PAC raps Region 10 over payments to contractor with expired performance bond

The Region 10 administration was yesterday accused of leaving the government “exposed” through its financial practices, after the Public Accounts Committee (PAC) found that it had continued paying a contractor although the performance bond had expired.

A performance bond is a sum of money agreed upon and put in place as a security net in the case that a contractor does not deliver fully, according to the terms set out in the agreement.

The project in question was the construction of a Health Centre and Living Quarters at Wiruni, Berbice River, which was terminated by the region in 2017.

The region’s Engineer Clive Peters yesterday told a PAC hearing that the project, which was scheduled to be completed by December 29th, 2016, was terminated on November 27th, 2017, after it was found that the performance bond had expired. The performance bond reportedly expired on June 11th, 2017.

It was subsequently related that the last payment was made to the contractor in July of 2017.

A total of 9.2 million was reportedly paid to the contractor, JPM, based on measured works, with $5.9 million in total being paid in 2016 and $3.2 million in total being paid in 2017.

The sum of the contract, according to the Auditor General’s 2016 report, was $19,684,000.

The engineer had stated that he had verbally related to the Deputy Regional Executive Officer (DREO) Maylene Stephen, who was acting in the position of REO at the time, that the bond had expired. The DREO stated that the action taken was to immediately terminate the contract.

“So you sat down with a contractor with an expired bond? The contract is not valid once the bond is expired,” PAC Chairman Irfaan Ali stated. “…You have exposed the entire government as a result of not enforcing the bond; ensuring that you have a bond that is valid. Do you understand the consequences of that action, engineer?” he questioned.

Under further questioning by Ali, Peters confirmed that he had an approval for the project to be treated as multi-year, but said there had been no extension to the contract time.

However, the region’s REO Orrin Gordon referred the committee to a document, dated December, 2016, stating that there was a three-month extension granted.

The DREO, when questioned on this, stated that the letter she wrote was based on a directive from the Public Works Department, which raised questions as to who granted the extension as the engineer said he had not.

Ali asked how the contractor then remained on the job, to which Peters responded, “…As with the bond, it probably must have been an oversight.” His response prompted murmurs from committee members present.

Ali pointed out to Gordon that based on his claim, whatever extension was granted would have only taken the project date to March, not July, when the final payment was made.

When Minister of Public Health Volda Lawrence questioned whether the project had been budgeted for again in 2018, Gordon stated no.

“So where will they put clinical staff?” Lawrence questioned.

“This thing was budgeted for in 2016, it wasn’t completed. It was placed in 2017, not completed. And then you just took it out in 2018?” Ali asked.

The Regional Health Officer, Pansy Armstrong, noted that the building of the centre was a priority project, and when asked, stated that she was unaware that it was not catered for in the 2018 budget. She added that she expected that it would have been completed by then.

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