In the interest of public transparency and in response to Mr Correy’s Letter to the Editor, previous Letters to the Editor, he has submitted on Everything Geraldton and questions he also asked of Council at the 28 July Ordinary Meeting the following information was provided To Mr Correy at both the Council meeting and in writing in a letter dated 3 August 2015:
Abraham Street/Verita Road Bridge contract
(A) Why did the CEO award the bridge contract to Georgiou at 8.171M plus GST with no reference back to Council when he was instructed in October 2014 to negotiate the contract at $8.2M inclusive of GST- in excess of $800,000 extra?
Before responding to the questions from Mr Correy I think it is important to clarify a few matters.
Since the Council made the decision to award this contract, Mr Correy has been on a fishing expedition to try and find some evidence to support a conspiracy theory that he has invented.
The repeated questioning on this matter has cost the City thousands of dollars in lost time and productivity. In addition to this, the line of questioning is considered to be a personal attack on the integrity of Officers from Brookfield Rail, Public Transit Authority, Department of Main Roads, GHD, the City and myself.
The panel of very qualified and experienced representatives from these organisations have more than 150 years of collective engineering experience, have built thousands of kilometres of roads, scores of bridges and have assessed thousands of complex tenders. This panel, whose integrity you have continually questioned, have unanimously agreed that Georgiou’s tender provided the best value for our Community.
I respect your right to ask questions and seek clarification but doubt that you can form an objective view because of your vendetta against this City and your lack of knowledge or experience in considering complex tenders and in building bridges and roads.
Response - A
The CEO was not instructed to negotiate the contract at $8.2M inclusive of GST this is a misrepresentation of the facts that a plain reading of the resolution reveals.
The CEO was in fact instructed to award and execute the contract if he was satisfied that:
- The preferred contractor was able to obtain a construction license from Brookfield Rail and enter into agreement with Brookfield Rail to enter and carry out works within the Rail Corridor.
- A tripartite agreement between Brookfield Rail, Public Transport Authority was able to be entered into.
- All other outstanding matters including without limitation the City’s exposure to Risk had been resolved.
- The negotiated contract was within the budget allocation and consistent with the intentions of the Tender.
The CEO was only required to refer the tender back to the Council if the above conditions were not met.
The negotiated contract was below the budget allocation of $10,000,000 and the above conditions were met, the CEO accordingly exercised the authority delegated to him by the Council.
Abraham Street/Verita Road Bridge contract
(B) If the tender price was varied or withdrawn doesn’t that then deem the tender non-compliant and therefore invalid? And if so, why was the tender not re-advertised or alternatively negotiations commenced with the next lowest conforming tenderer?
Response – B
The tender price was not withdrawn. Tenderers typically submit a price which includes a number of conditions and assumptions based upon their understanding of the scope of works. During the tender process these conditions and assumptions are clarified with prospective tenderers and tender prices are commonly adjusted. If you have had any experience in the evaluation of complex tenders you would understand this.
If a tendered price is varied during the assessment process as a result of nominated inclusions and exclusions, or in response to scope clarifications, it is not considered to be invalid. This practice is common with tenders of this nature and is supported by law.
The variations following the Council decision were anticipated by the Council and that is why they delegated authority to the Chief Executive Officer. The variations related to the third party requirements (Brookfield Rail, Public Transport Authority and MRWA) not known at the time and would have applied to any tender that was accepted.
The Verita Road bridge contract was awarded at $8,172,298.07 exc GST.
I have correspondence that states that an alternative tender from Highway Construction was on the table at $6,528,153.81 exc GST + $1,108,808 exc GST for 4 extras.
In simple terms the 2 tenders read like this:
- Georgiou Tender $8,172,298.07 exc GST
- Highway Construction (all in) $7,636,962.18 exc GST
Less a further $300,000 reduction resulting in a net tender price of
Difference $ 835,335.95
How does the City’s engineer justify the statement he made to the Council Meeting in May that the accepted tender was 1.5% below the next cheapest tender?
Also why did the CEO agree to pay $835,335.95 of ratepayers money more than was tendered?
The figures you have provided for comparative purposes are wrong because they do not incorporate the variations to the tendered prices of both parties during the assessment process. I note that you have also misleadingly added a discount of $300,000 that was offered by AlbemOperations & Highway Construction after the award, which you know would have been illegal for the Council to accept.
The following table shows a true comparison.
A proper comparison shows that Albem& Highway Constructions tender was $110,884.47 or 1.56% higher than the tender from the Georgiou Group.
If the contract award price to Georgiou was $8.17M + GST, can council please advise what was the lowest conforming submitted price of any of the remaining tenderers excluding all non-priced criteria assessment influence?
The submitted tender prices varied between $7,180,969.22 Incl. GST to $8,424,131.45 Incl. GST. These prices excluded any adjustments following receipt of responses by tenderers to clarifications from the Tender Assessment Panel and further third party requirements not available at the time of tendering.
Georgiou Group Pty. Ltd. was the highest ranked Tenderer based on the qualitative and quantitative assessment Criteria and Albem Operations Pty. Ltd. & Highway Constructions Pty. Ltd. was ranked third out of seven Tenders.