PAA faults TIA for ignoring margin of preference

I have gone through the PPAA ruling of Case No. 27 of 2015/16 - M/S Ernie Enterprises (T) Ltd & M/S Jeccs Construction and Supplies Ltd Vs Tanzania Institute of Accountancy (TIA) with keen interest especially on the implications and precedent set by the case. In a nutshell, below are the issues and analysis/arguments made by PPAA in relation to PPA 2011 and its Regulations 2013. [Source TPJ & PPAA Ruling Case No. 27 of 2015/16].

Appellants Submission: The appellants argued that the lowest evaluated bidder, M/s Home Africa Investment Corporation Ltd, did not deserve to be awarded the contract as it was registered by the Contractors Registration Board as a foreign contractor whilst the tender was exclusively reserved for local contractors on account of the fact that the Tender Document had stipulated that it would be financed exclusively by the Government of Tanzania and its value was not exceeding 10bn/-.

TIA’s responses to the appellants’ allegations: TIA argued that Home Africa Investment Corporation Ltd was duly registered as a company under the Companies Act, 2012 and therefore was allowed to bid in the tender, which was open for both local and foreign bidders; and that since national preferences had not been stipulated in the Tender Data Sheet they were not applicable.

PPAA’s analysis and arguments
“In determining the appeal, PPAA observed that according to the evidence, the proposed successful bidder was indeed a foreign firm duly registered and incorporated in Tanzania. However, it also observed that as the tender was floated under the National Competitive Bidding Scheme, TIA was obliged to grant a margin of preference to local firms against the foreign companies. The Appeals Authority considered the Respondent’s arguments in respect to Section 54(2) of the Act that in order for the preference scheme to be applicable, the same has to be stated in the Tender Document. The Appeals Authority considered the above arguments together with the effect of Clause 22 of the TDS in which the Respondent indicated “Domestic Preference NOT APPLICABLE.” The Appeals Authority observed that Section 54(2) provides for a general guidance on the applicability of the preference scheme. However, specific provision which mandatorily requires procuring entities to grant a margin of preference is Section 55(1) of the Act if conditions stated therein are complied with and the tender under Appeal complied with the said condition.

Apart from that, the Respondent clearly indicated under Clauses 7 of the Invitation for Tender, 17(3) of the ITT and 13 of the TDS that the applicable bid security is Bid Securing Declaration. By virtue of Regulation 27 of GN No. 446 of 2013, Bid Securing Declaration should be applied when the value of procurement does not exceed the threshold for exclusive preference. In the instant appeal, the contract price for award of this tender is TZS 574,282,227.72 which is far below the amount specified in the schedule. While the Respondent was therefore right to use bid Securing Declaration under Regulation 27 of GN No 446 of 2013, he was blatantly wrong for refusing to grant to the local bidders the respective margin of preference.”

Ruling
PPAA has ordered a procuring entity to evaluate tenders afresh after it became apparent during an appeal that the entity had refused to grant a margin of preference to local bidders in contravention of the public procurement law.

My Puzzle!
1. PPAA ordered TIA to re-evaluate the bids by taking into consideration margin of preference. I am putting myself in the shoes of TIA especially on the interpretations of the ruling and implementing directives given.

(i) Going by the PPA’s analysis, the tender in question falls under “Exclusive Preference” whereby foreign bidders are not allowed to participated but in this process foreign bidders participated – Bidding documents did not state it was exclusively for national bidders and Margin of Preference shall not Apply. In this case, will the re-evaluation consider “margin preference” or “exclusive preference”.  If the re-evaluation will consider “exclusive preference” – it implies that all foreign bidders will be disqualified as are ineligible BUT according to IFB and Bidding Documents they were not restricted.

(ii) if the re-evaluation will consider “Margin Preference” – it implies that evaluation process will use criteria which was not stipulated in the Bidding Document as already noted from the analysis, Bidding Document “Margin of Preference” was “NOT APPLICABLE”. Either way – this is a dilemma!

2. My take from the ruling is that “all tenders (works and non-consulting services) using Tender Securing Declaration are “exclusively for the national bidders” since are below threshold TZS 10,000,000,000 (works) and TZS 2,000,000,000 (non-consulting services) regardless the IFB and Bidding Document stipulated so”. In this case, the provisions in the Sections and Regulations override the provisions in the bidding documents even if Procuring Entities consider to exercise their discretion in the bidding documents “Apply” or “Not Apply” OR “Applicable” or “Not Applicable”. PPAA get ready for the influx of cases relating to application of “exclusive preferences”.

What is your take?