Audit Office probing contract award for crusher run, stones – Public Works Ministry

…says high demand led to open tender, single sourcing to regulate supply, prices

In a commitment to ensuring value for money, transparency and accountability, the Guyana Government has disclosed that the Audit Office is currently examining contracts awarded through open tendering as well as single sourcing processes to regulate the supply of aggregates to meet growing demands.
This was revealed in a recent statement issued by the Public Works Ministry, which explained that the management of the aggregates is being handled by a team using peer reviewed standard operating procedures and supported by substantial laboratory testing coupled with intermittent audits, both by internal and external parties.
“As a matter of fact, an audit is currently ongoing by the Office of the Auditor General of aggregate contracts and their implementation to ensure that the Ministry of Public Works is fully compliant with all of the requirements of the Laws of Guyana,” the missive detailed.
It was pointed out that due to the unprecedented development in Guyana, there was a tremendous demand on the local aggregate (crusher run and stone) supply which saw prices, in some places increasing by 100 per cent.
Upon realising that the local market could not service increasing demands for the materials coupled with price hikes, the Public Works Ministry in November 2022, developed short- and medium-term solutions for aggregates.
At the time, the ministry’s Works Services Group (WSG) Department had estimated demand for aggregates would grow from 1,337,000 tonnes in 2022 to 2,521,000 tonnes the following year and a further 3,220,000 in 2024.
To help support the projected and experienced demand, the ministry went out to public tender in November 2022 for the Supply of Materials: Lot 1 – 200,000 Tons Grade ‘A’ Crusher Run, and Lot 2 – 100,000 Tons ¾” Mins Stone (NPTAB # 167/2022/31). This process yielded a participation rate of eight bidders and was awarded at a negotiated price of G$9,000 per tonne for 200,000 tonnes. However, the ministry said that had still resulted in a deficit of over 1,100,000 tonnes.
During the period while that public tender was ongoing, the ministry said there was much outcry in the construction and associated sectors countrywide of the massively high prices for aggregates.
“This drove up the cost of construction for both the Government, Private Sector and Residential Construction. In December 2022, while the procurement was being formalised for the Open Tendering Exercise, the aggregate shortage was becoming even more exacerbated,” it noted.
This led to Government engaging eight other suppliers for much lower-value contracts using the single source method of procurement as catered for in the Procurement Act of Guyana.
According to the Public Work Ministry, these suppliers were all vetted, samples of their aggregates tested and rates agreed upon to be in keeping with fair market value. As a result, approximately 985,000 tonnes of aggregates were made available and that sought to cater for the demands in regions Two, Three, Four and Six – all of which had extensive projects being executed.
“Government’s initiative on this matter through the servicing of these contracts resulted in a swift and dramatic decrease in prices across the coast – in many cases from G$16,000 per ton to the price of $11,500 per ton – a nearly 30 per cent decrease and normalising the market,” the ministry explained.
It added that while the market started to respond during that time, new quarries started to produce aggregates, more barging services was made available and importation procedures became more streamlined, hence, the private sector suppliers became more efficient and therefore cheaper.
With the normalised price and the projected 2,500,000 tons of demand in 2023, however, Government still sought to maintain its position within the aggregate market to guard against any future unwarranted price increases.
As a result, in March last year, the Government went ahead with another Public Tendering exercise for the Procurement of Aggregates (NPTAB # 41/2023/31) in which 12 bidders participated. However, contracts were awarded to three bidders at approximately $10,750 to $12,000 per tonne for Crusher Run and $12,000 to $12,500 for ¾” and ½” aggregates for an overall total of 400,000 tonnes of aggregates.
Additionally, Government also engaged in six other contractors using Single Source Method of Procurement in accordance with the Procurement Act of Guyana for the supply of just over 485,000 tonnes to the tune of US$50 per tonne.
The Public Works Ministry said this intervention effectively resulted in approximately 35 per cent of the country’s aggregate requirements being catered for while leaving sufficient space in the private sector to allow for maintained operation and growth. (G8)