Mbabane: Ministry of Health Principal Secretary Dr. Simon Zwane has a big, hot and rotten potato in his hands.
Zwane is embroiled in a tender mess after he unlawfully approved Tender No. 5 of 2019/2020 Lot 8, items 5, 6, and 7, for the supply of refuse bags to DUZAS Investment (Pty) Ltd.
The wrongful act of the PS was exposed by Eswatini Public Procurement Regulatory Authority’s (EPPRA) Independent Review Committee (IRC). This was after KS Distributors hauled Zwane and the Attorney General before the committee which was constituted by prominent attorney Lucky Howe (Chairman), Rudolph Maziya (member) and Themba Ntiwane (member).
According to IRC documents which Independent News has seen, the dispute between the parties emanated from a decision by the PS to reject a tender from KS Distributors.
Zwane was found to have violated the Public Procurement Act Procedures of 2016 by awarding a tender to a company that disregarded published product specifications that were known by all tenderers.
According to the IRC the PS’ violation of this basic tenant of procurement and the attempt to cover it up was suspect of intentional violation of procurement procedures even though no evidence of corrupt act has been identified.
The PS was also found to have granted the tender to DUZAS Investments despite that it had quoted prices which were exorbitantly expensive than KS Distributors.
In the first instance, KS Distributors alleged that the first respondent – PS Zwane rejected its application to supply refuse bags on the ground that product samples provided by the former did not meet thickness specifications which were stated as 50 microns in the tender documents.
In the second instance, KS Distributors alleged that the PS gave three different reasons for rejecting its tender application at different stages of the tender process. It is said the initial letter informing the applicant (KS Distributors) that its tender has been rejected did not give specific reasons why the tender was rejected except to say that it (tender) did not meet the requirements.
The complainant further alleged that the PS intended to award the tender to DUZAS Investments on reason that the company presented thicker product samples of 70 microns thickness.
The position of the PS was that while the product samples which were presented by KS Distributors were of the required 50 micron thickness as specified by the tender, they turned out to be of light texture.
Zwane submitted that DUZAS Investments won the tender because the company provided product samples which exceeded the quality standard specified in tender documents and that the decision to consider the higher quality standard was made at the evaluation stage of the tender process.
The Attorney who represented KS Distributors, who was only identified as Mr. Magagula submitted that the thickness requirements of the refuse bags specified by the tender were 50 microns. He indicated that the information was contained in the statement of requirements and price schedule section of the tender. The attorney noted that the 50 micron thickness was the only product specification requirement that was communicated to all bidders.
KS Distributors further argued that by submitting product samples of 70 microns thickness relative to the specified 50 micron, DUZAS Investment should have been disqualified for failure to comply with the tender specification requirements. It was noted by the KS Distributors attorney that the tender did not provide room for providing samples which were thicker than 50 microns. It was stated by KS Distributors’ attorney that PS Zwane didn’t restate the need for renderers to strictly adhere to indicated tender specification requirements through a letter which was communicated to all bidders on March 7, 2019.
According to applicant’s attorney, the issue that product samples which were provided by KS Distributors did not satisfy requirements of the tender because they were “too light” were reflected in the minutes of the Adjudication Committee.
KS Distributors’ attorney further argued that that the prices quoted by the company that was awarded the tender – DUZAS Investments, were consistently and significantly higher across all items. In item 5, 6 and 7 under Lot 8 of the tender, the winner’s quoted prices (DUZAS Investments) were 91.8 per cent, 47.7 per cent, and 48.5 per cent pricier than what was quoted by KS Distributors.
Based on the aforementioned allegations, KS Distributors requested the Committee to award it payment of compensation for any reasonable costs incurred buy it in submitting the complaint which arose from an unlawful decision by PS Zwane. Furthermore, KS Distributors requested the Committee to set aside Zwane’s decision to award DUZAS Investment and award it to itself instead.
In response to the allegations leveled against him, Zwane, in an answering affidavit confirmed that KS Distributors did submit tender documents and product samples. However, Zwane disputed that KS Distributors was short listed but rather stated that the applicant qualified for the next stage of the tender process.
The respondents (Zwane and the Attorney General) similarly disputed the fact that the samples submitted by KS Distributors complied with the tender specifications, noting that the product had holes and were of light texture. The respondents further submitted that the characterization of the samples provided by KS Distributors as being light was made by the members of the Evaluation Committee through physical examination on previous experience.
Zwane and the AG argued that while KS Distributors submitted samples with the thickness of 50 macrons as specified by the tender, DUZAS Investments which won the tender provided samples with great thickness of 70 microns. They further submitted that the decision to accept product samples with a thickness of 70 microns was approved by the Evaluation Committee after adjudication because, it represented higher quality than all other competitors. They also submitted that product samples submitted by the applicant were not suitable for carrying waste and bio-hazardous materials.
In response to the submission by KS Distributors that quoted prices for products provided by DUZAS Investments were much higher than those provided by KS Distributors, they argued that the quality of products was actually more important than the issue of price. They went on to submit that the tender was awarded to the winning company because it provided higher quality of products samples.
On the question of relief requested by the applicant, the respondents argued that according to Procurement Act of 2011, the IRC does not have powers to order refunds of administrative costs and to award tenders. They then concluded their submissions by requesting the IRC to dismiss the application of KS Distributors that the tender be awarded to the second-best evaluated tenderer.
The primary question which the IRC had to look into was whether or not it was correct, fair and acceptable for PS Zwane to consider a higher quality standard of 70 microns thickness as a basis for awarding the tender to DUZAS Investments as opposed to 50 microns which was specified in tender documents.
The secondary question was whether or not the IRC has powers to award payment of compensation to the applicant in lieu of costs incurred in submitting the application.
Regarding the first question, the IRC opined that KS Distributors complied with product sample thickness specification requirements of the tender. Both parties to the case agreed that the tender documents specified 50 microns to be a measure of thickness for the tender. The Committee also noted that both parties agreed that the applicant submitted samples according to the thickness of 50 microns as specified in the tender documents.
The IRC found that awarding a tender based on different measure other than the one specified in published tender documents constituted a deviation and hence an amendment. The Committee stated that according to Section 71(2) of the Public Procurement Act Procedures of 2016, any clarification shall be copied to all tenderers. Subsection (2) of the same provision states that any amendment shall be issued in writing and the same information shall be provided to all tenderers at the same time. The spirit of this subsection is that all tenderers should be informed of changes to tender specifications and they all should be privy to information on changes in tender specification information.
“It is our view that applying different products thickness standards in determining the winner of the tender under Lot 8 comprised unfairness and constitutes a material violation of procurement procedures,” stated the IRC.
The parties to the case disagreed on the legitimacy of the reasons that were advanced by PS Zwane for rejecting the applicant’s tender. While PS Zwane submitted that he rejected the applicant’s application because it has holes, KS Distributors argued that the issue of holes was not legitimate because it was not advanced in the letter which he (PS Zwane communicated for the outcome of the tender evaluation but was only indicated later in his answering affidavit.
The IRC together with both parties to the case conducted an examination of all 20 black product samples of 50 micron thickness submitted by KS Distributors to the tender committee of the Ministry of Health. According to the IRC papers in the possession of Independent News, the exercise found only one bag with big holes and two with small holes. “Product samples with holes accounted for only 15 per cent of the total product samples submitted by KS Distributors. The one sample with big holes was characterized by the applicant as damages and not defects. Product samples submitted by the tender winning company were also examined. Only three black product samples were submitted, two large bags and one small bag. Two of the samples were defective, one with large holes and one with small holes,” the IRC averred.
The Committee added that of the defective bags, one was 70 micron bag. One of the winning tenderer’s red 70 micron bags was incidentally found to have a fist size defect, witnessed by all present.
“Reasons given by PS Zwane for rejecting KS Distributors application were found to be inconsistent across different circumstances of the tender process, Characterization of product samples which were submitted by the applicant as having holes is in accurate given that the majority (85 per cent) of the product were found to be without holes upon examination by both parties to the case and members of the IRC,” the IRC said.
It went on to state that the findings of the samples provided by the winning tenderer gave a percentage of 67.7 per cent defects, including a thicker 70 micron bag.
“It is therefore our opinion that the reasons given for rejection of the applicant’s (KS Distributors) application are not legitimate.
On the disagreement whether the Procurement Act of 2011 confers powers on the IRC to order refunds of administrative costs and to award tenders, it found that Section 52 (c) of the Procurement Act of 2011 confers powers to the IRC to require payment of compensation for any reasonable costs incurred by a tenderer submitting the complaint in connection with the procurement proceeding as a result of an unlawful act or decision of the procuring entity,
“It is also our view that section 52 (b) of the Public Procurement Act of 2011 confers powers to the IRC to annul in whole or in part or revise an unlawful act or decision of the procuring entity or substitute its own decision other than bringing a contract into force. It is our opinion that the Principal Secretary did not apply his mind in dealing with the complaint of the applicant. It appears that he aligned himself to the Tender Committee of the procuring entity and as such neglected as well as failed to perform the due diligence required of him as part of his oversight function as the controlling officer of the procuring entity,” the IRC said.
The IRC further said it was improper and unlawful for awarding the tender under the prevailing circumstances.
The Committee concluded that evaluation of tenders against published specifications that are known by all tenderers is a basic principle which all procuring entities should know and must follow. “Violation of this basic tenant of procurement and the attempt to cover it up is suspect of intentional violation of procurement procedures even though no evidence of corrupt act has been identified,” the IRC said.
The Committee then ordered that the intention to award the tender to Duzas Investment be set aside meaning that the complaints of KS Distributors were upheld in whole.
“The respondent is directed to award the tender to the best qualifying tenderer based on value for money and the thickness of 5o microns as stated in the tender documents not on the 70 microns thickness. The first respondent (PS Zwane) is also directed to take into consideration that characterization of the product samples that were submitted by the applicant had holes was not correct because a majority of the samples did not have holes,” the IRC ordered.
It further ordered the PS to pay compensation to the applicant in lieu of direct and reasonable costs incurred by the applicant in connection with the administrative review proceedings.