Conco Namibia loses N$600m substations tender battle

The bid evaluation committee of the Central Procurement Board (CPB) says awarding a tender to construct the new 400kv Kunene-Omatando substations to Conco Namibia by NamPower poses significant risks that could result in substandard work.

This revelation is contained in the evaluation committee’s report on the examination and evaluation of the bid.

Conco Namibia is a South African-based company in which local businessman, Leake Hangala, who is a former NamPower managing director, owns a 20% stake.

The company won the N$600 million tender in 2016 ahead of Siemens and Alstom Grid SAS Solutions JV Radial Truss Industries (Pty) Ltd.

The bid evaluation committee (BEC) was appointed on 29 June 2018 in terms of Section 26 of the Public Procurement Act to examine and evaluate the bidding process in the Kunene-Omatando substations’ tender.

The appointment of the evaluation committee follows a Windhoek High Court order of 6 December 2017 which directed the CPB to adjudicate all bids.

The report seen by The Namibian says Conco’s bid is not responsive, and it deviated from the provisions of the requirements referenced in the tender.

Conco tendered for N$231 million, Siemens for N$496 million, and Alstom Grid SAS Solutions JV Radial Truss Industries (Pty) Ltd for N$449 million.

The evaluation committee said Conco’s rate for design and records was too low for the project, and could result in the use of substandard materials.

For example, Conco quoted for only 3 x 400kV isolators and 4 x 132kV isolators, compared to Siemens that quoted 26 x 400kV isolators and 19 x 132kV isolators.

Conco also quoted for 14 x 400kV pantographs, while Siemens quoted for 51 x 400kV. The other fact was that Conco listed very few single line diagrams in the technical drawings as required by the tender.

“For the supply, delivery, installation, testing and commissioning, the other bidders priced by almost double what Conco offered. In other words, Conco’s price is nearly half of what the other two bidders quoted,” the report stated.

The evaluation committee concluded that any bidder who excludes a part thereof might be rejected as being non-responsive.

“It is important to note that while Siemens and Alstom JV are original equipment manufacturers (OEM), Conco is only a contractor. It is quite worrisome that the supply cost for the same equipment is lower than the price of the equipment offered by OEMs,” the BEC’s report explains.

The BEC said Conco had modified their bid bond.

A bid bond is a debt secured by a bidder for a construction job, or similar type of bid-based selection process, to provide a guarantee to the project owner that the bidder will take on the job if selected.

The BEC explained further that should NamPower award the tender to Conco, then there will be risks that will threaten the project.

“Another main cost driver for this schedule was the provision for the hiring of a crane which is required for the installation of equipment. Alstom JV, and not the others, explicitly made this provision.

“For Siemens, this cost can easily be deemed to be in the pricing for installation, given the amount that they have offered for this item. The same cannot be said for Conco, as only N$1,9 million was quoted as an overall figure for supply, delivery, installation, testing and commissioning.

“The bidder deleted the word “Unconditionally” from the wording of the bid security. This has resulted in them deviating from the requirements of the request for tender (RFT),” the report stated.

According to the documents, the BEC recommended that Alstom Grid SAS Solutions be awarded the tender as Siemens had indicated that they are no longer interested in the bid, the committee said.

NamPower sources told The Namibian that managing director Simson Haulofu and the chief officer for power systems development, Reiner Jagau, want to cancel the tender because of a lack of funds, although the previous board approved additional funds for the project.

Although CPB chairperson Patrick Swartz confirmed yesterday that a bid evaluation report was submitted for adjudication, he said the report was not yet available for public consumption as the bidding process was not yet completed.

“It will be completed after the decision is announced and there is no request for reconsideration of the decision of the board,” Swartz said.

Swartz also said the notifications would be issued soon and then the due process will be followed according to the Public Procurement Act.

Haulofu, who confirmed to The Namibian last week that they had referred the tender to the CPB, said they had not seen the document. He added that the evaluation committee would not provide a report to NamPower, but to the CPB.

“Therefore, NamPower has not had sight of this report as this report cannot be submitted to NamPower, in line with the provisions of the act,” Haulofu said.

Hangala yesterday said they had not been informed of the evaluation committee’s decision. He stated that it was a big insult to say that his company would not be able to complete the work and would resort to using cheap materials.

“We are a credible company in Africa. This report must have been cooked. As for allegations that they want to cancel the tender, why would they want to do that? There seems to be dubious things happening there,” Hangala said.

In late 2016, the previous NamPower board headed by Maria Nakale-Gaomas blocked Conco from getting the Masivi-Shiyambe and the Kunene-Omatando substations, citing conflict of interest after the parastatal’s former senior manager of project management and implementation, Jurgen Senke, resigned in September 2016.

Senke, who had been with NamPower since February 2005, joined Conco a few months later when the tenders were being evaluated. At NamPower, Senke was responsible for the preparation of tender documents for the transmission projects, and the administration of the Omatando tender.

Before Senke’s recruitment by Conco, NamPower had invited tenders for the construction of the Kunene substation near Ruacana, and the extension of the existing Omatando substation near Ongwediva.

NamPower’s tender and procurement rules and regulations forbid employees from affiliating with any company tendering for work at the parastatal. The regulations also say doing so can be regarded as a conflict of interest, or shall be considered as creating the impression of insider dealing.

After withdrawing the two tenders from Conco because of the conflict of interest allegations, the old NamPower board instructed Haulofu and his management to negotiate a price reduction with other bidders.

In a somewhat surprising move, the new NamPower board, which came into power in January 2017, decided to cancel the two tenders, effectively reversing the decision by the old board to award the bids to Actom/Radial Truss Industries Pty and Siemens Germany if they had agreed to lower their prices.

After the cancellation, Conco took legal action against NamPower, its former board chairperson Nakale-Gaomas, the CPB, Siemens and Radial Truss Industries.

In his ruling in December last year, Judge Hosea Angula directed that the CPB should consider and ‘adjudicate’ all bids for the two tenders that passed the first and second evaluation stages.

Angula also set aside the previous board’s decision to cancel the tender for the Kunene substation and the Omatando substation extensions.

Conco is already busy with three NamPower tenders, namely the Zambezi substation, Gerus substation and the Omburu & Otjikoto 220 kV shunt voltage compensator.

 

Source: Namibian

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