20th August, 2006  Volume 13, Issue 6

First with the news and free with its views                                     First with the news and free with its views                             First with the news and free with its views                                    


ICTA myths and tender frauds

President Mahinda Rajapakse, (inset) V. K. Samaranayake, P. B. Jayasundera, Bid evaluation criteria where Samsung obtained marks for local partner, Samsung’s clarifications and P. B. Jayasundera’s circular No. 352/10

By Dilrukshi Handunnetti

Overt manipulation and awarding of a tender to a Korean company with the Procurement Board of the Information and Communication Technology Agency (ICTA) choosing the highest bidder and paying Rs. 80 million extra for an e development programme  has come to light. 

The story dates back to year 2003 when Minister Milinda Moragoda wished to undertake a massive e-Sri Lanka drive. The Korean government also wished to make a contribution towards the initiative but with the change of governments, the process hibernated for a while.

Loan from Korea

However, invitation for bids (IFB) was called when the government of Sri Lanka received a loan from the Export-Import Bank of Korea from the resources available at the Economic Development Co-operation (EDCF) of Korea.

The specific amount received for this purpose was US$15 million (approx. Rs. 1,500,000,000) to finance Lanka Government Network (LGN) project of the e-Sri Lanka Development programme. At this point, the ICTA was selected as the implementing agency and the Cabinet Appointed Tender Board (CATB) on November 1, 2005 called for bids for the design, supply, installation and operation of Lanka Government Network (LGN). 

It was stated that LGN was a highly available, secure and reliable underlying information infrastructure backbone that would connect all the government organisations of the GOSL in a cost effective and secure manner. Initially, 350 locations were identified for connectivity in three phases.

 It was next announced that bidding would be according to International Competitive Bidding (ICB) procedures specified in the "Guidelines for Procurement Under the EDCF Loan, March 2005" and Government Procurement Guidelines. It was open to all bidders from the Republic of Korea.

Minimum qualifications

It was announced that bidders should fulfil the minimum qualification criteria. This meant, the Management Service Provider (MSP) having a minimum of five years experience in the implementation and management of large-scale Wide Area Network (WAN) projects.

Further, the MSP was to have experience in successful implementation of large scale managed network infrastructure projects with a project value exceeding US$ 10 million, experience in managing and co-originating various stakeholders and enjoying a total annual revenue of minimum US$60 million to establish financial credibility.

A significant stipulation was the fact that the foreign MSP should have a local alliance/partnership so that the MSP will have legal liabilities for the project.

Also, it was specified that the MSP should have a registered Sri Lankan business presence or have partners or consortium, operational with adequate staff for a minimum period of five years or more with a proven track record of providing respective managed services.

For the two stage bidding process, a pre bid meeting was called on November 16, 2005 at the ICTA itself. Bids closed on November 30.

At this point, a full-fledged consortium, Korean Telecom Network (KTN) submitted its bid for US$ 13.93 million, Samsung Networks Inc. for US 14. 82 million. The other bidder was Korea Exchange Banking Technologies (KEBT).

According to ICTA sources, it was KTN that submitted a technically convenient bid complete with customers’ sites and survey preparations to the ICTA.  

Then Request For Proposal (RFP) was made and KTN submitted a comprehensive proposal with experts being flown in to the island to assist in mastering the technical aspects of the same.


Inside sources say that it was at this level, when evaluation of proposals commenced that serious manipulation began within the ICTA in stark violation of the tender procedures.

In February last year, when a procurement clarification was sought from the ICTA, Procurement Advisor Christy Perera sent an e-mail response to Samsung titled "Inquiry about the second stage technical proposal format."

Samsung had first questioned whether a partnership and a joint venture would be considered one and the same, and next the difference between partners and sub contractors. "Are they the same or do they have different function/relationship?" the company queried, and Perera replied, "No, they are not the same."

Further, the clarifying mail sent by ICTA’s Procurement Advisor Perera stated that sub contractors were not involved in signing the contract but should be declared when the proposal is submitted.

It has now transpired that despite the strong backing received, Samsung Networks did not even fulfil the minimum eligibility criteria specified by ICTA.

According to the invitation for bids (IFB) of the e-Sri Lanka Development Project (IFBA; ICTA/GOODS/18) it was mandatory for the foreign Manage Service Provider (MSP) to have a local alliance or partnership to ensure that such MSP will have legal liabilities for the project.


Similarly, the said MSP according to stipulated criteria should have a registered Sri Lankan business presence, or have partners or consortium operational with adequate staff for a minimum period of five years or more with a proven track record of providing respective managed services. Samsung did not possess the above two pre-qualifications, though they were able to go to the next level without being disqualified at the very outset.

Other bidders now claim that the technical evaluations on both bidding stages were inaccurate and were full of malpractices which were geared towards granting the contract to an already selected company.

It has now transpired that as per the technical evaluation criteria listed in the tender document, 12 marks were given to experience and expertise of ‘the local partner of the bidder’ whereas Samsung did not actually have a local partner.

The Sunday Leader has reliably learned that in the case of Samsung Networks bid, the 12 marks have been given to subcontractors and not the local partners. (See document)

Not only that, there were other misrepresentations at the technical evaluation. The ineligible company had also received two marks given to the bidders’ experience in implementing Economic Development and Co-operation Fund of Korea (EDCF) projects though Samsung Networks has not implemented any EDCF funded projects. Nevertheless Samsung managed to secure full marks.

There were other issues clouding technical evaluation.


Our investigations have revealed that KTN had initially objected to the appointment and formation of a technical evaluation committee (TEC) in violation of government stipulated tender guidelines which fell on deaf ears. KTN had objected on the basis of a public finance circular issued by Treasury Secretary P. B. Jayasundera.

The objection was that according to clause 33.1 of the Procurement Guidelines (as amended by the Public Finance Circular No. 352/10), there was a defect in appointing Chairman, ICTA Prof. V. K. Samaranayake to participate/represent technical evaluation committee of the ICTA itself.

Jayasundera’s public finance circular issued to all secretaries of ministries, heads of government departments, corporations and statutory boards cautioned them against the inclusion of chief executive officers of such organisations in TEC, as it would undermine the role of other TEC members.

Referring o Chapter 111 of the Guidelines of Government Tender Procedures (revised edition August 197) regarding the appointment of TEC members, Jayasundera instructed that, "the members of the TEC should feel free to express their independent views and make recommendations to the Tender Board. In this context, the inclusion of chief executive officers (managing director, general manager, chairman etc.) of organisations in TEC tend to undermine the role of other members of TEC drawn from the same organisation. Therefore, you are kindly requested to refrain from nominating or appointing such officers to TEC." (See document )

Samsung secures bid

What is more, it has now transpired that Samsung has managed to secure the bid despite furnishing misleading information for technical evaluation purposes. This despite tender documents specifying ‘misrepresentation of information’ being a fraudulent practice which could disqualify a bidder.

According to instructions issued to bidders, what is termed a ‘fraudulent practice’ is "a misrepresentation of facts in order to influence a procurement process or the execution of a contract to the detriment of the borrower and includes collusive practices among bidders (prior to or after submission of bids) designed to establish bid prices at artificial, noncompetitive levels and to deprive the borrower of the benefits of free and open competition."

Under this stipulation however, it is possible to reject a proposal or to declare ineligibility, either indefinitely or for a stated period of time. However, none of the above occurred in respect of Samsung Networks despite the gross misrepresentations.

Accordingly, Samsung Networks in their answers to clarifications raised by the ICTA at the first stage of LGN bid evaluation, brazenly declared Sri Lanka Telecom (SLT) as their ‘local partner.’ Interestingly enough, the TEC had given full marks for the local partner acting on the basis that SLT was indeed a local partner of Samsung whereas it was only a subcontractor.

When questioned on the nature of the local presence of Samsung Networks, the company response was in fact a laugh. In a written clarification Samsung said, "once we are awarded this project, we will set up our office and our staff from Korea will be based in Colombo office. Our office in Colombo, local partners and sub contractors will collaborate for the successful implementation and operation of LGN."

Local partner

Having stated that, Samsung added, "our principle partner is Sri Lanka Telecom. MIT, Metropolitan, Softlogic and Advantage Technology will be involved in implementation and operation in some degree."

When the bidding process reached second stage whereupon bidders are required to produce their partnership agreements and financial reports, Samsung Networks also managed to alter their original position and declared that they in fact do not have any local partner fearing disqualification at this stage.

What baffles ICTA insiders themselves is as to why the TEC chose to ignore all the gross misrepresentations, misleading statements and tender procedure violations in this manner. While bidders may try, as they often do, all the tricks in their books, ICTA officials themselves are baffled by the fact that the TEC did not outrightly reject the Samsung bid, but instead lent every possible support for the company to secure the bid.

When subsequent objections were raised against SLT being principal local partner of Samsung and a subcontractor with another, SLT quickly disassociated itself from the Samsung partnership claim. Instead, it wrote to Chairman, CATB, stating its position.

In a letter dated November 28, 2005, Chief Marketing Officer, Sri Lanka Telecom, Kapila Chandrasena announced a partnership with Enterprise Technology (Pvt) Ltd.

More problems

The Samsung bid however encountered more problems than the above.  The two stage procurement guidelines were not properly implemented and followed by the ICTA itself. Other competitors allege that if the bidders were acting according to the tender guidelines of the government, the price bid should have been opened only after the completion of the technical evaluations.

At this point, ICTA, it is learned had requested the bidders to include the total price in their technical proposals for Stage 2 bidding purposes.

However, such treatment was not meted out to other competitors. When KTN made representations seeking clarifications from ICTA, not even minutes of the meeting were released to KTN. What is more, the company was also requested to alter their technical solution at this point, according to ICTA insiders.

Naturally, when the matter reached the next stage — it led to the more technically advanced and superior solutions proposed by KT Networks to be rejected without any valid reasons being provided.

KTN’s proposal was a state of the art satellite solution to connect all the 350 government-building locations. Considering the fact that most of the locations happened to be in remote areas, the company’s belief was that satellite communication facility was the most viable and suitable method for deploying high bandwidth connections.


What was more, ICTA was to gain the additional benefit of coming to own the equipment. However, for no apparent reason, the solution was rejected and was told to work out a ‘land line’ solution. ICTA inside sources associated with the process confirmed that Samsung Networks Inc. had proposed only a landline solution.

When the final marks were announced, KTN objected and sought a revision in the marks. The grouse the company has is that if the revision was done according to the stipulated marking system, KTN should have secured the highest marks and naturally become the more eligible bidder to win the contract for the project. What is more, marks were verbally announced and were not in writing.

In this highly questionable backdrop, CATB approved Samsung’s proposal and rejected the other two. Following representations made to higher authorities, on May 17, 2006, President’s Secretary Lalith Weeratunga wrote to KT Networks announcing the disqualification of the company to secure the tender. However, it allowed an opening for the company to make representations to the Procurement Appeal Board (PAB).

On May 20 this year, Manager, NI Business Marketing Division, Overseas Business Development Department, KT Networks, Yong Jin Kim formally submitting an  appeal drew the PAB’s attention to the irregularities in the tender evaluations and even the fraudulent practices.


Kim whilst highlighting several major irregularities also questioned the eligibility of Samsung Networks, alleging that if the evaluation was just and impartial, KT Networks was of firm belief that the contract should have been awarded to them.

"If the evaluation had been just and impartial, we believe that we should have obtained the highest marks for the technical evaluation. Further, our price bid was substantially less than that of Samsung Networks. If the evaluation has been accurate and impartial, we would have got the recommendation which eventually would save a significant amount of money for the Government of Sri Lanka.

We earnestly request your fair and just evaluation of the representations we are making against the award and recommend our bid which we believe is the technically most compliant and lowest in price."

 Having charged processing fee of Rs. 50,000, PAB did not offer a valid explanation for such rejection, according to angry ICTA insiders.

After such a fiasco of manipulating marks and violating tender procedures to ensure success for one bidder, to this date, the tender remains un-awarded, a fact a source from the CATB confirmed. What is more, the ICTA also agrees that though Samsung secured the bid, contract is yet to be granted and says no more. 

The loss to the state is in the range of Rs. 80 million with the selection made, but no matter. KTN and KETB have been unfairly evaluated only to award the tender to the highest bidder. It really must be a sign of a wealthy state, albeit the expenses of war.

Then again, here is a topic that comes directly under President Mahinda Rajapakse himself.

ICTA says...

Speaking to The Sunday Leader, a top ICTA official said that the contract was not awarded to any company yet.

He said that there were no irregularities in deciding to issue the contract and admitted that the tender process had ended.

"The cabinet has decided to give the contract to Samsung Networks, but it has not been awarded yet. Some parties allege that there are irregularities in deciding as to whom the contract should have been awarded to. But the procedure adopted was perfectly fine and there was no irregularity as alleged," he said.

He said that Samsung Networks had in fact quoted a lesser price than the other company, Korean Telecom Networks (KTN).

"The amount quoted by the company is not known at the moment, but the amount was certainly less than the amount bid by Korean Telecom Network," he added.

Stop the fighting at once - US tells Govt.

The bodies of the 17 aid workers murdered in
 cold blood outside their office in Muttur

Last week the United States was alarmed. Already news had reached the State Department of a humanitarian crisis beyond manageable proportions in Sri Lanka.

It hurriedly called on its Principal Ambassador to South and Central Asia, Steve Mann to drop everything and fly to Sri Lanka to deliver an urgent and compelling message. A message, not to a terrorist organisation, but to a government - a democratic, legitimate and as Mann himself stressed, a friendly government. 

Two hour talk

Mann in a two hour diplomatic dialogue with President Mahinda Rajapakse, that covered a wide range of details including military, humanitarian and political aspects and the future role of facilitating countries and the Co Chairs, and at meetings with General Sarath Fonseka and Foreign Minister Mangala Samraweeera, was to convey a harsh message.  

The message was clear and precise and largely prompted by humanitarian concerns - Stop the fighting.

Mann had come to Colombo "in a highly focused fashion to speak about the fighting," and nothing else.  And the words of Mann though diplomatically couched did not lose any of its intensity or harshness. Mann directly left for Washington after his Colombo visit demonstrating the tour was a deliberate and special one.

Neither was Mann naively optimistic that the Rajapakse government would take his words lying down. He described the meetings as thoughtful but said, "I believe the government has taken very seriously the points that I have brought and we will be in close touch in the days ahead."

Stop the fighting

"I have been sent here because the United States is deeply concerned about the fighting in the recent past," Mann said in a statement to the media Thursday, immediately following his lengthy discussion with Rajapakse. "The current situation is a threatening one and we believe that a continuation of the fighting can only make the prospects for peace worse and will benefit neither side. The US therefore calls for the immediate cessation of hostilities," he said.

Mann was also quick to urge the humanitarian aspects stating "Let me note as well that the United States is concerned by rising humanitarian needs and this also underlies our call for a cessation of the fighting."

Support to NGOs

Prompting a poignant reminder of the fate of 17 aid workers in Muttur, Mann said, "we call on all sides to give full support to Non Governmental Organisations in the effective regions and to respect the dedicated work that they are doing in alleviating the suffering."

LTTE atrocities

Focusing also on LTTE atrocities he stated "the call for cessation of hostilities cannot and must not be one sided. The spotlight is as well on the LTTE and I wish to underscore that there is a clear and direct responsibility for the LTTE to cease all acts of violence immediately and return to negotiations."

His statement also had traces of the Oslo Communique, the Tokyo Declaration and the recent joint statement of the Co Chairs issued in May this year.

Mann urged that, "both sides at this important time must show they are willing to make the political compromises needed for a political solution within an undivided Sri Lanka."

One recalls that the 2003 Tokyo Declaration referred to the agreements already reached and the US$ 4.5 billion was pledged on the basis the peace process will be taken forward.

In the Oslo Communiqu‚ the parties agreed to explore a solution founded on the principles of internal self determination in areas of historical habitation of the Tamil speaking peoples based on a federal structure within a united Sri Lanka and acceptable to all communities.

Joint statement

When the Co Chairs met in Tokyo on May 30, 2006 they issued a hard hitting joint statement which said that "the government must show that it will address the legitimate grievances of the Tamils. It must protect the rights of the Tamils throughout the country and ensure violators are prosecuted. It must show that it is ready to make the dramatic political changes to bring about a new system of governance which will enhance the rights of all Sri Lankans including Muslims."

Last week the United States reiterated its stand on the issue. "The Government of Sri Lanka, must work seriously to address the legitimate Tamil grievances and ensure that the conduct of its security forces is impeccable even in combat. And the sides work towards a solution that includes democratic rights and rule of law for all peoples in Sri Lanka," Mann stated.

Certainly the international community believes that no solution is possible through military means. Perhaps the most fundamental difference the United States perceives is that in the case of Sri Lanka it remains a fight between the citizens of one country. To them this is not a war between States or ideologies but a battle between ethnic groups for their political rights even though it has taken a terrorist form.

Support for SLMM

Mann in his statement also reaffirmed the full support of the United states both for special envoy Hanssen-Bauer and the Sri Lanka Monitoring Mission which he said played critical roles in the potential resolution of the conflict.

In the back drop of a possible SLMM pull out with the SLMM office in Trincomalee already shut down last week, it was also clear that the US was now perhaps willing to expand its role in Sri Lanka. Mann hinted, " I would not like to have the US role limited by saying well we are fighting terrorism worldwide so why aren't you fighting it here in Sri Lanka. I want to keep the focus of my visit here on that broader and immediate context of a cessation of the fighting. That is the instant, urgent case before us. That's what I have tried to work for. Again my meetings today have been with government and they've been thoughtful, detailed meetings."

Responding to a question on whether the US would fight terrorism in Sri Lanka with the commitment with which it fights it elsewhere, Mann said the United States has long designated the LTTE as a foreign terrorist organisation and it is listed as a terrorist organisation by the US the EU and by Canada. The LTTE has brought that on itself, he said. However Mann urged that the focus must be kept on where it belongs.

Ban may be temporary

He alluded to the fact that an LTTE ban was temporary and may be lifted under stringent conditions which he then spelt out. "The ban will remain as long as the LTTE espouses terrorist methods and uses these methods to advance its cause," Mann said. "So let's make no mistake here. The US view of the LTTE has long been a matter of public record and we have been very consistent in that."

Therefore while Mann was principally engaging the government he was sending out carrot and stick messages to the Tigers as well. Give up terrorism and the ban may be lifted. He however did not dismiss the 'cause' of the Tamil people and made a distinction between such cause and terrorist methods.

Indeed, the underlying message that pervaded Mann's diplomatic dialogue was abundantly clear. He made unstated but obvious distinctions between the LTTE cause and the method in which the LTTE was using to advance that cause. He clearly demarcated the fault lines on humanitarian issues. He distinguished between terrorist organisations and legitimate governments.  And he told the media the government was thoughtful on these matters and was well prepared with answers when it came to humanitarian concerns.

To a journalist at a media briefing despite diplomatic verbiage it looked as if Ambassador Mann was not really buying every glib answer put forward by the Rajapakse regime.

Be that as it may Mann was merely delivering a message on clear instructions from the US government and stated to media "But my focus here again is to engage with the government on the way forward. What is the way in which we can collectively still try to work towards a political solution?"

Familiar ground

Mann is no stranger to Sri Lanka nor to its fighting and endless but often meaningless peace agreements. From 1992 to 1994 he served as his country's deputy chief of mission in Sri Lanka. From 1995 to 1998 he was the country director for India, Nepal and Sri Lanka. In May this year he succeeded Donald Camp as the principal deputy assistant secretary of state for South and Central Asian affairs.  

Only a few months earlier Mann's predecessor Donald Camp on a similar visit to Sri Lanka had warned - legitimate governments are held to higher standards.

Since those words, the north and east of Sri Lanka had become a camp of bloody carnage. From Muttur to Mawilaru to Mullaitivu the bodies piled up. Nothing was more shocking than the deliberate close range shooting of 17 aid workers. And the government was blamed. It jolted the international community. It shocked the foreign aid agencies. This was the first time such an outrage had taken place. Foreign news wires and media immediately ran speculative stories of aid agencies rethinking their programmes in Sri Lanka.

However it was perhaps the massacre of 61 school girls in Mullaitivu that acted as the final and sharpest bradawl on the ample seat of Uncle Sam and prompted an immediate reaction in the shape of Ambassador Mann.

Many US politicians took the matter up as well. For instance Congressman Danny Davis from Illinois called the bombing "an inexcusable act of violence" and stated "I was saddened, horrified and outraged to learn that an orphanage for young girls which I visited in April of 2005 in Mullaitivu district was bombed by government forces."

The killings had also prompted horrified reactions from various sectors both local and international and had put the government on the back foot despite its many attempts to dismiss the aerial bombardment as part of a military campaign on LTTE training centres.

Defence Spokesperson Keheliya Rambuwella said "If they are trained in arms one cannot consider them as normal children. If a child comes with a gun to shoot a soldier you cannot expect them to just stand there and hug them. At a time like this we cannot just look at their age but what they are aiming to do."

Media campaign

However UNICEF Spokeswoman Joanna Van Gerten maintained "The girls were attending a two day course in first aid and the children are innocent victims of violence and SLMM Chief Ulf Henricsson said, "We couldn't find any signs of military installation or weapons on the premises."

Meanwhile UNICEF Executive Director Ann M.Veneman called on all parties to respect international humanitarian law and ensure children and the places where they live, study and play are protected from harm.

While there is a terrible reality in the words of Keheliya Rambukwella that would resonate well with the war mongers their seems to be little doubt according to UNICEF and SLMM investigations, that the institution was at one time housing a girl's home reportedly caring for children rendered orphans by war.

The nations security forces have commenced an admirable media campaign 'Together for all' where the family unit and children are given pride of place. The government must not allow this great campaign and the reputation of its security personnel to be the subject of mere advertising puffery.

If one considers the lives of some more valuable than the lives of others, if one mourns the deaths of some more than others then one is a traitor to the concept of a united and undivided Sri Lanka. If one does not treat all citizens with respect then one is guilty of stoking the fires of separatism.

And that is why the words of Keheliya Rambukwella that the age limit or gender of those at a proposed target of attack is immaterial in a military strike a death knell for humanity. It is this mindset that would ensure that ethnic strife will continue on this tiny island for decades to come.

©Leader Publications (Pvt) Ltd.
98, Ward Place Colombo 7
Tel : +94-75-365891,2 Fax : +94-75-365891
email :