Irregularities in X-ray and security equipment purchased by SriLankan: Official

By Maleesha Sulthanagoda 

SriLankan Airlines technical staff did overseas equipment evaluations without proper authorisation or procedure, a top official of the national carrier told the Presidential Commission of Inquiry (PCoI) yesterday, with concerns raised that the airline may have overpaid for X-ray and other machines purchased from 2011 to 2016.  The PCoI on irregularities at SriLankan Airlines, SriLankan Catering, and Mihin Lanka heard from SriLankan Airlines Security and investigations Manager Titus Kannangara. Kannangara, testifying before the PCoI, provided documents on the tender proceedings in procuring explosive trace detectors (ETDs) and X-ray machines for the use of the airline since 2011.  

The national carrier initially called for bids from X-ray machines and ETD suppliers in 2013, and later in 2014. The initial bids were called by the airline for three X-ray machines on 22 December 2013, with a closing date in January of 2014. After five months of proceedings, the call for tenders were cancelled due to various security reasons. 

He also noted that the European Union (EU) ordered the purchase of two ETDs for SriLankan Airlines in 2011. When the Commission queried Kannangara whether it was normal practice for a national carrier to take over 3 years to comply with EU orders, he failed to answer. 

SriLankan Airlines later called for bids from suppliers for three X-ray machines and two ETDs in November 2014, with a closing date on 18 December 2014. It had taken the evaluation committees over seven months to evaluate the received bids. Kannangara mentioned that the evaluations were done by a financial committee and a technical committee.

“The evaluations of the received bids were carried out by the appointed technical and financial committees. According to the company procurement manual, the financial committee looks through all the received bids and then shortlists some of them. Then they engage in negotiations with these suppliers to get a competitive quotation. After the financial committee comes to a decision regarding the supplier, and the report is forwarded to the Board of Directors. After approval has been given, the technical staff will do onsite inspections and other related tests. If all goes well, the related division will procure the machinery,” he said.

Out of the received bids, four companies were shortlisted. Exel Trading International Ltd and Nimrod Systems Ltd were among them. 

The documents provided noted that the technical committee placed for evaluations went to Thailand for onsite inspections of the machines to be provided by Exel Trading before the financial evaluation report was conducted.  It was also mentioned that the technical committee only went to Exel Trading for onsite inspections. The Commission mentioned that this was contradictory to the steps mentioned in the procurement manual. 

Kannangara said that the onsite inspections of the machines from Exel Trading were conducted on 25 January 2016, while the evaluation report conducted by the evaluation committees was put forward to the Board of Directors on 8 February 2016. 

The PCoI also queried Kannangara on how the technical committee knew if Exel Trading was the selected party for the procurement of the machines, he failed to answer. 

The documents provided to the PCoI mentioned that the initial bid by Exel Trading for the five machines were Rs. 117 million, and that it had been reduced to Rs. 84 million after negotiations. 

Although the evidence provided by Kannangara also stated the quotations submitted by the other suppliers, it did not however mention whether the prices were prior to or after negotiations. When the PCoI queried Kannangara for further explanation, he failed to comply, as there was insufficient documentation. 

He also noted that the machines acquired by the national carrier was placed in the Grandfather list of the Transportation Security Administration (TSA) of the US, and the certification was said to expire in 2019.  It was mentioned in a previous hearing that once a manufacturer puts in an application, TSA of US checks them as follows: first, the technology is tested and on passing, is put in the ‘Approved’ list. Then, these machines are field tested for about 24 months, and those which pass go into the ‘Qualified’ list. Those which fail the field test are put in the ‘Grandfather’ list. Countries are advised to buy from the Qualified list and never to buy from the Grandfather list.

Although Kannangara assured the PCoI that the machines were placed in the Qualified list at the time of purchase, and that the expiry date of the certification was extended through an amendment, the PCoI required documents pertaining to these.