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Supreme Court of Vanuatu |
IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
HELD AT PORT VILA
(Civil Jurisdiction)
Civil Case No. 87 of 2000
BETWEEN:
MR GILBERT DINH
(Plaintiff)
AND:
The Minister for Infrastructure and Public Utilities
(First Defendant)
AND:
The Attorney General
(Second Defendant)
JUDGMENT
In April 1999 the Public Works Department issued invitations to make bids for a contract under the Vanuatu Urban Infrastructure Project, specifically for the Rehabilitation of Urban Roads.
A document entitled Invitation for Bids was sent to enquirers (page 64, defendants’ bundle). By letter dated 9th April 1999 the plaintiff was sent a copy. The Invitation gave outline details of the process, and how full particulars might be obtained A pre-bid meeting was fixed for 30th April at 10.00 am at the office of the Public Works Department.
There were two stages, a pre-qualification stage and then the bid for the contract itself. Applicants were required to send in two sealed envelopes, one containing the answers to the pre-qualification questionnaire, the other containing the bid. Both had to be sent in concurrently and before 11-30 a.m. on 31st May (page 69-70, defendant’s bundle). Paragraph 8 of the “Invitation for Pre-qualification” states “Only bids from contractors and joint ventures pre-qualified under this procedure will be opened”.
There is no dispute the plaintiffs had all these documents. The plaintiff says that their pre-qualification and bid envelopes were lodged before 31st May. On 3rd June they say Mr. John Herbert telephoned Mr. Alex Palavi, the general manager of the plaintiff SMET (Mr. Gilbert Dinh trading as Societe Melanesienne D’Entreprises et de Travaux) to tell him SMET was disqualified. Mr. Palavi sought an explanation. On 22 June formal notification was sent and SMET’s tender bid was returned unopened, (letter of the Acting Director, PWD, dated 22 June 1999, page 28 plaintiff’s bundle).
By a letter dated 14 June 1999 to the Director General of Public Works Mr. Palavi sought to have SMET’s tender bid re-included in the process, (Page 18, plaintiff’s bundle). The reason apparently for the request being so that the Government could support a local company. Mr. Palavi said SMET, if successful, would then meet the ADB screening criteria, and said how this could be done. The ADB, Asian Development Bank, was providing most or all of the funds for the project.
Mr. Manasseh Tari the Director General, replied by letter dated 17 June 1999 (plaintiff’s bundle, page 19). He set out why SMET failed to qualify, and suggested, in future, SMET considered going into “a joint venture with foreign companies if you think that your company may not meet all the requirements outlined in the criteria”.
Mr. Palavi sent a further letter dated 21st June 1999, stating they weren’t aware the bid meeting was scheduled for 10th June, and again stating they could meet ADB criteria.
The plaintiff alleges their tender bid was some VT 40-50 million lower than the company awarded the contract. The plaintiff further says the defendants failed to set competitive and transparent pre-qualification requirements for the tenders, in breach of Section 3 (3) (f) of the Government Contracts and Tenders Act, No. 10 of 1998. Section 3 (3) (f) states
“Prior to entering into a Government Contract a minister must first
(f) use a competitive and transparent process when deciding who to award the contract to including where applicable, a tender process as may be prescribed by this or any other Act or regulations”.
The plaintiff says the Tender Board itself was not properly constituted. Damages are claimed for these alleged breaches of statutory duty. It was said SMET was being deliberately excluded.
A constitutional claim under paragraph 18 of the statement of claim was left aside at the start of the trial.
The defendants responded that the whole process was open, clear and fair. They say the plaintiffs made errors in submitting their pre-qualification questionnaire. These could not be remedied afterwards.
Alex Palavi, the general manager of SMET, was the only witness for the plaintiff. He was responsible for putting in SMET’s documents. In cross-examination he accepted he understood if a company did not pre-qualify then its tender bid would be returned unopened. He accepted he had the Pre-qualification documents and instructions.
The Pre-qualification document set out in full the procedure. At paragraph 2.2 of the Evaluation it states “The applicant is required to provide evidence that he has had an average annual income from civil engineering construction works carried out over the previous five years of not less than three times the total estimated annual construction costs of the contract for which it has applied… If an applicant fails to satisfy this condition it will not be considered for further evaluation”.
The plaintiff simply failed to meet this requirement. By their own arithmetical error they thought they had.
Mr. Palavi filled in the “ Assessment of Financial History of Applicants.” Turnover figures for two of the five years required were not available due to factors beyond the plaintiff’s control. This does not affect the issue even if one assumes for the lost years the best or even double the sum of the years when a sum is available.
An average turnover was calculated. A contract estimate was inserted and a period of 9, meaning months, was inserted.
The document stated “To score a pass the average annual turnover… for the preceding 5 years must be equal to or greater than three times the estimated annual total cost of the contract…” (page 23 plaintiff’s bundle).
Mr. Palavi multiplied the estimate by three and divided by nine. That figure of nine referred to months, and not years. He should have divided by nine-twelfths. The document referred to the estimated “annual” total cost of the contract. Had he made the calculation properly, then SMET would have required an average annual turnover in excess of US$12.4 million. On its own figures the average was US$1.24 million. On that basis the pre-qualification criteria were not met. It was clear on the face of the document that the company could not qualify. This was pointed out verbally and in writing to the plaintiff.
Further complaint was made that no opportunity was given to rectify this error and allow the plaintiff to include his other business interests when qualifying or provide bank guarantees.
First, were the Board and the defendants to have deviated from the procedures they had set to allow a bidder a second go, other companies might well have had justifiable claims of favoritism. If SMET made errors in its reading of the documents and filling in of the forms, nothing has been cited to me or adduced in evidence to shew any obligation of any kind upon the defendants to help a bidder correct those errors. The errors were clearly a failure by the plaintiff to read and understand the pre-qualification documents.
There is no evidence to suggest Vanuatu companies were excluded. There was specific provision for bank guarantees if a company considered it could do the work but its financial capacity was insufficient (paragraph 3.3 – Instructions page 72, defendant’s bundle). Pre-qualification was open to “ Contractors and voluntarily formed joint ventures”. Indeed it is the plaintiff’s evidence that had had he put together a consortium of his companies the financial capacity qualification might have been met on their own or possibly with others. It was too late to suggest this after rejection upon failing to pre-qualify.
A pre-bid meeting was fixed for 30th April. Had the plaintiff had queries about pre-qualification they could have raised them then or in the month to the closing date. M. Palavi frankly accepted he overlooked the pre-bid meeting. There is no suggestion any queries were made up to 31st May.
The plaintiff, through counsel, suggests an artificial financial barrier was raised which was not capable of being met by local contractors. However, the evidence of Mr. Palavi is that with the plaintiff’s other companies and/or bank guarantees the plaintiff could well have qualified. His frustration was that having made the initial errors he was not permitted, when he did understand the range of available qualifying criteria, to have a second chance.
Further, I have had no evidence from the plaintiff that the pre qualification documents on their face in any way supported the plaintiffs’ contentions. Indeed, they appear to be a practical, commercially sensible procedure for awarding contracts of this kind. There is no “barrier” of US$ 12 million dollars. The pre qualification turn over figure is directly dependent upon the value of the contract. The “barrier” did not preclude six firms or joint ventures submitting applications and four of them passing the prequalification test. It was clear on the face of the documents that there could not be a second opportunity to pre-qualify.
The plaintiff asserted SMET was capable of carrying out the work in any event. Mr. Palavi only referred to one contract of similar size which SMET had undertaken, and that was as a sub-contractor. I need not make any ruling on whether SMET was capable of carrying out these works.
I have looked at all the evidence in the light of section 3 of the Government Contracts and Tenders Act. I can find nothing on the evidence before me to suggest the process was other than competitive and transparent.
Reference was made to the Tender Board not being properly constituted when the bid assessments were made. Mr. Palavi said he was told the Board was short of members and no representative of the Attorney General was present, as is required by the Act. That was hearsay. There was no other evidence. The stark fact is the plaintiff’s bid did not get that far.
I do not reject the evidence of Mr. Palavi when he refers to facts within his knowledge. However, I cannot act on or accept his opinions about what should have happened. I make allowance for the fact he gave evidence in English, although he is a francophone. No interpreter was requested.
I accept the evidence of Manasseh Tari and Willie Watson. There was nothing contentious in their evidence.
I can find nothing on the evidence to support the plaintiff’s claim. SMET’s difficulties stemmed not from the prequalification and tender bid documents and their terms, nor the operation of the process, but from errors made by the plaintiff’s general manager, Mr. Palavi. He must be commended for the honesty and frankness with which he faced those matters in his evidence. However, given the fact that his was the only evidence adduced it is difficult to see on what basis this case was brought. I dismiss it.
The plaintiff will pay the defendant’s costs on a party and party basis as agreed or taxed.
The plaintiff is to notify the Court be 11 a.m. on Friday 2nd November if the “constitutional” claim under paragraph 18 is being pursued. If no notification is received, it will be struck out.
DATED AT PORT VILA this 19th October 2001.
R.J. COVENTRY
Judge
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