Questions linger about Biwater contract

We are disappointed that Governor Boyd McCleary decided against calling an inquiry

into government’s relationship with Biwater, but glad that he has committed to closely monitoring the project to ensure that it is managed properly.

As this newspaper argued shortly after the Biwater agreement was announced in February 2010, granting a no-bid contract for such a major project was unconscionable. And events in recent months have raised questions about whether the deal is in the territory’s best interest:

• Members of the public have protested loudly, petitioning the governor for an inquiry and marching on the Central Administration Building.

• The opposition has called for an inquiry into the government’s relationship with Biwater — a call guardedly supported by Education and Culture Minister Andrew Fahie, who added reasonably that the investigation should also include past water contracts under the former government.

• The rival company Ocean Conversion-BVI, which currently supplies water to the territory, has protested that the contract will disenfranchise its investors, many of whom are Virgin Islanders and belongers.

• News has surfaced that the BVI Electricity Corporation initiated the purchase of a generator through Biwater at the end of July 2009, about seven months before the water-and-sewerage contract was signed.

• Documents have surfaced from United States courts that suggest that Biwater may be facing financial difficulties.

• The Foreign and Commonwealth Office has warned that the Biwater contract represents a contingent liability for the territory, but this information was not included in this year’s budget.

Now, the public wants answers. Unfortunately, clear information on the Biwater agreement and preceding negotiations has been difficult to come by, with officials from government and Biwater alike remaining tight-lipped.

Mr. McCleary’s response to the public will not put these issues to rest.

While the governor concedes that a tendering process would have been preferable to a no-bid contract, he also points out that past water production contracts were granted without tendering. This fact is an indictment of the current and former governments, but it does not make no-bid contracts right. On the contrary, the sheer magnitude of the water-and-sewerage project makes the government’s failure to tender it that much worse.

The governor also points out that Baker Tilly — one of three independent experts hired by government to help negotiate the contract — found that the Biwater agreement will significantly reduce the cost of potable water. This may be so, and it is certainly a strong argument for granting the contract. But OC-BVI has claimed that it can offer a cheaper package, and the absence of a transparent tender process means that the public won’t know whether OC-BVI or another company could have provided a better deal.

Still, in spite of these unanswered questions, we are glad that Mr. McCleary has committed to monitoring the contract carefully with the assistance of the auditor general. We trust that he will keep his word. We hope, too, that he will make the auditor general’s quarterly reports public, so that taxpayers can keep tabs on how their money is being spent. Considering the delays facing other major capital projects, such steps will be necessary to ensure that the contract is properly managed.

But the care shouldn’t stop with the Biwater project. Government also has announced plans for $45 million in related water-and-sewerage works, which officials said would largely be completed by petty contractors. Apparently, this work is a necessary complement to the Biwater project. The governor and the government should work together to ensure that it, too, will be properly managed.

There is one potential benefit to the governor’s decision: Considering that the recent stamp duty inquiry wasn’t completed until almost three years after it first was announced, a Biwater inquiry may have further delayed the project — which already has been delayed for more than a year for reasons that haven’t been properly explained to the public.

Now, presumably, the territory can begin to focus on fixing its water-and-sewerage woes, which grow worse every day.

Full disclosure: Beacon Publisher Russell Harrigan has an interest in OC-BVI.