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Highway Southern on collision course
Fresh crisis erupts after Appeal Board overrules Tender Board decision to cancel Daewoo award
The contract for the construction of part of the Southern Highway has run into a roadblock amidst questions over the cancellation of the contract to a Korean company and an appeal board decision overruling the cancellation.
A three-member Procurement Appeal Board (PAB) headed by former judge K. Viknarajah considered an appeal against the determination of the Cabinet Appointed Tender Board (CATB) and held that the decision to cancel the contract was not correct. The other members of the Board were D. Jayawickrama and T.P.G.N. Leelaratna.

The appeal was made by the South Korean construction giant Daewoo E & C Co. Ltd. This company was initially awarded the contract to build a stretch of nearly 30 kilometres of the Southern Highway between Dodangoda to Kurundugahahethakma. The award was subsequently cancelled by the CATB.
The Appeal Board overruled the CATB decision and recommended the award of the contract to Daewoo.

However, The Sunday Times learns that moves are under way to ignore the Appeal Board decision and submit a fresh cabinet paper to award the contract to another bidder.

The Appeal Board in its order has questioned the decision by the same Tender Board to change its decisions on requests or appeals made by aggrieved parties. It noted that the object of having a Procurement Appeal Board is lost when a Tender Board usurps the functions of the Appeal Board.

The Secretary, Ministry of Highways in his submissions states that the award of the tender to Daewoo has been recommended twice but the Japan Bank of International Cooperation (JBIC), the funding agency, did not concur with the decision on the grounds that the bid evaluation contained significant flaws.
But, the Appeal Board has held that the bid did not contain any significant flaws. They said that they were of the view that proper procedure had been followed in bid examination and bid evaluation.

The Taisei Corporation of Japan in its submissions had stated that the concurrence of the JBIC is necessary in terms of the Loan Agreement and said that it was the only company that had submitted an alternative bid. Taisei had also stated that JBIC would not concur if there were any irregularities in the procedure.

“In our view there has been no improperness in the procedures,” the Appeal Board held. The CATB had decided on November 16, 2004 and August 10, 2005 about the award of the contract, but subsequently changed its decision based on the recommendations of the Technical Evaluation Committee (TEC) and the consultants.

One of the issues made was that the bid submitted by the Daewoo had material deviation and therefore was non-responsive. “As to why the CATB decided to cancel its own decision made twice and to reject the majority decision of the TEC and follow the ambiguous opinion of the dissenting members is puzzling”, the Appeal Board noted. Daewoo’s Rs. 7.4 billion bid was lower than Taisei’s bid amounting to Rs. 7.7 billion.

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