Overpayments to contractors continue

– 2012 audit report

There continues to be overpayments to contractors with several ministries and regions facing serious challenges in being able to recover amounts overpaid on various contracts, according to the Auditor General’s report for 2012 which was tabled in the National Assembly yesterday.

“This continued trend coupled with no evidence to suggest that disciplinary action of any kind had been meted out to engineering or other staffs involved in the assessments of works in progress and the certification of progress payments is troubling and hints at Management’s perceived inaction to remedy the current situation,” the AG’s report said. It identified the Ministry of Health as the entity that has overpaid the most at $15 million.

The report said that advances continue to be issued from the Contingencies Fund which did not meet the required criteria for such advances resulting in $95.661 million being drawn from the Fund and utilized to meet expenditure that did not meet the eligibility criteria as defined in the Act.

The report also highlighted the outstanding US$2 million owed for the sale of Guyana Stores Limited which was due since September 2002. A similar situation exists in relation to the privatisation of the National Paints Company where US$900 000 is still outstanding on the purchase price.

The report also noted that in contravention of the Article 212 (W) of the Constitution, a Public Procurement Commission to monitor public procurement and the procedures has not been appointed.

In relation to the Ministry of Health, the AG’s report noted that in 2012, the ministry expended $2.722 billion for pharmaceuticals and medical supplies of which the New GPC was awarded contracts totaling $1.872 billion followed by Caribbean Medical Supplies at $185 million.

“The transaction with New GPC Inc. included fifteen contracts valued at $1.642 billion of which freight charges totaled $123.913 million. The contracts were supported by five bank guarantees with an aggregate value of $1.829 billion. The guarantees were required to be valid for one year but each had a validity of only three months and a set expiry pattern in months ending August 2012, January 2013 and April 2013. There were no guarantees in force at the time of the examination, but the contractor was still to deliver goods valued at $164.603M,” the report said.

The report noted that there was no response from the ministry in this regard and it recommended that the Ministry take immediate steps to have the contractor fulfill the obligations.

The report also noted that there was $208.090 million in expired drugs.

Further, it highlighted that in 2011, a contract for the construction of an Acute Care Psychiatric Hospital in Region Six was awarded to the sum of $112.739M. Total payments under the contract were $91.9 million but physical verification of the works revealed unsatisfactory features.

“The work appears to have been abandoned for a prolonged period of time. No personnel or equipment from the contractor was on the site and it was overgrown with vegetation. Termite nests were also noted on various areas of the building,” it said. The report noted that the completion date for the works was stated as 18 May 2012. “However, at the time of our physical verification on 4 September 2013 the works were incomplete. At this date, a total of sixteen months had elapsed from the contractual completion date. No approvals for extensions of time was noted and therefore the contractor is liable for liquidated damages,” the report said.

It said that the value of the measured work completed at that time was $92.079 million based on the payment certificate. “However, an examination of the works revealed thirty-four instances where amounts totaling $15.722 million were paid in relation to unexecuted works. It was therefore clear that the consultant had overstated the actual value of works completed by the contractor,” the report said.

The AG urged that the ministry investigate the matter to recover any overpayment and it was indicated that this was being done.

The AG’s report has been criticized in recent years for focusing on many trivial matters rather than larger issues of government unaccountability and lack of transparency.