Ensure performance bonds in place – MP warns procuring entities

The Parliamentary Opposition is warning Government entities of the importance of ensuring a performance bond is in place when entering into a contract with any contractor that would see advances being paid.
This advice was specifically given by Opposition Parliamentarian Juan Edghill, who is also a member of the Public Accounts Committee (PAC). Over the past few months, a number of accounting officers were asked by the committee to account for fiscal infractions when procuring goods and services.
It has been noted that, in some cases, Government has had difficulty recouping losses because of non-existent bonds.

“Any contract that is signed between a budget agency and a contractor, where (sums of money) are given in advance before the supply of the goods or the service or the performance of the contract; whether it is civil works, that money that was paid must be covered by a bond,” Edghill warned during a recent interview with this publication.
“So if the service is not provided, you could draw from the bond. There must be security in the form of a bond. So it’s almost handing the people the money and what you do with it you do with it,” The parliamentarian added.
Edghill decried the existence of the practice, and noted that more stringent measures are needed to prevent their repeat. The Audit Office of Guyana is expected to present the AG 2016 Report in a matter of months.
The PAC, which also has the task of preparing its own report based on the AG’s 2015 findings, has been the scene of turmoil for the past few months, with some of these accounting officers having to be cautioned and evicted from the Parliament Chambers for being untruthful with the Committee.
Performance bonds
A poignant case of inadequate or non-existent security bonds for contract works is the East Coast Demerara road project. The project commenced in 2011 and spanned Better Hope to Belfield, with the civil works split into seven lots.
It was intended to bring a number of benefits for motorists using the road, including reducing congestion. Over $2.7B have been expended on this project.
Courtney Benn Contracting Services had been assigned to do works on Lot Three: from La Bonne Intention to Beterverwagting, with the contract sum being $349M. Compustruct, on the other hand, was assigned Lot Four of the highway improvement programme, ranging from Beterverwagting to Triumph. The cost for that lot was $322.3M.
According to the Auditor General’s Report, both were granted time extensions up to June 17, 2015. By September 18, 2015, the auditor observed, Lot Three was 80 percent complete, while Lot Four was halfway completed.
The Auditor had noted that advance payments of $120.6M for Lot Three and $132.7M for Lot Four were not recovered.
The auditor had also stated that Compustruct submitted only one advance bond, while receiving three advance payments. Compustruct’s performance bond expired on December 31, 2014. In the case of Courtney Benn, the company’s bonds also expired in 2014.
In February 2017, however, Courtney Benn denied reports that his contract was terminated because he had not fulfilled his contractual obligations. In fact, Benn reportedly stated that his work was completed, as the roadway was widened, drains dug, and sheet pilings erected.
The now Ministry of Public Infrastructure is in the process of collecting payments as restitution.