The Auditor General Report of 2020 has found that contracts totalling $1.5 billion, across various Ministries, were terminated last year largely owing to poor performance from the contractors who, in some cases, were awarded the contracts three years prior.
According to the Auditor General’s Report, five contracts were terminated during the period under review as a result of poor performance from the contractor. These contracts include the mammoth $826.7 million contract for the construction of the Yarrowkabra Secondary School.
This contract had been awarded to BK International, but was terminated in November 2020. Despite the contract being awarded in 2019, the project was beleaguered by delays that saw only five per cent of the works being completed.
In fact, the contract even started off on the wrong foot since the National Procurement Tender Administration Board (NPTAB) awarded the contract to BK from a total of five bids received, despite no details regarding the advertisement, duration for submission of bids or Tender Evaluation Report or Engineer’s Estimate being provided to the Audit Office. When given a chance to respond, all the Head of the budget agency would say was that the contract was terminated and the relevant documents would be provided.
“Physical verification carried out on the 31 August 2021 revealed that the works were incomplete, and the contractor has demobilised and vacated the site. The site was secured by personnel attached to a private security firm which was contracted by the Ministry,” the Audit Report said.
“However, the works completed at the time of the physical verification includes clearing, levelling and compacting of the site, construction of reinforced concrete foundations and columns for Blocks C, D, E, F, G and J.”
Even more disturbingly, the Auditor General revealed that BK International received an advance payment of $162 million in three parts, representing 19.6 per cent of the contract sum followed by one interim payment of $53.7 million.
According to the Auditor General, the advance payment guarantee and performance bond expired on December 31, 2020, and the advance payment has not been recovered. In the meantime, R Bassoo and Sons has now been tasked with completing the Yarrowkabra school project.
St Rose’s Secondary School
Another beleaguered contract was the $412.3 million contract to construct the St Rose’s Secondary School. According to the Auditor General, this particular contract was signed on August 8, 2018, with a timeline of 18 months for completion and a defects liability period of three months.
The Auditor General said that the contractor, Courtney Benn Contracting Services received two advance payments of $52.9 million and $28.9 million in 2018 and 2019 respectively, along with several interim payments.
“However, at the time of writing in September 2021 only $13.6 million or 16.6 per cent of the total advanced payment to the contractor had been recovered leaving an outstanding balance of $68.2 million still to be repaid by the contractor.”
Meanwhile, the Audit Office carried out physical verification of the site on September 2, 2021 and found that Courtney Benn had since demobilised and vacated the site. Indeed, the contract was yanked from Courtney Benn Contracting Services and subsequently awarded to Chinese company Shandong Degian International.
As recent as earlier this month, Education Minister Priya Manickchand, accompanied by Ministry officials, paid a visit to the school where it was revealed that work was proceeding on schedule.
Based on the 2020 Audit Report, the State has not had much luck recouping monies.
“The Advance Guarantee ?. 1 dated 6 August 2018 for the sum of $52.9 million and Advance Guarantee ?. 2 dated 23 December 2019 for the sum of $29.5 million had since been expired on 1 March 2020 and 31 March 2020 respectively before the date of termination of the contract on the 2 November 2020,” the Report stated.
“The performance bond valued $105.813 million was valid at the time of termination; however, at the time of reporting in September 2021, there was no evidence that the Ministry had levied on the bond that has since expired on the 1 March 2021.”
Both contractors in the Yarrowkabra School and St Rose’s fiasco were taken to court by the state, with Courtney Benn Contracting facing a $414 Million lawsuit and BK facing a $718 Million lawsuit for the incomplete St. Roses High school.
Another contract cited by the Auditor General was the one for $321.8 million for the construction of the Health Ministry’s main office building, which was also terminated by the Government. The contract was yanked from Chung’s Global Enterprises.
