Relevant excerpts from the ADB report:
3. This contract was originally awarded to Hanil-Koneco Joint Venture in October 2002 but was terminated in May 2004 due to the contractor?s non-performance. In July 2004, the ADB Procurement Committee approved a recommendation for rebidding under postqualification procedures and a slight repackaging of the original contract, covering only Sindhu and Gyalthum AARs. On 13 January 2005, the Melamchi Water Supply Development Board (MWSDB) awarded contract MDS/AAR/02 to CCECC-Sharma-Lama JV, the lowest evaluated substantially responsive bidder.
7. RCCC, based on calculations of its consulted experts, estimates the construction costs
for AARs Sindhu and Gyalthum should be NPR 644,782,188, while the project engineering
consultant (the consultant) projected costs of NPR 972,002,755. RCCC believes that this
difference may have given room for collusion.
23. The Engineer?s Estimate primarily serves as a tool for budgeting purposes and as a tool for the Executing Agency together with the Consultant, to determine whether a bid is reasonable. ...
28. In the 1999 final design study carried out under the Project, the cost of the Sindhu and Gyalthum Adit Access Roads was estimated at NPR 672,000,0002. The original contract that included these two roads and other works was awarded in 2002 to Hanil Koneco JV for its bid price at NPR 456,182,1533, compared to the Engineer?s Estimate for the total package of NPR 888,767,550. As mentioned in paragraph 3, the original contractor did not complete the works, and the contract was terminated in May 2004.
29. The Consultant prepared a third estimate in 2004 for rebidding purpose, estimating the costs of the two roads alone at NPR 972,000,000.
30. Based on the evolution of the Engineer?s Estimate over the five-year period from 1999 to 2004, and taking note of the first contractor?s inability to perform its obligations under the contract at a bid price that was substantially lower than the 1999 and 2001 Engineer?s Estimate, the latest estimate from 2004 does not seem to be inappropriate.
V. CONCLUSION
31. Based on the assessment of the documents in its position and the interviews carried out, OAGI has not found or received any evidence of collusion or other corrupt or fraudulent practice among those involved in the bidding process for the MDS/AAR/02 contract.
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So the facts are clear. Hanil Koneco JV bid for 456 million in 1999 when the estimate was 888 million and then couldn't perform their job as they had promised. When the new bidding began in 2004, the estimate was revised to 972 million and the winning bid by CCECC-Sharma-Lama JV was 950 million.
Also, it has to be noted that the costs were estimated by an independent consultant (from which country I don't know) who wasn't interviewed by the RCCC because he is non-Nepali. Isn't he the only person who can provide a clarification for why the new estimated costs were higher than in 1999?
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