Education ministry gets ‘F’ for overpaying contractors

The Public Accounts Committee (PAC) yesterday chastised Education Ministry Permanent Secretary Delma Nedd for continuously failing to sanction officers who approve payments to contractors for substandard and/or incomplete work.

According to the Auditor General’s 2010 Report, the ministry had authorised millions of dollars in overpayments to contractors for works to several schools, including the St Joseph High, the New Campbellville Secondary, St Agnes Primary, Comenius Primary, Charlestown Secondary, and Cummings Lodge Secondary.

Together, the overpayments amounted to $6.741 million, and the committee noted that in the case of St Joseph, the amount overpaid was one third of the total contract sum. It was further discovered that none of the officers whose inaccurate assessments led to the overpayments have been sanctioned beyond stern verbal warnings.

It was PPP/C MP and committee member Odinga Lumumba who raised the issue of sanctions. Lumumba, who is usually a strong of proponent of sanctions in such scenarios, said that if the persons looking at these works are wrongfully authoring payments they should go to jail.

When Nedd was asked what actions have been taken against the persons responsible for the overpayments, she said that while no written or legal steps had been taken, the person(s) have been warned orally. Lumumba, whose call for sanctions resonated among his fellow committee members, then suggested that the ministry’s failure to sanction persons responsible for such overpayments is tantamount to collusion.

He eventually proposed to the committee that policies be pursued to commit ministries to sanctioning persons responsible for overpayments. He was, however, informed by fellow PPP/C committee member Gail Teixeira that such policies already exist and that the problem is the non-enforcement of sanctions.

APNU MP Jaipaul Sharma, who also sits on the committee, upon closer examination of the Auditor General’s report, found that the ministry had promised to start sanctioning inspectors who failed to accurately verify works done by contractors. He asked why the ministry was not living up to its promises.

Teixeira noted that such actions are rampant among ministries when dealing with their projects all over the country. Instructions are being given to authorise payments with no proper scrutiny of what is being done, she pointed out, while adding that the defects liability clause, which is included in all contracts, is being abandoned. This clause, Teixeira explained to her fellow committee members and the ministry representatives, protects the investment being made and must be adhered to.

PPP/C MP Bibi Shadick, a lawyer, told Nedd that the officer/s who wrongfully signed off on documents which inaccurately represented the reality is/are criminally liable. She added that anyone found to be guilty of this should have been surcharged or sent home.

Asked how the overpayments occurred, Nedd initially made several offerings but ultimately she was informed by the committee that her explanations did not address the question asked.

PAC Chairman Carl Greenidge, at one point, questioned whether she fully understood what she was being asked. Nedd made further attempts to address the committee’s question, but by the time she was finished the committee still was not impressed by her explanations.

Greenidge thus asked representatives from the Auditor General’s Office if they could provide some clarification. It was then that the Director of the Audit Office’s Works and Structure Department Phillip Smith explained that the overpayments have occurred because the ministry’s officials frequently pay contractors the amounts stipulated in their contracts without checking to ensure that the works completed are in accordance with what is demanded in the Bill of Quantities.

Moreover, he said, his officers have discovered instances where inspections are carried out, but that the measurements taken are incorrect–reflecting that work has been done where it has not been and resulting in further overpayments.

Following this explanation, Nedd told the committee that the unit responsible for measuring works done by contractors was, at one point, short of staff and that this inhibited its ability to effectively carry out its responsibility. She said, however, that actions have been taken to bolster the capacity of the unit responsible for inspecting works and that no such incorrect readings have occurred recently.

It was clear that the committee was not at all pleased that the Permanent Secretary was unable to sufficiently explain why the overpayments occurred and then speak of preventative measures only after the Auditor General’s Office was called on for clarification.

Greenidge, in particular, seemed annoyed and told Nedd that explanations offered to the committee need to be sensible. “If you don’t know, say you don’t know,” he scolded her. Shadick also noted the timed manner of Nedd’s response and said that she could have offered that explanation from the inception.

The most comprehensive attempt to explain the reasons for the overpayments were made by Rabindra Kishore, who was part of the delegation representing the ministry. He admitted that the measurements of works taken by the ministry’s inspectors were sometimes not in accordance with what was required in the Bill of Quantities and that money was paid over to contractors when it should not have been.

In addition to increasing the human resources of the ministry’s inspections unit, the committee suggested that the ministry broaden the list of persons with the scope to verify works done by contractors. Nedd and her officers were urged to include the teachers of the schools where works are being carried out. Lumumba said it would be easy for a teacher or head teacher to ensure that a contractor installed the required amount of “windows”.

Doing this will produce preliminary reports on the works of contractors and serve to bolster the inspection process before payments to contractors are authorised. Nedd disclosed that such initiatives have already been undertaken. She added that the ministry has placed Bill of Quantity charts on public boards at several schools.

The ministry has so far been able to recover some of the outstanding sums through methods described by Shadick as blackmail. Shadick told the committee that the ministry is well known for awarding contracts to contractors who have been overpaid in the past, only to deduct the overpaid amounts from the new contract.

Using this method, the ministry has been able to recover over $4 million.

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