CPTU review panel finds the tender process flawed, completed irresponsibly with corrupt intent
A review panel of the Central Procurement Technical Unit (CPTU) under the Planning Ministry has asked Bangladesh Railway to scrap a tender to select the operator for its online ticketing and reservation after finding irregularities in the tender process.
The panel also recommended formation of a probe committee to identify and take departmental action against the officials involved in manipulating the tender by apparently colluding with a bidder – the joint venture of Shohoz Limited-Vincen-Synesis.
Dhaka Tribune has obtained copies of the CPTU review panel judgment and other documents related to the tender. The panel found that the Shohoz JV did not meet the eligibility criteria for the tender, and concluded that they had also artificially lowered their bid amount in apparent collusion with railway officials by depriving Bangladesh Railway of over Tk25 crore in advertising revenue.
The CPTU review panel submitted its recommendations on January 13, but the railway is yet to take any measures.
One year ago, the railway invited a tender to recruit an operator for the online ticketing and reservation system for the next five years. The new operator was supposed to take over from the present operator from February 1, 2021.
The railway fixed Tk4.35 per passenger as the charge for the operator, who would install machines, software, necessary infrastructure, and human resources for the period.
Nine companies, including the current operator, took part in the bidding that ended late March last year. The seven-strong tender evaluation committee on November 10 selected the Shohoz JV as the operator as they offered the lowest price per ticket of Tk0.25.
The price offered was over 94% less than the official price set by the railway, according to the railway’s tender evaluation committee report.
It added that the joint venture would charge Tk5 crore in 60 months for an average 3,333,333 tickets per month, saving approximately Tk83 crore in five years.
While the railway was preparing to sign the contract with Shohoz JV, current operator Computer Network Systems (CNS) filed a complaint with the CPTU review panel under Rule 57 of the Public Procurement Rules, 2008. CNS claimed the railway did not inform them why their bid was rejected.
Due to a delay in the hearing on the complaint at the CPTU review panel, the CNS filed a writ with the High Court to bar the deal between the railway and the joint venture. Shohoz Limited challenged the writ before a chamber judge, but the chamber judge ruled that the review panel could proceed with the case.
The CPTU heard the complaint and ruled on January 13 that the tendering process was “flawed and completed irresponsibly.”
The CPTU judgement said: “The lowest price offered of Tk0.25 is 94.25% less than official rate. This price demonstrates that either the official rate was overpriced, the lowest bidder wilfully offered the low price to frustrate the tendering, or they quoted the price in connivance with officials and with corrupt intentions.”
The judgement also said that this type of “cunning ploy” was not desirable from a service-oriented entity such as Bangladesh Railway.
“The tender demonstrates the imprudence, insincerity and connivance of railway officials,” it added.
According to the review panel, the technical section of the tender calls to include revenue generated from alternate sources. However, the Shohoz JV, in violation of the terms and conditions of the tender, in its bid added an additional section that said they would be able to garner over Tk25.31 crore in revenue from advertisements on paper tickets and the railway website.
The joint venture then deducted the advertising revenue from their bid amount, artificially lowering the ticket price to Tk0.25, the judgement said.
It added that the advertising revenue from the website and tickets would be much higher than that quoted by the Shohoz JV.
CNS quoted Tk76.41 crore while Shohoz JV offered Tk82.25 core when the advertising revenue is considered – nearly Tk6 crore more than CNS, according to the panel.
“No bidder other than the Shohoz JV made such an offer. This indicates that the tender evaluation committee and Shohoz connived to include such a condition with a view to making financial gains,” said the panel.
Furthermore, in order to be eligible for the tender, bidders must have experience issuing 5,000,000 tickets in a single year, but the Shohoz JV did not meet this condition.
Bangladesh Railway Additional DG (Operation) Mia Jahan, who is the convener of the tender evaluation committee, in a letter to all the committee members on October 12, 2020 said: “The actual number of tickets issued in a single year [by the Shohoz JV] is much lower than the required five million.”
However, before the CPTU review panel, he claimed that the signature on the letter was not his own. The panel cross-checked the signature with his signatures in other documents and found that they matched.
The panel then recommended the formation of a probe committee and a re-tender process.
In a written statement, Shohoz JV said Article G.9 of the tender document clearly states that the participating tenderer needs to propose different avenues of its revenue generation, such that its charge to Bangladesh Railway can be nullified or minimized.
Therefore, the tender document calls upon tenderers to propose other revenues, such as advertisement, so that the cost to Bangladesh Railway is minimized.
In accordance with the article, Shohoz JV included advertisement revenue from giant screens and ticket printing in both its technical and financial proposals, which amounted to Tk25,31,82,000 in advertising revenue. Inclusion of the advertising revenue by Shohoz JV, has reduced the cost to Bangladesh Railway to only Tk0.25 per ticket, which was by far the lowest bid price.
All advertisements would need Bangladesh Railway’s approval. Hence, there is no scope for Shohoz JV for taking more than the Tk25.31 crore it stated in the proposal from this source of revenue, the statement said.
"We provided proof during the tender process that we issue close to two crore [20 million] tickets in a year through our ticketing system,” the Shohoz JV statement said. “We also submitted signed testimonials from 24 of our top operators who certified how many tickets they sold through the Shohoz ticketing system.
“The letters were all signed in the letterheads of all these operators and attested by the BRTA. Furthermore, the technical evaluation committee independently reached out and obtained official reaffirmations directly from our top operators that clearly stated that we sell much more than 50 lakh [five million] tickets per year through our multi-tenant ticketing system. Through our lowest bid, Bangladesh Railway would have saved crores of our taxpayer’s money,” the statement said.
When asked about the matter, Railway Minister Nurul Islam Sujan said: “Which operator should we assign? The one who charges Tk0.25 per ticket, or the one who offers more than Tk2?
“I don’t see anything wrong if the railway benefits from corruption,” he told Dhaka Tribune.
The minister said they had not formed the probe body as the case is still proceeding.