Articles

Procurement commission to probe claims of violations in Region Nine contract awards

The Public Procurement Commission (PPC) will investigate allegations of procurement violations in Region Nine and has asked Regional Democratic Council Chairman Bryan Allicock to provide supporting information for the allegations he has levelled.

“Yes, we will… we have asked him to send us all relevant information that will assist the investigation,” Chairman of the PPC Carol Corbin told Stabroek News yesterday when contacted.

Allicock, the opposition People’s Progressive Party/Civic representative in Region Nine, had written to the PPC asking that it investigate the award of contracts in the region as he claimed over 40 contracts were awarded via “selective tendering.”

In a letter to the PPC, which was seen by Stabroek News, Allicock alleged that of “approximately 60 projects awarded… only 18 were advertised,” while the others were awarded by the Regional Tender Board via selective tendering.

He further charged that the contracts “were only awarded to supporters of the Coalition Government,” while other bona fide contractors were not considered.

“Information received from [a] reliable source [states] that most of these contractors who were considered under the selective tendering do not have valid compliances,” the letter states.

Allicock added that the Regional Democratic Council believed that the developments represented a total violation of the procurement legislation and as a result sought an urgent intervention.

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Gov’t seeking consultant on sale of Guyana’s crude oil

Government has advertised for consulting services to provide guidance on selling Guyana’s share of crude oil, expected early next year with oil major ExxonMobil’s Liza Phase 1 project on track to achieve first oil by the first quarter of 2020.

Liza Phase 1 is forecast to produce up to 120,000 barrels of oil per day at peak rates, a portion of which will accrue to Guyana. Last week, advisor to the Department of Energy (DoE) Matthew Wilks spoke of the DoE’s crude oil lifting and marketing plan, which would see this country selling its share of oil “independently to get the highest price on the international market.” He had disclosed that the agency has advertised for a crude oil market advisor to provide analysis of the best mechanisms for government going forward in this area.

According to the ad on the Ministry of the Presidency’s website, the objective of the assignment is for the consultant to provide advisory services and technical support towards the establishment of a crude oil marketing function which would cover “all aspects of crude marketing and logistics of crude oil produced in Guyana, together with preparation of competitive tenders for such marketing.”

According to the terms of reference, the consultant’s duties would include the provision of views on world crude markets (volumes forecast and price estimates by regions) and, more specifically, the US Gulf Coast and Asian markets.

It also includes advising on the best crude marketing strategy for government’s share of lifted crude oil resulting from its production sharing contract(s), based upon the criterion on maximising government revenues, highlighting the pros and cons of: single seller or agent versus multiple sellers; single market or a variety of markets; a fee per barrel of oil marketing arrangement based on spot sales versus longer term sales to a specific buyer; FOB crude oil sales versus CIF sales or a mixed FOB/CIF sales portfolio including shipping; as well as long-term versus medium-term versus short-term sales or a mix thereof.

Further, the consultant has to provide advice on the possible pricing formulas potentially achievable for each category of possible sales (destination, duration); spot references for European sales; Latin America, Africa and Asia sales; and long term price formulas.

Additionally, the consultant will have to provide advice on the optimal marketing strategy to create a benchmark crude premium for Guyana crude and develop a risk management strategy to include pricing objectives; approved contractual and financial instruments; risk exposure limits; counterparty credit limits; and hedging policy.

Pragmatic timeline

The consultant’s duties will also include providing advice on comparative economics of domestic use of crude oil compared to international markets and how to maximise government revenue from crude oil sales. He or she would also have to define the organisational requirements for Guyana’s crude oil marketing function including business pro-cesses; staffing and skills requirements; internal procedures and approval pro-cesses; budget resources; data requirements; monitoring and reporting requirements and provide a pragmatic timeline to achieve an operational crude oil marketing function.

The consultant will also have to propose interim methodologies for procuring a transparent marketing arrangement that maximises the government revenues from crude oil sales such as fee per barrel of oil marketing arrangements. Other duties include the training of DoE and other petroleum related agency staff via group workshops, individual mentoring and supervised on-the-job training. Topics to be covered include commercial terms governing international crude oil marketing, oil pricing, oil quality and basis differentials, and cargo operations including lifting and scheduling.

“The consultant will base his/her work on the crude oil volumes available for export as provided by the operator(s) and its updates from time to time,” the ad says.

It stated that these activities are estimated to take place over a period of four years commencing this year. The contract will initially be issued for one year with a possibility of renewal for the duration of the project period based on performance.

The core deliverables for this assignment are the provision of advice and assistance to the DoE as required in executing the scope of work.

The ad noted that the consultant selected will work under the direction of the Director of the DoE or other designated official within the department; and will work closely with other government agencies involved in the oil and gas sector as required.

Inception visit

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Image: Joe deSousa (flickr)

Cold meals

After five years of paying out millions of taxpayers dollars more than it bargained for, and granting numerous extensions for its completion, the Government has been left with an unfinished School Meals Centre at Six Roads, St Philip, the Auditor General has revealed.

The contract was awarded to a firm which bid at nearly $20 million after then Minister of Education Ronald Jones overruled the tenders committee’s decision in favour of a bid that was almost two million dollars lower, at over $17 million. The project overran its costs by a further three million dollars. Total spent: $23 million.

Now, the contractor is demanding the Ministry of Education  “clarify its position” on the project so it could decide if to “start arbitration proceedings”.

Auditor General Leigh Trotman has said this request should be “dealt with post-haste”.

“If negotiations prove unsuccessful, then the Ministry should seek legal advice on the matter,” the Government’s accounting overseer has recommended in his annual report.

The Auditor General’s Report for the financial year April 1, 2017 to March 2018, said that the building of new school meals centre, which was to be completed on January 2014, after construction commenced in August 2012, was still incomplete even after numerous extensions to the deadline.

Construction was due to begin on August 31, 2012, at a cost of $19.9 million. Part of that figure, $6.66 million, was allocated for the procurement and installation of kitchen equipment.

But as of December 31, 2018, the Government had already spent $23.12 million, inclusive of $7.38 million for the kitchen equipment.

The new centre was to be built to provide meals for schools in St Philip, Christ Church, St John and parts of St George, as well as cater to an emergency response event of a national disaster.

It was to replace two centres: Summervale, St Philip, which was closed to facilitate the construction of the new prison at Dodds, and St Christopher, Christ Church, which was operating in extremely cramped conditions while providing meals to 20 schools instead of the two for which it was originally built.

The Six Roads project involved the building two-storey building; the procurement, installation and commissioning of kitchen and related equipment; and the training of personnel to use that equipment.

The project was publicly tendered during the months of January and February 2011. The Tenders Committee recommended the contract be awarded to “Firm 1” in the amount of $17.68 million, but Jones countermanded the board, leading to the contract being awarded to “Firm 2” in the amount of $19.90 million.

The Auditor General said: “The rationale for varying the recommendation was based on the view that the award of the contract to ‘Firm 1’ would not lend to the most effective utilisation of domestic labour, and maximum circulation of the financial resources to be invested in the project.” The firms were not named in the report.

But after granting three extensions of the completion date at a cost of $1 million, due to various factors including the discovery of the cavity in the foundation, revised drawings for the water tank, the foundation, plumbing and electrical items as well as the procurement and installation of certain finishes and items, the project was only about 68 per cent complete by the November 2014 deadline. The value of work and materials on site was $13.62 million.

As of January this year, the Auditor General estimated that the building was approximately 90 per cent complete. But the kitchen equipment, the heart of the school meals centre, is yet to be installed.

Auditor General Trotman said: “A key issue here was the dispute between the Contractor and Contract Administrator about the correct drain pipes to be installed in a section of the kitchen.” 

Government incurred more than $56,000 in interest cost for late payments, while the contractor complained that the late payments were hindering the progress of the project.

The Auditor General’s report revealed that consultants for that project were being paid some $22,600 a month: mechanical engineers ($4,500), civil and structural engineers ($3,400), quantity surveyors ($3,400) and the architect including a “kitchen equipment consultant” ($11,300).

An agreement with the kitchen equipment supplier was signed on October 16, 2015 at a contract price of $7.02 million, $0.43 million more than what was approved by Cabinet, and no timeframe for completion of the work was given.

The quantity surveyor indicated in a financial review dated August 31, 2018, that the anticipated final project cost would be $25.36 million.

Additional parking area was also approved in January 2016 at a cost of $1.20 million. About $275,000 was paid to the contractor to start the additional car park, but nothing could be done since a boat and occupant was on the property.

“At December 31, 2018, the boat has not been removed from the property,” said the Auditor General, who recommended that the Ministry of Education should ensure no future encumbrances on the land.

“Furthermore, funds should not have been disbursed for the car park when the boat was still on the property. This has resulted in monies being disbursed unnecessarily which could have been utilised in another area,” he said.

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Image: U.S. Department of Agriculture (Wikipedia)

Govt launches probe into AATT kiosk contract

US $510,000 a month for sev­en years.

That cost and time frame for a con­tract en­tered in­to by the Air­ports Au­thor­i­ty of T&T board and No­vo Tech­nol­o­gy In­cor­po­ra­tion Ltd—for sup­ply of au­to­mat­ed im­mi­gra­tion kiosks—has raised “red flags” for Gov­ern­ment, which has or­dered a probe of the con­tract.

Na­tion­al Se­cu­ri­ty Min­is­ter Stu­art Young yes­ter­day an­nounced for­mer Jus­tice Rol­ston Nel­son will probe the mat­ter and re­port in two months.

Young said part of the con­tract which al­so both­ers Gov­ern­ment con­cerns con­tract ter­mi­na­tion. This will re­quire the State to pay the com­pa­ny the month­ly cost for all sev­en years of the deal—a to­tal of al­most US $43 mil­lion.

At yes­ter­day’s post-Cab­i­net me­dia brief­ing, Young con­firmed a PNM-ap­point­ed AATT board—but not the cur­rent board—was in­volved.

“The con­tract has very oner­ous terms. We saw mas­sive red flags and need to ask ‘why did you en­ter this con­tract and on whose au­thor­i­ty did you en­ter it’,” he said.

“I’m not say­ing any­thing was done wrong by the board, but red flags have been raised and from de­ci­sions, we’ve seen it looks as though there may be cir­cum­stances in the en­ter­ing in­to of the con­tract we’re not com­fort­able with—cer­tain­ly the terms we’re not com­fort­able with.”

He said the State hasn’t paid the full US $510,000 month­ly fee for the au­to­mat­ed pass­port kiosks, “so they (com­pa­ny) are claim­ing we owe them.”

Young said Cab­i­net was un­aware of the con­tract which was signed in 2017 and a sup­ple­men­tal con­tract signed in March 2018. He said it ap­peared the ini­tial in­volve­ment on the is­sue might have been through the Na­tion­al Se­cu­ri­ty Min­istry, but it ap­peared there was no in­volve­ment of the Works Min­is­ter, un­der whose purview AATT falls. Young, who be­came Na­tion­al Se­cu­ri­ty Min­is­ter in Au­gust 2018, said he was un­aware of the sit­u­a­tion and had re­cent­ly asked im­mi­gra­tion about the kiosks.

Hous­ing Min­is­ter Ed­mund Dil­lon, who was Na­tion­al Se­cu­ri­ty Min­is­ter from Sep­tem­ber 2015 to Au­gust 2018, did not re­ply to calls yes­ter­day.

Young ex­plained the “red flags” went up when it be­came ap­par­ent the con­tract was ex­e­cut­ed be­tween AATT and the com­pa­ny for in­stal­la­tion of the kiosks for Pi­ar­co and To­ba­go’s air­ports. The con­tract was first en­tered in­to on De­cem­ber 15, 2017 and a sup­ple­men­tal con­tract in March 2018.

Kiosks were launched in 2018 and used on a vol­un­tary ba­sis.

He said the AATT ap­proached the Works Min­istry for fi­nanc­ing for pay­ment for the con­tract and Works Min­is­ter Ro­han Sinanan then raised is­sues with the Fi­nance Min­istry, ask­ing for Fi­nance’s Cen­tral Au­dit unit to ex­am­ine the pro­cure­ment and ten­der­ing process­es.

Cab­i­net ap­point­ed Young, Sinanan and Fi­nance’s Colm Im­bert to re-ex­am­ine doc­u­men­ta­tion sur­round­ing the is­sue.

Young said cir­cum­stances sur­round­ing the first con­tract and the “strange” sup­ple­men­tal one in 2018 mer­it­ed ur­gent in­ves­ti­ga­tion.

Young said: “We have se­ri­ous con­cerns with ex­pen­di­ture of this sum. The US $510,000 month­ly fee would al­so be just over TT $3 mil­lion month­ly—TT $40 mil­lion an­nu­al­ly.

“But AATT wouldn’t have got­ten pro­gram­ming rights to the kiosks af­ter pay­ing for sev­en years. Most as­tound­ing, ATTT didn’t have arrange­ments to cov­er fi­nan­cial pay­ments. Our team ad­vised Cab­i­net it was un­ac­cept­able.”

He said an air­port tax was pro­posed to cov­er the kiosk cost but by the time the con­tract was en­tered in­to there was no law in place to make kiosks manda­to­ry.

Young said rec­om­men­da­tions on the is­sue made to Cab­i­net were ap­proved yes­ter­day. The Works Min­istry will now seek in­de­pen­dent le­gal ad­vice on the con­tract, le­gal oblig­a­tions by AATT and the state and how the process start­ed.

Works’ le­gal team re­cent­ly met an in­de­pen­dent coun­sel re­tained on the mat­ter. He didn’t give cost of the coun­sel but added le­gal fees would nev­er be the $1.4 bil­lion paid dur­ing the Peo­ple’s Part­ner­ship’s tenure.

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Image:  E. I. Sanchez (flickr)

Tobago airport RFPs cancelled

The Re­quest for Pro­pos­als (RF­Ps) is­sued for the con­struc­tion of the new ANR Robin­son air­port has been can­celled.

Gov­ern­ment has or­dered that the project be re­tendered and has now tak­en re­spon­si­bil­i­ty for fi­nanc­ing the mul­ti-mil­lion dol­lar air­port up­grades.

Guardian Me­dia un­der­stands that the RF­Ps were can­celled since last month and Gov­ern­ment man­dat­ed the Na­tion­al In­fra­struc­ture De­vel­op­ment Com­pa­ny (NID­CO) to re­tender for the mul­ti-mil­lion dol­lar project. It was re­vealed that on­ly one bid­der re­spond­ed to the RF­Ps—Chi­na Rail­way Con­struc­tion Cor­po­ra­tion.

Ac­cord­ing to in­for­ma­tion re­ceived by Guardian Me­dia, the new ten­der, which went out to pre-qual­i­fied com­pa­nies on Mon­day, changed from a de­sign/fi­nance/con­struct RFP and is now bro­ken in­to two sep­a­rate parts.

Last week, Guardian Me­dia sought con­fir­ma­tion from Fi­nance Min­is­ter Colm Im­bert and Com­mu­ni­ca­tions Min­is­ter Stu­art Young.

Nei­ther men re­spond­ed to What­sApp mes­sages nor text mes­sages.

On Thurs­day chair­man of NID­CO, Her­bert George con­firmed the can­cel­la­tion of the orig­i­nal RFP and ex­plained the con­di­tions of the new ten­der.

“This new ten­der is split in­to two parts,” he said.

“The first part is the main works for the new sec­tion of the air­port and the sec­ond one is for the up­grade of the ex­ist­ing fa­cil­i­ty.”

The first ten­der is turn key, which means that the se­lect­ed con­trac­tor will be re­spon­si­ble for the de­sign/con­struc­tion and com­mis­sion­ing of the new build­ing, while the sec­ond ten­der is de­sign/build.

“Both as­pects would be fund­ed by the Gov­ern­ment,” George said.

The ten­ders are open to both lo­cal and in­ter­na­tion­al con­trac­tors. It was re­tendered on June 11.

Gov­ern­ment had ini­tial­ly pegged com­ple­tion of the project by De­cem­ber 2020 and George said he was hop­ing to meet that dead­line.

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Image:  Wikipedia