The Central Procurement Board of Namibia (CPBN) has disqualified three companies — controlled by three brothers — from bidding for contracts valued at N$382 million to supply maize meal and protein to the education ministry.
The board said the companies controlled by brothers Herman Nekomba, Erastus Nekomba and Jacob ‘Jacky ‘ Nekomba were excluded from the tenders for alleged unfair advantage over other bidders and concerns over possible collusion and conflict of interest.
The three denied any wrongdoing and are now suing the tender board in the High Court.
This month, two of the brothers won tenders to supply food to police officers and trial-awaiting prisoners for three years in regions.
In the brothers ‘ latest bid via their entities, for a state contract, they tendered three separate bids with their individual companies to supply maize meal, blend, pack and transport it to the ministry of education’s schools in regions.
They backed each other up in the tenders like providing transport to each other or using the same administrative official.
The maize tender, which was advertised in October 2020 and attracted 22 bids, is valued at N$280 million. Erastus tendered through Degrande Investments CC (N$186 million), his brother Herman used Stream Two Properties CC (N$209 million), while Jacky tendered via Degree Power Investment CC (N$188 million) for the maize meal tender.
The trio wanted to provide maize meal to 14 regions.
But the Central Procurement Board of Namibia stepped in during the evaluation process between 18 February and 27 July 2021 and disqualified the companies controlled by the three brothers.
“Bidders had the same surname, physical and postal address in their founding statements as bidder number 2 and bidder number 15.
This is regarded to be conflict of interest…which is to have a relationship with each other, directly, through common third parties, that puts them in a position to have access to information or influence on the bid of another bidder or influence of the purchases regarding this bidding,” the board said.
Former tender board chairperson Patrick Swartz explained why they are against connected companies to bid for state tenders.
He said that one of the aims of a bidding process is to identify the bidders with the lowest bid that will eventually prove to be value for money for the government.
“When bidders use the same company or their bid contains the same ingredients, one of the dangers is that it prevents competitive bidding. Bidders using the same ingredients have an unfair advantage over the rest of the bidders,” he told The Namibian last week.
According to Swartz, the government is thus prevented from getting value for money because bidders are using similar ingredients to stifle competition.
“It negatively affects the integrity of the bidding process, and bidders and the public lose confidence in the bidding process. There is also the danger of price fixing or price rigging in order to suppress and eliminate competition,” Swartz said.
The entities controlled by the three brothers objected to the disqualification and approached the review panel in the Ministry of Finance through their lawyers Sisa Namandje, Kadhila Amoomo and Chairmaine Kavitjene to challenge the board’s decision.
They lodged their objection in January this year and claimed that it was unconstitutional to disqualify.
The brothers ‘ decision to dispute the tender triggered the Review Panel to hold a hearing on the matter on 11 February 2022.
Swartz defended their decision to disqualify the brothers.
He said at that hearing that the brothers ‘ close ties placed them in a position to have access to information and influence over each other’s bids.
“Relatives are not precluded from partaking in the same public procurement processes, but are prohibited from using their direct relationship to influence other bidders ‘ bids and consequently the decisions of the Central Procurement Board of Namibia,” Swartz said.
He added that evidence showed that the companies submitted the same laboratory results of maize meal, sugar, protein and salt in their bids.
According to him, this shows that the companies of the brothers might have shared information to tender for the contracts.
He said the bids of the three companies also have several other similarities that “placed them in a position to have influence over each other’s bids”.
Swartz also submitted a copy of a lease agreement for transport between Degrande Investments CC and Degree Power Investments CC.
These submissions, Swartz said, “are proof of the extent of the conflict of interest between the three companies ‘.
However, Herman’s Stream Two Properties CC argued at that review panel meeting that the company is a legal entity, separate from its shareholders, and that the company as a bidder is not a human with a surname.
“A physical and postal address could not affect the outcome of a bid. It is common practice that companies could share office space without discussing bids, and an excuse to exclude the company and thus their decision is irrational,” the company said.
