BBIAP fuel farm contract: TI Pakistan censures CAA for bypassing highest bidder

Transparency International Pakistan has censured Civil Aviation Authority (CAA) over bypassing the highest bidder in the award of contract of Fuel Farm or Hydrant Refuelling System at Benazir Bhutto International Airport Islamabad (BBIAP) in violation of Public Procurement Rules 2004. In case violation is proved, the contract would be considered "misappropriation under rule 50."
In a letter sent to the Director General, CAA, Nadeem Khan Yousufzai on May 31, Adviser TIP, Syed Adil Gilani has drawn his attention to allegations that CAA has been trying to award the contract to M/s APL at Rs 0.40 per litre, whereas according to the bid documents requirements, the contract has to be awarded to the highest bidder, and M/s Pakistan State Oil, who has quoted Rs 1.01 per litre being the highest bidder are being denied the contract. It means that exchequer will loses Rs 0.61 per litre on every revenue of Rs 0.40 per litre, which is 150 percent more than what PSO will be paying to CAA. He has asked for confirmation whether the report alleging following violations is correct or not:
1. In April 2011, the CAA had asked the Infrastructure Project Development Facility (IPDF), which operates under the Ministry of Finance, to act as consultant in carrying out a pre-qualification exercise amongst Oil Marketing Companies (OMCs) operating in Pakistan and despite APL having no experience of airport operations or running/ maintaining a fuel farm or hydrant system, they were pre-qualified on the basis that they were coming as a consortium with a German firm.
2. The bidding documents states that bidders would submit a hydrant access charge on per litre basis, which it would pay CAA for using the Hydrant Refuelling Services (HRS) facility and the bidder paying the highest per litre through put, shall be the winning bidder.
3. The bid itself was based on Single Stage Single Envelope one line bid basis and was carried out on March 28, 2012 (after 12 months of prequalification), at the IPDF head office in Islamabad in the presence of CAA officials, IPDF officials and representatives of each of the pre-qualified OMCs. At the bid opening, Shell declined to participate in the bidding process while APL bid 40 paisa per litre and PSO bid 101 paisa per litre. As such PSO was declared the highest bidder for the project.
4. That the CAA seemed to be delaying the contract award by now hiring financial advisors to evaluate a single figure bid evaluation. "These delaying tactics seem to be in contravention of PPRA Rules 29, which state that "Procuring agencies shall formulate an appropriate evaluation criterion listing all the relevant information against which a bid is to be evaluated". Such evaluation criteria shall form an integral part of the bidding documents".
5. As per PPRA Rule 30 "All bids shall be evaluated in accordance with the evaluation criteria and other terms and conditions set forth in the prescribed bidding documents.
6. CAA is unwilling to follow PPRA Rule 38 which states that the accepted bidder "if not in conflict with any other law, rules, regulations or policy of the Federal government, shall be awarded the procurement contract". This delay in contract awarding seems highly questionable and mysterious".
TIP referred to the Supreme Court of Pakistan's judgement given in the Rental Power Plants Case on March 30, 2012, where it had stated that it is important to note that all the executive authorities are bound to enter into contracts for supplies at the least expense to the public exchequer, and that the most significant consideration for every department of the government must be the best economical mode of meeting the public needs.
Ministry of Defence through its letter of January 31, 2011 had issued directives that Public Procurement Regulatory Authority (PPRA) Rules must be observed in letter & sprit while making procurements. Violations of those rules will be viewed seriously and head of department/ organisation will be held responsible for the same.
Adil Gilani informed the managing director that CAA had been regularly violating on almost all procurements, and also blatantly bypassing the PPRA requirements issued under various notifications and regulations. If the news report is correct, then it is a case of misprocurement under Rule No 50.
And such procurement is also to be dealt under Rule No 2 (f) "corrupt and fraudulent practices" includes the offering, giving, receiving, or soliciting of anything of value to influence the action of a public official or the supplier or contractor in the procurement process or in contract execution to the detriment of the procuring agencies; or misrepresentation of facts in order to influence a procurement process or the execution of a contract, collusive practices among bidders (prior to or after bid submission) designed to establish bid prices at artificial, non-competitive levels and to deprive the procuring agencies of the benefits of free and open competition and any request for, or solicitation of anything of value by any public official in the course of the exercise of his duty, he said. He asserted that Transparency International Pakistan is striving for across the board application of Rule of Law, which is the only way to stop corruption.
Copies of the letter have been forwarded for necessary action as per rules read with the Supreme Court of Pakistan's orders on April 28, 2010 in case of LNG contract to GDF-Suez to Chairman, PAC, Islamabad, Chairman, NAB, Islamabad, Chaudhry Ahmad Mukhtar, Federal Minister for Defence, Ministry of Defence, Rawalpindi, Secretary, Defence Division, Pak Secretariat - II, Rawalpindi, Registrar, Supreme Court of Pakistan, Islamabad, Auditor General Pakistan, Islamabad, and Managing Director, PPRA, Islamabad.