Underlying principles of competition

The US Agency for International Development has revealed additional details of the procedures that govern its procurement contracts, for the on-going Asean Competitiveness Enhancement Project known as ACE.

It confirmed the selection process for sub-contractors is the sole responsibility of primary contractor, Nathan Associates Inc, an US consultancy company with an office in Bangkok, Thailand.

USAID was responding to a set of questions filed by TTR Weekly on the tourism component of a project that involves a US$4 million budget to be spent over the period, 2008 to 2013. The project’s objective is to re-brand Asean tourism and conduct a tourism marketing campaign linked to a new consumer website, SoutheastAsia.Org.

Nathan Associates, in the role of prime contractor for ACE , manages projects that cover both textiles and tourism and represent an overall budget of US$8 million funded by USAID.

USAID states Nathan Associates is ultimately “responsible for the performance, scope of work indicated in the tasks orders/contracts relating to the ACE project and including those for sub-contractors.

“In line with the requirements of the contract’s scope of work, Nathan follows its established procurement procedures to obtain necessary services through sub-contracts,” USAID stated.

“USAID has no direct relationship with the sub-contractors, only with the prime contractor.”

The agency “provides monitoring and oversight as well as technical direction to the contractor in accordance with the terms and conditions of the contract. All USAID contracts are also subject to audits. However, the contractor is responsible for performing the scope of work.”

TTR Weekly sought clarification on the relationship between the US consultancy company, Nathan Associates and USAID, which spans variety of aid related projects linked mainly to competitiveness, human resources and training.  The ACE project  is its first foray into tourism in Asia.

Nathan Associates is identified on a long list of US companies that over the years have demonstrated satisfactory track record working with USAID and have shown high levels of competence and expertise in managing projects in the past. They were rewarded with what is identified by the US agency as ‘indefinite quantity contract” (IQC) status.

The ACE project as we know it today, started its journey back September 2007, when USAID states that, “through a fully competitive, transparent process, it awarded an indefinite quantity contract (IQC) to Nathan Associates Inc for the implementation of the Asean Development Vision to Advance National Cooperation and Economic Integration (Advance) project.”

But it was not until February 2008, when USAID “issued what is called a task order for Nathan Associates to provide technical assistance in the Implementation of the Asean Competitiveness Enhancement (ACE) project,” that the project started to have a life of its own.

Nathan Associates manages the ACE project based on a five-year task order and updates progress to the USAID contracting officer  technical representative (COTR), Michael Satin, of  the USAID Regional Development Mission Asia.

Nathan has a regional office in Bangkok and another in Jakarta to work with the Asean Secretariat. Its officers identify themselves as USAID and ACE project executives, although technically they are employed by the prime contractor, Nathan Associates.

To clarify this point, USAID stated: “Mr RJ Gurley is an employee of Nathan Associates, the implementing contractor of the Asean Competitiveness Enhancement (ACE) project. He is the chief of party of the project. USAID’s relationship with Mr Gurley is through the contract with Nathan Associates.”

It reiterated that the “contractor is responsible for performance of the scope of work and is required to submit periodic progress reports in accordance with the terms and conditions of the contract.”

However, critics voiced concern over the selection process for sub-contracts with relation to SoutheastAsia.Org and the tourism marketing campaign. They asked if the selection process was made public.

USAID responds that “procurement promotes full and open competition unless an exception applies in accordance with Federal Acquisition Regulations and USAID Acquisition Regulations. Its contractors and implementing partners are expected to follow this practice in the procurement of goods and services.”

It said: “In accordance with US Federal Regulations, prior to award, the USAID contracting officer made an affirmative determination of Nathan’s responsibility to perform this contract. Nathan demonstrated a satisfactory record of business ethics and integrity which is expected in carrying out the project.”

On whether invitations to bid were issued to provide a meta-search facility and booking engine for the SoutheastAsia.Org site, USAID cited what it called “the underlying principle of competition.”

USAID states: “USAID’s contractors and implementing partners are expected to comply with terms and conditions of the contract and established corporate procurement procedures to obtain necessary services through sub-contracts following the underlying principle of competition.

“The Wego subcontract has a value of less than US$100,000 and therefore does not require USAID Contracting Officer’s consent. The degree of competition is based on the contractor’s procurement procedures.”

This shifts the focus to ACE project executives and their procurement procedures that are required to reflect the spirit of USAID regulations to ensure compliance with the “underlying principle of competition.”

This “underlying principle of competition” (to quote USAID), would apply to numerous sub-contracts since late 2008 that require “requests for proposals,” such as:

1. The appointment of the consultancy firm, Taramax, based in Hong Kong, to produce a report “Marketing the Southeast Asia Destination Brand,” a tourism marketing strategy and plan for the Asean region, released in June 2009.

2. The appointment of a booking/meta-search site for the website Southeast Asia.Org, identified March 2009 (officially announced 9 December 2009);

3. Appointment of a company to build the website SoutheastAsia.Org July 2009, (estimated cost of US$20,000 to US$30,000);

4. The appointment of a company to undertake a US$500,000 marketing campaign to support the consumer site SoutheastAsia.Org, January 2010;

5. Appointment of a company to do a remake on the Mekong region website ExploreMekong.Com, January 2010, (estimated cost of US$16,000);

6. Appointment of a meta-search site for ExploreMekong, January 2010.

It is understood that all of these projects would be covered by task orders and a selection process that would require proposals from at least three companies, or legal entities, to be presented to Nathan Associates for consideration.

The selection process and requests for proposals are flagged as confidential documents and are not available for public release. However, prior to going online with this report, TTR Weekly forwarded an extract of the above text to the contracting officer technical representative, Michael Satin, offerng him the right of reply to confirm that the above six components of the ACE project had, either been covered by “requests for proposals,” or did not require them under USAID procurement guidelines.

The ACE project is described by USAID as a joint venture with Asean Tourism Association’s board that allows them to vet aspects of the  project.

USAID says: “All major decisions for the marketing strategy, marketing plan, website development and related business decisions have been and continue to be vetted with the Aseanta management committee and board.”

This would suggest that  board members  were given information that would demonstrate that Asean companies had been given an equal opportunity to bid on all Ace components related to tourism. The Aseanta board is made up of elected representatives of private sector associations representing a vast array of companies related to travel and hospitality in Asean. Many of those member companies are in a position to compete for ACE project contracts.

In the case of the remake of the ExploreMekong website and the choice of a meta-search site, the Mekong Tourism Coordinating Office’s stakeholders are government servants representing the six Mekong region countries. They are accountable to their ministries and national tourist offices for the decisions they make. Arguably, they would need to see the proposals regarding their tourism website. But so far no one in Aseanta or the MTCO has asked.

Their reasons for not asking are similar to the sentiments  echoed by all recipients of donor aid, worldwide. “We are on the receiving end of an aid programme. We are getting something for nothing so why ask for the procurement details,” TTR Weekly was told.