Retaining Walls & Petty Contracts Tango Continues

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Critical issues surrounding contract letting — such as the waiving of the tender process, contract splitting, and general procurement weaknesses were highlighted by the office of the Auditor General in two reports that were tabled in the House of Assembly on 28 June.

The 2012, and 2013 Auditor General reports were part of the backlog that were bemoaned by the Opposition and promised by Premier and Minister for Finance, Dr. the Hon. D. Orlando Smith. Both documents were presented to the House along with comments from Financial Secretary, Glenroy Forbes.

In raising the contract related issue Auditor General Sonia Webster announced in the Report for the year ended 31 December 2013 that the regulations currently in place for public procurement are insufficient to ensure that transparency and value for money is achieved in contract letting.

The Auditor General announced that soft provisions allow for circumvention of regulations which can be bypassed or otherwise disregarded with the splitting of contracts and waiver of tender. Therefore, Webster called for the regulations dealing with public tenders to be reviewed. She explained that the revision would result in improved management, and transparency in public procurement.

Petty Contracts Tango & Splitting

An extensive look at how government contracts are being split and how petty contracts are being awarded was presented by then Acting Auditor General Amoret Davies in the Audit Report for the year ending 31 December, 2012.

Davies disclosed that in 2012 more than 540 petty contracts and agreements were executed by the Government representing a commitment in excess of $19,923,099. She noted that approximately 29.28 percent of this (or $5,832,769) was for petty contracts and agreements under the administration of the Public Works Department.

The Acting Auditor General explained that in 2012 the practice of splitting major contracts into smaller parts to facilitate issuing petty contracts was pervasive. “This was seen on several projects and across ministries,” she pointed out.

Davies further explained that the rationale provided for contract splitting is to allow for work to be shared and promote development of skills among local contractors. However, she said that it was observed that the end result is often works that is inconsistent with quality. This she opined was because the persons undertaking the petty contracts are individuals who are not sufficiently qualified or experienced to perform the work.

The Acting Auditor General also announced that the current petty contract trend leaves room for cronyism and nepotism. “The selection of contractors on a split contract is particularly susceptible to cronyism, nepotism and favoritism and has to a large extent become heavily politicised. This is all made easy by the fact that no formal competitive bidding is required and the works are now divided and costed in the budget by District. More needs to be done to regulate and monitor petty contracts if the government is to achieve value for money on these agreements,” she noted.

Retaining Walls Abuse

The Acting Auditor General complained that there have been cases where public funds have been used to address issues with private properties via the petty contract means. She said that the issue is not new and was first reported in the 1997 Audit Report.

Davies noted that there are instances where petty contracts can be used to address matters affecting private properties. These instances – she said – involved prevention of erosion of soil onto public roads, preventing the erosion of private property or widening of a public road and compensating persons who give up land to accommodate expansion or improvement of public roads.

However, the then Acting Auditor General announced that during 2012 the government continued to issue petty contracts for building private estate roads and retaining walls which did not qualify under the mentioned criteria.

Davies lamented that the practice of doing work on private properties has apparently snowballed to the point where it is considered the norm and legislators are urged to do so by residents.

“This type of activity is commonplace and a substantial amount of Public Works Department’s time and resources are consumed in performing assessments, costing, preparing petty contracts, and monitoring works carried out on private property. There is now a widespread expectation by citizens that the government will carry out work on their private roads, while the public roads are often left in disrepair,” the 2012 report stated.

FS Comments

In response to the Auditor General’s points about contract splitting and waiving of the tender process the Financial Secretary announced that he would be reissuing guidelines and will be working closely with the Ministries to ensure the enforcement of the policy. He said that the regulations would be reviewed and amended to enact the necessary changes.

As it relates to the Auditor General’s announcement that contract splitting was pervasive in 2012, the FS announced that he understands why such action was taken in some instances, but stated that contract splitting should not be a norm.

He also announced that work is now ongoing to implement a Procurement Act and Guidelines to address this issue and several other matters.

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