Contractor received $45M for incomplete Port Kaituma Doctors’ Quarters

-Auditor General finds overpayments for unfinished health buildings in Region One

The incomplete Doctors’ Quarters at the Port Kaituma Hospital Complex, for which $45 million was paid

Contractors hired to construct buildings for the Ministry of Public Health in Region One as far back as 2016 failed to complete the projects despite being advanced more than 50% of the contract sums, according to the 2017 Auditor General’s report, which urged that efforts be made to recover all the money overpaid.

In the report’s review of the ministry’s capital expenditure, which was presented to the National Assembly on Thursday, it was noted that the Doctors’ Quarters at the Port Kaituma Hospital Complex were not only incomplete but the works done were valued at far less than the money paid over to the contractor.

“The contractor received payments totalling $45M or 72% of the contract sum as at 31 December, 2016. Physical verification of the works on 30 August 2017 revealed that actual works measured only $14.768M or 24% of the contract sum,” the report said. The total cost of the contract is said to be $58.341M; the engineer’s estimate was $62.291M.

The works were expected to be completed no later than 6 December, 2016 but up to the time of the report’s completion the works were not completed and there was no evidence that an extension of time was granted to the contractor.

In a letter to the contractor, dated 20 July 2017, the Ministry highlighted the fact that the contract had expired and the works were approximately 20% completed. In the letter, the report said, the ministry indicated its decision not to extend the contract and the contractor was requested to visit the ministry to finalise payments for work done.

The pictures of the building in the report show a concrete edifice with no roof, windows or doors. It was also devoid of internal walls, plumbing, fittings and an electrical network.

The ministry, in response to queries from the Audit Office, indicated that the contract was terminated. As a result, the Audit Office recommended that the Head of the Budget Agency present the letter of termination to the contractor and to recover any amounts overpaid on the contract.

Also at the hospital, a contract in the sum of $50.915 million was awarded for the construction of a new generator building and installation of generator, electrical cabling and main distribution and control. The engineer’s estimate was $42.603 million.

The report said that approval was granted for an increase in the size of the contract to $79.876 million. The contract was signed on 29 December 2015.

As at December 31, 2016, amounts totalling $77.879 million were paid to the contractor. “At the time of reporting, the works remained incomplete and valid performance bond/mobilisation bonds were not presented for audit scrutiny. The contractor received a second advance in the sum of $36.404 million or 45.6% of the revised contract sum, the report said, before pointing out that this was a breach of contract, since “only one advance payment was specified in the contract.”

The ministry’s response was that the generator is presently housed at the new hospital. The work started on 19 January 2016, the same day that the commencement order was issued. At the time of the audit, the bond was not given to the auditors and the second payment was for an interim certificate valuation for materials on site.

The Audit Office recommended that the copies of the updated performance bond/mobilization bonds and the supporting documentation for the second advance payment be presented for audit verification.

Additionally, a contract for the construction of the Infectious In-Patient Facility was awarded at a cost of $40.963 million against the engineer’s estimate of $47.527 million and it was signed on December 29th, 2015.

The report informed that as at December 31, 2017, the contractor had received a total of $39.938 million. Physical verification on August 30th of that year revealed incomplete work and the contractor has “demobilized” from the site. There were no approvals for extension of time and additionally no breakdown/details were attached to the Payment Voucher. Further there was no evidence that liquated damages were deduced from the payments made, despite the works being significantly delayed.

In response, the ministry, while confirming that the contractor did not complete the building on time and had left the site, said that he was written to about completing the building. In its response the ministry also informed that the contractor was written to a second time and it made it known that a “stringent” penalty clause was included by the ministry.

A similar situation occurred with the contract of the construction of a Nurses’ Hostel at the Region One hospital. Again, a large amount of money was paid to the contractor but the project was never completed. The contract was signed on August 9, 2016 and $36.939M of the $52.771M was paid over to the contractor during that year. Physical verification of the works on August 30, 2017 revealed that it was incomplete and that the actual value of the work done was $2.686M, a difference of $34.253M. The work was approximately 5% completed.

The Audit Report noted that while there was a change to the design and layout of the building, no variation order or revised designs costing was presented for the changes to the contract. Further, the performance bonds expired on January 2, 2017 and July 2, 2017, respectively and there was no evidence of renewal.

It didn’t end there for this hospital as the contracted work on a theatre suite was yet to start and the newly built mortuary building is yet to be outfitted with necessary amenities.

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