Despite receiving an advance payment for the construction of a health centre and living quarters at Wiruni, Berbice River, the contractor is still to complete the works and has since abandoned the site, according to the 2017 Auditor General’s (AG) report.
The Region Ten administration, under which the contract was awarded, has since disclosed that the agreement has been terminated and that it is hoped the works can be completed with the funds that will be allocated in the 2019 budget.
The AG’s report, which was presented in the National Assembly last month, stated that the contract for the construction works was awarded by the National Procurement and Tender Administration Board (NPTAB) in the sum of $19.684 million. The defects liability period was set at three months. The total payments made to date for works completed are $9.167 million.
According to the report, a physical verification revealed that the contract agreement date, start date and duration of the contract, could not be determined from the documents examined and the contractor received an advance payment of $3.937 million, representing 20% of the contract sum. It was stated that the advance payment was followed by three interim payments of $2.019 million, $1.390 million and $1.822 million, respectively; it was difficult to ascertain whether or not the advance payment was fully recovered.
The physical verification on 6 July 2018, revealed that the works were incomplete and the site was abandoned, the report said, while adding that it was discovered that correspondence dated 27 November, 2017 and captioned “Termination of Con-tractual Agreement – Construction of Concrete Health Centre and Living Quarters, Wiruni, Region №. 10”, and addressed to the contractor, indicates that the contract was terminated but an examination of this correspondence revealed several inaccuracies.
It was found that the correspondence references clauses 4 and 12 of the General Condition of Contract (GCC) and relates to liquidated damages, however, an examination of the contract document by the Audit Office revealed that GCC Clause 4 actually addresses the Engineer, while GCC Clause 12 addresses “works to be completed by the expected period of completion.”
These clauses, it was explain-ed, were therefore inaccurately quoted in the letter of termination.
It was pointed out that the correspondence gives the rate for liquidated damages as 0.2% per day but the examination of the contract document revealed that GCC Clause 32 – liquidated damages— stipulates a rate of “0.05% per week of the bid price.”
Additionally, the actual basis of termination of the contract could not be determined from the documents examined; no performance bond or advance bonds were noted in the documents examined and it was difficult to ascertain from the Payment Voucher examined whether or not the advance payment was fully recovered, the report said.
The report said that additionally, it is unclear whether or not a valuation at termination was prepared and all accounts settled.
The region, in its response, explained that the contract was terminated and that a request will be made in the 2019 budget for completion of this building, while an assessment will be undertaken of the work done to date to verify the value for payment.
The Audit Office recommended that the regional administration ensure that any bonds issued are honoured, a final account or valuation at termination be
prepared, and any amount overpaid be recovered.
Meanwhile, the audit also revealed that the upgrading of the drainage system at Wismar Street, Mackenzie was incomplete at the time of physical verification earlier this year. The contract was awarded and the entire contract sum has already been paid.
The report said that the contract was awarded by the Regional Tender Board in the sum of $8.947 million. There was an approved variation of $2.959 million, revising the contract sum to $11.906 million, against an Engineer’s Estimate of $9 million. As of 31 December 2017, the full contract sum was paid to the contractor.
However, a physical verification in 2018 revealed that the works were incomplete and the contractor was on site completing the reinforced concrete drain works.
The Head of the Budget Agency explained that these works were ongoing.
The Audit Office recommended that the regional administration immediately desist from certifying and making payments to contractors for incomplete works and put proper systems in place to avoid recurrences.
