Unfair Sh822 billion tender by Bank of Tanzania

Dar es Salaam, Tanzania:

The Public Procurement Appeals Authority (PPAA) has ordered the Bank of Tanzania (BoT) to restart a multibillion-shilling tender for the reprinting and supply of banknotes after noting flaws during the vetting of bidders.

The quasi-judicial body has discovered that all four international firms that were shortlisted after the pre-qualification process failed to comply with criteria set in the tender documents.

“It is crystal clear that the appellant and the three shortlisted applicants failed to comply with Item 16 (1). Furthermore, all shortlisted applicants and the appellant failed to comply with Item 14 (1) of the Summary of Evaluation Criteria on Financial Situation and Performance of the Pre-qualification Document.

“In view of the above findings, the Appeals Authority concluded that all pre-qualified tenderers ought to have been equally disqualified,” said the PPAA in its recent deliberations.

The decision follows an appeal by the leading banknote printing firm, Ms De La Rue International Limited, that was challenging its disqualification from the lucrative deal floated by the central bank in July last year.

The appeal arises from a pre-selection of suppliers who tender for reprinting banknotes at the BoT sub-head office in Dar es Salaam.

The bank, via the Tanzania National e-Procurement System (TANePS), invited applicants to apply for the tender for reprinting banknotes at the BoT sub-head office in Dar es Salaam. Eight applications were received by the July 8, 2022, deadline.

Following an evaluation, four applicants who were found to have complied with the requirements of the prequalification documents were shortlisted.

The companies include Ms Orell Fussli AG, Ms Polska Wytwornia Paplerow Wartosciowych Spolka Akcyjna, Ms Oberthur Fiduciaire SAS and Ms Giesecke+Devrient Currency Technology GmbH.

The BoT Tender Board informed Ms De La Rue that it had not been shortlisted due to its failure to meet the financial capability commitment required.

The other reason given for disqualification was that that company submitted a letter from its bank that lacked a commitment statement to guarantee it during tendering and execution of the tender.

The company’s efforts to remain in the tender also failed after an independent review panel appointed by BoT rejected its application for an administrative review of the decision to disqualify it. The panel concluded that the company was fairly disqualified.

De La Rue appeals

At PPAA, the company was represented by Advocate Brian Mambosho, who was accompanied by Mr David Aldridge, the company’s country director.

At the hearing of the appeal, Mr Mambosho strongly disputed the reason given for his client’s disqualification, stating that the financial capability commitment letter dated June 27, 2022 attached to their application met the requirements of Item 14 (1).

According to the counsel, by the commitment letter dated 27 June, 2022, the Global Loan Agency Services Limited (Glas) offered to extend Sterling Pounds 275 million (about Sh822 billion) for execution of the tender.

The lawyer further said about Sterling Pounds 121.4 million was available for utilisation as at the date of the letter.

He argued that the appellant had indicated current commitments, future commitments and how they would be financed in compliance with Item 16 (1) of the Summary of Evaluation Criteria on Financial Situation and Performance of the Pre-qualification Document.

“The applicant submitted tangible evidence of its financial status as required by the pre-qualification document. Therefore, the respondent’s act of disqualifying the appellant was not justified,” he argued.

The company sought suspension of the procurement process pending determination of its appeal and a declaration that the bank’s guarantee submitted by the appellant complied with bid instructions.

BoT’s reply

BoT was represented by a state attorney from the Office of the Solicitor General (OSG), Edwin Webiro, who was assisted by Mr Deodath Mushi, senior state attorney from BoT.

Mr Webiro submitted that the appellant was disqualified for failure to comply with the requirement to submit a letter of commitment from their bank that they would be guaranteed during the tendering and execution process.

“The requirement was very specific and clear and not too general as contended by the appellant,” said the state lawyer, adding that the commitment letter had a number of anomalies, like the words used, which did not indicate if the bank was committed to guarantee the appellant during the tendering and execution processes.

“The appellant was required to comply with the requirements of the pre-qualification document despite being experienced in the industry of printing banknotes.” Thus, the appellant’s non-compliance with Item 14 (1) rendered its application non-responsive and therefore its disqualification was far and in accordance with the law,” he argued.

PPAA decides

The appeals authority started its analysis by considering BoT’s argument that the Sterling Pounds 275 million has been extended to the De La Rue Group of Companies and not the Appellant (De La Rue International Limited).

“The Appeals Authority finds such an argument to have merit as it is clear that the credit facility has been issued to the De La Rue Group of Companies.

The appeals authority is in agreement with the respondent (BoT) that the De La Rue Group of Companies and the Appellant are two distinct legal entities in the eyes of the law,” said the appeals authority.

The appeals authority also assessed if the proposed four pre-qualified applicants complied with Item 14 (1).

The authority started with reviewing the application submitted by Ms Orell Fussli AG and observed that at the slot where it was required to attach a commitment letter from its bank, it attached a recommendation letter dated July 4, 2022, from UBS Switzerland AG.

“The said letter was general and did not indicate if the issuing authority committed itself to guaranteeing the firm during tendering and execution,” said the PPAA.

Regarding Glesecke+Devrient Currency Technology GmbH compliance with Item 14 (1), attached the letter indicating that Unicredit Bank knows Glesecke+Devrient Currency Technology GmbH has the capacity to meet its obligations for the execution of the contract.

“The wording of the letter did not indicate that the bank has committed itself to guaranteeing the firm during tendering and execution.”

The authority also considered whether Ms Polska Wytwornia Paplerow Wartosciowych Spolka Akcyjna complied with Item 14 (1). The firm submitted a letter from Bank Pekao indicating that it is ready to work with Ms Polska and willing to support it with a bank guarantee during tendering.

“The wording of the letter does not state explicitly that the bank committed itself to guarantee the applicant during the tendering and execution of the contract.

The letter does not state that the bank would provide support to that particular applicant by issuing a line of credit facility of the magnitude to be determined during tendering. Thus, Ms Polsk failed to comply with the requirement of Item 14 (1).

Lastly, the PPAA evaluated Ms Oberthur Fiduclaire SAS to see if it complied with Item 14 (1). The company submitted a letter addressed to BoT from Societe Generale, indicating that the issuing authority was ready to guarantee Ms Oberthur by being ready to issue a line of credit facility of the magnitude to be determined during the tendering process.

After reviewing the letter, PPAA concluded that the letter did not indicate that the issuing authority committed itself to guarantee the applicant during tendering and execution of the contract,” said PPAA.

“Having reviewed the applications of four firms and observed that none of them complied with the requirements of Item 14 (1), the appeals authority allows the appeal and nullifies the whole pre-qualification process. The respondent is ordered to restar the pre-qualification process in observance of the law,” said the PAA.