S Korean Bank May Reject Route 3 Contract

A South Korean bank has threatened to reject a contract awarded by the Ministry of Public Works and Transport to rebuild a portion of National Route 3 after it objected to the government’s bid evaluation criteria, ministry officials said this week.

South Korea agreed in late 2002 to loan the government

$18 million to rebuild a 32.5-km stretch of road linking Kampot town and Kampot district’s Trapang Ropaou village, as well as construct a 290-meter bridge in Kampot. In November, the government put a $17 million contract for the project up for bid.

Under the terms of the loan, only South Korean firms could bid for the contract. The government initially awarded it to Kukdong Engineering Co, even though its bid was about $240,000 higher than the low bidder, Shin Sung Engineering Co.

After Uk Chan, undersecretary of state at the ministry, wrote the South Korean government-run Export-Import Bank of Korea to inform it that Kukdong was awarded the contract, he received a stinging reply from the bank that was published in full last week by the Khmer-language opposition newspaper Odom Kete Khmer (Khmer Ideal).

The letter, written by the bank’s loan director, Hak Soo Kim, and dated Dec 9, said that under the loan’s conditions, the bank must approve the ministry’s criteria for bid evaluation. The government, however, did not seek the bank’s approval before awarding the contract. Instead, it just submitted its criteria for bid evaluation as information.

The government awarded the contract to Kukdong based on criteria that gives bidding companies a maximum of 50 points for their cost proposal and 50 points for their technical proposal, Uk Chan said. An inter-ministerial committee chaired by Cabinet Minister Sok An evaluated and scored the proposals.

The technical proposal evaluates a company’s working capital, experience, construction equipment and key personnel, among others. The company with the most points—as determined by the committee—wins the contract.

Though Shin Sung received two more points than Kukdong on its cost proposal, Uk Chan said, Kukdong received 18 more points than Shin Sung on its technical proposal. He did not elaborate.

Sok An could not be reached for comment on Wednesday.

The criteria did not meet the standards of the South Korean bank.

“We regret again to notice that the Criteria are too unreasonable, unfair and manipulated, in that the Criteria seem to allocate too much points to some specific items,” Hak-Soo Kim wrote to Uk Chan.

“You are requested to prepare the fair and transparent Criteria with the reasonable grounds and explanations” in line with the loan’s guidelines,” the letter continued.

“Please be notified that any result evaluated with the Criteria which are not approved by us is null and void,” Hak-Soo Kim wrote.

Hak-Soo Kim could not be contacted. South Korean Embassy officials refused to elaborate on the letter or the bidding process.

Uk Chan defended the ministry’s decision, which he said was made with the help of a South Korean consultant.

“We studied properly before deciding to choose Kukdong,” he said. “Kukdong is a top company in building roads along the regional Mekong delta. It has experience building roads and bridges in Vietnam, Laos and Thailand.”

Uk Chan sent a letter to the South Korean bank on Dec 18 explaining the committee’s bid criteria. He would not disclose the letter. The bank has not yet responded.

Officials from Kukdong and Shin Sung could not be contacted.

Several ministry officials contacted this week would not give their names, fearing repercussions, but said that mismanagement of the bidding process is common in the ministry.

“It stinks in there,” said one official. “There are many cases similar to this.”

Another official said that the government was embarrassed by the “strong wording” of the bank’s letter and was eager to rectify the bidding process so South Korea would continue to fund other infrastructure projects in the future.

“We feel ashamed,” said the official, speaking on condition of anonymity. “We want to get correct with Korea because we need funds.”

He added that the ministry should have followed the loan’s conditions from the beginning and that he expects the ministry to eventually award the contract to Shin Sung.

When asked why Kukdong was chosen over Shin Sung, the official hesitated.

“It goes up too high,” he said. “You must understand.”


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