Latest update January 17th, 2025 6:30 AM
$15M payment for supply of ‘wrong’ bulldozer to Region Six in limbo
… Construction contract used to procure machine – Audit report
There is deep worry that the state could lose $15M paid to a contractor who supplied a ‘wrong’ bulldozer to officials in Region Six (East Berbice/Corentyne). A report from a special investigation done by the Auditor General’s office unearthed major breaches in the transaction.
The report was turned over to Regional Executive Officer (REO), Kim Williams-Stephen on Tuesday last.
The report found that the region and the supplier signed a construction contract instead of a supply contract, resulting in irrelevant terms and conditions.
The probe was sparked by media reports, that regional officials received a D4 bulldozer in the sum of $14.8M from K&P Project Management Company in December 2017, when in fact the bid documents had stipulated a D3 bulldozer.
Former Region Six REO, Dr. Veerasammy Ramayya
Region Six REO, Kim Williams-Stephen
Williams-Stephen has indicated that the region signed for and received the bulldozer, but later wrote to the suppler requesting that it be removed, since it was the wrong machine. The REO indicated that they had received confirmation from the contractor that the correct bulldozer would have been supplied. This was not done.
On June 7th, 2018, the REO wrote to CARICOM General Insurance Company Inc. seeking to levy on a performance bond of $14.8M. The contractor had furnished the region with the bond from the insurer.
The matter of the purchase was raised at the Public Accounts Committee (PAC) meeting yesterday, and there was some worry that officials may be unable to levy on the bond, since the region accepted the bulldozer and there was no subsequent contract signed with the supplier.
Interestingly, the audit report revealed that the supplier furnished the region with a performance guarantee dated March 13, 2018 to June 13, 2018, for the supply and delivery of one reconditioned D3 Angle Blade bulldozer.
PAC Chairman Irfaan Ali raised questions on how a bond was issued when the region did not enter into a new contract with the supplier.
“Did you [the region] sign off as verifying that the equipment was received?” Ali asked the REO.
Williams-Stephen replied, “Yes”.
The bulldozer which was supplied by K&P Project Management Company
Ali then asked, “Did you proceed to make full payment based on that verification?”
Again the REO replied in the affirmative.
“Then what are you claiming? You have no claim. That is why I am saying that you have killed the bond. You have accepted the equipment. You have verified the equipment and completed the transaction by paying over,” Ali asserted.
The REO then confirmed that all she has in her possession is a bond which was produced without a contract.
“And the contractor has your $15M,” Ali stated.
Williams-Stephen pointed out that this transaction occurred under the watch of REO Dr. Veerasammy Ramayya.
MAJOR BREACHES
The Auditor General’s report stated that the purchase of the D3 bulldozer was not explicitly stated in the region’s approval and that the supplier did not meet one of the qualifying criteria which stipulated that the bidder must have supplied equipment of a similar nature.
According to auditors, a performance security was not enforced and an advance payment of 53% for the contract sum was paid to the supplier, even though the contract did not make provision for such payment.
It was also revealed that the bid document had indicated that a 10% performance security in the amount of $1.5M would be required.
Auditors found no evidence that the security was provided by the supplier, an indication that the requirements of the bid were not enforced by the region.
Further, the audit revealed that regional officials did not examine the bulldozer upon its receipt for defects.
When auditors inspected the bulldozer supplied, they found that the chassis plate appeared to have been tampered with, it had a damaged belt, a unit hanging without a nut, rough welding, fabrication works and damaged rubber mount, wire and cable.
The contract was signed on September 12, 2017. Auditors found that the contract included the lines, ‘stop work and periodically cease construction without reason before completion’ and ‘the employer hereby covenants to pay the supplier as per measured works completed’.
This shocked auditors, as it mirrored contracts used by the region for construction works.
The region had also published the invitation for the bid in one newspaper, which is a breach of the Procurement Act, which stipulates that this should be done in newspapers of wide circulation. As a result, only one bid was received.
Similar Articles
THE BLUNT OF THE DAY
Sports
Features/Columnists
No conflict of interest exists
Peeping Tom… Kaieteur News- Accusations of conflict of interest have a peculiar way of rising to the surface in Guyana.... more
Clarifying misconceptions about the Panama Canal
Sir Ronald Sanders (Antigua and Barbuda’s Ambassador to the US and the OAS) By Sir Ronald Sanders Kaieteur News–... more
Weekend Cartoon
