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Why SISL got billion-dollar Beetham project

NGC explains...
Published: 
Sunday, March 16, 2014
Energy Minister Kevin Ramnarine

A confidential seven-page report, submitted by National Gas Company (NGC) to Energy Minister Kevin Ramnarine details eight reasons why Couva-based Super Industrial Services Ltd (SISL) earned the controversial billion-dollar Beetham Water Recycling Plant project. Ramnarine had mandated NGC to provide a report on the tender and award process amid calls from the Opposition that the massive contract was awarded to a company owned by known government financier, Krishna Lalla.

 

While Ramnarine verbally presented some of the details within the report during his presentation at Parliament on Friday, the Sunday Guardian obtained a copy of the report which praised SISL for having an overall “superior” proposal. It also compared NGC’s own project estimate of US$149,999,000 to Altatec’s US$95,224,643 and SISL’s US$167,755,329. 

 

One of People’s National Movement (PNM) leader Dr Keith Rowley’s main concerns with the award was that it was given to SISL even though their bid price was much higher than the nearest bidder. The report notes that the price difference between the two bids worked in SISL’s favour. “In post-bid clarifications, Altatec noted several areas where they may seek to revisit the price submitted for example, changes in global steel prices and soil conditions,” the report noted. 
 

This compared poorly with SISL’s bid which, according to the report, already made allowances for the Environmental Impact Assessment and soil conditions. The Couva-based company also committed itself to one variation which would be based on any increase of the global steel prices. The report, which was dated March 13, 2014, arrived at the conclusion that Altatec’s lower bid “contained significantly below market value ‘elements’ which is subject to higher levels of variability in their prices would be expected.” 

 

One of the examples listed in the report states that NGC’s in-house estimate for the pipeline unit rate per meter (supplied and installed) was USD $1,700, SISL bid USD$ 1,339.72 per meter, while Altatec bid at USD $525 per meter. “This rate is considered extremely low when compared with the in-house estimate and significantly increased the risk of variability,” the report stated. (RS)
 

 

SISL vs Altatec’s bid

 

SISL:
1. SISL scored 77.93 per cent in the technical evaluation (54.55 out of 70.00)
2. SISL complied in main with the plant design proposed in the RFP and actually provided a superior design.
3. SISL proposed a superior pipeline methodology.
4. SISL submitted a superior construction programme.
5. SISL information submitted on RO pumps was of superior quality.
6. SISL proposal has greater local content.
7. SISL design team has extensive membrane plant experience.
8. SISL indicated that only if global steel prices changed they may consider applying for a variation in the contract price. SISL confirmed that EIA and soil conditions risks were considered in their bid. Their bid price can be considered firm (apart from variation in world steel prices) having a high degree of confidence and consequently subject to low variability.

 

Altatec:

1. Altatec scored 52.71 per cent in the technical evaluation (36.90 out of 70.00)
2. Altatec’s deviation in the plant design as proposed in the RFP increased the risks associated with plant maintenance.
3. Altatec failed to provide a detailed pipeline construction methodology even after several requests during the bid clarification exercise.
4. Altatec’s construction programme was not comprehensive.
5. Altatec’s overall price was 46 per cent lower than the in-house estimate, significantly increasing the risk of completing the project within the proposed price.
6. Altatec confirmed three to five per cent of risk contingency in their price, this is extremely low for a design and build project of this type with the likelihood of several request for variation of the contract price (if awarded) via variation orders and the possibility of increased cost during implementation.
7. Altatec identified global steel price increases, variations in the EIA, and soil condition risks as factors which would contribute to price increases. In effect, Altatec has, in fact, signalled its bid price is subject to higher levels of variability resulting in a lower level of confidence in the proposed price.