Contract system needs reform
Government should thoroughly reform its system of awarding contracts, which currently enables public money to be spent without sufficient accountability.
Auditor general’s reports recently tabled in the House of Assembly cover the years 2007 to 2009, but they describe detrimental practices that have been ongoing for at least a decade, if not much longer.
For example, the reports found that multiple petty contracts were often awarded in situations that called for a major contract. This practice discourages accountability because petty contracts, which are less than $100,000, are not required to be tendered or made public.
Though proponents argue that the existing system helps Virgin Islands contractors share work and develop skills, “the result is frequently work that is of inconsistent quality or engagement of individuals who are not sufficiently qualified or experienced to perform the contract,” according to the two most recent audit reports.
Moreover, a single contractor sometimes was awarded multiple parts of a split contract, which together exceeded the major-contract threshold. This practice, the reports add, “is particularly susceptible to cronyism, nepotism [and] favouritism, and has to a large extent become heavily politicised.”
These problems are exacerbated because no formal competitive bidding is required, and “the works are now divided and costed in the budget by district,” according to the reports. The auditor general also noted that public funds commonly were used improperly to develop private property.
The negative results of this flawed system are all too clear in a territory where major projects are routinely botched or delayed. To understand the magnitude of the issue, one need only consider successive governments’ failure to meaningfully address Tortola’s sewage problems for more than a decade in spite of handing out contracts worth millions of dollars.
To help address such issues, the auditor general recommends better regulating and monitoring petty contracts so that the government will receive better value for money.
To that end, a good first step might be to revisit a recommendation made in the chief auditor’s 2001 report, which notes that the Ministry of Finance drafted guidelines for administering petty contracts in 1999 but they were never advanced for implementation. Such guidelines, which have yet to be established, are needed now more than ever. We would add, too, that all petty contracts should be public.
However, even if the contract system is reformed, leaders will also need to make better decisions. We were shocked to learn from the Audit Office that in 2010, only nine of 38 major contracts went to bid. Though Cabinet has the right to waive the tender process if necessary, this ration suggests that Cabinet abused the privilege mightily that year. In the future, all major contracts should be tendered unless a good reason for doing otherwise is publicly stated.
The new government, which came to office promising transparency and accountability, should address these matters immediately. The reform process should start from the bottom up, and it should be carried out in keeping with international best practice.