Sea defence warning and procurement

Just days into his administration and with much political uncertainty around, President Ramotar’s government will have to urgently address the concerns expressed by the European Union about the need for swifter work on sea defence projects failing which grant funds can be at risk.

Repairing and rejuvenating sea defences is a terribly expensive undertaking and one Guyana can ill-afford on its own and therefore the EU warning must be taken to heart. The loss of any grant funds under the European Development Fund would be disastrous but not unique for a PPP/C government, the last one having lost $1.6B in 2007-8 when the sugar industry failed to submit an action plan on time. Ironically, President Ramotar was a member of the GuySuCo Board at the time.

In direct language, the recently accredited EU envoy, Mr Robert Kopecky said that following a visit to sea defence sites that Guyana risked losing money if work was not speeded up. Delays over the last two years have been caused by, in his words, a “certain lack of capacity in managing the large portfolio” of the contract while the provision of resources has also been a problem in this area. If not remedied, the EU said that “there is a risk of loss of considerable amounts of funds”. The sites visited included Kitty, Coldingen, Melanie Damishana, Uitvlugt, Aurora and Zeelandia. While the works at most sites were in an acceptable state, at some locations the works could not be taken over and this the EU noted could result in the enforcement of liquidated damages.

It is not the first time the EU has evinced some concern about the sea defence sector to which it is a major contributor. In December 2007, then Representative Geert Heikens had stated during the signing of a funding agreement that a sector policy was important, the obvious implication being that a lot of money was being poured into a sector where there wasn’t a clearly defined policy. Even then, the Head of the sea defence division Mr George Howard was moved to say that some “stepping-up” would have to be done in terms of maintenance management of sea defences.

One would expect that both the Ministry of Works and the President’s office would seek to determine from the contractor BK International what the problems are and to reiterate the danger of the loss of the funds. There are, however, broader issues which President Ramotar and his administration need to begin to tackle from the outset.

It is well known that BK International as a large stakeholder in the sea defence sector and the operator of a quarry has gotten a large share of the contracts. It is also known that BK has won a variety of contracts in other sectors. The issue then arises as to whether it is overstretched and has bitten off more than it can chew.  At what point in the procurement process and due diligence determination is there a calibration of the resources at the disposal of a contractor and an aligning of this with the various projects to be executed? If this question was to be posed to the various governmental agencies and the National Procurement and Tender Administration Board which makes the final decisions there will likely be stony silence.

It is important that as many of these projects as possible be executed by local contractors for obvious reasons. However this should not be at the risk of having projects unduly delayed with the attendant liability of the withdrawal of scarce resources or the creation of conditions where work is speeded up and shoddily done.

Therefore, as is the anticipation of a large segment of the public and the opposition parties who will now control Parliament there must be a clinical assessment of the bona fides of all contractors and a careful examination of their ability to take on a variety of projects simultaneously. So while BK could properly tender for and be awarded a large sea defence contract based on its manpower, equipment and stone stockpiles, it doesn’t mean that it would then be in a position to win another contract next week with the same endowment.  This would seem to be one of the possible factors in the EU’s concerns about the state of readiness of some of these projects.

The determining of the ability of the bidding contractors would take place at the level of the evaluation committees peopled by officials from the various ministries.  However, given the view that political considerations under President Jagdeo’s government often held sway over professional considerations and given the good relations between the last administration and this particular company, there would be valid concerns over whether sufficiently rigorous due diligence was done of the company’s capabilities.

President Ramotar needs to begin putting some distance between his fledgling administration and the previous one on matters like procurement and ensuring the fullest transparency in the attendant decision making. The gold standard would be the swift constituting of the Public Procurement Commission – which has not been convened a decade after it was mandated by the Constitution – and its overseeing of the work of the NPTAB. How swiftly this can be done is left to be seen but considering the billions in taxpayers’ and donor funds being expended the public would expect that this would be one of the immediate priorities of President Ramotar even without the pressure from the opposition.

The public has been thoroughly incensed at the secrecy surrounding public procurement and the mind-boggling decisions that have been taken in some cases i.e. the award of the Amaila Falls hydropower access roads to Mr Fip Motilall. It has been widely accepted that Mr Motilall had never built roads of the type he was awarded. Yet this travesty was permitted only for government spokesmen to later berate him over the delays despite the warnings from professionals that the contract should not have been awarded to him.

Earlier this year, concerns were raised about a contract being awarded for the supply of a large number of computers for the Ministry of Education by an individual who had clearly not been in this business for a sufficiently long time.  These distortions of best practice raise serious questions which neither the President nor the NPTAB should want to fester.

There is also the matter of the quality of the monitoring and supervision of these major projects. Are there sufficient numbers of supervisory firms for these projects and are they doing an adequate job? Earlier this year, with the elections approaching, a vast number of road projects were signed under the CDB-funded CRIPS programme. What about the execution capacity of these contractors and who will adequately supervise them?

The President, his government and the opposition must also address the question of the urgent passing of an engineer’s act so that qualifications from the get go can help to eliminate the risk of the unqualified being allowed to produce and get away with shoddy work. The need for this act has been studiously ignored by the PPP/C since 1992.

These are only some of the pertinent matters that
complement the concerns raised by the EU on Friday.

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