ISLAMABAD: Transpa-rency International- Pakistan (TI-P) has raised serious questions on FBR's tender for IT-based solutions for electronic monitoring ( track & trace) system for tobacco products, sugar, fertilizers and cement, claiming it will inflict a Rs 13.5 billion financial loss on the national exchequer.
In a letter to Chairman FBR, Javed Ghani, Vice Chair, TI-P former Justice Nasira Iqbal said that TI-P, in response to its letter dated February 8, 2021, received a reply from Second Secretary Project on February 12 February 2021.
“FBR in its reply did not respond to the following issues pointed in TI Pakistan’s letter of February 8, 2021, raised by the complainant, and in the comments of TI Pakistan.
“As stated by FBR, the exchequer is losing annually tax of Rs 40 billion, i.e., Rs 280 billion in last seven years only on cigarettes so why has FBR avoided tendering for the Track & Trace after abandoning the tendering process in 2013 RFP.
“Waqar Masood was the Secretary Finance from April 2013 – January 2017 and the Principal Accounting Officer of FBR, and is also SAPM on Revenue in the present government, and may be is in a better position to clarify this loss of Rs. 280 billion (identified by the FBR itself),” according to the letter.
According to TI-P, “on August 6, 2019, FBR issued RFP, for the installation of Track & Trace system of tobacco products. On September 12, 2019, the tobacco lobby met with the Chairman FBR and managed to convince him to change the evaluation methodology to favour the lowest cost solution provider as was provided in the 2013 RFP, rather than a combination of technical and financial performance.
On November 20, 2020, FBR issued a document called Instructions for Licence (IFL) for installation of Track & Trace system for tobacco, sugar, fertilizer and cement products. Submission date of applications was December 19, 2020, extended to December 31, 2020. Again against evaluation criteria contained in the previous tender, and also in 2013 tender, the FBR without any reason, changed the evaluation criteria to Quality Cost-Based Selection (QCBS) method, 80:20, and 160 marks were for technical and 40 marks for financial, with marks to be awarded on the discretion of evaluation committee, with some sub-criteria favouring only one bidder, e.g., as many as 50 points (31% of technical) were reserved for secure delivery of the tax stamps/ Unique Identification Mark (UIMs) to the manufacturers’ premises, which left the door open for subjective marking of proposals, in violation of PPRA Rules 2004 and PPRA Regulations.
“The favouritism of FBR/Consultant to one bidder is clear from the marks difference given to other 7 bidders, as none of them were awarded marks over 85%, against 97.8% marks awarded to M/s ACIL/ Authentix/MITAS.
“The FBR foreign consultant responsible for ‘suspicious’ evaluation are South African M/s IDECO BIDECO Biometrics, and reportedly do not have any past experience of installation of Track & Trace project, and the JV partners of one bidder viz. M/s MITA, partner of M/s Authentix also a South African Company, and the company also reportedly does not have any past experience of installation of Track & Trace system.
“M/s AJCL Private Limited financial bid was 52% more expensive than the lowest bid, and just by manipulating and implanting discretion the technical evaluation criteria exchequer will end up paying 52% more than the offered bid of M/s Steuermaaken Solution (Pvt) Ltd - Rs13.5 billion in contract of Rs 39.4 billion.
“This is also to point out that “in 2019 M/s Steuermaaken Solution (Pvt) Ltd was declared as more qualified bidders than M/s AJCL/ Athentix in Technical Scoring,” according to the letter.
TI-P is of the view that the FBR has prima facie violated PPRA Rule No32. Discriminatory and difficult conditions, which do not allow ascertaining the discriminatory or difficult nature of any condition reference shall be made to the ordinary practices of that trade, manufacturing, construction business or service to which that particular procurement is related.
“In 2013 and 2019 the evaluation criteria with consent of all bidders was that after technical evaluation, financial bids of only technically qualified firms/JV will be opened, and contract will be awarded to the lowest responsive bidder, however changes made in the evaluation criteria, is against the ordinary practices of this trade.
If Consultant does not have any past experience of tobacco track and trace system, how and why was this firm appointed by FBR, questions TI-P.
“Bidders determined by FBR as less qualified in 2019 (72 marks out of 80) and quoted 52% lower rates than the bidder who was determined by FBR more qualified in 2019 (73 marks out of 80) were not awarded the contract due to change in evaluation criteria, which resulted in favoring a single bidder and put others at a disadvantage, as indicated in marks given to 8 bidders. This may attract application of PPRA Rule 2(f) “corrupt and fraudulent practices” includes…, “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”.
According to TP-P, the following additional alleged irregularities need to be looked into.
“The consultant appointment process was rejected by the World Bank. Thereafter, the FBR appointed Consultant allegedly in violation of PPRA Regulations, and has not posted the Contract Agreement on PPRA website, till today.
TI-P noted that “the evaluation criteria is not complying with PPRA Regulations and Pakistan Engineering Council (PEC) rules, which requires defining how score of 1 or 2 (weightage) will be awarded. For example in 3.9, 10 marks are divided into 5 sub criteria, like paper 2, polymer 2, etc., but what is the basis of awarding 0.5, 1, 1-1/2 or 2 marks. And clauses 3.5-3.8 of the evaluation criteria prescribe 19 marks for the various features of the physical tax stamp of the bidders. But FBR as well as Consultant did not take samples from 8 bidders for physical checking, to determine the award.
Reference to marks award criteria by PEC Standard Procedure for “Evaluation of Proposals for Procurement of Engineering Services” 2009. FBR Evaluation Criteria did not include any requirement of qualification/experience of the firm, which is a basic requirement for any procurement. It was reported that the successful bidder’s product is used in only one country, and that too is not satisfactory.
All 160 marks are awarded to bidders in a non-transparent manner, and are against PPRA Rules & Regulations.
“Clause 1.8 of Annex No 2 states that the applicant shall have no material conflict of interest with the industry of the Goods such as, but not limited to, direct or indirect involvement in the manufacturing, import, export, distribution, wholesale and retail of the Goods; but according to the website a JV partner of the M/s AJCL/ Athentix, is actively involved in the indenting, import and export of several commodities such as ethanol, cement, sugar, fertilizer, rice and wheat. Why has FBR not invoked clause 1.8 to determine the responsiveness or non-responsiveness of the bid of M/s AJCL/Athentix.
“Chairman FBR is again requested to look into these allegations, as non serious attitude of FBR on this project since 2013 may results in again abandoning of Track & Trace system project implementation, similar to the precious tender of 2020, in which FBR and Ministry of Law committed violation of PPRA Rules and Contract Award was cancelled under the IHC Orders,” according to the letter.
Copyright Business Recorder, 2021
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