Auditor General Dan Duguay said the award of a contract to develop, finance and construct a cruise ship berthing facility should, under the law, go through a tendering process with the Central Tenders Committee.
Mr. Duguay was responding to a statement made by Leader of Government Business McKeeva Bush last weekend indicating Cabinet could decide whether such a capital project went through the Central Tenders Committee Process.
‘I don’t think that’s true,’ Mr. Duguay said, who added that he had done research on the issue. He said Section 35 of the Public Management and Finance law and especially Section 37 of the PMFL Financial Regulation indicated, in his opinion, the need to put the financing and award of the project to build cruise ship berthing facilities through the Central Tenders Committee.
‘Those are the regulations that I understand are in force today and those are the regulations we will audit to until they change,’ he said. ‘I haven’t been told they changed any of the regulations and I’m sure I would have been informed.’
Mr. Duguay also responded to a question raised by Mr. Bush about why he didn’t announce an audit of the Memorandum of Understanding signed under the previous government with the Atlantic Star developers for a similar port development. That MOU did not go through Central Tenders.
‘A Memorandum of Understanding is exactly that,’ he said, noting that there was no contract signed so nothing had to be reviewed by the Central Tenders Committee.
Had that MOU led to a contract, Mr. Duguay said it should have gone through Central Tenders and that the Auditor General’s Office would have probably looked at tendering and construction of the project in due course in any event.
Former Minister of Tourism Charles Clifford said Tuesday it was always the intention to have the actual contract for the construction of the port project go through a Central Tenders Committee process.
‘What we signed with Atlantic Star was a Memorandum of Understanding to negotiate an agreement to develop the port facilities,’ Mr. Clifford said, adding that Atlantic Star was involved simply because it was the land owner of the property that would have been used to develop the new cargo port.
Mr. Clifford said the MOU only committed the government to negotiate with Atlantic Star to finance and develop the cruise and cargo facilities. He said it also allowed parallel discussions to take place with the cruise lines.
‘If we had completed the Environmental Impact Assessment and reached the point where we were going to proceed, the construction of the facilities would have been put out to tender,’ Mr. Clifford said.
Looking at the current situation, Mr. Clifford conceded that the government might have similar plans.
‘Part of the problem is we don’t know what they are thinking because there’s a lack of transparency,’ he said. ‘They very well may be going down the same path, but at this time we don’t know.
‘The way they’ve put it out there, it sounds as if they’re going to award a contract. If that’s the case, they’re already running afoul of the law.’
Mr. Clifford said there were circumstances under the PMFL Financial Regulations where capital projects wouldn’t have to go through Central Tenders.
‘But it would have to be in the context of a national emergency,’ he said. ‘Something like [the cruise berthing facility] certainly wouldn’t qualify for that.’
Mr. Duguay also believes that the port project wouldn’t qualify for the exemption from the Central Tenders process under Section 37 (3) of the PMFL Financial Regulation.
‘I think we understand what 37 (3) was meant to do, and that was do deal with exceptional circumstances like a hurricane,’ he said, adding that parts of the clause talk about entering a contract for the ‘restoration’ of the Islands.
He said if the government was building a dock to replace one that was destroyed in something like a hurricane, then the provision of 37(3) could apply. However, he said he didn’t think the provision applied to the building of a new dock and that the issuing of the Expression of Interest in itself seemed to argue against there being exceptional circumstances in this case.
Mr. Duguay acknowledged the government might argue that the poor economic situation represented exceptional circumstances.
‘I just don’t buy it at the end of the day.’
Last week, Mr. Duguay dismissed the claim by Mr. Bush that the port project didn’t need to go through Central Tenders because the government wasn’t paying any money.
Section 37(1) of the PMFL Financial Regulations states the government and its entities are required to offer for public tender any contract for the purchase of assets over $50,000.
‘The government is probably giving up something and… I would consider that purchasing an asset,’ Mr. Duguay said. ‘The bottom line is no one is just donating the work on the project.
‘In some sense, we’re going to be paying. Whether we purchase it through a reduction of revenue of port fees or some other way, the regulations would apply.’
Mr. Duguay also refuted claims by Mr. Bush that going through a Central Tendering process would delay the project a year.
‘My experience has been that it would take substantially less than that,’ he said. ‘I don’t believe that even if they started now it would take a year.’
Responding to Mr. Bush’s claims that he might not be acting alone in seeking to audit the tendering process, Mr. Duguay denied there was any hidden agenda in his actions.
‘I am acting alone,’ he said, saying he decides what audits his office does. ‘My only agenda is seeing the Cayman Islands gets value for money and ensuring people follow the rules of the land.’
Mr. Duguay said he was undeterred by Mr. Bush’s threat of being sued.
‘I view what I’m doing here as doing my job and I’m not concerned about getting sued for doing my job.’