-2007 Auditor General report
The Report of the Auditor General for 2007 has revealed that the Transport and Harbours Department (T&HD) failed to observe the requirements of the Procurement Act for its capital works but the department has since assured that it has taken corrective action.
According to the report, which was tabled yesterday in the National Assembly, whenever the requirements were observed blanket waivers were obtained from the National Procurement and Tender Administration Board (NPTAB). Consequently, “capital works to be executed on vessels were not publicly advertised, with the result that there was a failure to determine whether contracts were awarded at the most competitive prices or to the best responsive bidder.”
It cited the following contracts as being in breach: $15M for rehabilitation of navigational beacons, $26M for the reconditioning of the MT Aruka, $38M for MB Sandaka, $15.8M for the MV Barima and Lady Northcote, $15.9M for the MB Baramanni and $262M for the procurement of spares and services.
The Audit Office recommended that “the Ministry institute measures to ensure that the TH&D observe requirements of the Procurement Act as it relates to public tendering, in order to promote transparency during the acquisition of goods and services under its capital programme.”
The Ministry of Public Works and Communication responded to the concerns raised by stating that the Head of the Budget Agency indicated that the T&HD has taken corrective action and all capital works were to be advertised from 2008.
Meanwhile, the report noted that “the T&HD continued to advance the full contract sums without the completion of works and/or delivery of goods.” “This exposed the institution to great financial risks, should contractors fail to perform at set standards or renege on arrangements”, the report added. During the reporting period the entire amounts under two contracts, which totalled $42.770 million were advanced to suppliers from the capital programme Reconditioning/Construction of Ships in June 2007 and October 2007.”
The Head of the Budget Agency within the Ministry explained that this practice has ceased, since corrective action was taken in 2007.
In relation to the four-lane highway from the Demerara Harbour Bridge to Ruimveldt which had been subject to numerous delays, the Auditor General’s report revealed that the ministry made a demand on the retention bond to the value of US$804,000 ($160m) because of the failure to correct defects and complete outstanding work. The report said that the demand was honoured by the bank and the sum was paid last year into the Consolidated Fund.
The report pointed out that initially the road went beyond its extended July 9, 2006 deadline but liquidated damages were not deducted from the contractor Seereeram Brothers of Trinidad. Further, at the end of the defects liability period on December 29, 2006 , a considerable amount of defective works had not been remedied.
The Auditor General’s report said that explanations indicated that on July 3, 2006 another agreement was signed for an extension to the four-lane road and during negotiations it was agreed that the contractor would waive all claims on Lot 1 and Lot 2 and the government agreed to waive claims for liquidated damages.
The eventual claim on the retention bond was made after the failure to correct defects and complete outstanding works.
The Auditor General’s report however said that the final account in relation to these works is still to be provided for assessment. The report said that the head of the budget agency has undertaken to provide the required information.
