Against allegations that it has been quoting low prices in its bids – reportedly as a trick to be awarded contracts in Malawi — only for it to inflate the figures while the works are in progress, Mota Engil quoted its contract bid price for the retendered Marka-Bangula Railway project at K82 billion.
This is K34 billion more than the price at which it bid in the first tender last year which government eventually cancelled following an investigation by the Anti-Corruption Bureau (ACB).
In the initial bid, Mota Engil was awarded the contract after it bid at a price of K48 billion.
After the retendering, the contract is now being awarded to China Railway 20 Bureau Corporation.
But Mota Engil has defended its new figures, arguing they are realistic and are down to the changed scope of works.
In the first tender, ACB carried out investigations acting on complaints from fellow bidders who, among other claims, said Mota Engil had under-priced the contract.
They claimed this was in keeping with its tradition of bidding at a low price for the purpose of securing contracts only to inflate the figures in the course of the project.
Without responding directly to our question whether the current bid price of K82 billion (from the initial K48 billion) does not justify that claim, Mota Engil’s Public Relations Manager Thomas Chafunya said the first price was based on scope of the work given and prices prevailing in 2020.
“When the process was restarted in 2022 it carried a different scope of work which meant additional works were required.
“The Honourable Minister of Transport was recently quoted in the media as saying that he actually added more works to the scope and what this meant is that those going for the project needed to go back to the drawing board and rework their submissions,” he said.
Chafunya further said fuel and other inputs have risen due to international price movements and the devaluation of the Kwacha against major currencies.
“For example, price of diesel moved from K 586.00/litre in 2020 to K 1042.00/litre in 2022 and reinforcing steel moved from K660,000.00/ton in the first bid round in 2020 to K1,250,000.00 in 2022 representing 80 percent increase.
“Furthermore, the scope of 2020 involved re-use of old rails and sleepers at no cost to contractor while the 2022 scope specifies new rail and concrete sleepers materials to be supplied by contractors.
“So, as you can see, Mota Engil presented a bidding cost it is confident with to be realistic to deliver the project amidst the prevailing local and international economic conditions,” he said.
In an interview, Minister of Transport and Public Works Jacob Hara said the ministry indeed made changes to the scope of work due to leakage of tendering documents among contractors.
“I was not around when the first awarding of contracts was done. But to answer your question, we changed a little bit on the scope of work because we did not want to retender the same documents because there was leakage of tendering documents across the contractors so we changed a few things so that if somebody had stolen somebody’s work, they would still find it difficult to tender the documents using the stolen work.
“So, we changed the designs so we knew that it was going to be a little more expensive because we also included some station building in the tender. That is why partly the whole project was going to be up anyway. But on why the lowest [Mota Engil] became the highest, that is for the contractor [to know],” he said.
In the first bid, Mota Engil emerged the successful bidder with the lowest price of K48.2 billion against two others– China Railway 20 Bureau Corporation at K59.9 billion and China Civil Engineering at K79.7 billion.
Other bidders were D &M Rail Construction/Malbro JV at K97 billion and ABD/Golden Star/Lennings JV at K95 billion.
But following the announcement of intention to award the contract to Mota Engil, the other bidders lodged a complaint with ACB, accusing the Portuguese firm of underhand dealings.
In one of their letters of complaint dated August 27, 2021, the firms said Mota Engil had been selected dubiously.
On the bid price in particular, the complainants said:
“We are convinced that this project cannot be executed at the price of MWK48,244,861,524.00 under normal circumstances. And knowing the history of this particular contractor on various projects where some major items are deliberately not priced but later, we see variation orders and addendums being issued that most times double the contract price.”
In the letter, they claimed that Mota Engil had inflated contract amounts – while in the course of the work – for the interchange project in Lilongwe and the Lirange-Namatunu- Chingale-Machinga Road.
“This contractor is able to make variations of more than 100 percent on the initial contract amount which if it was factored in the initial bidding process would make him the most expensive bidder,” they said.
During the bid opening after the retendering process, on January 21 2022, four firms Mota-Engil, D&M, China Railway 20 and China Civils had expressed interest in the contract.
Mota Engil presented a revised bid of K82 billion, D&M quoted the deal at K70 billion, China Civils at K63 billion while China Railway 20 quoted the deal at K68.2 billion.
Malawi News was unable to get a comment from D&M on why it significantly reduced the contract when the scopes of the work have been increased.
In its findings on the first bid, the ACB faulted the Evaluation Team at the Ministry of Transport for substantially departing from the requirements of the Bidding Document when evaluating the bids.
“This makes the intended award of contract to Mota Engil without any solid basis,” ACB concluded.
The project is a reconstruction of a 72-kilometre railway line stretch from Marka to Bangula whose aim is to revamp the Sena line which connects Malawi to the crucial port of Beira—a project which is intended to reduce the cost of trade for Malawi.