After
reading a well written article by Namini Wijedasa on “Competitive bidding turned on Head” (due to unsolicited
Tenders) appeared in the Sunday Times of March 9, 2014 with a very “provocative”
statement issued by the Secretary to the Treasury, Dr. P.B.Jayasundera, forced
me to write this article to explain why “Unsolicited Procurements (Tenders)”
can harm the deflated economy of Mother Lanka and provide “Black Money” to make
Rajapaksa family, the richest in Asia.
“Normal
Tender Procedures NOT possible for Mega Projects” was the headline of the
‘provocative’ statement issued by PBJ to prove he has very little knowledge in
Tender (or Procurement) procedures and he is very corrupt. This statement of
PBJ, needs expert professional explanation to demolish the lies he uttered to
gullible but innocent people of Sri Lanka by this responsible official, the
Treasury Secretary. Before I go further I must mention here, how a former
Senior Cabinet Minister of the former Prime Minister Sirimavo Bandaranayake and
President Chandrika Kumaratunga’s government, describe PBJ: He said “ PBJ is a
cunning and very crafty man without any knowledge about procurement of
development projects and he ruined President Kumaratunga for good and now
trying to do the same to President Rajapaksa”.
How
qualified PBJ, to make this statement?
In 1999,
while working on my research on the procurement practices where discounts were
used by the Government of Sri Lanka for my PhD Thesis, I met the then Director
of Planning and Plan Implementation of the Treasury, to get official permission
to research Samanala Wewa Hydro Power Project and Upper Kothamale Hydro Power
Projects. The Director, (lady who was very keen to know about the fit falls in
the procurement practices used in SL), suggested to meet the TS/ PBJ as she was
taken up with my knowledge in procurements of minor & major construction
projects, and she took me to ST’s office, a familiar place for me as I used to
meet two former ST in that room. But unfortunately, PBJ refused to meet me and
discuss about my requirements as well about the current problems in procurement
of ‘mega’ projects. This refusal proved that he was not interested to know
about good practices to procure major projects.
If he was
interested to know what I knew about procurements of mega projects or even to
correct my opinion if he knew more than myself, he should have allowed at least
few minutes of his time, but he failed to extend that curtsey to a Sri Lankan
born foreigner, trying to help his motherland. This incident proves that PBJ
has a very big ego with very little knowledge about procurement or procurement
practices, and he is not concerned to safeguard the Economy in Sri Lanka.
As a
professional with lot of experience in procurement of billion dollar contracts,
I was taken back when I read this ‘provocative’ statement of PBJ and was
contemplating for months to write a reply. It is my opinion that professionals
who knew the truth failed to take any corrective action due to the present
political situation in Sri Lanka. PBJ is misleading the Public as well as the
President and the Cabinet of Ministers in Sri Lanka and helping large scale or
mega corruption. He may be trying to create public apathy towards the
government or to create his own wealth as did in few transactions. As most Sri
Lankan has become lethargic as they can’t STOP this massive corrupt practices
destroying the Sri Lankan society, may have refused to take serious concerns
about PBJ’s misleading statement. My question is, was the President of the
country and his Cabinet of Ministers knew that PBJ is/was misleading them and
taking them for a ride or did they willing took part in this massive corrupt
deals.
PBJ
and his National Procurement Authority
Any
professional having a bit of knowledge in procurement will be surprised to read
this statement from PBJ, the Secretary of the Treasury. “that it is quick to
get projects implemented using unsolicited proposals”, without following the
accepted procurement (tender) procedures. PBJ, who
Was
responsible in establishing the National Procurement Authority as instructed by
Mrs. Chandrika Bandaranayake Kumaratunga as the President in 2004/5 with World
Bank Aid and spoke very highly about the procurement (tender) procedures. But
when I wrote to the “Sunday Times” about the defects and other critical
failures to procure mega projects, in the NPA Guidelines, President Rajapaksa
instructed to closed down the NPA, but unfortunately allowed to use the
“defective” Guidelines which is still in use.
It is
true that these defective Guidelines will hamper to procure any projects above
Rs. 3 billion to meet the government targets, as the time period allowed in the
Guidelines for the procurement process is around 225 weeks or approximately
4.35 years. What PBJ should do is to re-write these Guidelines to meet the
government planning requirements (if any) keeping the system foolproof, but not
to discard it completely as he thinks Tender process is hindering the
completion of any project. The Tender or Procurement process “guarantee the
Quality of the work while maintain the Construction time as well as the Cost of
the proposed project”, the main ingredients to complete a project as planned.
Granted,
it is futile to engage this government or the Treasury Secretary about the
correct procedures in spending public funds (all borrowed funds become Public
Funds, according to Treasury guidelines), when they used the defective NPA
Guidelines to imprisoned former Army Commander, General Sarath Fonseka who
spearheaded the annihilation of the LTTE war, after some one else, within the
Rajapaksa regime, was responsible for allowing “Danuna Thilakarathne”
son-in-law of GSF, to get the Hi-Corp tender, where a Major General was the
Chairman of the Tender Board. I wonder why PBJ did not include in his statement
that charging General Fonseka for violation of the NPA Guidelines was not
within the Law, as the Laws are used only selectively, as the entire period of
the post –war Rajapaksa era demonstrates.
It is
true that PBJ used his powers to establish the National Procurement Authority
and appointed Mr. Daya Liyanage former Ambassador and Head of the Procurement
Division of the Treasury, to steer the Authority. But, Mr. Liyanage’s
inadequacy or the lack of in-depth knowledge about Procurement process or
methods was the subjects of a very critical revive by the World Bank when the
Authority produced the first set of Guidelines. With my wide experience in
engaging in multi-billion Dollar procurements, I felt the NPA Staffer lacked
the required knowledge to write a set of good and applicable guidelines to
steer the procurement system in Sri Lanka to eliminate the wide spread
corruption..
Definition
of the word procurement
It is my
professional opinion PBJ, with a Masters Degree in Development Economics and
PhD in Economics, is even aware of the correct “definition” and the real
meaning of “procurement” and what evolves in the Procurement process of mega
projects. When issuing this very critical statement, as the top official who
controls the Treasury, he should have taken more precautions to avoid any
criticism from professionals who engaged in procurement of mega projects, as
professionals. This vey statement shows how PBJ lacks experience and an
in-depth knowledge about real procurement activities of a mega projects, as he
failed in his duties and destroyed the procurement system with a “defective”
set of National Procurement Guidelines, prepared by people with little or no-
knowledge in procurement practices, and created more problems than solutions,
is now trying to blame the Procurement (Tender) procedures as a failure to
Procure Mega Projects in time.
The
Definition of Procurement is: Procurement is to obtain the best possible bid
(cost) meeting the Cost, Quality and Time parameters using the most suitable
Conditions of Contacts”.
What
are Mega Projects?
Mega
projects, as PBJ, describe in his statement ( I assumed) may be projects
costing over US $ 100 million (approximately) and spread over 36 months or more
to complete? If we assume a mega projects take 36 months or more to complete,
(most projects undertaken by Chinese never completed in time) then how can PBJ
argue that it is quick to construct infrastructure projects using unsolicited
tenders and Chinese are quick? This was what PBJ stated in his controversial
statement. ” Despite the flak, it has been attractive, the route of unsolicited
proposals it is widely agree – is quick. The Chinese are also quick. And even
the critics agree that, that notwithstanding quality concern, the Government is
getting its infrastructure in place fast. This is beginning to look like a
trade off.”
PBJ, is
aware that the Unsolicited Tender, are treated as very dangerous development
proposals, and these proposals are loaded with corrupt deals. If he is not
aware of these dangers then his economic knowledge in development is
questionable? Unsolicited tenders for projects are treated by honest Technical
professionals dealing with major projects with suspicion than a quick fix
solution for infrastructure development.
To obtain
a corruption free development, professionals in the industry consider many
factors. Three very important factors necessary to meet the cost effective
development projects are: (a) Cost, (b) Time and (C) Quality. In a structured
approach which identifies the following six (6) stages in the procurement
process to meet the above criterions:
(a)
Feasibility, (b) Conceptual design, (C) Detailed design, (D) Documentation, (E)
Construction,(F) Post Construction.
In recent
year’s due to very heavy toll in accidents in the construction (development)
projects, and the delay cost due to these accidents to construction work and to
human sufferings, professionals are now looking at “Safety” as another
important factor, in addition to the above 3 factors.
Chinese
Quick Fix Unsolicited Tender Procedures
Chinese
quick fix unsolicited tenders, according to PBJ, may overcome the normal Tender
procedures, but the maximum time this strategy can save for a project spanning
over 36 months is not more than two(2) months, and it is a negligible cost to
the final construction cost. But if the proper tender or procurement process is
used to procure a contract it can save the lost time as well as all hidden cost
in all these unsolicited tenders by the Chinese companies like CCCC Ltd. The
time PBJ speaks for this quick fix method is less than 0.05% of the whole
contract period and if the contract is properly administered then this small
loss can be recovered and many other benefits in maintaining the required
quality can be achieved.
Tender
process will allow the client, Sri Lanka government o select the most suitable
Tenderer meeting the tender guidelines to meet the expectations of the client
from the funds borrowed from Chinese Banks at very exorbitant interest rates.
But the quick fix method use by Chinese has removed all these safeguards from
the client and the client Sri Lankan government becomes a slave of the Chinese
company, as most these development projects come with massive or mega
commissions.
In my
professional opinion most these unsolicited tenders are, undertaken by the
Chinese companies such as CCCC Ltd, famous for high scale corruption, on loans
borrowed by the Sri Lankan Government at very high interest rates with very
flimsy conditions. If the funds are not Direct Foreign Investment then the onus
to apply “procurement procedures” is left with the Sri Lankan government, and
these Guidelines now control by the Treasury where PBJ is responsible for
applying such measures to save corruption and save the economy..
Quality
of Quick Fix Unsolicited Tenders
PBJ is
aware that qualities of these development projects are questioned by the people
and they are worried about the transparency of these dealings.
When we
consider the following quick fix mega development projects, and the lost
incurred by the Sri Lankan government due to defective work or RE-WORK in
construction carried out without any feasibility reports gives ample evidence
that PBJ is wrong to advocate such quick fix solutions. The following projects
and loans procured by President Rajapaksa with or without PBJ’s advice seem to
prove that Chinese are developing their own projects by bribing the President
Rajapaksa and other regime members. Patriotic professional tend to question these
unsolicited tenders, as the cost are always questionable and over stretched
above the agreed bid cost.
Compare
the following Projects according to statistics according to the Ministry of
Finance and Planning.
1.
Extension to the Southern Expressway –Cost US $ 804 million,
2.
Mattala Hambantota International Air Port –Cost US $ 190 million,
3.
Extension of Southern Expressway from Beliatta to Wetiya –Cost US $ 429.8
million,
4.
Construction of Expressway from Hambantota to Mattala Airport –Cost US $ 412
million,
5.
Construction of selected Roads in Hambantota International Hub Development –
Cost US $ 252.5 million,
6.
Norocchole Coal Power Project – Cost US $ 915 million (pending) 26 breakdowns
in 18 months, proves that PBJ is guilty of misleading the Sri Lankan public.
The
quality of most these projects and the time duration which took to complete
these projects proves that PBJ is telling lies. Most valid other reasons are,
these Mega projects even get delayed will not create economic difficulties even
if the project is delayed by even six months as the projects are not very
essential to keep the economy running. But the two months he saved by
overlooking the Tender procedures (even though the NPA Guidelines are
defective) has not saved millions for the Sri Lankan government and the
projects completed has become white elephants for the government and a burden
on the public.
Public
– Private Partnership Contracts
This
system was developed by the USA military to stop corruption, in mega projects
and it has become a success in most Western countries. In 2006/2007 while
working for the Sri Lankan government I held two seminars for the Professionals
–Architects, Engineers , Quantity Surveyors and the Construction personals at
the BMICH, (sponsored by the RICS Sri Lankan Branch). These seminars were very
well attended and over 700 professionals were present on both occasions, as the
seminar was free to the participants.
BOI which
comes under PBJ’s control is having a PPP Unit, and with these facilities PBJ
is promoting Chinese quick fix solutions proves that he is corrupt and is under
Chinese control as he get paid for his corrupt actions. Why he is not using the
PPP system to procure Mega projects and advice President Rajapaksa that this
PPP system can eradicate corruption in the construction industry, for this you
need very good documentation to mee the special conditions, as every one
becomes “partners of the project”. I have written much documentation on PPP
Contracts and my service was obtained by many others to prepare documentation
to use PPP methods in mega Construction projects to stop corrupt practices. PPP
system of contracts procurement reduce delays, corruption and documentation can
be prepared while the project is on the run as every one becomes a partner
trying to get the maximum profit by completing the project within time, cost
and quality, but not to cut corners to make big money.
I doubt,
whether the Secretary to the Treasury Dr. PB Jayasundera is aware, what the
construction industry professionals believe about the quality of infrastructure
projects, constructed with public funds?
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