High Court in Lilongwe orders RBM to re-tender contracts that were awarded to a company that did not qualify for bidding

The Reserve Bank of Malawi

By Duncan Mlanjira

The High Court sitting in Lilongwe — under Justice Kenyatta Nyirenda — has ruled on Monday, August 23, that the Reserve Bank of Malawi (RBM) should re-tender contracts which were dubiously awarded to a company that did not qualify for bidding in the first place.

This follows an earlier determination from Public Procurement and Disposal of Public Assets Authority (PPDA) Review Committee which ordered the Central Bank to retender the disputed tenders after one for the bidders, Sparc Systems, had lodged a complaint to PPDA having noticed serious irregularities done by RBM in favour of another bidder, Mitra Systems.

However, instead of executing the decision of the PPDA, the Central Bank proceeded to the High Court suing Sparc Systems Ltd, in a quest to maneuver and proceed to award to Mitra, and seeking nullification of the decision by PPDA and challenging the legality of the said decision ordering it to retender.

In his ruling, after reading sworn statements from the interested parties, Justice  Nyirenda has upheld the decision by PPDA to have the bids retendered. The Court has also nullified the award of the 3rd Lot to Mitra, a decision which will now see all the lots being retendered.

“The Claimant must re-tender both contracts, that is, the contract for the supply and delivery of Lot 1, Lot 2 and Lot 3 of the ICT Equipment for ATS (Procurement reference number RBM/ICT/008/20) and the contract for the supply and delivery of ICT Equipment for Flexicube Upgrade (Procurement reference number RBM/ICT/007/20),” reads part of Justice Nyirenda’s ruling.

Justice Nyirenda was also amused with how RBM awarded Mitra Systems Limited the contracts when it was agreed that one of the  requirements was to operate for more than five years.

“By way of illustration, in the present case the Claimant had stated that the bidder should have at least 5 years experience. As such, the purpose or goal of preliminary screening exercise would have been to confirm if the bidders met this requirement.”

“A bidder having less than the stipulated experience had to be disqualified at this stage. This is clear from regulation 132 of the Regulations as read with Desk Instruction 13: General Evaluation Procedures For Goods, Works And Routine Services.

“The upshot of this is that the 2nd Interested Party should have been disqualified at the preliminary screening stage because it did not have the requisite experience, that is, 5 years in supplying office machines.”

“There should have been no need therefore, to engage in a detailed evaluation of its bids. The Defendant ignored its own qualification requirements and allowed an ineligible bidder to continue to participate in the procurement proceedings.

“This was not only grossly irregular but also a violation of the principles of fairness set out in the Act,” continued the ruling.

The ruling then turned down RBM’s request to award Mitra Systems the contracts, saying the decision cannot stand.

“Based on paragraph 57, the order by the Defendant that the Claimant should proceed with the recommendation to award to the 2nd Interested Party the contract relating to the supply and delivery of ATS Procurement reference number RBM/ICT/008/20 Lot 3 cannot stand.

“The award is, accordingly annulled. This means that all the Lots have to be re-tendered. I so order. On the authority of the decision of the Supreme Court of Appeal in Mutharika and another v. Chilima and another, Constitutional Appeal No. 1 of 2020, the re-tendering will only be open to the qualifying bidders which participated in the previous procurement proceedings. It is so ordered,”  added Justice Nyirenda.

Furthermore, the Court has ordered RBM to involve independent evaluators for the retender and that all the future tenders should include electronic copies (CDs) in the submission to avoid any suspicion of tampering with documents.

The Judge has also ruled that the bidding process in this case will only involve those that bid last time, adding that all bidders will cover their own costs.

“Bidding for the contracts to be re-tendered will only be open to the qualifying bidders which participated in the previous procurement proceedings.”

The reserve bank has also been ordered to pay the cost for the case.

RBM’s invited bids from eligible bidders for the supply and delivery of the ICT Equipment for ATS equipment and Flexicube Upgrade that were flighted in the media on June 2, 2020 and May 29, 2020 respectively.

A number of bidders responded to the invitations to bid and, after evaluation. On 14th November 2020, RBM produced intention to award the two contracts to Mitra Systems as the lowest evaluated bidder.

This prompted Sparc Systems Limited who was also a bidder in this procurement to write the Bank requesting access to the entire record of the procurement proceeding in pursuant to its rights under section 37 of the Constitution as well as section 34 of the Public Procurement and Disposal of Assets Act.  This request from Sparc who suspected foul pray as they quoted lower than Mitra was refused by the bank

The decision forced Sparc Systems Limited to lodge a complaint to the PPDA which then instituted a Review Committee to look at the case. Having head from both sides, RBM and Sparc, the PPDA Review Committee ruled against the bank and ordered the Central Bank to re-tender the bids.

This did not go well with the Central Bank which took the issue to the High Court suing Sparc Systems Limited in a bid to convince the Court to still go ahead to award the said ICT company the controversial contracts.

But this was rejected by Justice Nyirenda, who faulted RBM for wrongly naming Sparc Systems Limited as defendant instead of PPDA which had ordered it to re-tender, saying Sparcs Systems Limited was an interested party in the whole saga.

At the PPDA Review Committee, Sparcs Systems Limited had faulted RBM for flouting its own set of rules, which among others, included a requirement of a 5-year experience in supply of ICT equipment.

The company which was awarded the contracts had a two-year experience, contrary to the set of rules that were placed in the bidding process. The Central Bank had defended the decision by claiming that they have known individuals behind Mitra and that these had Mitra met the 5 years requirements.

RBM also argued that Sparcs Systems Limited failed to submit Manufacturer Authorization from Dell, an accusation which was turned down by the company which went ahead to show the review committee that it had matched the requirements to all the criteria including the Manufacturer Authorizations and technical details as requested in the bidding process.

Sparc also refuted RBM claim that the company had only one traceable reference in the bidding document which the Bank showed as a basis of disqualification. The company said it has more experience and references not only in Malawi but across Africa as shown in its bidding document and company profile submitted to RBM.

The Malawian ICT Service providers then went ahead to accuse the Bank of not following the procedure at bid opening by failing to go through the bid opening checklist to verify if the requested information was available in the bids, a normal trend that ensured the availability of Manufacturer’ Authorization, bid security and bid validity period are checked and verified in the presence of representatives.

And when Sparc Systems Limited brought these accusations against RBM to the PPDA review committee which then ordered the Central Bank to render, the Bank rushed to the Court to obtain a stay of the enforcement of the decision by PPDA, questioning the committee’s legal powers and also accusing the committee of not providing enough reasons for its decision and also adding that the equipment was needed urgently for the running of critical systems for the Bank.

In court, SPARC System — a company that was duly proven during the proceedings that it had vast experience in the bidding process — presented evidence that it did add in its bids the required Manufacturer’s Authorisation letter from Dell.

The Court heard that the Manufacturer’s Authorisation letter might have been maliciously removed from the hard copy bid document after SPARC Systems presented a PowerPoint evidence that on its page of contents, the requirement was indicated as been presented on page 21 of the document.

In his judgement, Justice Nyirenda ordered that RBM “must re-tender both contracts, that is, the contract for the supply and delivery of Lot 1, Lot 2 and Lot 3 of the ICT Equipment for ATS (Procurement reference number RBM/ICT/008/20) and the contract for the supply and delivery of ICT Equipment for Flexicube Upgrade (Procurement reference number RBM/ICT/007/20)”.

This is a milestone and landmark case as most of the procurement cases do not come to a logical conclusion as most participants prefer to settle out of the court.