GDF responsible for over half of total overpayments by ministries, dep’ts

-over $17M paid to contractor for works still to be done

Images included in the 2017 Auditor General Report showing the area where the wharf, approach and floating raft should have constructed at the GDF Coastal Battalion, New Amsterdam. (Audit Office photos)

According to the latest Auditor General’s Report, 58% of the more than $34 million worth of overpayments discovered within the Ministries and Departments in 2017 were made by the Guyana Defence Force (GDF).

The report found that last year, the GDF overpaid on contracts by more than $20 million, with the majority of that sum notably being spent on one project in which the contractor was paid in excess of $17 million for works that up until August 2018, had not yet been done.

It was stated that a contract for the construction of a timber wharf, the approach and a floating raft at the GDF Coastal Battalion, New Amsterdam, was awarded by the National Procurement and Tender Administration Board (NPTAB) in the sum of $52.638 million to the lowest and most responsive of three bidders.

The contract was signed on November 3rd, 2017, with the start date being within seven working days after signing of the contract and an intended completion date of six months after signing.

The defects liability period was three months.

Since the commencement date, the contractor received an advanced payment of $15.476 million on November 30, 2017. The amount represented 30% of the contract sum. Subsequently, an interim payment of $16.858 million was made on May 8, 2018, for a total received payment of $32.351 million.

However, physical verification by the Audit Office on August 29th, 2018, showed that the GDF certified the works and paid the contractor a total of $17.830 million for works which had not yet commenced on site.

“Valuation No.1 was grossly inflated to reflect that the works under the contract were in an advanced stage of completion, resulting in the contractor receiving a total of $32.351M or 61% of the contract sum at the time of the physical verification,” the report notes, before adding that it was observed that the contractor was on site but only clearing and earthworks on the approach to the wharf had commenced, contrary to what was paid for in Valuation No. 1, which certified payments for the wharf, plumbing and electrical installations.

Further, according to the contract, the duration for completion of the works was six months from signing, however, at the time of reporting, a total of nine months had elapsed and the works were incomplete, and no performance bond or advanced payment bond was seen in the documents examined. As a result, it is unclear if there was a valid bond at the time of reporting.

The overpayment on this particular contract formed the majority of $20.117 million in overpayments for the GDF in 2017 and which is part of a total of more than $50 million in documented overpayments still outstanding for last year.

The report shows that in 2017, overpayments to contractors decreased compared to 2016 but the value and number of overpayments continue to concern the Audit Office.

According to the 2017 report, overpayments amounting to $71.738 million were made in respect to measured works on 79 contracts administered by Ministries, Departments and Regions in 2017, of which sums totaling $37.093 million and $34.645 million were in relation to Regions and Ministries/Departments, respectively.

This is compared to $82.658 million in overpayments on the measured works for 98 contracts in 2016 and $35.700 million made on measured works on 31 contracts in 2015.

The 2017 report further explained that included in the $37.093 million in overpayments recorded by the regions, $20.051 million or approximately 54% were made in Regions One, Four and Eight.

Further, of the $34.645 million overpaid on contracts in Ministries/Departments, $20.117 million and $9.336 million or approximately 58% and 27% were made by the GDF and the Ministry of Public Security, respectively.

Also noted was that at the time of reporting in September, 2018, a total of $15.258 million out of $37.093 million or approximately 41% percent of the total overpayments discovered under the Regions had been repaid while 17% or $6.018 million out of $34.645 million discovered under the Ministries/ Departments were recovered.

“Taking these repaid amounts into account, a balance of $50.461 million in overpayments still remained outstanding, of which $28.626 million is for Ministries/Departments and $21.835 million is for the Regions,” the report notes.

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