Security contracts not bid, signed

Audit reveals several areas of concern

Some $300,000 spent on security contracts by the Cayman Islands Department of Education Services between July 2010 and February 2011 was not put out to bid, according to an internal government audit just released this week.  

Moreover, auditors found there was no formal agreement in place for the services that the security firms were providing during those dates.  

“It will be difficult to enforce accountability between the two parties [referring to the department and the security services company] if there is no signed agreement detailing the terms and conditions of the services required,” the Internal Audit Unit report stated.  

The findings were part of an internal audit report that looked at issues dealing with bidding practices and facilities management within the Department of Education Services. The department received about $57.6 million to run the public school system in the Cayman Islands during the 2010/11 government financial year. Roughly one-quarter of that total budget – $14.8 million – was spent for maintenance and procurement services. 

The audit, which was completed in July 2012, was revealed following an open records request filed by the Caymanian Compass.  

Auditors analysed security services expenses and found that $308,005 was spent between 1 July, 2010, and 28 February, 2011, for the service. Nearly 75 per cent of that expense – $230,184 – was paid to one security company without any evidence that a contract was put out to tender or that any formal service agreement was in place.  

The review noted that it was past practice in the department to request that security companies provide quotes, with the lowest quote being selected.  

Section 37(1) of the Financial Regulations of Cayman’s Public Management and Finance Law state: “A prescribed entity, statutory authority or government company is required to offer for public tender, a) any contract for the purchase of supplies, services and assets over $50,000.”  

“It is against the government’s policy and value for money may not be assured when contracts for the procurement of goods and services are not tendered as required by the regulations,” auditors noted.  

Department of Education officials responded to the audit’s findings: “The tendering of security contracts has been identified as a key operational priority and will be started shortly after the beginning of the [current 2012/13 school year] as input from school staff is critical to the development of the tender documents.”  

The advertisement of the security services contract tenders was expected to be released in March 2013, according to department management.  



The internal audit review of the department’s facilities maintenance operations essentially found that no one was looking at utilities bills before they were paid.  

“Our review of the utilities expenses of the department from July 2010 to February 2011 did not identify any documentation to indicate that utilities were scrutinised and approved prior to payment,” the report noted. “The facilities manager advised that he was not aware that this is part of his duties and responsibilities and had assumed such monitoring was being done by the respective school principals or their designate.”  

This led to the department being essentially unaware when utilities expenses came in higher than expected when compared to the budget, auditors said.  

For instance, the department’s water bill at one unidentified school facility was $2,316 for the budgeted period compared to the projected $1,200 figure in the budget. Bills for one of the school’s fax machines were actually $612.89 for the period compared to a budgeted $432. 

“Although the negative variances noted above are not material in amount, the inadequacy of monitoring utilities expense against the approved budget may lead to undetected variances and thereby inability to take timely corrective action,” auditors said.  

The department said active monitoring of utility payments began at the start of the previous budget year [2011/12] and is continuing today.  

“All utility bills are being sent to all principals … for review and approval,” the management response stated. 


  1. If the major security firm in Cayman had not had a huge hand in writing the Private Security Law itself, maybe this might not be the case.

    And the major owner of the other main security firm was not a confirmed supporter of the UDP party…again, this might not be the case.

    Almost a 1/4 million dollars in untendered, unsigned contracts for security services is a sweet deal…if one can get it.

    Quashing 1/2 million dollars of security training contracts in 2008 because there was a possibility that neither of these companies would get it because they simply were not qualified was not so sweet a deal…

    And neither was the RCIPS keeping the training bids and portfolios that were supposedly to be put out to tender…but never were.

    Pity I didn’t take out copyright patents before submitting the best of the lot.

    The auditor general in Cayman truly has his work cut out for him…

    And I wish him all the luck in the world.

    He is certainly going to need it.

  2. This the same department that under their control the cost of the school in Frank Sound went from 56M with Tom Jones to 122M under their direct control.
    At the frank sound school this department awarded labour only contracts for work up to 50K to contractors if they had a TB licence without defined work packages – I wonder how they going to explain that to the Audit department!!!!

    If the Educational department was a private business then all the senior management would be sacked. But because this government the budget just goes up to cover up these cock ups and we the private sector pay more tax.While the government’s legal HR departments bury their heads in the sand. I think it is time that some of these public servant’s did some jail time for breaking the law.

Comments are closed.