Govt clamping down on contractors with several companies

…public servants also on watchlist

In an effort to combat corruption in the public procurement processes, the Guyana Government is putting systems in place to combat collusion between family members to hog contracts.
This is according to Vice President Bharrat Jagdeo on Thursday. He noted that the Regional Administrators across Guyana would be asked to investigate and be knowledgeable of the companies’ owners before contracts are awarded.
In defending his reason behind this position, the VP explained “There are some contractors, who through their families, own multiple companies – wife, children, everybody – and they come and bid. You don’t know who they are because they are companies and then you end up with a single family putting in three or four different bids and often, they win contracts and the community knows who they are and we don’t.”
On this note, the regional administrations across the country have been instructed to pay keen attention to this issue and to cleanse the list of pre-qualified contractors to remove those who have multiple family-owned companies.
Moreover, Jagdeo added that government will also be asking contractors to declare their interests.

No prohibition
In fact, the vice president hinted that the same will have to be done by some public servants, who also participate in, and could possibly influence the bidding process.
“There is no prohibition, if you work for government, to bid in a contract but you should not do so in an entity that is connected to you. So, we’re enforcing that so that you can’t prejudice the bid process,” he noted.
Jagdeo said these issues were addressed during a recent outreach to Region Two (Pomeroon – Supenaam), at a meeting with contractors and employees of the regional administration.
Looking at the regional administration’s perspective, he said there needs to be full compliance with the Procurement Act and the related regulations. “Too often we have found departures from the standard bidding document that is a part of our legislation and because there is so many procuring entities around the country…at different levels…sometimes they can alter the bidding document which should be standard,” he pointed out.
As such, more training was recommended for procurement staff within the various regions to ensure they clearly understand the tendering process in order to enhance the system.
The Government is also working to blacklist contractors who are failing to complete projects that are in keeping with quality or in a timely manner.
“We had a tough talk with the contractors too that we intend to rigidly enforce the law,” the VP stated about his recent visit to the Pomeroon-Supenaam region.
The meetings hosted in Region Two will be replicated across the country to deal with procurement issues.

Training
“The Ministry of Finance will go across the country, ensuring that all the procuring authorities… are aware of this and that departures from established procedures would have consequences,” Jagdeo noted.
Following concerns raised over the award of contracts to selected contractors and the inability to meet project deadlines or build according to specifications, the Government embarked on a plan to pursue greater accountability within the procurement processes across all sectors. Among the initiatives announced was the establishment of a Contract Compliance Unit within the Ministry of Legal Affairs and other units within the various ministries to assess the performance of contractors.
Moreover, President Irfaan Ali at a press conference in June disclosed that approximately $3 billion in charges for liquidated damages have been instituted over delays in public projects across the country.
Liquidated damages refer to a provision allowing for the payment of a specified sum in the case of a breach of contract. Based on the value of the contracts, the percentage of the liquidated damage is calculated. This can range from 0.1 per cent up to 10 per cent of the contract sum.
According to President Ali, instructions have been given to charge the maximum value of liquidated damages from those delinquent contractors.
Guyana Times was told that while most state agencies have embarked on recovering liquidated damages, the Ministries of Public Works, Housing and Water, and Agriculture are the main entities with defaulting contractors.
In fact, the Public Works Ministry has issued letters to contractors on a whopping 365 projects that have been experiencing unjustified delays, seeking liquidated damages to the tune of $934.65 million.
This newspaper understands that Avinash Construction and Metal Works, which is executing the controversial $475 million Cemetery Road Expansion project is one of the defaulting companies that will have to pay this fee.
The multi-million project, which will see the two-lane carriageway being extended into four lanes, was initially expected to be completed since July 2023. However, those works are still ongoing.
Meanwhile, only recently, government moved to terminate the contract with Trinidadian company, Kalco Guyana Incorporated, which had abandoned its works on sections of the Conversation Tree Road Expansion Project.
Last month, Public Works Minister Juan Edghill disclosed that Kalco has since settled the outstanding mobilisation costs while government has paid the Trinidadian company for works done so far on the incomplete road.
Government has since retained S Jagmohan Construction and General Supplies Inc., which has already completed another section of the Conversation Tree Road, to finish the abandoned works.
However, as Government goes after these delinquent contractors, banks and insurance companies that issue performance bonds to contractors could find themselves facing the consequences for delays in public projects.
During a June 6 press conference, VP Jagdeo explained that as part of their contracts, contractors are required to put up a performance bond that the State can draw down on should they fail to complete their works on time or at all.
These performance bonds are often issued by commercial banks and insurance companies. As such, in addition to contractors, the Vice President is also putting these financial institutions on notice that they will not be “risk-free” since government intends to levy on these performance bonds.