The recent flap over the who, what and when of government’s bidding process on a US$185 million loan it needs to get through the 2010/11 budget year has likely gotten a bit confusing for many following the story.
The recent controversy involving the award of the loan, the bypassing of Cayman’s established bidding process through the Central Tenders Committee, and allegations regarding personal enrichment and government favours due to the award has led to an auditor general’s investigation and threats of legal action.
The brouhaha has also led to various proposals that would change the way government contracts are bid out.
The ideas include what has been a controversial proposal requiring all tenders for government contracts to be made public.
Cayman Islands Premier McKeeva Bush signalled earlier this month that his administration may change the Central Tenders Committee’s membership, following two high-profile controversies involving bids on government projects.
Bush’s comments came during debate on a private members motion filed by independent MLA Ezzard Miller, which sought government’s agreement on requiring all actions of the tenders committee to be done in public.
Miller also asked in his motion that all project bids be made public “at the time they are opened by the Central Tenders Committee”.
“I believe it’s time for government to open up the tendering process,” Miller says, adding that it was especially important “in this age of transparency and everybody wanting to make sure they have full knowledge of all and sundry that goes on in government”.
The premier indicated that government would consider Miller’s motion, but declined to make any promises since the government’s current bid process is undergoing a review by the auditor general’s office.
“I would support this motion, but I would like to…put in the word ‘consider’, so that the review will consider it,” Bush says.
Auditors began a review of the bidding process for the proposed, nationwide, public closed circuit television surveillance system more than a month ago.
While that review was quietly proceeding, a major controversy erupted over bids for US$185 million in borrowing government sought to fund on-going operations.
Premier Bush has admitted that he ignored recommendations of the Central Tenders Committee to select a joint bid of two locally operating banks for the financing package. Rather, Bush chose a New York based investment firm in private negotiations.
Bush says he did so because the agreement reached with Cohen and Company Ltd. was the best deal for the Cayman Islands.
“The fact is, the government of the country was elected to run the country,” Bush says. “Cabinet must be the final arbiter…not an appointed board.”
“We have agreed to the current process needs to be changed…there will be a whole new reworking of the membership,” the premier continued, adding that he hoped that “reworking” would occur before the auditor general’s review is completed in April.
Aside from the on-going disputes over the recent bids, Bush noted that total openness and transparency with regard to certain government bids was likely impossible.
Bush said it also might be difficult to get individuals to serve on various appointed boards and committees if meetings all had to be held in public.
The Observer on Sunday here attempts to set down, in as much detail as is available, every step taken from beginning to end of the bidding process for the US$185 million government loan.
Timeline:
24 June – Legislative Assembly approves Premier McKeeva Bush’s budget for the 2010/11 fiscal year. CI$155 million (US$185 million) in borrowings are approved as part of the spending plan.
9 July, 16 July – Treasury Department advertises for provision of financing on US$185 million. No advertisements sent to the local newspapers, as required.
28 July – Revised deadline for financing bid submissions; seven bids are opened and received. Another four financial institutions ask for an additional week to submit bids.
It was pointed out to Premier Bush on this date that no mention of the request for proposals was made in the newspapers for the government’s US$185 million financing.
24 August – Treasury advises that the previous bid process should be terminated to allow all interested bidders to make a proposal, if they wished. The Central Tenders Committee accepted the recommendation on the same day.
26 August – New tender advertising process begins. Premier Bush states that, in addition to the US$185 million financing, the new tender seeks liability management solutions for government’s entire public sector debt portfolio.
“This is one of the reasons to re-tender in the first place,” Bush told the Legislative Assembly on 3 November.
26 August, 3 September – ads placed in the Caymanian Compass do not reflect the “liability management solutions” portion of the bids. Nor do those proposals specifically appear in tender documents on the CTC website at the time.
9 September – Details of new bids are received from seven financial institutions. They are presented to a technical committee for review and subsequent report back to the tenders committee.
22 September – The Treasury Department’s technical committee presented its report and recommended a joint venture bid of two locally operating banks, Royal Bank of Canada and First Caribbean, as the bid winner for the financing.
It was revealed on 3 November in the Legislative Assembly that the technical committee chose the second lowest overall bid for the financing rate because “there were doubts…about whether the lowest could deliver the amount of financing that government needed in the time frame that government needed it”.
The lowest bid offered a 3.5 per cent interest rate on the loan, according to the premier.
The Central Tenders Committee initially rejects the second lowest bid from RBC and First Caribbean.
24 September – The lowest bidder withdraws its initial offer.
The same evening, the Central Tenders Committee indicated its willingness to accept the second lowest bid, after initially indicating members would not support that bid.
25 September – Premier Bush informs Financial Secretary Ken Jefferson that he did not consider the RBC-First Caribbean bid good value for money and that the bidding process for the financing should be abandoned.
The premier states that none of the bids had provided financing for Cayman Airways, as he requested. However, there is no indication in either the first or the second tender that the CI$19 million loan for CAL was ever part of the request for proposals.
Around this time, Premier Bush – while in New York City at a United Nations conference – contacts Cohen and Company, the eventual bid winner to see if they can provide financing arrangements.
27 September – After Bush stated that the bid process be dropped, the Central Tenders Committee indicated it had accepted the second lowest bid from RBC and First Caribbean.
28 September, 29 September – The previous lowest bidder asks for a schedule for when government needed the financing. They received it on 29 September. The low bidder again decides they could not provide the funding in the time frame set by the CTC.
“I was only informed of this after the fact and was simply told that the 3.5 per cent bidder could not provide the funding,” Bush said on 3 November. “It was subsequent to this that I learned some of the details.”
12 October – Premier asks RBC-First Caribbean if their bid might include CI$19 million loans for Cayman Airways. “I did not receive a positive response,” he said.
22 October – Senior civil servants are informed via a memo that government has received financing for its loan.
25 October – Public announcement that a successful bidder (Cohen and Company) has won the bids for the US$185 million financing arrangement. The website www.caycompass.com first reports the bid award and the subsequent bypass of the Central Tenders Committee in doing so.
27 October – Premier Bush makes a broadcast statement to the country, explaining his reasons for choosing Cohen and Company as the bid winner. Bush admits during the address that he ignored the bid process to get a better financial deal for the country.
29 October – Cayman Islands Auditor General Alastair Swarbrick announces his intention to review the entire government procurement process in a report due out by April 2011.
1 November – Opposition Leader Kurt Tibbetts gives a televised address questioning the legality of Bush’s decision to override the Central Tenders Committee and choose Cohen and Company.
3 November – Bush provides a more detailed statement about the financing arrangement to the Legislative Assembly. At this time, Bush states that he cannot reveal the specific terms of the loan being discussed for fear of prejudicing the negotiations.
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