Thu | Nov 26, 2020

SMOKE CLOUDS FIRE TRUCKS - Integrity Commission called on to probe multibillion-dollar contract award process

Published:Monday | October 19, 2020 | 7:22 AMJovan Johnson/Senior Staff Reporter
Stewart Beckford, commissioner of the Jamaica Fire Brigade.
Stewart Beckford, commissioner of the Jamaica Fire Brigade.

A company which was being entertained by the Jamaica Fire Brigade (JFB) as it selected another for a multibillion-dollar contract that was not tendered to provide 30 fire trucks has written to the Integrity Commission seeking its intervention.

The company, Ian K (Agencies) Limited, is crying foul and its attorney, Michael Hylton, QC, has declined to discuss the August 24, 2020 letter, which he says the Integrity Commission has acknowledged receipt of.

The Gleaner submitted questions on October 5 to the Ministry of Local Government, which, initially, said it could not answer before October 14. However, Permanent Secretary Marsha Henry-Martin later said a response would take longer “due to a further review of the questions wherein it was determined that more time will be required to assess the questions and prepare the responses”.

Dozens of pages of leaked Public Procurement Commission (PPC), ministry and Ian K documents obtained by The Gleaner suggest that while the ministry and fire officials were entertaining Ian K over its December 20, 2018 unsolicited proposal, they were simultaneously seeking permission from the PPC to give the contract to another entity.

National Safety Limited, the Jamaican company mentioned in the PPC and JFB documents as the entity selected to supply the trucks, said, “We are not the recipients of the government contract.

“We will, however, need to consult with the international body prior to being able to respond to any questions,” said M. Angela Templer, managing director of National Safety, the local dealer of Rosenbauer America trucks – the make vehicles the JFB said it wanted.

It is not clear whether a contract has been signed, although Local Government Minister Desmond McKenzie had announced in July that the 30 trucks are to be supplied next year.

Who has been contracted is among the questions that Julian Robinson, an opposition parliamentarian, tabled last Tuesday for McKenzie to answer within 21 days.

The documents obtained revealed that JFB Commissioner Stewart Beckford made an urgent lobby, first for permission to acquire 10 trucks costing US$8 million, then a further 20 valued at US$15.8 million – both from the same supplier.

In its letter to the Integrity Commission expressing “deep concern”, Ian K contended that its offer to supply 30 fire trucks and a five-year servicing package would have cost $2.5 billion – or $1.32 billion less than what the selected supplier was charging.

That computation does not square with the $3 billion the local government minister said was being spent to acquire the trucks.

“On any analysis of these objective facts, it was not commercially justifiable for the JFB to recommend or for the PPC or the Government to agree to enter into a contract at a price that was approximately $1.32 billion more than the offer by our client,” Ian K argued.

Ian K is chaired by Ian Kent Levy with Matthew Levy as managing director.

In a resubmitted proposal to the fire chief on January 3, 2019, the managing director argued for the use of trucks made by the Magirus, a 156-year-old fire equipment company based in Germany.

A trip to Magirus’ production plant for JFB officials was also placed on the table, and ultimately taken up in June.

“The JFB’s acceptance of this officer should not be in any way construed as a commitment to do business with Magirus or any of its entities,” the commissioner added in his letter copied to the permanent secretary and JFB Chairman Russell Hadeed.

But it soon became clear that the ministry never intended to take up Ian K on its offer, as the JFB’s Procurement Manager Rory Chin, in a letter dated June 12, 2019 – the same month of the Germany visit – sought the Public Procurement Commission’s permission to use direct contracting to procure 10 fire trucks (pumpers).

Chin explained that the pumpers were “urgently” needed as the brigade’s 39-unit fleet was short of 20 trucks, consisted of vehicles mostly over a decade old, leaving four to five fire stations daily “without adequate fire coverage”.

Thirty-two of the trucks in the fleet were bought from Rosenbauer America, through National Safety, the manager said.

Chin told the PPC that using the direct contracting method – where the supplier is selected by the entity needing the services – “would reduce the time by eight months and standardise the fleet”.

PPC Chairman Raymond McIntyre responded in a June 28, 2019 letter, telling Chin that the JFB could go ahead and use the sole source procurement. He said, however, that where the cost of the procurement exceeded $30 million, the JFB “is advised” to get the PPC’s permission to award the contract.

As the JFB was working to meet the PPC’s requirements, the parallel process with Ian K was ongoing, ultimately resulting in an updated offer being submitted on September 4, 2019.

That revised offer reportedly considered the feedback from JFB officials who visited Germany.

The officer maintained the request for the Government to give an “unconditional, irrevocable” guarantee to back Ian K’s financing of the trucks, through Magirus, at an interest rate of 5.83 per cent per annum.

That particular issue was “problematic”, a government source said.

As responses from the JFB and the ministry dried up, Ian K wrote to the local government minister on October 25, 2019, requesting a meeting.

No response came and exactly a month later, on November 25, 2019, the JFB submitted its justification to the PPC, which later invited senior brigade officials to a meeting in December to discuss the request.

But before the PPC could respond to the JFB, the fire chief wrote on January 13, 2020, asking the commission to “urgently” consider allowing the JFB to use National Safety to supply an additional 20 Rosenbauer trucks, bringing the total number of units to be provided to 30.

That urgent request followed information Beckford said he received from the finance ministry that additional money – approximately $1 billion – was found to secure a deposit on the 20 trucks, but which had to be contracted by March 12, 2020.

“If the timeline is not met, the money will become unavailable and the brigade would have lost out on an opportunity to reduce the drastic shortage of pumper units within its fleet,” the commissioner pleaded, stating that an invoice from the proposed supplier accompanied the letter.

On January 20, 2020, the procurement commission responded, approving the June 2019 request regarding the 10 pumpers, and gave its “no objection” to the inclusion of the additional 20 trucks under the same contract to National Safety, a 48-year-old local supplier.

The PPC indicated that the contract should be submitted to Cabinet for approval.

The fire brigade, based on the PPC’s documents, had informed the commission at a December 18, 2019 meeting that five tender processes had failed.

In a 2018 attempt, two bids were submitted but one was deemed “non-compliant” following an evaluation, the PCC said, referencing statements from the fire officials.

The JFB representatives reportedly said the brigade decided to use the single source procurement method to engage National Safety, which had tendered on all previous occasions and had previously supplied trucks which “have proven to be reliable and efficient with a good lifespan”.

After several unanswered letters and telephone calls involving officials of the JFB and the ministry between February and August this year, the permanent secretary wrote to Chairman Levy on July 30 expressing “regret” at being unable to confirm meeting dates.

Henry-Martin also told Levy to be “reminded” of recommendations in an August 14, 2019 letter she said was sent to him regarding the government guidelines for unsolicited proposals.

Levy responded that he did not receive that letter and only got sight of it because it was attached to the one sent in August.

jovan.johnson@gleanerjm