PUBLIC PROCUREMENT AND DISPOSAL OF PUBLIC ASSETS AUTHORITY
APPLICATION FOR ADMINISTRATIVE REVIEW IN RESPECT OF THE
EXPRESSION OF INTEREST FOR PROCUREMENT OF FUEL MARKING SERVICES
IN UGANDA (MOEMD/INCONS/16-17/00188/PSD)
ENTITY
:
APPLICANT :
MINISTRY OF ENERGY AND MINERAL DEVELOPMENT
SGS UGANDA LIMITED
MARCH 2017
1
Contents
1.0
BACKGROUND .............................................................................................................................. 3
2.0
LEGAL PROVISIONS APPLICABLE ............................................................................................ 5
3.0
GROUNDS FOR THE APPLICATION........................................................................................... 5
4.0
FINDINGS BY MAC ....................................................................................................................... 5
5.0
MAC RECOMMENDATIONS TO THE COMMITTEE ................. Error! Bookmark not defined.
Page 2 of 10
1.0
BACKGROUND
1. Ministry of Energy and Mineral Development (herein after referred to as MOEMD) sought to
procure fuel marking services in Uganda with an estimated cost of UGX 20 (Twenty Uganda
Shillings) per liter of fuel marked.
2. On 1st and 5th of November 2016, the Notice of Expression of Interest (EOI) for the
procurement was advertised in the Daily Monitor newspaper, the New Vision newspapers and
in the East African newspaper respectively with a deadline for bid closing of 22nd November
2016.
3. On 22nd November 2016, bidding was closed. The following five (5) firms submitted bids:
Table 1: Firms that submitted bids
No Name of bidder
1. Authentix Inc
2. SICPA SA in Association with SICPA Global Fluids Integrity SA
3. Quality Extended Enterprise Limited in Association with Decipher PTE Limited
4. SGS Uganda Limited
5. Intertek International Limited
4. The evaluation report dated 19th December 2016, indicated that two (2) bidders failed at the
preliminary evaluation stage for the reasons indicated in table 2 below:
Table 2: Bidders that failed at preliminary evaluation
No Name of Bidder
Reasons for disqualification
1. SGS Uganda Limited
 Failure to submit the firm’s current Trading License
for 2016 or its equivalent.
 Failure to submit the firm’s certificate or registration
of its equivalent.
 Failure to submit a copy of the firm’s Annual Tax
Clearance Certificate for the previous financial year
or its equivalent.
 Failure to submit a copy of the Tax Registration
Certificate or equivalent.
 Failure to submit proof of having performed similar
projects in terms of magnitude and technical nature,
for a period of not less than three years over the past
ten years.
 Failure to submit proof of having developed and/or
implemented at least one fuel marking project in
Africa or in any country with similar characteristics
to Uganda.
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No
Name of Bidder
Reasons for disqualification
 Failure to submit proof of possession of patents rights
over the marking and tracing system.
 Failure to submit audited accounts for the years 2013,
2014 and 2015
International  Failure to submit proof of having performed similar
projects in terms of magnitude and technical nature,
for a period of not less than three years over the past
ten years.
 Failure to submit proof of possession of patents rights
over the marking and tracing system.
 Failure to submit proof from a banking institution of
capacity to access credit of a minimum of USD
1,500,000.
2.
Intertek
Limited
5. The Evaluation Committee recommended the following firms to be invited to submit
proposals; Authentix Inc; SICPA SA in Association with SICPA Global Fluids Integrity SA;
and Quality Extended Enterprise Limited in Association with Decipher PTE Limited.
6. On 3rd January 2017 the Contracts Committee approved the recommendations of the
Evaluation Committee.
7. On 4th January 2017, the notice to bidders following technical evaluation was displayed with
an expiry date of 17th January 2017.
8. On 10th January 2017 and 16th January 2017, SGS Uganda Ltd requested MOEMD for
information on the reasons why it was eliminated.
9. On 16th January 2017, SGS Uganda Ltd applied for administrative review to the Accounting
Officer and paid administrative review fees of UGX 10,000,000.
10. On 27th January 2017, the Accounting Officer provided the reasons for SGS Uganda Ltd’s
failure at the preliminary stage. The letter was received by SGS Uganda Ltd on the 31st January
2017.
11. On the 27th January 2017 the administrative review fees of UGX 10,000,000/= was refunded
to SGS Uganda Ltd.
12. On 14th February 2017, SGS Uganda Ltd through K & K Advocates applied for administrative
review to the Authority.
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2.0
LEGAL PROVISIONS APPLICABLE
i)
ii)
iii)
3.0
The Public Procurement and Disposal of Public Assets Act, 2003.
The Public Procurement and Disposal of Public Assets Regulations, 2014.
The PPDA (Administrative Review) Regulations, 2014.
GROUNDS FOR THE APPLICATION
1. The bid submitted by SGS Uganda Ltd was in its own capacity and not in association with
Tracerco as a Joint Venture. The Cooperation Agreement that was submitted was for purposes
of Clause 5 of the EOI to show possession of patent rights over the Marking and Tracing
System.
2. The Cooperation Agreement submitted by SGS Uganda Ltd was for purposes of Clause 5(b)(iii)
of the EOI to show possession of patent rights over the Marking and Tracing System.
3. The SGS annual report submitted were audited and therefore complied with clause 5(c)(i) of
the EOI.
4. SGS Uganda Ltd submitted documents to show experience as required by the EOI.
5. The entire procurement process was in contravention of Sections 43, 44, 45, 46 and 48 of the
PPDA Act No.1 of 2003 as amended.
4.0
FINDINGS OF THE AUTHORITY
Ground One:
The bid submitted by SGS Uganda Ltd was in its own capacity and not in association with Tracerco
as a joint venture. The Cooperation Agreement that was submitted was for purposes of Clause 6
of the EOI to show possession of patent rights over the marking and tracing system.
Findings
1. Clause 6 of the Expression of Interest (EOI) provided that firms could associate with other
firms in the form of a joint venture to enhance their qualifications. The form of association,
where applicable had to be indicated in the Expression of Interest and each firm in
association was required to provide information separately as provided in the EOI.
2. SGS Uganda Ltd submitted that its bid was not in association with Tracerco and hence
there was no requirement for Tracerco to submit the eligibility documents as required by
the EOI.
3. The Accounting Officer submitted that clause 6 of the EOI required firms in an association
to independently provide eligibility documents as set out in clause 5 of the EOI. That
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although SGS Uganda Ltd complied with the requirement, the associate i.e. Tracerco did
not submit any of the eligibility documents as required.
4. The Authority found that the Expression of Interest was submitted by SGS Uganda Ltd and
this was evidenced by the cover letter that submitted the bid, the Certificate of
incorporation; Tax Clearance; Tax Registration Certificate and the Powers of Attorney
were in the name of SGS Uganda Limited.
5. The Authority found no document in the bid indicating any form of joint venture between
SGS Uganda Ltd and Tracerco Limited.
Decision of the Authority on the ground
The Authority finds merit in ground one.
Ground Two
The Cooperation Agreement submitted by SGS Uganda Limited was for purposes of Clause
5(b)(iii) of the EOI to show possession of patent rights over the Marking and Tracing System
Findings
1. Clause 5(b)(iii) of the EOI required bidders to show possession of patent rights over the
Marking and Tracing System.
2. The evaluation report indicated that SGS Uganda Ltd did not possess the technology but
rather the sub-contractor Tracerco had the patent rights over the Marking and Tracing
System.
3. SGS Uganda Ltd submitted that the patent rights over the Marking and Tracing System are
available to all SGS Group of companies and affiliates (SGS Uganda Ltd inclusive) by
virtue of Article 6.2 of the Cooperation Agreement which provided that Tracerco was to
provide for each project contracted with a client, marker technology as part from the
Authentication Technology which is distinct from any other marker identification provided
to other clients in neighbouring countries.
4. The Accounting Officer responded that SGS Uganda Ltd did not have possession of the
patent rights to the Marker and Tracing System as required under clause 5(b)(iii) of the
EOI notice by virtue of Article 7.3, 7.4 and 7.5 of the Cooperation Agreement which
provided that the parties at all-time remain independent contractors of the other and nothing
in the agreement would be construed as creating a partnership, joint venture or a relation
of principal and agent. The parties were also prohibited from entering into contracts on
behalf of the other or to bind the other party in any way.
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5. The Authority observed that the Cooperation Agreement relied on by SGS Uganda Ltd to
show that it had possession of the patent rights was between SGS Group and Tracerco and
clearly stated that:
(a) Under Article 1.5, the scope and role of SGS, SGS affiliates, Tracerco and Tracerco
affiliates in each project would be agreed on a project by project basis as described in
the agreement; and shall be documented in a specific Project agreement which shall be
the binding document between the parties for each specific project.
(b) Under Article 6.1 Tracerco was to disclose reasonable details about the improvement
to Authentication Technology to SGS and to SGS Affiliates which are parties to the
applicable project agreement to assess whether the authentication technology provided
to the client should be amended to include the improvement.
6. The Authority found that:
a) Tracerco had possession of the patent rights over the Marking and Tracing System
and had in the Cooperation Agreement committed to provide the technology for
each project contracted by SGS Group Management. SGS Uganda Ltd, the bidder
was not party to this Agreement.
b) For SGS Uganda Ltd to gain possession of the patent rights, it had to enter into a
Project Agreement with Tracerco pursuant to Article 1.5 of the Cooperation
Agreement. In this particular case, there was no evidence submitted to show that
such an agreement had been entered in to by the parties.
c) In light of the above, SGS Uganda Ltd did not have possession of the patent right
over the Marking and Tracing System as required under the EOI.
Decision of the Authority on the ground
The Authority does not find merit in ground two
Ground Three
The SGS Annual Reports submitted were audited and therefore complied with clause 5(c)(i) of the
EOI.
Findings
1. Section 5 of the shortlisting criteria (5) (c)(i) of the EOI, required bidders to submit audited
accounts by a registered auditor for the last three years i.e. 2013, 2014 and 2015. This was
to demonstrate that the company’s liquid assets and /or credit facilities net of other
contractual commitments satisfied the minimum requirement of USD 1,500,000.
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2. The evaluation report indicated that SGS Uganda Ltd in Association with Tracerco was
disqualified at the preliminary evaluation stage for failure to submit audited accounts for
2013, 2014 and 2015.
3. SGS Uganda Ltd submitted that the SGS statements of accounts were audited and a full
and detailed report was contained in the annual reports.
4. It contended that SGS Uganda Ltd in its bid included Statements of Accounts for SGS
Group for the 2013, 2014 and 2015. The Accounts for SGS Group submitted to MOEMD
were certified by auditors.
5. The Authority found that the books of accounts submitted were for SGS Group and not
SGS Uganda Ltd who was the bidder.The Entity was therefore justified in disqualifying
the bidder on the requirement for audited accounts since SGS Uganda Ltd had not
submitted its certified audited books of accounts.
Decision of the Authority on the ground
The Authority does not find merit in ground three.
Ground Four
SGS Uganda Ltd submitted documents to show experience as required by the EOI.
Findings
1. The shortlisting criteria 5(b)(i) and (ii) in the notice of EOI, required bidders to submit:
a) Proof of having already performed similar projects (in terms of magnitude and
technical nature) for a period of not less than three years over the past ten years; and
b) Evidence of having developed and/or implemented at least one fuel marking project in
Africa or in any country with similar characteristics to Uganda.
2. The evaluation report indicated that SGS Uganda Ltd had failed to submit proof of having
performed similar projects in terms of magnitude and technical nature, for a period of not
less than three years over the past ten years and proof of having developed and/or
implemented at least one fuel marking project in Africa or in any country with similar
characteristics to Uganda.
3. SGS Uganda Ltd submitted that by virtue of being 100% owned by SGS SA and a member
of SGS group, SGS Uganda Ltd has the experience required by Clause 5(b)(i) and (ii) of
the EOI.
4. The Applicant further stated that it submitted documents related to experience in Uganda,
Senegal, the Philippines and Serbia. That since, all the companies that executed the above
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projects operated under the SGS Group, the experience could be claimed by SGS Uganda
Ltd.
5. The bidder also indicated in an attestation that SGS Uganda Ltd was part of the SGS Group
and as such benefited from the experience, references, staff and support from the other
companies of the SGS Group.
6. The Entity submitted that the evidence attached to demonstrate the experience of the
applicant was in the names of SGS SA of Switzerland and SGS Senegal S.A of Dakar; and
these were separate legal entities. In absence of a joint venture agreement between them
and the applicant, their experience could not be claimed by the applicant
7. The Authority noted that the fuel marking experience of SGS Uganda Ltd which was
evidenced by a letter dated 1st September 2004 had stopped on 31st December 2006 was
within the 10 years required by the EOI but performed for less than 3 years. This experience
was therefore not responsive to the EOI.
8. The Authority found that the experience submitted by SGS Uganda Ltd was of other firms
i.e. SGS SA, or SGS Senegal and was not its own. The evaluation committee therefore
properly evaluated SGS Uganda Ltd in this requirement.
Decision of the Authority on the ground
The Authority does not find merit in ground four
Ground Five
The entire procurement process was in contravention of Sections 43, 44, 45, 46 and 48 of the
PPDA Act No.1 of 2003 as amended.
Findings
1. The Applicant submitted that the procurement process was in contravention of sections 43,
44, 45, 46 and 48 of the PPDA Act of the PPDA Act No.1 of 2003 as amended.
2. Sections 43, 44, 45 and 46 of the PPDA Act provide for basic principles of procurement of
non-discrimination; transparency; accountability; fairness; and competition respectively.
Section 48 provides for economy and efficiency.
3. The Authority found that the Entity was not in contravention of the above principles since
the procurement was published under open bidding method and the evaluation and
shortlisting was conducted in accordance with the criteria in the notice of EOI.
Decision of the Authority on the ground
The Authority does not merit in ground five.
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DECISION OF THE AUTHORITY
In accordance with Section 91 (4) of the PPDA Act 2003 and in light of the findings of the
Authority during the Administrative Review process:
a)
The Application for Administrative Review by SGS Uganda Ltd is rejected light of the
findings on grounds 2, 3, 4 and 5; and
b)
The Entity should proceed with the procurement process.
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