$14.5M overpaid for Region 10 contracts… Local Govt. to hire in-house lawyers, introduce internal auditors

Jan 25, 2013 News

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–    $7M paid, no work found by state auditors

By Leonard Gildarie
Overpayments on government contracts have remained a major problem, especially at the regional administration level.
Policy makers are now working on a number of measures which will include the publication of errant contractors’ names in the newspapers, the hiring of lawyers and engineers, and stricter monitoring of regional accounts to ensure compliance.
These were among some of the disclosures made Monday during Parliament’s Public Accounts Committee (PAC)’s examinations of the 2010 report of the Auditor General.
Being grilled by the PAC, which comprises Members of Parliament (MPs) from both sides of the House, were officials from the Ministry of Local Government and regional representatives of Region 10, including Regional Executive Officer (REO), Yolanda Hilliman.
Problems with overpayments were among the most debated issues, with MPs wanting to know how monies were doled out for jobs completed, yet later, checks revealed outstanding works.
In the Region 10 area, state auditors in the 2010 report found several problems with the systems that led to $14.5M being overpaid to contractors – overpaid meaning simply that jobs were not completed yet final payments were made.
According to the Region, in explaining some of the problems, in one case a contractor died. In yet another, the contractor, instead of working with a particular wooden design for drains, decided to use concrete. MPs were told that the Region decided to accept that explanation and pay the contractor the equivalent.
While corrective works were done in subsequent years, last week the regional officials revisited some of the contract sites in order to get an update, prompting MPs to wonder whether enough efforts were being made to ensure the state’s funds are being well spent.
In one case, an official of the region accompanying state auditors to the reconstruction of a bridge at Victory Valley, in Linden, took them to the wrong one. The explanation was that he was new.
At West Watooka, a contract was awarded in 2010 for the upgrading of drains. State auditors were unable to verify whether works were done and as such declared the $7.2M issued to the contractor as an overpayment.
The explanation by the Region 10 administration failed to answer who authorized the full payments. This is what was written: “Contractor has reportedly revisited the project site and carried out corrective work. These were however not done to specifications; the contractor has failed to complete these despite several commitments to do so.”
At another location, at Fox Road Hill Foot, auditors found that there was an overpayment of $220,590 – the contractor has not responded to the region, despite being written to.
According to Manzoor Nadir, who represents the government on the PAC, the incidents are alarming. Both Nadir and Odinga Lumumba raised the issue of contractors not being given more contracts when they have outstanding ones. There are no laws, specifically, which allow government to reject a contractor from a new contract while there are outstanding works for another. However, it was acknowledged that at the administrative level, there are assessments that could be done to reduce the incidences of poor performance.
Issues like performance bonds and due diligence on the contractors were also raised.
Nadir pointed out that it is no secret that collecting monies overpaid to contractors is a major issue. He urged for more personnel within the region to improve monitoring.
Gail Teixeira, of the government side, said that the introduction of an internal auditing department should be priority.
In response, Permanent Secretary (PS) of the Ministry of Local Government, Collin Croal, disclosed that an internal audit department is indeed being mulled at the Ministry, along with an engineer and two lawyers.
In one case of a drain being built, the region overpaid after the contractor built it several feet short of the specified length…he compensated by building it wider. Yet the regional officials in charge of works passed it. Asked to explain, PAC was told that the region may have calculated on the square feet built instead of the exact specifications, something that PAC’s chairman, Carl Greenidge found unacceptable.
According to the Permanent Secretary, among the most pressing problems that the regions are encountering is the fact that contractors would bid for works in a particular region and then win even more in other regions, stretching them to the limit.
The absence of a central database to determine how much work contractors are involved in is also a setback, he said. Moves are underway to correct this.
The Region 10 officials have two weeks to update PAC on details of the outstanding projects of 2010.

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