Power play at Metro mass: board awards contract to company that failed bid requirement

Although Allied Home Stores Limited (AHSL) failed to meet the criteria for the award of contracts for the supply of tyres to the Metro Mass Transit Limited (MMTL) this year, the board, of the company, overturned the decision of an Evaluation Committee that scrutinized the bids submitted and recommended Rana Motors.     
 
The board’s decision was on the basis that apart from value for money, the non-submission of an audited financial statement, the criterion used in disqualifying the AHSL’s bid, was not used as a benchmark for other companies that submitted bids.

Board Chairman of MMT, Nana Ansah Sasraku

According to the full Evaluation Report for the supply of the tyres, which has been made available to the Daily Graphic, the AHSL failed to comply with demands of the bid which deals with submitted financial reports (audited accounts) for the last two years, covering 2011 and 2012, to show its financial capability to execute the said contract.

The report, signed by an evaluation panel comprising Sylvester B. Ziniel, Ebenezer Allotey and Rose Omane, recommended that the MMT negotiate with Rana Motors for the award of the contract at GH¢10,690,200 to deliver the tyres on call basis for fully complying with all requirements of the tender.

According to the report, two companies — Rana Motors and C.Woerman — met all the criteria for the tender and recommended that C. Woerman be considered for the contract should Rana Motors turn down the offer.

The board, in a memo dated June 11, 2014 after a meeting of the Tender Committee, however, insisted that apart from the issue with audited accounts, the Evaluation Committee’s recommended supplier’s price substantially exceeded the budgetary provisions for the tyres.

“The committee (the Tender Committee or ETC) did not accept the disqualification of Allied Home Stores Limited on the basis of non-submission of the audited financial statements since the ETC took note of the fact that the Evaluation Committee did not evaluate any audited financial statements as a key requirement for responsiveness. The ETC, thus, found AHSL responsive,” it said.

That, however, contradicted the Evaluation Committee’s Report which indicated that apart from AHSL which failed to comply with the demand of the tender with respect to audited accounts, other companies — CFAO, Rana Motors and C. Woerman —  complied with it.

The memo, signed by the Board Secretary, Mr Emmanuel Amoah, directed management to “estimate tyre usage of two months, amounting to 1,300 tyres, and deduct that from the budgeted number of tyres for this year and the remaining awarded on contract to AHSL”.

MD queried

The Managing Director, Mr Noble Appiah

The board, in a letter dated September 29, 2014, queried the managing director of the company and asked him to respond to a number of allegations.

There were media reports last week that the board of the MMT had, in the query, cited the Managing Director, Mr John Noble Appiah, for overstepping his bounds in the running of the company.

The letter, signed by the Board Chairman, Osabarima Ansah Sasraku, and copied to the Transport Minister, accused Mr Appiah of defying the board’s directive to award a contract for the supply of 400 tyres, valued at GH¢604,800, to AHSL and  instead handing the deal to Rana Motors.

According to the media reports, an audit by PKF covering the period between July 2013 and June 2014 raised questions of procurement irregularities against Mr Appiah.

He was found to have spent over GH¢33 million without approval, for which the board was demanding answers.

MD responds
Mr Appiah declined to speak on the matter when contacted by the Daily Graphic, stating that the issue was being resolved internally.

However, a letter dated October 7, 2014 stating his responses to the board’s query and available to the Daily Graphic stated that in 2012, the MMT entered into long-term contracts with Rana Motors and Somotex for the supply of tyres.

“I fully endorse the initiative by my predecessor because the modern practice in the industry is to enter into long-term contractual arrangements with well-tested brands as a strategic and supply chain continuity measure,” it said.

According to the letter, in September 2013, the quantity of tyres under the contract with Rana Motors had been fully supplied.

“I decided that until a new tender was conducted and provided Rana Motors could supply additional tyres at the 2012 price, they could be given an order to supply on call basis as MMT Limited had a budget for the procurement of tyres and that had been approved by the board,” it said.

It said management succeeded in negotiating 2012 prices with Rana Motors for 2013 at the time when Somotex, a company which in 2012 had also been contracted to supply tyres to the company, sought for price adjustment, citing depreciation of the cedi as a reason, but the management refused to endorse it.

The letter indicated that management, in March 2014, conducted NTC for tyres — the process went through a number of processes and eventually the board directed that the contract be awarded to AHSL.

It said prior to the award, the Tender Committee, chaired by the board chairman, had requested management of the company to issue an award to AHSL for the supply of 1,700 tyres to avoid shortage.

“While AHSL was able to supply 750 front tyres, however, the remaining 550 rear tyres did not meet the technical requirement of the user department, hence they were rejected based on critical specification with regard to date of manufacture,” it said.

It said following that, the need arose for 400 tyres with same specifications, and since AHSL could not readily supply the quantity and based on request for tyres, he (managing director) authorised that Rana Motors or Somotex be contacted for immediate supplies if they had them in stock.

“The assertion that I had been negotiating with Rana Motors for the supply of tyres at the time MMT Limited had issued a contract with AHSL is not a true reflection of the information available on the issue,” the letter said.

Drivers not recruited
Mr Appiah, according to the board, engaged in operational staff recruitment — without the board or the Transport Ministry — for buses to be imported from China, though the deal was yet to be concluded.

In response, the letter indicated that the company expected 200 buses to be delivered in July this year.
In preparation for that, an advert was placed in the dailies in March 2014 for operational staff because in the past the company had been saddled with inadequate professional drivers due to delayed recruitment of operational staff before the buses were delivered.

It said the decision was a proactive step to enable the operational staff to be properly recruited and trained before the delivery of the buses, adding that it would have been highly unprofessional if the buses were delivered and adequate arrangement had not been put in place to operate them, a situation which he claimed had happened in the company before.

The letter, however, maintained that as of October 7, 2014, no operational staff had been engaged for the operation of the buses.