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Areia Preta: wastewater plant Losing bidder asks CE to revoke adjudication

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A new consortium took over the Macau peninsula wastewater treatment plant last Saturday, October 1, but the controversy over the public tender seems far from over.
After several appeals and lawsuits filed by different bidders, a new complaint was sent to Chief Executive Fernando Chui Sai On late last month, claiming there were irregularities in the way the bids were assessed and asking for the adjudication to be revoked.
The adjudication process for the operation of the wastewater treatment plant kicked off in March 2010 and was supposed to be completed in a few months.
The new operation contract of the Areia Preta plant was supposed to be signed on October 1, 2010. However, the contract was not adjudicated prior to that date and the deal with the then operator – Engenharia Hidráulica de Macau (EHDML) – had to be extended for an additional year.
In a late December dispatch the Chief Executive extended the contract with EHDML until October 2011, for a total of MOP 6.9 million.
The tender attracted nine companies but two bids were rejected outright and five others were excluded in June 2010 because the commission decided they lacked qualifications or documents.
Some of the companies that were excluded from the international tender, mainly the shareholders of EHDML – Va Tech Wabag and Waterleau Group - took the case to court but their appeals were successively snubbed, including two injunctions to halt the process.

The Infrastructure Development Office (GDI) last month decided to grant the five-year contract worth some MOP 600 million, which includes the modernisation, operation and maintenance of the treatment plant, to ‘CESL Asia – Investimentos e Serviços, SA/ Indaqua – Indústria e Gestão de Águas, SA/ Tsing Hua Tong Fang Co, Ltd’.
According to documents sighted by Macau Daily Times, the losing consortium ‘Consulasia Consultores de Engenharia e Gestão Lda/ Consulgal Consultores de Engenharia e Gestão, SA’ is now challenging GDI’s decision and has asked the Chief Executive to “revoke the adjudication and order a new assessment of the proposals”.
The two remaining bids were scored 57.36 percent and 66.45 percent in the technical assessment phase, with only one going to the second stage (price evaluation) as a 65 percent score was required.
But the losing bidder disputes the score given by the tender evaluation commission, saying that it acted “illegally” in excluding some of the projects that the bidder had given as a sign of its experience.

‘This was a bad call made by the tender evaluation commission, which deprived the consortium’s proposal of points that it deserved – the points were inappropriately and unlawfully deducted,’ stresses the complaint sent to the Chief Executive

In the complaint, the consortium argues that the reason given by the tender evaluation commission to exclude the projects had already been dismissed by the commission that opened the bids, “which normally has the final say on whether the bids’ documents are in line with what is required”.
“This was a bad call made by the tender evaluation commission, which deprived the consortium’s proposal of points that it deserved – the points were inappropriately and unlawfully deducted,” the complaint claims.

Discrepancies vs glitches

In the complaint, the consortium headed by Consulasia also points fingers to what it identifies as some shortcomings in the winning bid.
According to the document which was viewed by MDTimes, the proposal put forward by local company CESL Asia “has some discrepancies in the deadlines for the works required” by GDI’s tender programme.
“In the Chinese-language version, it [the winning bidder] states that it will take 180 days, but in the English language version it says 240 days,” explains in the document the consortium led by Consulasia, a company that is also part of the joint-venture that operates the Pac On waste incinerator.
The company adds that apparently the tender evaluation commission “didn’t clarify or tried to clarify the cause of such a discrepancy, demanding a clarification from the winning bidder”.
“Nevertheless, the commission took as a fact that the deadline proposed was 180 days.”
Hence, the consortium says such discrepancies may “affect the quality and feasibility” of the chosen bid. Moreover, it adds, the commission decision “was also disadvantageous” to their proposal.
But CESL Asia’s chief executive officer António Trindade calls it “a minor glitch”.
“In all other documents, even in the English-language, we state that the execution time is 180 days. That is also what is stated in the commitment letter that we sent to GDI,” Trindade told MDTimes.
“Our commitment is to perform what we are required in the shortest possible timeframe.”

‘The water treatment processes brought in by our partners and their hands-on operation of plants could not be matched by our competitors,’ said António Trindade

Missing information

The complaint also points out that a document related to the project description is missing from the winning bid, which makes the proposal “incomprehensible”.
As such, it continues, the score given to that proposal in some items included in the tender programme “should have been significantly lower than what it was”.
The consortium headed by Consulasia also criticises the fact that another item required by the tender programme was “apparently ignored”.
“The winning bid proposes to install a system to treat 48,000 cubic metres/day without the treatment process required in the tender,” the complaint claims.
The winning bid system, according to the documents, “is composed of a primary sedimentation tank, an aeration tank, a secondary sedimentation tank and disinfection tank”.
However, the losing consortium argues that their competitors only have one secondary sedimentation tank, “notwithstanding the fact that the tender programme required two”.
In addition, it continues, there was not enough information “to guarantee that the [primary tank] membranes’ performance achieves the required efficiency.”
But António Trindade says the water treatment system proposed “is unparalleled in Macau”.
“The water treatment processes brought in by our partners and their hands-on operation of plants could not be matched by our competitors,” he said.
Trindade claims that the venture will use a membrane bioreactor process (MBR) to treat the water.
The membrane bioreactor is the combination of a membrane process like ultra-filtration with a bioreactor, and is widely used for urban wastewater treatment and water reuse applications.
The consortium headed by CESL Asia is going to operate the Areia Preta wastewater plant until 2016 and Trindade says that “in three or four years the plant will be a reference in the region”.
The CESL Asia chief acknowledges that the less than one-month timeframe was short to prepare the transition, but it says the plant handover is going “smoothly”.
“We are now trying to make the operation stable and analyse the source of the current problems, such as the wastewater odour control,” Trindade said.
“We have never had problems or complaints with the plants that we managed and the same principles will be applied in this one,” he added.
But from the tender’s point of view, some sources familiar with the process say this was a “terrible situation”.
“If we go for an international tender and we get people from Hong Kong, Singapore and mainland China, it’s a shame that at the end of the day you only end up with one bidder that finally got through the whole process,” they say.
Macau Daily Times asked the GDI and the Environmental Protection Bureau, which oversees the operation of Macau’s wastewater treatment plants, to provide some clarifications regarding the public tender process. Despite repeated attempts we received no helpful reply.

The consortium led by local company CESL Asia took over the Areia Preta wastewater treatment plant last Saturday

Considering appeal

Sources told MDTimes that Wabag, which was excluded early in the process, as well as the final losing bidder, are considering lodging an appeal to the courts to challenge the adjudication of the contract.
However, such a decision will only be taken after further consultation of the process, the sources said.
In the complaint sent to Chui Sai On, the consortium led by Consulasia claims that its competitor’s proposal “has several shortcomings in relation to the requirements included in the tender’s programme”.
Hence, the consortium asks the Chief Executive “to revoke the adjudication and order a new assessment of the proposals”.
MDTimes learned that Va Tech Wabag has also sent a letter to the Chief Executive, detailing what they thought was incorrect in the process.
But a legal response will be issued pending further information from GDI, a person said.
Wabag still has on-going legal proceedings relating to why it wasn’t included in the tender, and for now is still trying to compile all the information included in several documents to decide whether or not to appeal – “it depends on whether they made any fatal flaws in the process,” a source told MDTimes.
Engenharia Hidráulica de Macau had been managing the city’s main treatment plant since 1996, and Va Tech Wabag, the major shareholder in EHDML, is in charge of the wastewater treatment plant in Coloane.
The company had a setback in 2008, when the Court of Final Appeal acknowledged that a local businessman, Tang Kin Man, had imparted some of his shares in EHDML to then secretary for Transport and Public Works, Ao Man Long, in exchange for the adjudication of the plant operation contract.
Tang was convicted to a prison sentence of 12-and-a-half years for corruption and money laundering but is still at large, while Ao is currently serving a 28-year-and-a-half prison sentence for the same crimes.

‘The wastewater treatment plant is in an area of Macau where the people don’t want it,’ said a person familiar with the situation

Wrong place

According to another source with an engineering background, the technical solutions included in this tender “are not good and will cost the government a lot of money”.
“In fact the wastewater treatment plant is in an area of Macau where the people don’t want it,” said the person, explaining that there were plans to move it to another area.
“That is probably why some land around the plant was changed to be private housing. People spent millions on new flats and they were told it wouldn’t smell because the plant was going to be moved.”
Meanwhile, there’s been more and more construction around the plant “so now there is more trouble with wind dispersion and there are now many more people living around the plant, so there will be more chances to pick up rogue emissions,” the person added.
The Areia Preta plant does have a system that works “but under some conditions it can get overloaded and lead to some problems,” the source acknowledged.
The peninsula’s wastewater treatment plant includes a sludge incinerator that was supposed to be shut down with this new contract.
But the incineration plant is still running, a source said, adding that apparently that is out of the contract’s scope.
Yet another source, also familiar with the situation, said there was no final decision yet. The alternative, the person said, would be to burn the sludge in the Pac On incineration plant operated by a consortium that includes Consulasia, “which would cost a lot more money” than in Areia Preta.

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