

“Therefore, since the process with regard to this tender was carried out within provisions of CAP 394 of the Laws of Zambia, I would advise that the Ministry of Communications and Transport abide by the decision of the Zambia National Tender Board of 5th December 2008.”

The source further disclosed that on this same day, Dr Eustern Mambwe had also written to Siliya explaining that the ZNTB process was transparent and dismissed as false assertions from Siliya's alleged anonymous informer claiming that the process was not transparent.

“I saw that letter because it was copied to our DG [Mr. Kapitolo]. If you dig deeper, I am sure you will find it,” the source said. “But basically, Dr Mambwe explained that as permanent secretary, he did not interfere in the evaluation process of any tender but only submitted the recommendations of the evaluation committee to ZNTB. He said that for ZNTB's Central Tender Committee to award the contract, it proved that all tender guidelines and regulations were adhered to. Dr Mambwe also said that the tender invitation and receipt of bids by ZNTB was openly and publicly conducted and each bidder knew its strength or weakness.”

However, the source said last month Siliya instructed Dr Mambwe to ensure that ZNTB cancelled the earlier contract awarded to Thales Air Systems.

“Again, Dr Mambwe wrote to the DG [Kapitolo],” the source said. “In his letter, Dr Mambwe explained that he had been directed by Dora to inform the DG that the tender should be re-tendered because she wanted to ensure that only manufacturers of radars are considered for the award, not middlemen. I saw this letter so it is not a rumour.”

The source said what was unknown to officials at ZNTB and probably some officials at the ministry was the fact that SELEX had in early December last year offered, to the Director of Civil Aviation, to repair the radar at Lusaka International Airport.

“But interestingly, as we have come to learn, this same SELEX company had earlier in February last year recommended that the radar at Lusaka International Airport was obsolete and needed to be replaced at a cost of Euro 13.7 million,” the source said. “But ten months later, they offered to repair gratis the same 20 year-old equipment they said was obsolete.”

And correspondence between National Airports Corporation (NAC) managing director Robinson Misitala and the Director of Civil Aviation reveals that SELEX had proposed to repair the existing radar head and offered a one-year warranty on the repairs. SELEX also promised to make available spares and facilitate their purchase for a period of one year.

However, NAC advised against taking up the SELEX offer because they thought the free offer had some undetermined hidden costs.

“We note that the SELEX offer does not clearly address the current technical situation of the Lusaka ATM radar, and therefore, it is difficult to conclude how adequate this intervention will be,” Misitala's letter to the Director of Civil Aviation dated January 7, 2009 read in part. “In particular the SELEX offer is not clear, unless otherwise clarified, on the following issues which have been addressed in order to have a modern, reliable and cost effective radar equipment that meets our requirements:

(1) replacement of the obsolete radar display system (2) replacement of the radar head computer maintenance system (3) provision of and enhanced lighting protection system, (4) provision of an adequate standby power supply, (5) installation of air traffic control radar communication radio system including the control consoles, (6) need to upgrade the secondary surveillance radar equipment to include mode-S and (7) integration of proposed Livingstone radar system to Lusaka control centre.”

Misitala noted that assuming that these were not part of the free offer, NAC would not have to source funding “for these relatively expensive but desirable improvements in order to restore the functionality as intended in the specifications of the current Zambia National Tender Board offer reference TB ORD/045/08-415”.

Misitala observed that in addition, more funding would be needed to cover the training of technical staff who would maintain the system, training of the air traffic controllers, funding for stocking of minimum buffer stock of spares, cost of maintenance in regard to age component on the equipment and cost calibration.

“It is important to note that to have a comprehensive radar control system that meets our requirement, the above elements must be in place and therefore the total cost of additional funding required to complete the installation of a radar facility at Lusaka International Airport should be made available and incorporated in the proposal,” Misitala stated. “We note that despite gratis offer from SELEX, the additional funding is far beyond and the ability of the Corporation will require government to intervene. In this respect, we would also like to advise that though the offer looks attractive there is an undetermined hidden cost of maintenance, reliability assurance, and limited shelf life and above all the equipment once repaired will require to be upgraded to meet modern demands of air traffic control.

“On this account, it is our view that it is not advisable to make decision of taking up the offer and abandoning our initial intention of procuring new radar equipment for Lusaka International Airport. The Corporation would be interested to explore the offer if technical and operational aspects highlighted are met and additional funding source is well established otherwise we will subject the processes of acquiring and implementing the much needed radar facility in the Zambian airspace to delays to the detriment of enhancing air safety and security to say the least.”

And on January 14, 2009 ZNTB director general Kapitolo replied to Dr Mambwe's letter which advised him to cancel the award of the tender to Thales Air Systems as per Siliya's instructions.

“We wish to inform you that following your request, the Zambia Public Procurement Authority has reviewed the process that was followed from the onset of the tender to the award of the contract. The Authority has also reviewed the bid offered by the recommended bidder, the evaluation process and the award process and made pertinent observations,” Kapitolo wrote. “Between the time of advertising the tender on 30 June, 2008 and the time of tender closing on 26 September 2008, the following companies bought the bidding documents: (i) SELEX - Italy, on 9 July 2008, (ii) SAAB System SA, on 10 July 2008, (iii) Thales Air Systems S.A, on 11 July 2008, (iv) World Cap U.K (Principal) Rethony, on 14 July, 2008, (v) Intelcan, on 16 July, 2008 (vi) India Sistemas, S.A on 24 July 2008, (vii) Airport Interface Technologies, on 25 July 2008, (viii) Globe Agronautic, on 17 September 2008, (ix) Nanjing Large Scale Electronic System Eng Co Ltd on 17 September 2008; (x) Ramnet C.H.M on 17 September 2008 and (xi) Hua Jiang Investments Limited, on 26 September 2008.”

Kapitolo further wrote that at the time they opened the tender on September 26, 2008 only six bids were received. These were, as earlier stated with their options - Hua-Jiang Investments Limited, Intelcan, China LES, Ramet C.H.M, Thales Air Systems S.A and SAAB Systems Limited.

“The bids were then subjected to an evaluation process by an evaluation committee consisting of eleven officers representing the Ministry of Communications and Transport, National Airports Corporation, Zambia Air Force and the Office of the President,” Kapitolo stated. “The evaluation committee went through all four stages of the evaluation process, namely the preliminary evaluation, detailed technical evaluation, commercial evaluation and the post-qualification evaluation. After the evaluation process, Thales Air Systems SA was found the most responsive evaluated bidder and recommended for award of contract.

“The evaluation report and recommendation were forwarded to the Central Tender Committee for authorisation of award of contract. Before presentation to the Central Tender Committee, the evaluation report and the six bids were subjected to further scrutiny by the Zambia Public Procurement Authority.”

Kapitolo further stated that at the meeting on December 5, 2008 the Central Tender Committee comprising 11 members authorised the award of contract to the recommended most responsive, lowest evaluated bidder, Thales Air Systems SA at a cost of Euro 9,050,168.00.

Kapitolo stated that from the above proceedings, the Zambia Public Procurement Authority was satisfied that the tender was conducted in a fair and transparent manner in compliance with the ZNTB Act as it existed at the time. He further stated that the secretariat had also verified from the bid submitted by Thales Air Systems as well as from the Internet that Thales Air Systems SA was a major and reputable manufacturer of radar equipment.

“In the bid, Thales has offered to design, deliver, install and commission the STAR 2000 and RSM 970 radar station manufactured by Thales Air Systems SA,” Kapitolo stated. “This co-mounted configuration is in operation in 200 locations. Thales Air Systems SA has in the recent five years installed 70 combined STAR 2000 - RSM 970 PSR + MSSR radar and over 130 stand alone RSM 970's including recent turn-key systems in Australia, South Africa and Ireland.”

Kapitolo observed that the Zambia Public Procurement Authority had also observed that Thales Air Systems SA was present in South Africa, Angola, Congo, Nigeria, Niger, Ivory Coast, Chad, Senegal and Madagascar where it had delivered primary and secondary radar stations and ATM display system for enroute and approach control centres. Kapitolo stated that other observations were that Thales Air Systems SA had fulfilled a wide range of operational needs in more than 260 operational systems, serving some of the largest and most complex air space in the world, be it in Europe, Africa, Singapore, Australia or China.

“From the above, the Zambia Public Procurement Authority is satisfied that Thales Air Systems SA is a manufacturer or radar equipment and not a “middleman”. Stated Kapitolo. “In view of the above observations regarding the conduct of the tendering process, and the status of Thales Air Systems SA as a manufacturer of radar equipment, the Zambia Public Procurement Authority has not found any compelling reason to justify the cancellation of the tender.”

However, Kapitolo's observations notwithstanding, Siliya on January 26, 2009 wrote to SELEX's vice-president Domenico Lovino in Italy granting SELEX authority to repair the radar head at Lusaka International Airport.

“I wish to make reference to your offer dated 4th December, 2008 proposing to repair the Lusaka International Airport Air Traffic Management radar head,” stated Siliya. “In repairing the radar head, I am sure your company would want to bring the facility to full operational status required taking into consideration the time it has been unserviceable.

“I have therefore granted the authorisation for your technical team to proceed on the understanding as stated in your letter. On arrival in Lusaka, you will be met by the National Airports Managing Director who will facilitate your clearance and access.”

The source said Siliya should convince everyone who participated in this process on why she has authorised SELEX to repair the radar at the airport when the same company had earlier observed that the radar was obsolete and needed to be replaced.

“The second point is that this SELEX did not even participate in the tender process although they bought the bidding documents; they didn't submit these documents to ZNTB,” the source said. “And why should Dora single-source when the law is very clear on how such tenders must be handled? Why should Dora lie that Thales Air Systems is a middleman when they are a reputable manufacturer? If the tendering process was not transparent, what was not transparent about it? And what is transparent about the process that Dora undertook? All these are questions that Dora should explain to the public because she is performing public functions so she is accountable to the public. But when you analyse her letter of December 11, 2008 to Mr Kapitolo, it is clear that Dora had settled for SELEX even before the tender process began because she stated that the ministry requested for funding after identifying a company to provide a tender to the government. And if you further analyse everything, you will see that it is SELEX that had inspected the facility at the airport in February last year and recommended that the radar was obsolete and offered to replace it at the cost of Euro 13.7 million.

“But since the President is saying that Dora is a smart and hardworking minister, I wonder if she will care to answer all these questions. But something is wrong somewhere. Is Dora smarter than all the officials in ZNTB, the ministry and NAC who have offered her both legal and professional advice? The public should probe this SELEX deal.”

When reached for comment yesterday, Siliya said she was busy as she had to prepare something.

“Why don't we do that tomorrow? You are again rumour mongering? You are rumour mongering!” said Siliya before bursting into laughter. “You are again rumour mongering… rumour mongering. You have heard that one already? You guys are unbelievable.”

Labels: CORRUPTION, DORA SILIYA, PRIVATISATION, ZNTB

posted by MrK @ 7:59 AM