– results in millions in overpayments to contractor
The Audit Office of Guyana has uncovered discrepancies whereby a contractor carrying out a project for the Guyana Defence Force (GDF) was overpaid after the project’s evaluators inflated certification documents to cover for the slow pace of work.
This is contained in Auditor General Deodat Sharma’s 2017 report. The contract in question was awarded by the National Procurement and Tender Administration Board (NPTAB) for the construction of a timber wharf approach and a floating raft at the GDF’s Coastal Battalion in New Amsterdam.
According to the report, the contract sum was $52.6 million, against an engineer’s estimate of $54.5 million. Signed on November 3, 2017, the works were supposed to be completed within six months of the contract signing.
However, when the Audit Office carried out a physical inspection of the project on August 29, 2018 (over nine months later), it was discovered that the GDF certified and paid a total of $17.8 million to the contractor for works that hadn’t even started.
“Valuation number one 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 $32.351 million or 61 per cent of the contract sum at the time of the physical verification,” the Auditor General stated.
According to the Auditor General, the contractor had already been given an advance payment of $15.4 million, 30 per cent of the contract sum, on November 30, 2017. The contractor then received another payment of $16.8 million on May 8, 2018.
The defects liability period of the contract, in which a contractor must rectify any mistakes out of his own pocket, is for three months. However, the Auditor General could not determine from payment vouchers exactly who certified the works and thus, was responsible for the overpayments.
“It is unclear if the advance payment was recovered at the time of reporting. In addition, it could not be determined from payment voucher examined who certified the works,” the audit report states.
The Auditor General found that the contract was paid to supply, pitch, point and then drive greenheart timber piles 65 feet long. They were also paid to provide and install greenheart capping beams, supply and compact white sand, install a galvanised metal gate to the entrance of the wharf and install solar lamps, among other things.
The report noted that none of these things were in place. But State Auditors did find the contractor on site. According to the Audit Office, the contractor was on site but only the clearing and earthworks on the approach to the wharf had commenced.
According to the Auditor General, this is contrary to what was paid for in valuation number one, which certified payments for the wharf, plumbing and electrical installations. To make matters worse, the Auditor General could find no trace of a performance bond or advance payment bond; crucial elements for ensuring contractors do not deviate from their contracts.
“The GDF engineer will monitor the ongoing works more closely to ensure the pace of work is increased, in keeping with the payments made,” the Audit Report stated as the GDF’s response to the findings. In its recommendations, the audit office urged the GDF to recover the overpayments and put systems in place to prevent reoccurrences.
Overpayments on contracts have long been a sore issue. It was found in the previous Auditor General’s report that overpayments on 98 contracts administered by various Ministries, departments and regions in 2016 amounted to $82.6 million.