Auditor General flags MARAD for paying contractors in advance without proper documentation

Apr 05, 2022 News

Kaieteur News – The Auditor General’s 2020 report has flagged a contract signed by the Ministry of Public Infrastructure, through the Maritime Administration Department (MARAD) in 2019, where a contractor was paid the full contract sum in advance for the rehabilitation and docking of a vessel, while there was no proof of the status of the works.
The contract was signed under the Ministry on November 27, 2019 for the docking and rehabilitation of the M.L. David P vessel.
According to the AG, Deodat Sharma, the entire contract sum of $12.949 million was paid to the contractor in that same year.
Although the name of the contractor was not provided by the AG, Kaieteur News had reported that during the opening of this project at the National Procurement and Tender Administration Board (NPTAB) office in September 2019, two contractors had entered bid to carry out the rehabilitation works on the vessel. The firms that bid for the MARAD project were the Guyana National Industrial Company Inc. which submitted $14,486,128 and Courtney Ben Contracting Services Limited which submitted $12,949,060.
The AG report states that “The bank guarantee expired since 15 January, 2020. As a result, the Department was not in a position to levy on the said bank guarantee, should the contractor default. In addition, documentation certifying the percentage completion of work was not seen.” As a result, the AG noted that this is a clear breach of the payment schedule of the contract.
Moreover, the Auditor General went on to explain that in August, 2020, the Department stated that the works had not yet started, even though, one year had elapsed after the final payment was made. Up to the time of reporting in September 2021, the report said that evidence was not submitted to indicate the status of the works.
In response, the Ministry explained that “The Head of Budget Agency stated that no maintenance records for the M.L. David P. vessel are available for the years 2019 and 2020. However, maintenance records are now in place. In addition, MARAD had intended to have the vessel docked in 2019; however, exigent circumstances prevented the execution as planned. This was not done to breach any regulation, but was committed out of necessity.”
The Audit Office, therefore, recommended that the Head of Budget Agency submit the logs for audit.
The AG report also highlighted a similar instance whereby a contract of $27.157 million was signed for the docking and rehabilitation of the MT Setter vessel where the full contract sum was again paid to the contractor in 2019, but up to the time of the AG report in September 2021, no documentation on the works were seen.
This project was being executed under the Ministry of Public Infrastructure as well. “The entire contract price was paid to the contractor in 2019. It was observed that a bank guarantee was not provided for payments made, as documentation certifying the percentage completion of work was not seen. This is a clear breach of the payment schedule of the contract,” the Auditor General stated.
Similar to the ML David P. vessel, works on MT Setter in August 2020 did not start even though one year has elapsed after the final payment was made.
The report explained that in response to the findings, the Ministry said that the Head of Budget Agency stated that no maintenance records for the M.T. Setter is available for the years 2019 and 2020. However, a maintenance log is now in place.
As such the Audit Office recommends that the Head of Budget Agency submit the logs for audit.

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