Gov’t focus on price led to bad scrap metal contract

Auditors hope new procurement policy will make bids easier to judge

A botched 2013 contract to clean up scrap metal at the George Town Landfill focused too much on price instead of the ability to do the job, according to a new report from the Office of the Auditor General.

Successive governments have tried to hire companies to remove the scrap metal, the bulk of which was deposited at the landfill after Hurricane Ivan in 2004. Government awarded a contract in 2013 to Cardinal D Ltd., expecting the project to take four to six months, according to the report. The project had not been finished a year and a half later. The auditor’s report notes, “It appears that Cardinal D has failed to perform on two separate scrap metal removal contracts. With regard to the Contract, they failed to deliver the minimum level of scrap metal removal despite being afforded two contract extensions.”

The Auditor General reviewed how the contract was awarded in a public interest report, not a full audit. Auditors looked at how the Department of Environmental Health graded the two companies that bid on the project, finding that the people on the tender committee used an inappropriate scoring method.

The auditors note in the report, “We were advised that the primary objective of the contract was to remove scrap metal from the Cayman Islands, yet the scoring methodology focused on price as opposed to the ability to execute.”

Responding to questions by email, Martin Ruben, with the Auditor General’s Office, said the officials awarding the bid did not have enough guidance to score the companies appropriately.

The Public Management Finance Law, Mr. Ruben said, “requires public officials to demonstrate that they acquire goods and services with due regard for value for money. Without the proper policies and guidance in place at the time this contract was signed, it was clearly not possible for the officials involved to demonstrate compliance with the Law.”

The auditors went through the same grading exercise for the two bidders as the original tender committee. The original panel gave Cardinal D the full 100 points in the evaluation, and 81 points to the other company, Island Builders. An independent consultant for the Auditor General gave Cardinal 70 points and Island Builders 100 points.

The difference in opinion came in the pricing and experience criteria. The auditors write that the original panel gave too much weight to price and overlooked experience, choosing the company with far less experience and a worse track record for completing similar projects.

This was the first report for new Auditor General Sue Winspear. In a statement released with the report, she said new procurement rules should make the tenders evaluations more reliable. “Recently, there have been some very positive developments that promote more effective procurement practices including the passage of new legislation and the creation of a central procurement office,” she said.

“This report identifies opportunities for better guidance to government officials involved in the acquisition of goods and services.”

Mr. Ruben echoed the auditor general’s sentiment: “The new procurement law, if implemented with the appropriate guidance and training, should help ensure that officials avoid these kinds of situations in the future.”

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