Wed | Jan 26, 2022

$50-million contract controversy hits RADA

Tussle with top bidders, agency after scoring error could lead to lawsuit

Published:Sunday | December 5, 2021 | 12:15 AMJovan Johnson - Senior Staff Reporter
Phillip Henriques, managing director of KIA and JLP member of Parliament.
Phillip Henriques, managing director of KIA and JLP member of Parliament.

Kingston Industrial Agencies (KIA).
Kingston Industrial Agencies (KIA).
Richard Powell Snr, Executive Chairman of MAPEX.
Richard Powell Snr, Executive Chairman of MAPEX.
Agriculture Minister Audley Shaw.
Agriculture Minister Audley Shaw.
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An alleged scoring error that resulted in an initial winner of a multimillion-dollar contract to supply tractors has plunged the Rural Agricultural Development Authority (RADA) into controversy, with a lawsuit threat from the aggrieved company...

An alleged scoring error that resulted in an initial winner of a multimillion-dollar contract to supply tractors has plunged the Rural Agricultural Development Authority (RADA) into controversy, with a lawsuit threat from the aggrieved company dangling over its head.

A quiet showdown is also developing between the board and Agriculture Minister Audley Shaw, as seven of the 13 directors have refused to submit their resignation as requested by the minister.

Machinery & Parts Exports (MAPEX) is upset that in just over a month it moved from being the preferred bidder to losing out to Kingston Industrial Agencies (KIA), whose managing director is Jamaica Labour Party Member of Parliament, Phillip Henriques.

Henriques said he had declared his interest in the company to the ethics committee of the House of Representatives.

MAPEX, whose Executive Chairman Richard Powell worked with KIA for 27 years up to 2000, is a US-based company which incorporated in Jamaica in July 2007. It has a branch on Hanbury Road in Manchester, while KIA is also a family business that was incorporated in 1944.

Both companies distribute a range of agricultural and construction equipment such as tractors, pumps and harvesters.

On June 28, RADA’s director of public procurement, Sumnah Baker, writing on behalf of then CEO Peter Thompson, advised MAPEX’s president and CEO, Josef Powell, that the company was the recommended bidder to supply six 4X4 rubber wheel farm tractors.

The tender process opened on January 4 and closed January 25, the same day the bidding was scheduled to be opened, according to an advertisement.

MAPEX didn’t confirm but its bid was reportedly valued at around $51.8 million.

The letter also indicated the so-called standstill period of five days up to 11 a.m., July 2, during which the Public Procurement Act says bidders may challenge the decisions. In this case, MAPEX, KIA, and two other bidders were reportedly involved in the process.

More than a month after advising the bidders, on August 5, Baker wrote back to MAPEX indicating that the initial results were overturned “based on an objection from one of the bidders and …further review of the technical evaluation”.

That review was recommended by the Public Procurement Commission (PPC) that has the final say on public contracts that exceed $30 million – but not greater than $60 million. Contracts valued at more than $60 million must get Cabinet approval.

RADA said the review resulted in both MAPEX and KIA receiving the same score and that based on the invitation to bid, KIA, with the lowest value of $49.7 million, was being recommended for the contract.

In the letter, Baker apologised for “any inconvenience” and said a standstill period to accommodate any queries would expire on August 10 at 3:00 p.m.

‘FLABBERGASTED AND DISAPPOINTED’

MAPEX’s executive chairman said the company was “totally flabbergasted and disappointed” with the decision, adding in a response on August 9 that “irreparable damage has been caused” and that it had “initiated” production of tractors based on the June 28 advisory, according to documents obtained by The Sunday Gleaner.

“We totally reject the contents of your letter,” Powell Sr added in a missive to Baker, adding that in the interest of transparency, RADA disclosed several questions such as: what was reviewed, what the PPC recommended; KIA’s complaint; whether KIA’s complaint was within the standstill period and the structure of the review committee.

Powell Sr said RADA should reconsider its position, as MAPEX did not want to take legal action and that the company was looking forward to an “amicable, reasonable and prompt resolution”.

Then Agriculture Minister Floyd Green and Permanent Secretary Dermon Spence were copied on MAPEX’S official complaint.

In its response, this time from the RADA CEO, the authority disclosed the reasons for reversing the decision, even as it insisted that there was no contract in place and MAPEX had no basis to initiate the procurement of the tractors.

According to Thompson, KIA took issue with the fact that their tractor and the one that MAPEX sold were “equal in comparison” and “could not comprehend” why its bid did not achieve the required technical score.

KIA is the local distributor of New Holland tractors, while MAPEX supplies CASE-IH units – both belonging to the same US-Italian company, CNH Industrial, although from different product lines.

That letter was sent to the PPC, Thompson said, because at the time, the commission was reviewing RADA’s initial recommendation.

He also said the PPC requested that RADA re-evaluate the technical evaluation of the bids because partial scores were allegedly assigned to areas that the bid documents did not make provision for.

MINUTES BEFORE DEADLINE

Following that review, all the scores were adjusted, bringing both companies on the same level which then made the value of each bid the deciding factor, with KIA winning out because it was about $2.1 million less.

Thompson also told MAPEX that he did not name the complaining company in previous correspondence. However, Henriques confirmed to The Sunday Gleaner that his company submitted the objection.

Meanwhile, the then RADA director also disclosed that KIA submitted its complaint on the day the standstill period was due to expire, at 10:25 p.m., 35 minutes before the deadline time.

He said MAPEX’s claim that it had initiated the production of the contractors left RADA in a “state of bewilderment” since a contract was not signed and the company was only told it was the preferred bidder.

MAPEX was not happy and, through its attorneys Williams, McKoy & Palmer, chastised RADA over the handling of the process, even alleging it was “deeply disturbed” that the political connections involving KIA’s principals “weighed on the procurement process”, a claim RADA rejected.

Attorney Marc Williams said though his firm was retained to take the matter to court, it was requesting that RADA withdraw its notification to KIA that it was the preferred bidder.

“It is glaring that the tender process was unequivocally compromised and blatantly discriminatory against our client,” noted attorney Marc Williams in an August 25 letter, adding that instead of going immediately to court, his clients were requesting a reconsideration of the decision to withdraw MAPEX’s preferred bidder status.

Williams said it was appalling that RADA ‘admitted’ that KIA allegedly based its objections “on information that was unlawfully divulged to them”.

The procurement law forbids a procuring entity from disclosing information connected with the evaluation of bids or obtained throughout the procurement process.

Williams contended that the decision of the PPC to request a re-evaluation was flawed because it was based on that alleged unlawful disclosure.

BREACH OF DUTY

Further, MAPEX’s concerns related to the objection that the company said should have been communicated to it, especially because it came 35 minutes before the standstill period ended.

“RADA breached procurement practice by not informing the preferred bidder (MAPEX) and giving them the opportunity to respond before the matter was sent to the PPC for consideration…at the very least, our client’s response should have been logged and put before the PPC,” said the attorney, adding that MAPEX’s response would have assisted RADA and the PPC.

“It is as a result of RADA’s breach of duty and/or negligence in not communicating the objection to the preferred bidder for over 40 days, which caused them to have a legitimate expectation that they would be receiving the contract and accordingly cause them to incur expenses, loss and damages,” Williams said, demanding that the procurement process be suspended to facilitate reviews or potential court action.

However, RADA dismissed MAPEX’s application for a review, saying its revised recommendation for KIA was “justified” and that MAPEX’s claim that the authority acted unlawfully was “without merit”.

In its September 23 response, RADA denied disclosing details of MAPEX’s bid to KIA and said it informed KIA in compliance with the law and also that it acted properly by seeking the PPC’s approval first, based on the value of the contract.

“We are unable to speak to; and are not concerned with the bidders’ political affiliation in executing our role,” stated Marina Young, who by then was the acting CEO, as Thompson left on a secondment to head the Jamaica Agriculture Commodities Regulatory Authority.

The Andrew Simpson-led RADA board had moved a no-confidence motion against Thompson.

MAPEX has contended that Young’s response did not address its specific concerns and said it would file for a court injunction in a letter dated September 28, to which RADA responded on October 12, noting that the issues were addressed.

MAPEX’s attorney has declined to comment on the developments, saying the company would “not confirm or deny the allegations/information discovered by The Sunday Gleaner”.

“We will, however, confirm that MAPEX has challenged the tender process and will be vigorously pursuing the matter through the appropriate channels,” Williams said.

KIA’s Henriques, who is also the MP for Clarendon North Western, also declined to speak to MAPEX’s claims, insisting that his company is working on fulfilling its contractual obligations.

“Once we received the purchase orders, we would have made the assumption, a reasonable assumption, that everything’s been through the proper government process, PPC and everything,” said the businessman.

RADA board showdown with agriculture minister

A week before Agriculture Minister Audley Shaw sought the resignation of the Rural Agricultural Development Authority (RADA) board, the directors strongly criticised the acting CEO Marina Young for allegedly disregarding their views that the Attorney General’s advice be sought on how to proceed with the controversial multimillion-dollar tractor contract.

Young reported the contract issue at an October 14 meeting of the board.

The board directed Young to seek the Attorney General’s opinion or scrap the process and do a new tender, given the problems that emerged.

The RADA board has no direct say over procurement matters although at least two of its members sit on the procurement committee that Young headed.

However, Young reportedly shocked board members at the next meeting on November 11, when she told them that the contract was being formally awarded to Kingston Industrial Agencies (KIA), whose managing director is Jamaica Labour Party Member of Parliament, Phillip Henriques, after getting legal advice from the ministry’s internal lawyers.

Board members, including some who were against Young getting the acting role, reportedly expressed dismay that their recommendation was not followed.

At least one member threatened to resign, arguing that the procurement process was compromised.

The meeting reportedly ended abruptly and eight days later, Shaw wrote the chairman Andrew Simpson requesting the resignations of the directors because he was “not satisfied with the direction in which RADA is heading”, according to documents obtained by The Sunday Gleaner.

In a response on November 23, the chairman questioned Shaw’s move, claiming that the minister had expressed confidence in the board at the October 14 meeting.

“We did not receive any negative feedback from you since,” Simpson said, admitting that the sudden request surprised his colleagues.

DISCOMFORT OF THE BOARD

He sought clarity from Shaw on what was suddenly not satisfactory, noting that the board members were “concerned “about any impression you or the public could have developed based on your letter that we have been operating less than inscrutably”.

Shaw reportedly indicated in a telephone call with Simpson that he was not satisfied with the management of the farm road programme but according to Simpson’s letter, the board insisted that it was delivering on RADA’s primary mandate.

Simpson confirmed to The Sunday Gleaner that he was among seven board members – two more than the minimum for a quorum – who have not resigned. Six resigned.

However, the chairman declined to discuss the tractor contract issue or indicate which members resigned.

“We don’t want to disclose confidential information of the organisation,” he said yesterday.

In a parting message, one of the resigned members told Shaw that the tractor procurement process could “raise concerns or lead to possible embarrassment”.

“The recordings of the board meeting held on November 11, 2021, should be reviewed, and preserved. It highlights the discomfort of the board with this matter,” read the letter.

Two senior agriculture ministry officials say they were surprised the process was allowed to continue.

“The contract should not have been awarded and the process go back to tender. If RADA had to correct the scores, fine. Because the PPC supported the award of the contract does not mean the procuring entity had to go ahead with the process. The outcome was materially affected by the errors and retendering, though an inconvenience for all parties, would have been the more transparent way,” said the official who requested anonymity because they were not authorized to speak.

Simpson’s company CCA Capital Partners was at the centre of a controversy over a consultancy contract with the Clarendon Alumina Production (CAP) Limited.

Questions sent to RADA and the permanent secretary last Wednesday were not answered up to press time. Young acknowledged receiving the queries.

Shaw inherited the board that was appointed on the recommendation of Floyd Green who was forced to resign from Cabinet in September over a party he attended on a COVID-19 no-movement day.

Because Shaw has the power to revoke the appointments, it remains unclear why he has not gone that route.

jovan.johnson@gleanerjm.com