-after delays despite $58M advance payment
Auditor General (AG) Deodat Sharma has advised the Ministry of Education to terminate a more than $350 million contract for the construction of the St Rose’s High School after the contractor failed to complete the work more than a year after the award.
In his 2019 report, which covers the year 2018, and which was seen by Sunday Stabroek, Sharma stated that the National Procurement and Tender Administration Board had awarded a contract in the sum of $352.710 million for construction of the school along Church street but though the contractor received an advance payment of $52.906 million followed by one interim payment of $5.186 million, no work has been completed.
“At the time of reporting the Advance Payment was not recovered [and] based on an examination of the contract and a physical verification of completed works, measurements and calculations [it] was discovered that…the site was abandoned and overrun with bushes. No equipment or materials were on site, while the only personnel from the contractor present was a security guard,” the report said.
In May last year, Chairman of the school’s Board Governors Kenrick Thomas said an alteration in the design and foundation of the new building was the reason behind the delay in the start of construction.
The AG’s report highlighted that no details regarding the advertisement for the works or Evaluation Report were presented for audit examination and therefore the Audit Office was unable to determine when the works were advertised and the basis of award of the contract.
Additionally, the engineer’s estimate could not be determined from the documents submitted for audit examination and while the Notification of Award was sent to the contractor since 24 April 2018, the contract, for reasons which remain unclear, was signed four months later on 8 August 2018.
The contractor, it was discovered, had been issued with the advance payment despite a failure to provide an advance bond as required by the contract. Further, an advance guarantee from an insurance company was provided instead of the required bank guarantee.
Though the ministry’s Permanent Secretary has attempted to explain that discrepancy as due to a design review, the AG has recommended that the payment be recovered and the contract terminated.
“The initial foundation design could not sustain the applied loads for the proposed building and that process along with the ensuing process for the Tender Board award would have been responsible for this delay,” the ministry explained. Notably, the company which designed the building was also expected to supervise its construction and has apparently failed to adequately perform either task.
The AG has recommend that the Supervising Con-sultant, the Byno-Rowe Wiltshire Partnership of Trinidad, be held responsible for failing to recognise that the advance payment bond was not in accordance with the contract.
The company had been issued a contract in the sum of US$134,790 for provision of consultancy services (Design and Supervision) for the reconstruction of the school in 2017.
According to the AG, no details regarding the advertisement for the design and supervision services or Evaluation Report were presented for audit examination but it was noted that one bid was received and the contract was awarded to the sole bidder with a letter of acceptance issued to the consultant on 30 August 2017. The signed contract agreement, however, was undated and stated the year as 2017.
The duration for the services was from 30 August 2017 to 30 July 2018 for the design phase, while the supervision services commenced upon the signing of the contract for the construction works.
“A physical verification conducted on 6 August 2019 revealed that the contractor has not commenced any construction works and we have not seen any documentation from the supervising consultant regarding the reasons why the works have not commenced,” the report stated. The AG requested that the ministry submit a Tender Evaluation Report, insurances for the contract, Commencement Letter, a detailed site layout for the construction works, detailed construction drawings, justification for stoppage of works, contractor’s approved work programme, copy of the Supervising Consultant’s Supervision contract and payments made for supervision to date and a copy of the most recent site progress meeting.
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During the fiscal year of 2018 the administration of Region 9: Upper Takutu – Upper Essequibo was cited for millions in overpayments as well as for the acceptance of poorly executed or shoddy work.
Stabroek News has previously reported that Auditor General Deodat Sharma has directed the administration to recover in excess of $12 million paid to a contractor for the upgrading of a section of the road at Culvert City, Central Rupununi under Capital Works but he has also listed a plethora of concerns about recurrent expenditures.
In his report he noted that amounts totalling $383.013 million were expended on various maintenance works during the year including repairs to a section of road at St. Ignatius, Central Rupununi, repairs to Farm to Market Roads at Parishara, Central Rupununi and repairs to Achawib Primary School, Deep South Rupununi.
In relation to the repair of the road at St. Ignatius the contract was awarded by the Regional Tender Board in the sum of $8.2 million to the fifth lowest responsive of seven bidders.
The contractor received the full contract sum for completed works at the time of audit but physical verification of the completed works, measurements and calculations revealed an overpayment of $3.410 million.
While the AG has advised that the region recover the overpayment and ensure that all works completed are correctly measured and quantified before payments are made to contractors, the Regional Executive Officer has committed to recovering the overpayment only after the current Engineer has verified the works.
Another contract issued by the region this time for repairs to a Farm to Market Road at Parishara Central Rupununi was cited not for “overpayments” but for possible violation of accounting standards and shoddy work.
The contract was awarded by the Regional Tender Board in the sum of $11.6M to the most responsive of six bidders. At the time of audit this contractor had received the full contract sum for completed works but physical verification of the completed works, measurements and calculations revealed that a completely new timber bridge was constructed under this contract for road repair works, resulting in works of a capital nature being executed and paid for using recurrent funds.
The value of this newly constructed bridge was $5.7 million and it was priced and paid for as one lump sum Item in the Bill of Quantity, while the finished works were substandard, crooked and had poor quality timber installed.
Surprisingly the Audit Office has highlighted two contracts of vastly different sums for the same works.
According to the report a contract for Repairs to Achawib Primary School, Deep South Rupununi was first awarded by the Regional Tender Board in the sum of $10 million to the most responsive of four bidders.
The contractor received an advance payment of $2.940 million but physical verifications and examinations of records revealed that the contractor never mobilised to the site, as such he was overpaid the sum of $2.940 million.
An examination of the evaluation report also revealed that the awarded contractor’s bid price was actually $10.054 million, however, the contract was signed for the sum of $10 million, which was the Engineer’s Estimate.
Correspond
According to the report it is unclear how and why the Regional Democratic Council signed a contract for a sum which does not correspond with the contractor’s bid and there was no evidence that the contractor ever provided a mobilization bond yet he still received the payment.
Further at the time of reporting, there was no evidence that the contract was ever terminated, despite the fact that the contractor failed to pursue the works and the works were subsequently completed by another contractor under a new contract.
The second contract for this project was issued by the Regional Tender Board in the sum of $7 million to the lowest of three bidders.
The contractor received the full contract sum for completed works at the time of the audit but physical verification of the completed works, measurements and calculations revealed that there was a breach of the Procurement Act in the awarding of a contract valued above $1.5 million using the three-quote method of procurement.
Also while no evaluation of the works was done since they were deemed as emergency works it was observed that the RDC had enough time to obtain three quotes for the works, while the duration for completion was stated as eight weeks.
Further, the Audit Office failed to accept that the works were an emergency since a contract was signed for the same works in May 2018. The RDC would have therefore been fully aware that the repair works were to be effected since May 2018.
“As such, the RDC’s claim of the works being an emergency is invalid since the previous contract should have since been terminated and the works should have been retendered and subjected to National Competitive Bidding (NCB), in keeping with the Procurement Act,” the report notes.
In this case as well an examination of the Tender Board Minutes revealed that the contractor’s bid price was actually $7.365 million but the contract was signed for the Engineer’s Estimate of $7 million.
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Government has quashed its plans to redevelop Smith Barcadere.
In a brief statement issued Wednesday afternoon, the Ministry of Commerce, Planning and Infrastructure advised that it had decided that the proposed Smith Barcadere project will not proceed.
“The Smith Barcadere Committee agreed that the project should not be pursued,” the statement said.
No reason was given for the decision.
It follows a ‘protest picnic’ organised by the group People for the Protection of Smith Barcadere last month and ongoing opposition from many local residents.
Opponents of the proposed redevelopment challenged the plans for the popular South Church Street beach, which included a parking lot, an arch at the beach entrance, walkways, additional bathroom blocks, a security office and a timber cabana.
After last month’s protest, government agreed to halt its plans until further public consultation was held and agreement on a way forward was found.
Officials had also agreed to hold a public meeting at the South Sound Community Centre to discuss the proposed plans. That meeting was never held.
Wednesday’s announcement follows claims on social media on Tuesday that land near the beach, which was the proposed area for the redevelopment, had been cleared.
The ministry refuted this, saying in a statement, “No project works have been undertaken on the site and none are planned for the future.”
The project, it said, was in an early stage of development, with the tender review process completed in February.
George Town South MLA Barbara Conolly told the Compass on Wednesday that she was disappointed the project is not going ahead.
“I wanted the Smith Barcadere area made safer and to provide access for all Caymanians and residents. That’s not going to happen now,” she said.
People for the Protection of Smith Barcadere member Berna Cummins, on Wednesday, welcomed the news that project will not move ahead.
“I’m delighted that there will be no further work carried out at Smith Barcadere and that it will remain in its natural state for all the people of Cayman to enjoy. Hopefully this will not arise again that proposed enhancements will not be done without public input. MLA Barbara and The SB [Smith Barcadere] Committee listened to the people and understood that we did not want any changes,” she said.
She thanked all the members of the People for the Protection of Smith Barcadere for their effort and support of the public throughout the island.
“Smith Barcadere is a very special place to so many people and it must remain in its natural and beautiful state,” she said.
Taura Ebanks, a George Town South constituent and one of the vocal activists against the project, posted a video to Facebook showing part of the beach that appeared to have been cleared of some vegetation.
On Wednesday, Ebanks, reacting to news of the cancellation of the project, said, “I am pleased to hear that in the absence of answered questions and proper public consultation, that our government has decided not to proceed with the estimated $2 million Smith Barcadere project at this time.”
She added that she believes that there are basic needs that can and should continue to be explored for simple cost-effective solutions, “as it relates to beach access for all, not only for this beach, but all beaches here in the Cayman Islands”.
How we got here
The ministry said it had commissioned the project on land at Smith Barcadere that the government had purchased n 2016 for $5 million.
The purchase followed a public petition led by the Save the Cove group for government to intervene after the land was earmarked for development by a private developer.
In January, the Cayman Compass highlighted plans for the latest developments in the project after a tender was posted on government’s public procurement portal.
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AUDITOR General Pamela Monroe Ellis is standing by findings of a performance management audit of the Rural Agricultural Development Authority (RADA) that the agency breached procurement guidelines, based on investigations carried out by her office, on its management of the Farm Road Rehabilitation Programme (FRRP) from 2014 to 2019.
According to the findings of the report, which was tabled in Parliament in October, the authority’s process of selecting contractors was not always transparent or competitive.
The auditors said that of the 112 road rehabilitation contracts valued at $1.6 billion that were reviewed, RADA used the local competitive bidding methodology for only four contracts, valued at $90.8 million.
“Conversely, RADA utilised the limited tender methodology for 75 contracts valuing $1.04 billion,” the report said.
Monroe Ellis said RADA was unable to indicate the basis on which contractors were preselected for an invitation to bid on road rehabilitation contracts. Furthermore, she outlined that in six instances RADA used the limited tender methodology to award contracts, valuing $129.8 million, despite the procurement guidelines not being met, “thereby denying other qualified contractors the opportunity to participate in the procurement process”.
At yesterday’s meeting of the Public Accounts Committee (PAC) at Gordon House, chief executive officer of RADA Peter Thompson explained that the contracts were put to tender at one value but the responses returned at higher values, from which the lowest bidders were selected.
Government member and St Catherine South Western Member of Parliament Everald Warmington argued that this was normal par for the course in works contracting.
But the auditor general said: “I have not been advised of the estimation provided by Mr Thompson here this morning [but] the finding, as it is remains, there was a breach – unless Mr Thompson can provide evidence to the contrary.”
“I know that the heads of agencies oftentimes can provide an explanation which may appear reasonable, but it is my responsibility to point out where there are breaches, and even where I may think it’s reasonable, I cannot take it on myself to accept it because then I become complicit, and I will be called on to provide an explanation alongside the perpetrators of the act,“ added Monroe Ellis.
The probe also found that RADA utilised the direct procurement and emergency methodologies for 33 contracts, valuing $520.93 million, although the allowable circumstances permitting the direct and emergency procurement methodologies were not met.
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The T&T Chamber of Industry and Commerce (T&T Chamber) is again appealing to the Government to operationalise the substantive provisions of The Public Procurement and Disposal of Public Property Act.
The T&T Chamber in a statement called for the immediate proclamation of Section 24 – (1), 2 except (f), (3) (4) and (5) as it reminded Finance Minister Colm Imbert of the commitment given in his 2020 Budget Statement that the new procurement arrangements would be fully implemented this year.
The chamber, which has long advocated for the implementation of the procurement legislation also questioned why Government was moving to make amendments to Section 7 of the Act, when this was not the recommendation from the Office of the Procurement Regulator.
“We also note that the Minister of Finance in his 2020 National Budget presentation delivered on 7th of October 2019, stated “Further, we have received recommendations from the Regulator regarding the appropriate treatment of public-private-partnerships and Government-to-Government arrangements, which we intend to adopt” (Ref: Page 8, Budget Statement 2020).
We understand the Office of the Procurement Regulator (OPR) recommended that there should be no amendments to section 7, so what is being suggested now is contrary to those recommendations.”
The T&T Chamber stressed the importance of honouring the repeated commitments to have the Act fully implemented to address the procurement inefficiencies and wastage of public funding.
In pressing for the urgent operationalisation of the legislation, it said current procurement regulations must ensure that Government expenditure be made with the benefit of Trinidad and Tobago in mind.
Recognising that government-to-government arrangements may provide the benefit of preferential offers like economic and technical assistance, the T&T Chamber recommended that the total cost of ownership must be captured in evaluating any purchase decision.
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