ISLAMABAD: The National Highway Authority has awarded a contract of Rs148 billion to a Pakistan-China joint venture firm for building a 230-kilometre section of the Karachi-Lahore Motorway amid allegations of irregularities.

The project is a part of the China-Pakistan Economic Corridor (CPEC).

The NHA invited bids for the project in August and awarded it to the joint venture of China Railway 20 Bureau and ZKB of Pakistan at a cost of Rs148.654bn and issued a letter of intent (LoI) to the two firms on Dec 8.

It is believed that the NHA could have saved Rs24bn if the project, which is being funded through the Public Sector Development Programme (PSDP), would have been awarded according to “instruction of bidders” (IoB) or clauses of the contract.

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One of the construction firms, which participated in the bidding process, has served a legal notice on the NHA for alleged irregularities.

The Frontier Works Organisation (FWO), another bidder, is said to be annoyed after its bid was rejected despite submitting what it claims the lowest bid of Rs134bn.

Some of the bidders have lodged complaints with the NHA that the successful bidder had allegedly reduced quantities and work material amounting to Rs10bn without reducing the cost of the project.

In the pre-bidding process, bidders were clearly told not to reduce quantities or the level of profile (thicknesses) of the road and also not to compromise on minimum material requirements. These instructions were given to ensure that bidders give a balanced bid which would guarantee completion of the project in accordance with desired specifications.

A senior FWO official expressed dissatisfaction over the rejection of the FWO’s bid and said: “There must be some unfair intentions behind the rejection of our bid.”

It has been observed that the NHA rejected the FWO’s bid of Rs134bn on the grounds that the firm had not completed any project above Rs91 billion and thus did not fulfil the criteria for entering the bidding process.

The NHA’s General Manager, Mukhtar Durrani, said that nothing wrong had been done in the award of the contract and any deviation from rules and clauses of the contract had already been agreed to by all stakeholders during pre-bidding meetings.

“If any bidder has any reservations, he should raise the issue before the NHA’s grievance redressal committee (GRC),” he said.

He said that one of the bidders had served a legal notice on the NHA, but added the authority had also given its reply to the notice.

Mr Durrani said the FWO bid was rejected because it was a unique engineering procurement and construction (EPC) project which had to be completed on a fast-track basis.

“We also had to keep in mind the financial status of the firms,” he said.

One of the alleged violations of contract rules was that the successful bidders had submitted separate bid securities with two different names, but not in the name of the JV even though Instructions to Bidders clause 15.1 of the bid documents said: “Each bidder shall furnish, as part of his bid, a bid security of an amount not less than Rs500 million in Pak rupees or an equivalent amount in any freely convertible currency. In case of a joint venture, bid security shall be submitted with name of proposed JV accordingly.”

The NHA GM said that the successful bidders had submitted separate bid securities instead of in the name of JV. “In fact bidders (local and foreign firms) had requested the NHA that they will make their JVs later but not at the time of submission of bid securities and, therefore, the NHA did not receive bid securities of successful bidders in the name of the JV,” he clarified.

A clause of the contract said: “Primarily, the bidders are not allowed to lower levels of profile and that bidders are advised to follow minimum specified design requirements at bidding stage”.

Another alleged anomaly in the award of the contact is that the successful bidders have submitted an undertaking that they will increase quantities during the progress of the project, but the NHA cannot entertain any such request and this facility has not been offered to any other bidder.

The NHA GM said that not only the firms in successful JV but all bidders have submitted such affidavits that in case of any shortcoming in their bids they will improve them after the bidding process is over.

Published in Dawn, December 12th, 2015