Favouritism and abuse of power alleged in ‘M396m’ dam contract
A construction venture is suing the Lesotho Highlands Development Authority (LHDA) after it withdrew a multimillion-maloti contract for works on the Lesotho Highlands Water Project for the second time.
The joint venture, DYNAP, argues that the second withdrawal of the contract, in November last year, is an abuse of power by the LDHA designed to advantage certain “favoured bidders” which it did not name.
DYNAP team leader Thesele Mokoma told the MNN Centre for Investigative Journalism that he suspected his venture was not the “expected winner”.
“It is either they had their favoured bidders whom we outcompeted, or they just undermined our capacity,” Mokoma said.
The tender was first advertised in August 2018 and withdrawn in February 2019. Reissued in June 2019, it was four months later withdrawn a second time. It was then reissued in November 2019 and withdrawn for the third time in May this year.
A fourth request for proposals is expected to be issued between June and August this year.
At issue is the replacement of houses, roads, schools and a police station that will be submerged by the Polihali Dam under phase 2 of the highlands water project.
The dam is designed to address water woes in Johannesburg while also generating hydro-electric power for Lesotho. The entire project was established by a 1986 Treaty between Lesotho and South Africa.
DYNAP and its constituent companies — NAM Consult Pty Ltd, Pemahn Consulting Pty Ltd, and Dynamic Construction Cost Consultants — want the High Court to interdict the LHDA from continuing with the procurement process, describing it’s second annulment as “irregular and unfair”.
Pointing out that DYNAP was top-ranked in the second recent bidding process, they want the LDHA to conclude negotiations and award the job.
The LHDA said it cancelled the contract because “financial offers for all the proposals passing the technical evaluation were significantly excessive” and went on to issue a third call for proposals.
In his founding affidavit, Mokoma said DYNAP and its companies “were in fact winners of the tender and allowing the tender process to proceed would mean that the applicants are now losers. They shall have lost business in millions of maloti.”
Mokoma cited a clause in the LHDA’s Standard Instructions to Bidders and Data Sheet which states that “any bidder achieving the highest combined score [technical and financial proposals’ scores] will be invited for negotiations”.
In a responding affidavit, the LHDA chief executive, Tente Tente, said DYNAP was “aware that the tender process for the contract could be cancelled at any time by the LHDA”.
“The LHDA is not bound to accept any proposal, and reserves the right to annul the selection process at any time prior to contract award, without thereby incurring any liability to the bidder,” Tente stressed.
Mokoma said this provision was not designed “for abuse to the disadvantage of the bidders” and did not give LHDA the right to cancel the selection process without valid and justifiable grounds.
“Otherwise the credibility of the LHDA and its procurement policy and guidelines and anti-corruption policy could be vitiated,” he added.
But Tente argued that DYNAP’s M71.7-million bid-price [professional service fees] was more than five times the LHDA’s estimate and “almost equal to the estimated construction costs”.
DYNAP estimated the total construction costs for all facilities at M396-million.
“The applicants’ price thus bore no relationship to the LHDA’s estimate [not given] and there was no purpose in attempting resolve the difference,” he added.
Mokoma said the LHDA had failed to demonstrate why and how DYNAP’s financial proposal was excessive, insisting “there is no way in which the construction cost of seven major facilities can be close to M71-million” as suggested by the authority.
“The LHDA has also failed to provide information on how it has determined its budget. The LHDA has not demonstrated how the applicants’ price is five times the estimate. As to how the estimate was reached, it remains a mystery,” he objected.
“The LHDA’s version is not supported by an affidavit from an expert vested with knowledge and authority to determine costs of the consulting services of this contract.”
Mokoma said Tente and the LHDA are neither consultants to the engineering industry nor contractors.
“They ought to have engaged experts in the related field for costing and presented such evidence through their affidavits. Only the consultants are in a position to provide an estimate for consulting services as well as construction costs.”
The LHDA public relations manager, Masilo Phakoe, did not respond to questions on how much the authority had spent in each of the tender withdrawals but Tente, admitted the exercise was expensive.
“Conducting a procurement process is a costly and time-consuming exercise, which will be immediately wasted if the interim orders are granted,” Tente noted in his court papers.
Following an extensive feasibility study conducted between 2006 and 2008, Lesotho and South Africa signed an agreement on August 11, 2011 for the implementation of the phase 2 which includes the Polihali Dam Reservoir, the Polihali to Katse tunnel, associated infrastructure and the Kobong pumped storage scheme.
As part of implementing Phase 2, the LHDA advertised a contract in August 2018 for professional services for the design and construction of “ancillary public service facilities” to be relocated to make way for the dam.
The infrastructure to be moved includes Mapholaneng Police Station, prison and associated staff accommodation, the Malingoaneng and Koung Ha Phohla Primary Schools, and prison and health facilities in Mokhotlong.
In its first withdrawal, the LHDA said it annulled the process “due to all bids failing to meet the minimum criteria”. In the second occasion, that is contested by DYNAP, it said “…financial offers for all the proposals passing the technical evaluation were significantly excessive with respect to the nature of the services required”.
Lastly with May withdrawal, the authority said “…there was confusion regarding our preference requirements, which could not be resolved within the current procurement process. As a result, we have decided to annul this process”.
“We will revise the request for proposals and remove any apparent ambiguities. The revised request will be re-advertised within the next three months,” added Tente, in his May 19 2020 letter to the bidders.