Bloated JDIP contracts?

BY RHOMA TOMLINSON Sunday Observer writer editorial@jamaicaobserver.com

Sunday, June 12, 2011

THE Public Administration and Appropriations Committee (PAAC) of Parliament last week uncovered information last week suggesting that a contract for work being done on the Newport West and Port Bustamante roadways in Kingston, had increased by over $100 million after it was removed from open tender and placed on the Jamaica Development Infrastructure Programme (JDIP).

News of the multimillion-dollar increase in the costs associated with the contract came during the weekly sitting of the PAAC, after Committee Chair Dr Wykeham McNeill pointed to cost disparities while scrutinising a list of work orders for JDIP projects, submitted by Permanent Secretary in the Transport and Works Ministry, Dr Alywn Hayles.

The document listed the current costs for work on the Newport West and Port Bustamante roads as costing $311.9 million, a $130-million hike on a previous tender submitted by the same contractor for the same project in December 2009.

McNeill said he had received information about the December 2009 tender from a list of contracts on the Contractor General's website.

He said at the time, a bid, successfully tendered by a prominent local contractor for the same project, was valued at $183 million, "but the project was then taken off the Contractor General's website and turned over to the JDIP... it's now in the JDIP for $312 million. That's over a million dollars in excess for the same contract. How does that happen?" McNeill asked.

But Dr Hayles said based on information he received from the NWA, the cost disparity occurred because of the time lapse between the engineer's estimate in 2009, and the issuing of the work order in October 2010, one year later.

Hayles said at the time, the engineer's estimate was actually $259 million.

"Certain basic material prices, however, would have been increased," he said.

He said too, that in 2009, there was an "error" in the contractor's tender price.

"There was an error in one of the significant quantities in the tender... the NWA is saying now the tender price was $201 million." This was different from the $183 million quoted on the Contractor General's website.

It was not immediately clear, however, why the contractor had made the error in the quotation.

But McNeill refused to accept Hayles' explanation.

"I do not understand how you arrive at that. You give the same work to the same contractor at $100 and odd million more. That's not right Mr Hayles," the PAAC Chairman said.

Hayles countered by saying the Works Ministry "wasn't able to accommodate it (the project) in 2009," but admitted that had they gone ahead with the project then, it would have saved the country money.

The Transport and Works permanent secretary said the 2009 contract was never awarded by the National Works Agency which administers road works for the government.

But, McNeill said "that was exactly the problem".

"It was taken back and given to the JDIP... one of the problems we had here as a committee is that this process (under JDIP) avoids the competitive tender, it avoids the contractor general's office... and what we have here is a road given to the same contractor at an inflated cost."

Hayles admitted that there were a number of loopholes in the JDIP contract award process, and said his office would be pushing to employ an independent consultant to review work orders to be issued under the road work programme.

Meanwhile, PAAC member Othneil Lawrence said he was concerned that contractors may be deliberately submitting low-cost tenders for government projects, then pushing up their costs once they were awarded the contracts.

"If that's happening, we have to do something about it," the PAAC Chairman responded.

Over the last few weeks, McNeill has been expressing concern about road project costs sky-rocketing, after they were removed from the open tender process and placed under the JDIP, the five-year road repair and rehabilitation programme which started in December last year and is financed through an agreement brokered between the Chinese and Jamaican governments.

He has threatened to turn the contract information over to the Contractor General's office for investigation.

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Bloated JDIP contracts?