Sat | Jan 19, 2019

No bias found in awarding Petrojam insurance contract - OCG report

Published:Wednesday | January 9, 2019 | 3:19 PMJerome Reynolds
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The Office of the Contractor General (OCG) has found no bias in the awarding of an insurance contract by state-owned oil refinery Petrojam.

The probe was conducted by the OCG and its report was tabled in Parliament on Tuesday by the Integrity Commission.

The Integrity Commission recently subsumed responsibility for the OCG.

Marathon Insurance Brokers Limited had raised concerns about impropriety, irregularity and bias concerning Petrojam’s 2017 Tender for Insurance Services and asked the agency to investigate, noting that it did not win the tender even though it submitted the lowest offer.

READ: Marathon wants gov't to break silence on Petrojam's voided tender process 

READ: Petrojam dispute - insurer dismisses Ministry's defence of costly contract

The OCG report said while there was an irregular action during the tender process the probe found no evidence of bias or impropriety in the awarding of the contract.

Here are highlights from the report.

Click to read Petrojam report

Findings

> The OCG has found no evidence of bias in the circumstances surrounding the 2017 tender for insurance services to Petrojam Ltd based upon the recommendation of Eckler Consultants & Actuaries. Notwithstanding the inability of the OCG to disclose the contents of the actuarial report which was prepared by Eckler Consultants & Actuaries, the Office notes that, upon an application of best practices and thorough due diligence, there is no evidence of bias in the evaluation process undertaken by the actuarial company regarding Petrojam’s 2017 tender for insurance services.

> The OCG concludes that Marathon Insurance Brokers Ltd. was not the successful bidder of the Petrojam’s 2017 tender for insurance services as it was not successful in the most substantial category of a ‘fronting fee’. The fronting fee proposed by the company was very high in comparison to those of other bidders. Of note, this category was allotted the most points as highlighted in the evaluation criteria. It is also the position of the OCG that, Criteria 5 and 6, which were the subject of the complaint made by Marathon Insurance Brokers Ltd., were in fact the criteria in which the company was the successful bidder as they scored the most points.

>  The OCG concludes that the actions of Longdown EIC in its request to Willis Watson Towers to provide further particulars of its experience in the lead markets after the close of tender is irregular. The referenced actions of Longdown EIC, which were not authorised by Petrojam Ltd., is tantamount to a breach of the provisions of the 2014 Government of Jamaica Handbook on Public Sector Procurement Procedures which states that “tenders received should be kept under the strictest control to ensure that the utmost confidentiality is maintained” and that “procuring entities shall ensure that all Bidders are given equal opportunity in the tendering process, for example, by insisting on strict adherence to the closing date and time for submission of tenders, and by preventing alteration to the proposals thereafter.”

> It is the opinion of the OCG that Petrojam Ltd. was aware that the actions of Longdown EIC were irregular in the above regard and took no action to remedy same. In point of fact, Petrojam Ltd. was satisfied that the actions of Eckler Consultants & Actuaries to disregard the request made by Longdown EIC to provide further particulars after the close of tender, was adequate.

> The OCG found no evidence of impropriety and/or irregularity as it regards the extension of the previous contract for the provision of insurance services which was awarded to Fraser Fontaine & Kong. The OCG is of the opinion that the extension, which was approved by the Cabinet of Jamaica and the NCC, is necessary as Petrojam Ltd. would risk having no insurance coverage as at the date of expiry of contract on April 1, 2017.

Recommendation

* The OCG strongly recommends that Procuring Entities should scrupulously adhere to the GOJ Procurement Guidelines and Regulations in the award of government contracts. In particular, the OCG recommends that Petrojam Ltd. abides by the provisions of Section 1, Volume 4 of the GoJ Handbook of Public Sector Procurement Procedures: “Tenders received should be kept under the strictest control to ensure that the utmost confidentiality is maintained. The contents of tenders should not be disclosed to any unauthorised person.”

* It is the recommendation of the OCG that in circumstances where Petrojam Ltd and/or other Procuring Entity has identified that there is a breach of any applicable laws, regulations or guidelines, such as in the case of Longdown EIC, the Procuring Entity should seek to remedy the said breach in an expeditious and effective manner as opposed to continuing with the implementation of the project in violation of the said applicable laws, regulations or guidelines.

* The OCG also recommends that procurement workshops be undertaken with Petrojam Ltd. and entities with which it engages for procurement related services, to reinforce the requirements of the GOJ Procurement Guidelines and Regulations in the award of government contracts, particularly those for the provision of insurance services.

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