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<TABLE cellSpacing=0 cellPadding=1 width="100%" border=0><TBODY><TR><TD><SPAN class=TopStory>Reviewing the contracts procurement process</SPAN>
<SPAN class=Subheadline></SPAN></TD></TR><TR><TD>Dennis Morrison
Sunday, August 06, 2006
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<P class=StoryText align=justify>Recently, public attention has been drawn to situations where contractors and consultants have been hired on government-owned or sponsored projects without complying with procurement procedures that have been established. The Whitehouse hotel project involving the UDC and NIBJ, two government entities, is the current case being discussed.<TABLE cellSpacing=0 cellPadding=5 width=70 align=left border=0><TBODY><TR><TD>
</TD></TR><TR><TD><SPAN class=Description>Dennis Morrison </SPAN></TD></TR></TBODY></TABLE><P class=StoryText align=justify>I agree that the fact of non-compliance with these procedures indicates that they need to be made mandatory and that there be penalties for breaches. But it is also important that penalties be carefully calibrated to match the severity of breaches if the public sector is to function at all. Thus, a review of the procurement process and the rules governing it, which have been in effect for a few years, is essential.<P class=StoryText align=justify>Every conscientious taxpayer and responsible citizen would accept that compliance with the procurement procedures is vital to ensuring transparency and accountability in the use of public resources. We would equally want to be assured that in applying these procedures we do not compromise timely decision-making on the part of the state.<P class=StoryText align=justify>This is particularly important where the state is involved in commercial operations on its own, or in public/private sector partnerships. In other words, transparency and accountability are vital to raising the quality of our governance; however, in striving to meet these ultimate objectives, we cannot ignore the central need for the bureaucracy to be efficient.<P class=StoryText align=justify>The government's procurement procedures involve several routes in arriving at contractual arrangements for acquiring goods and services. Public tender is the most important of these and the most talked about. But in overall terms, an even more important aspect for the public to understand is that the procedures specify that appropriate approvals be sought and received at each step of the procurement process.<P class=StoryText align=justify>It is where there are violations of this that penalties should be imposed. I suspect that a dispassionate review of the workings of the process will show that this is the real problem area, and not whether there is public tender or not.<TABLE cellSpacing=0 cellPadding=5 width=330 align=center border=0><TBODY><TR><TD>
</TD></TR><TR><TD><SPAN class=Description>A section of the Northcoast Highway. (Photo: Michael Gordon) </SPAN></TD></TR></TBODY></TABLE><P class=StoryText align=justify>While a public tender system will cut down on chicanery, it is also vital for us to understand that this system, which is what everyone seems to expect in every single case where government is procuring goods and services, does not guarantee the best prices. It also does not mean that the person selected will deliver the best performance.
There are so many examples, both here and in other countries, where bidders offering the best prices turn out later to be non-performers by not delivering on time or on the basis of the prices originally quoted.<P class=StoryText align=justify>The procurement procedures now in place require that the lowest tender be given preference, unless there is comp
<SPAN class=Subheadline></SPAN></TD></TR><TR><TD>Dennis Morrison
Sunday, August 06, 2006
</TD></TR></TBODY></TABLE>
<P class=StoryText align=justify>Recently, public attention has been drawn to situations where contractors and consultants have been hired on government-owned or sponsored projects without complying with procurement procedures that have been established. The Whitehouse hotel project involving the UDC and NIBJ, two government entities, is the current case being discussed.<TABLE cellSpacing=0 cellPadding=5 width=70 align=left border=0><TBODY><TR><TD>
</TD></TR><TR><TD><SPAN class=Description>Dennis Morrison </SPAN></TD></TR></TBODY></TABLE><P class=StoryText align=justify>I agree that the fact of non-compliance with these procedures indicates that they need to be made mandatory and that there be penalties for breaches. But it is also important that penalties be carefully calibrated to match the severity of breaches if the public sector is to function at all. Thus, a review of the procurement process and the rules governing it, which have been in effect for a few years, is essential.<P class=StoryText align=justify>Every conscientious taxpayer and responsible citizen would accept that compliance with the procurement procedures is vital to ensuring transparency and accountability in the use of public resources. We would equally want to be assured that in applying these procedures we do not compromise timely decision-making on the part of the state.<P class=StoryText align=justify>This is particularly important where the state is involved in commercial operations on its own, or in public/private sector partnerships. In other words, transparency and accountability are vital to raising the quality of our governance; however, in striving to meet these ultimate objectives, we cannot ignore the central need for the bureaucracy to be efficient.<P class=StoryText align=justify>The government's procurement procedures involve several routes in arriving at contractual arrangements for acquiring goods and services. Public tender is the most important of these and the most talked about. But in overall terms, an even more important aspect for the public to understand is that the procedures specify that appropriate approvals be sought and received at each step of the procurement process.<P class=StoryText align=justify>It is where there are violations of this that penalties should be imposed. I suspect that a dispassionate review of the workings of the process will show that this is the real problem area, and not whether there is public tender or not.<TABLE cellSpacing=0 cellPadding=5 width=330 align=center border=0><TBODY><TR><TD></TD></TR><TR><TD><SPAN class=Description>A section of the Northcoast Highway. (Photo: Michael Gordon) </SPAN></TD></TR></TBODY></TABLE><P class=StoryText align=justify>While a public tender system will cut down on chicanery, it is also vital for us to understand that this system, which is what everyone seems to expect in every single case where government is procuring goods and services, does not guarantee the best prices. It also does not mean that the person selected will deliver the best performance. There are so many examples, both here and in other countries, where bidders offering the best prices turn out later to be non-performers by not delivering on time or on the basis of the prices originally quoted.<P class=StoryText align=justify>The procurement procedures now in place require that the lowest tender be given preference, unless there is comp
</TD></TR><TR><TD><SPAN class=Description>Ken Chaplin</SPAN></TD></TR></TBODY></TABLE><P class=StoryText align=justify>Many government contractors are reportedly expressing concern over the approach and aggressive attitude of the new contractor-general, Greg Christie, especially in relation to the importance of tendering for road construction projects.<P class=StoryText align=justify>Some of these projects are considered the government's gravy train for contractors through the scheme of high cost overruns. But the contractor-general is insisting that taxpayers get value for money and that a close watch is to be kept on the implementation of contracts.<P class=StoryText align=justify>Some contractors aligned to the People's National Party and Government are said to be bawling about Christie's appointment, saying it was a case of the 'wrong man' put in the job. It was a mistake, one contractor who prefers to remain unnamed, told me bluntly.<P class=StoryText align=justify>On the other hand, many public service heads and private sector leaders have said that given the suspicion and corruption in the whole business of contracts and their implementation, Christie is the 'right man for the job' at this particular time. A colleague who knows Christie well told me that he is tough, determined, not afraid to confront people and is fiercely independent. He is the type of official that if anyone interferes or intervenes in his work, he will quit and say publicly why he did so.<P class=StoryText align=justify>In his report on the controversial Sandals Whitehouse hotel construction, Christie lashed out at the breaches of the government's procurement procedures, mainly by the Urban Development Corporation (UDC). Top public servants have expressed shock at Dennis Morrison's frontal attacks in his column in the Observer on aspects of Christie's report, especially relating to the need and importance of contractors tendering for projects.<P class=StoryText align=justify>The public servants were shocked because Morrison is chairman of two major public bodies - the Airports Authority and the Jamaica Tourist Board. He is also an economic adviser to the Government and a strong supporter of the ruling People's National Party. Christie appeared angry because Morrison questioned the legitimacy and logic of putting to tender certain projects in the construction of the Sandals Whitehouse hotel in the normal way.<P class=StoryText align=justify>Christie made a devastating response to Morrison. Said he: "As senior public officers such as Mr Morrison should know, the reasons for having these rules and procedures are quite simple and rudimentary. One is that public bodies and public officers, when they award government contracts, are spending the taxpayers' money - not their own. Another is to ensure that there is absolutely no place in the public sector procurement process for the subjective opinions or discretion of public officers, especially those who may be inclined to usurp the prescribed and mandatory contract award and tender process by summarily deeming it to be 'irrelevant' or 'unnecessary' whenever it suits them to do so."<P class=StoryText align=justify>He continued: "The bottom line is that public officers must follow the prescribed procurement rules. They must do so irrespective of whether they like them or not. If they do not comply, they should be held accountable. For what is at risk is not only the irretrievable loss of the trust that the public has reposed in its servants, but also the v
</TD></TR><TR><TD><SPAN class=Description>Dennis Morrison</SPAN></TD></TR></TBODY></TABLE><P class=StoryText align=justify>Statements made by representatives of Sandals/Gorstew on a public radio broadcast last week appeared to answer one of the questions I had raised in an article on July 30, 2006. This related to how practical it was for the contracts of service providers on the Whitehouse hotel project to have been terminated when ownership of the project changed.<P class=StoryText align=justify>According to these representatives, the contracts were actually terminated and the various consultants and contractors who had formerly been hired by the private sector developer were re-engaged by the new joint venture company.<P class=StoryText align=justify>This joint venture company, which eventually implemented the project, involved the former private sector developer working with two major State entities. On this basis, and assuming that the government procurement guidelines were in force at the time these contracts were being negotiated, contracting for these services ought to have been undertaken with the approval of the relevant authorities.<P class=StoryText align=justify>The remaining question, therefore, is: when did the procurement guidelines become applicable to the hireage of such services? The contractor-general's report seems to suggest that the guidelines became applicable after. This is a very important question that needs to be resolved.<P class=StoryText align=justify>As I have argued earlier, the board members of Newtown, both public and private sector, should have ensured that the transition from entirely private ownership to a private/public sector partnership was handled with due care. This would have involved consulting with the National Contracts Commission and consideration by Cabinet itself. In such a process, the issue of which contracts ought practically to have been put to tender would have been highlighted.<P class=StoryText align=justify>I am in no doubt, as I have stated before, that tendering of some of these contracts would have been regarded, and will still now be regarded, as impractical, given the proprietary nature of the services involved. This point must not be missed, even though we are angry about cost overruns related to waste and the burden they impose on taxpayers.<P class=StoryText align=justify>We await further examination of the contractor-general's report by Parliament, where it was tabled a few weeks ago, and answers to queries made by the leader of the opposition about certain findings of the report. One of these pertains to whether the switch from a Beaches to a Sandals concept involved additional costs.<P class=StoryText align=justify>The contractor-general had claimed that it did, but representatives of Gorstew rejected these claims, pointing out that the use of Beaches Negril as the reference by the contractor-general was wrong. According to them, the correct reference should have been Beaches Turks and Caicos.<P class=StoryText align=justify>My own view, having visited Beaches Negril and the Whitehouse hotel is that the layout of the two is completely different. It is, therefore, hard to see how the Whitehouse property could ever have been patterned off Beaches Negril. 
</TD></TR><TR><TD><SPAN class=Description>Vin Lawrence, former executive chairman of the UDC, which managed the project a</SPAN></TD></TR></TBODY></TABLE><P class=StoryText align=justify>THE forensic audit report on the contentious Sandals Whitehouse hotel project was far less complimentary to the state-run Urban Development Corporation (UDC) than the selective picture painted Monday by Information Minister Colin Campbell.<P class=StoryText align=justify>The already massive overrun on the project that was put at US$41 million has now been established at US$43.3 million, an additional US$2.3 million, and the auditors blasted the UDC, which managed the project, and its sub-contractor, Nevalco Consultants, as being primarily responsible for the excessive cost.<P class=StoryText align=justify>UDC and Nevalco failed to exercise proper control and to conform with the various protocols established for the execution of the project, adversely affecting "the various checks and balances consistent with good management and cost control", the audit found.<TABLE cellSpacing=0 cellPadding=5 width=135 align=right border=0><TBODY><TR><TD>
</TD></TR><TR><TD><SPAN class=Description>Alston Stewart, headed Nevalco Consultants, sub-contractor for the development </SPAN></TD></TR></TBODY></TABLE><P class=StoryText align=justify>Yesterday, one day after Campbell culled portions of the report to tell journalists that the project had given value for money, the audit report was tabled in Parliament, providing the complete picture of an idealistic project that went awfully wrong.<P class=StoryText align=justify>The report, commissioned by former Prime Minister P J Patterson, took 10 months to complete and cost the government $28 million. It came amidst heightening controversy over the Westmoreland-based hotel that was originally the dream of hotel magnate Gordon 'Butch' Stewart to drive development of the south coast, a still unspoilt stretch of lush splendour and virginal scenery.<P class=StoryText align=justify>But the dream was dashed when Stewart's Gorstew, one-third of the hotel partnership, with the UDC and the National Investment Bank of Jamaica (NIBJ), complained that his Sandals brand had been badly a injured because the hotel was completed later than scheduled and well below the quality visitors had come to associate with the name.<P class=StoryText align=justify>The audit team put much of the blame on the UDC, then led by Chairman Vin Lawrence and the Alston Stewart-led Nevalco.<P class=StoryText align=justify>It said the project manager and its sub-contractor had a responsibility to report project cost overruns to the board of the Ackendown Newtown Development Company (ANDCO) the joint venture company conceptualised in 2000 to develop the project - advise on how to reduce costs, and obtain the board's permission to proceed with the works but, "from all indications, this was not done and this was one of the main downfalls of the project".<P class=StoryText align=justify>Unfazed by the report, the UDC said in a statement yesterday that it had been "vindicated by the report of the Forensic Audit Team, as well as by the quality and viability of the final product".<P class=StoryText align=justify>But the auditors also slapped the ANDCO board, saying it "abrogated its responsibilities to
</TD></TR><TR><TD><SPAN class=Description>Mark Wignall</SPAN></TD></TR></TBODY></TABLE><P class=StoryText align=justify>Further revelations on the scandal surrounding the involvement of the UDC (Urban Development Corporation) with the Sandals Whitehouse project have begun to read like Alice in Wonderland. First, the forensic report, which tore into UDC and Nevalco itself, ate up a nice 'chunk of change' in the region of $28 million as reports have suggested.<P class=StoryText align=justify>At the very time that the forensic report has been tearing into UDC and the project management firm Nevalco (headed by Alston Stewart), the remnants of the UDC board under Dr Vin Lawrence remain in place and seem not unduly bothered that their once powerful and nationally influential chairman has resigned. It has not yet occurred to them that as trustees of the people's patrimony, in the days of the Lawrence-run board, they were mostly seen as 'rubber-stamps' to the directives of Dr Lawrence.
</TD></TR><TR><TD><SPAN class=Description>Geof Brown</SPAN></TD></TR></TBODY></TABLE><P class=StoryText align=justify>THE Forensic Audit Report should have brought some clear measure of resolution to the persisting scandal of the $43.3-million construction cost overrun at Sandals Whitehouse Hotel, bandied about for many months now. But there seems to be more confusion than resolution. One day the public hears that the hotel represented 'value for money'. The next day (literally) one leading newspaper steps back from that "vindication" it hailed the day before. Instead, it advised on its front page that the audit report "slams" the Urban Development Corporation (UDC) - previously under the chairmanship of Dr Vin Lawrence - for poor management contributing to the cost escalation. This newspaper also reported that the audit report "slams" the UDC. It turns out that the first run 'media-rosy' report was the result of what one leading daily called the "selective" version of the audit findings, as presented to the nation by Information Minister Senator Colin Campbell.<P class=StoryText align=justify>For the ordinary Joe, not to mention much of the general public, the question was: Which version of the Forensic Audit Report was correct? Well, they both were. The report did say the highly inflated cost of constructing the hotel nevertheless represented "value for money". But it was certainly disingenuous, if not deliberately misleading, to leave it largely at that, as the information minister appeared to have done. I did hear him on a morning talk show saying that he had not yet read all of the "bulky" document and he did concede that there were some "management deficits". That, however, was a far cry from the "slamming" and "blasting" of the UDC the media at large subsequently emphasised after journalists got a chance to take a closer look at the document.<P class=StoryText align=justify>As it turns out, the claim of Sandals Deputy Chairman Chris Zacca was pretty correct when he declared that the position of the Sandals partner in the tripartite development group was closer to the contractor-general's position in the latter's condemnation of the UDC's role in the scandal. For the audit report found that the board for the project knew of the cost overruns only one month before the hotel opened! This means that the UDC and its implementing companion, Nevalco failed to report what it should have until that last month, leaving the Sandals partner in the dark. In other words, it was a "Caesar reporting only to Caesar" situation. 
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