Zambian Watchdog

Fights for contracts leaves USA’s Millennium Corporation water project Lusaka in shambles, again

March 24
12:07 2014

This information has been given to ZWD by people at the centre of the Millennium Challenge Corporation, Zambia account.

Generally, this is the project aimed at implementing the Lusaka Water Supply, Sanitation and Drainage Project. It is funded by the United States of America the Millennium Challenge Corporation (MCC).
See the details here http://www.mcaz.gov.zm/

Procurement of the consultant for the US$355 million Lusaka water is once again in shambles.
Symptoms of bribery and corruption continue to slow the process of consultant appointment. CDM of Consultant of United States and SMEC International of Australia are fighting to win this lucrative project.
In 18 June 2013 the MCA Zambia unilaterally cancelled the consultancy contract with the selected consultant due what authorities saw as clear evidence of corruption in appointment of the consultants
(1). The consultancy contract was re-advertised on 4 September 2013 requesting proposals for management of capital improvement works amounting to US 250-300 million
(2). The total fund budgeted for the entire project is US$355 provided as a grant by Millennium Challenge Corporation an agency of US Government.
Bid from seven international and one local consultant were received. Among the bidders were:
1. MWH Americas with significant experience in Africa, Zambia and Lusaka.
2. Black and Veatch who were Consultants on the Lusaka water project some years ago with in depth knowledge of the project and Africa.
3. Hatch / Goba from Canada and South Africa with large experience in Southern Africa and North America.
4. Gauff Engineers of Germany and Mott McDonald of UK as a consortium both are among the top engineering consultancies in the world. Gauff was involved in the design of the project and was seen as having the great advantage of knowing the details of design work.
5. SMEC International of Australia with large experience in International consultancy and significant projects in Zambia.
6. CDM / COWI, CDM with very limited experience in Africa and virtually non in Zambia.
and COWI of Denmark with lots of experience in Africa.
The result of technical evaluation was announced on public opening held in Lusaka on 13 January 2014.
Three firms name Gauff, Hatch/Goba, and Bloomsberry were disqualified due to technicalities. MWH and Black and Veatch with greatest experience and best qualified staff scored 69% and 65% respectively which is much below the high passing mark of 85%. Only SMEC International with technical score of 85.5% and CDM with 95.5% qualified technically. The difference between the technical score of both companies and disqualification of very experienced firms is clear indication of corruption aimed at appointing COWI/CDM as the preferred firm.
At the public financial opening taking place in Lusaka the prices were announced:
CDM US$30.5 million and SMEC US$14.9 million. CDM price was more than double than that of SMEC.
This was all planned by the evaluation committee to ensure CDM wins. What the evaluation committee failed to anticipate is the MCC has a criteria for price competitiveness. MCC suggested to the MCA authorities in Lusaka to assess if the price of CDM is reasonable.

The news of this email was given to CDM by their friends at the evaluation committee of MCA. CDM works closely with CH2MHill in the US and in many part of the world and have won a US$500 million contract with Federal Emergency Management Agency (FEMA). This is for providing technical assistance support for FEMA disaster related operations throughout the United States.
Senior members of CDM has been said to have approached senior member of CH2MHill to assist CDM win this contract in exchange with more share of the US FEMA contract. The management indicated to CDM that they can support them if they bring their price down to 22 million which they felt was the highest this consultancy could attract and an informal agreement was reached. Through informal channels this was communicated to MCC of United States and a deal was struck for CDM to be called to negotiation.
MCA management of Zambia which had supported the CDM bid was delighted of the outcome as they were given US$50,000.00 upfront cash with promise of US$ one million to be disbursed over the life of the project to all involved in the project implementation and evaluation.
At negotiation CDM refused to reduce their prices less than 28 million. The reduction was done by introducing new staff and replacing the expensive staff. They even advertised the position openly( See reference 5). At this time when they heard this they were very angry that CDM have not met their commitment of price reduction. The other twist on the issue is that based on procurement rules of MCC the price cannot be negotiated with the consultant which has an unreasonably high price. They used this reasoning to suggest negotiation with SMEC. When CDM heard the decision could be against them being awarded they demanded the return of US$50,000 from the MCA team.
At this time the evaluation committee approached SMEC asking them to give US$50,000.00 cash so CDM can be refunded and a promise of US$ one million during the execution of the project. MCA in return agreed to increase the contract price by US$ one million dollar to cover the kick backs.
At the time of this writing MCA is preparing to call SMEC to negotiation.
At the same time both MWH and Gauff are filing complaint with MCC on irregularities with the procurement process.
You may wonder why I am telling you this. I am one of the members of evaluation committee. I have been very happy that I have a chance of benefiting from this project. However the Lord had another plan. Something happened to 10 days ago. I promised my Lord that if he saves me, I will repent. Lord has done his part and I am doing mine.

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