JAMAICA’S Auditor General Pamela Munroe-Ellis has rapped two state agencies over the controversial Jamaica Development Infrastructure Programme (JDIP) which she has concluded is shrouded in secrecy.

The auditor general said that the matter undermines the Government’s original intention for the project.

The Government through the Road Maintenance Fund (RMF), and the Export-Import (EXIM) Bank of China entered into the US$400-million loan agreement in August 2009 to finance the improvement and rehabilitation of the island’s road network under JDIP, the single largest road improvement exercise undertaken by the GoJ in history.

However, the auditor general, making public the findings after a special audit requested by the People’s National Party in a report laid in Parliament on Tuesday, said that “the Ministry of Transport and Works, together with the National Works Agency and the Road Maintenance Fund, which has the responsibility for the implementation of the JDIP, has not executed the programme in a transparent manner.

“This is evidenced by inadequate capital project planning, monitoring and record keeping. The deficiencies highlighted in this report threaten the Government’s objective to achieve its goal to improve the country’s road infrastructure under the Preferential Buyers Credit Facility with the Chinese EXIM Bank,” Munroe-Ellis said.

The auditor general said that the transport ministry and the NWA in executing the programme of works under the JDIP and subsequent similar programmes, should seriously consider, for implementation, the recommendations contained within her report to redeem themselves.

In looking at the contractor and sub-contractor selection for the project, Munroe-Ellis said that while the loan agreement application for the Preferential Buyer’s Credit facility with the China EXIM Bank allowed for the engagement of a Chinese contractor by competitive tender, the ministry had opted to utilise the sole source procurement methodology in awarding the contract to China Harbour Engineering Company (CHEC). She said that “this may have deprived the Government of the ability to achieve value for money and maintain transparency and fairness in the process.

“We observed that CHEC sub-contracted works valued at J$12.3 billion, as at July 2011, to 15 NCC (National Contracts Commission) registered contractors. There was no contractual relationship between the ministry, the NWA and the sub-contractors. However, there was an agreement between the NWA and CHEC to select sub-contractors from Grade 1 contractors on the NCC list in the category of General Road Works. However, we observed that grades two and three contractors also received sub-contracts from CHEC,” the auditor general’s report said.

According to the auditor general, “the absence of adequate and appropriate records limited the scope of the audit in assessing the transparency of the MTW/NWA selection process for JDIP projects”.

In another revelation, Munroe-Ellis said that, contrary to the provisions of the GoJ procurement guidelines, the NWA used the sole source method to award a contract to CHEC for US$1.2 million, approximately J$102 million, to refurbish its corporate offices without the required approval of the NCC.

“The NWA did not determine if the option of sole source would earn or deny the entity any financial and qualitative gains, which could be garnered by using the competitive tender method. The required contractor’s levy of approximately US$24,000 or J$2,040,000.00 was not deducted and remitted to Tax Administration of Jamaica in accordance with Sections 3 and and 4 of the Contractors Levy Act,” she said.

In addition the NWA, Munroe Ellis said, did not provide documents to inform the audit of the negotiation of individual contract prices.

“Consequently, we were unable to assess the transparency of the process. Further, the NWA failed to provide 19 of the 25 engineer’s estimates we requested to determine whether the contract prices were fair and reasonable,” she added.

In the meantime, the special audit also found that the NWA’s quality assurance monitoring activities of JDIP projects failed to meet its Key Performance Indicators (KPIs).

“For example, the NWA did not monitor 25 of the 77 active projects during the quarter January to March 2011, contrary to its Key Performance Indicators. Further, the NWA failed to provide the related quality control plan for the Christiana Development Road. In addition, there was no evidence that the NWA conducted the required reviews and provided the necessary comments to the contractor for seven of the 11 quality control plans received,” the report said.

The auditor general went on to note that poor planning of the Christiana Development Road Project resulted in frequent changes in the design alignment and undue delays in implementation.

It also said that contrary to Cabinet’s instruction, it was found that the Road Maintenance Fund used JDIP funds to acquire lands for JDIP projects instead of the Government’s 2011-12 budget.

“We observed that the NWA, in two letters dated May 3, and July 4, 2011, informed CHEC to arrange payments, as a matter of urgency, to four landowners for the sum of J$8.2 million. The aggregate appraised value for lands required for the road construction amounts to J$78.9 million,” the report said.

Meanwhile, the auditor general said that the “RMF was unable to identify works amounting to J$23.2 million, which the NWA certified as being satisfactorily completed”.

In her recommendations, Munroe- Ellis said that the ministry “must be mindful of its fiduciary responsibility to ensure that Government and by extension taxpayers obtain value for every dollar spent.

“Going forward, where sub-contractors are required, the ministry should consider including as a condition of the contract the requirement for the employment of only NCC registered contractors, as sub-contractors, which will ensure the engagement of qualified and competent sub-contractors,” she said.

Munroe-Ellis also said that the ministry or the NWA should immediately implement a formal system for the negotiation of contract prices for all remaining JDIP projects.

She added that the NWA must ensure full compliance with the Contractors Levy Act and instructed the agency to recover from CHEC, and remit to Tax Administration of Jamaica the US$24,000 in relation to the refurbishing of its corporate offices.

Yesterday, Transport and Works Minister Lester ‘Mike’ Henry, in a statement to the media, said he was committed to providing a prompt response to the Auditor General’s queries.

Henry said he has mandated quick responses from the permanent secretary in the ministry and the chief executive officer of the National Works Agency to the AG’s queries.

“I should be in a position to respond to the matters which were raised in Parliament yesterday (Tuesday), which had not been brought to my attention before, as should reasonably be expected,” Henry said.