The Ministry of Education and Culture, led by Minister Myron Walwyn, broke the law when constructing the incomplete perimeter wall around Elmore Stoutt High School in 2014 and 2015, overspending and ultimately failing to obtain good value for taxpayers’ money, according to the Office of the Auditor General.
The results of Auditor General Sonia Webster’s investigation into the project surfaced this month when Mr. Walwyn (R-at large) lambasted her methods in a fiery press conference that received significant media attention.
The minister provided news outlets with a draft audit report from July which was sent to his ministry for review, as well as the subsequent version of the document that appears to have been finalised in August.
He argued that the lack of major disparities between the two reports demonstrated that Ms. Webster’s office failed to listen to his ministry’s side of the story.
“Absolutely nothing we responded to was taken into account in the final report,” he said at the Oct. 9 press conference, to which the Beacon wasn’t invited.
There are in fact some differences between the two documents, however, and some of his ministry’s responses to the draft failed to address the auditor general’s assertions. In some cases, MEC officials’ remarks also included apparently misleading information that disregarded the territory’s laws or justified sidestepping rules by arguing that other ministries do the same.
Ms. Webster stood by her report and defended her decision not to make many changes based on the ministry’s comments.
“We only change reports for factual errors,” she explained. “We don’t change for excuses.”
Unlawful work orders
Ms. Webster pointed out in her draft report that the Public Finance Management Regulations prohibit government from issuing more than one work order — an assignment worth less than $10,000 that doesn’t require a specific contract — per job.
Mr. Walwyn’s ministry issued more than 70 of them for the incomplete ESHS wall. In their response to that part of the report, MEC officials — who repeatedly cited the urgency of the project — claimed that Cabinet had “waived the tender process, and approval was given to use the petty contract and work order process for the works.”
This account appears to be partly false, however, according to Ms. Webster’s subsequent August report, which noted that the Cabinet waiver obtained for the project permitted petty contracts but not multiple work orders.
Petty contracts are fundamentally different agreements that require more from contractors, including proof of a trade licence and good-standing certificates from both Inland Revenue and the Social Security Board. Though untendered, petty contracts are designed to have more safeguards than work orders to ensure that government gets good value for money.
The Beacon obtained a draft of the Cabinet paper submitted to seek the tender-process waiver for the wall project, and it also appears to confirm Ms. Webster’s account: The document — submitted to Cabinet by Premier Dr. Orlando Smith in early 2015 — requests approval to utilise petty contracts, not work orders.
Asked last week whether his ministry’s subsequent mass issuance of work orders contravened the Public Finance Management Regulations, Mr. Walwyn initially declined to comment. About an hour later, however, he took a different tack from his ministry’s audit responses.
“The way it is interpreted from my knowledge is that you cannot give two work orders on the same job to the same person so as to avoid the [petty] contract being done,” he wrote in a message to the Beacon, apparently implying that giving multiple work orders to different contractors working on the same project is permitted.
This interpretation, however, does not appear to be supported by the law.
Section 189(2) of the regulations reads in full, “Two or more works orders shall not be issued for the same works or services.” No mention is made of that restriction applying only to work orders issued to the same person.
Shown that section of the law, Mr. Walwyn suggested that this reporter ask officials in other ministries for their interpretations.
“I think you should really call perhaps the Ministry of Communications and Works and ask a question,” he wrote.
The minister also shifted responsibility away from himself.
“The interpretation is not mine,” he wrote. “Ministers don’t handle these things directly, contrary to public views. The finance officers, etc., are the ones that handle the technical parts of projects. I believe my interpretation is right because if it wasn’t I don’t think the Treasury would have issued a cheque.”
Ms. Webster, however, told the Beacon last week that it’s not the Treasury’s responsibility to ensure a ministry’s compliance with the law, and Treasury Department officials could not be reached for comment.
She also said that Mr. Walwyn’s “interpretation” of the Public Finance Management Regulations is incorrect.
“Finance regulations tend to be specific,” she explained. “There’s no room to interpret [Section 189 (2)] otherwise. Multiple work orders, if they occur, are to be treated as irregular.”
Even if Mr. Walwyn’s interpretation were correct, however, the ESHS wall project still appears to be in violation: According to contractor lists the minister provided to the Beacon, there are various instances where the same contractor was issued multiple work orders for a total value in significant excess of $10,000.
MEC Permanent Secretary Dr. Marcia Potter could not be reached for comment.
Lack of MF involvement
In addition to arguing that the MEC didn’t follow the work order regulations, Ms. Webster also identified a host of other issues associated with the ESHS wall project.
“Failure to involve pertinent government agencies eliminated checks that may have identified over-costing on the bill of quantities and resulted in more efficient and economical execution,” she wrote.
The draft Cabinet paper obtained by the Beacon indicates that the Ministry of Finance’s “Project Support Unit” was supposed to assist the MEC with managing the project. It didn’t, according to the audit.
The auditor general also stated that regulations required the MEC to utilise a list of prequalified contractors provided by the Ministry of Finance. MEC officials did not do this either, instead relying on selections made directly by Mr. Walwyn, according to the report.
In an interview with the Beacon in July, the minister confirmed that he selected contractors himself using a list kept by his ministry.
In their response to the draft audit report, MEC officials defended this practice as normal.
“Contractors are normally chosen by the sitting minister in each ministry and not by the Ministry of Finance,” they wrote.
They did not, however, address the legal obligation mentioned by Ms. Webster, section 181 of the Public Finance Management Regulations, which requires untendered works to be contracted to someone on the Finance Ministry’s list of pre-approved contractors.
“The subjective manner with which contractors were selected and assigned introduces issues of inappropriate political influence into the procurement process,” Ms. Webster wrote in her final report. “No evidence was presented to show that this was open, impartial, on merit or in keeping with the Public Finance Management Regulations.”
The great majority of the project’s 15 petty contracts and 70-plus work orders were issued within the three-month period before the 2015 general elections. In an interview with the Beacon in July, however, Mr. Walwyn adamantly denied being motivated by any interest in influencing voters.
Value for money?
The murky selection method also has other consequences beyond just potential politicisation, according to the auditor general.
“This process is contrary to best practices and contributes to a culture where contractors expect gratuitous public contracts from political representatives without due regard to fairness, transparency and proficiency in the selection process,” Ms. Webster wrote in the August report. “It also compromises the government’s ability to achieve fair value on money spent, both in terms of the monetary cost to the public and the quality of the work rendered.”
Mr. Walwyn has readily admitted that splitting up the contracts increased the price of the project, which his ministry initially estimated would cost about $828,000. MEC officials now expect the wall to cost a total of $1.166 million when complete.
The auditor general, however, believes the cost has ballooned even higher. While Mr. Walwyn claims that about $915,000 has been spent on the wall “with all things included to date,” Ms. Webster alleged that the number is actually about $985,000, and she noted that it climbs to more than $1.08 million if the calculations include the cost of a 2014 section built before the tender process was waived.
The ministry estimates the wall will cost more than $250,000 to finish, which would bring the project’s total cost — based on the audit report’s current expenditure estimates — to more than $1.33 million.
Mr. Walwyn did not respond to requests for comment about the difference in expenditure estimates. Ms. Webster, however, vouched for her office’s figure, which she said was cross-referenced with a record of payments made by the Treasury.
Costing
The audit also pointed to problems with the wall’s costing that appear to have driven up the price: Similar reinforced block wall projects completed by the Public Works Department in 2015 used construction rates that were less than half the rates paid for the ESHS project, according to the report.
In comments submitted to the auditor, Steve Augustine, the perimeter wall’s project manager, attributed the project’s high cost to varying elevation within the school’s campus.
The wall needed to be eight feet high all the way around the exterior, he explained, but that often meant it was actually a taller wall when standing inside the campus because the campus grounds are a few feet lower than the exterior property in certain locations.
Mr. Augustine — who also defended his work during Mr. Walwyn’s Oct. 9 press conference — also claimed that the wall has an atypical footing that increased the cost relative to other wall projects.
To dispute the costing figures generated by the auditor, Mr. Walwyn commissioned an “independent” valuation of the project from BCQS International. That report, which the minister said he funded himself, valued the unfinished wall at nearly $900,000.
However, BCQS qualified that its assessment relied on measurements from Mr. Augustine, who said the wall’s average height ended up at nine feet instead of eight.
“Actual field measurements would have to be taken by BCQS to determine the accuracy of this height,” the report notes.
Despite the increased cost, the minister vouched for the benefits offered by the petty contracts and the quality of work that was completed.
“The petty contract system has been a system that has served the country well,” Mr. Walwyn said in July. “Of course, there have been some areas where it needs to be improved, but it’s a good way to provide an economic stimulus in the community and a lot of contractors have been born out of that very system.”
His defense of that practice comes despite consistent international criticism of the territory’s procurement loopholes.
Caribbean Development Bank officials, for example, have decried the government’s tendency to split certain big projects up into a flurry of smaller, untendered contracts.
“While such a strategy will ensure that local contractors participate, it limits their technical competence and development potential to become larger and more successful,” bank officials stated in a 2016 report on the VI’s procurement system.
The report – commissioned by government after a Public Accounts Committee report alleged improper tendering practices for the Tortola Pier Park – added that contract splitting can also “frequently result in inconsistent quality of the final product.”
Recommendations
At the conclusion of her audit report, Ms. Webster recommended that a single contractor complete all of the remaining work on the ESHS perimeter wall project. She also said that individuals responsible for the “over costing and loss of economy” on the project should be held accountable.
As a general suggestion, the auditor recommended that government strengthen and utilise the Public Works Department to a greater capacity. Still, she noted that the department was already well enough equipped to have designed, planned and supervised the ESHS wall project on its own.
“The practice of using private contractors for work that can reasonably be carried out by government departments should cease,” she wrote.
She also recommended that government adopt better procurement regulations to discourage political involvement and help ensure fairness.
At a contractor workshop earlier this month, Dr. Drexel Glasgow, the director of projects in the Ministry of Finance, said a new “Procurement Act” had been approved by Cabinet and should be heading to the House of Assembly soon.
The act’s regulations, which will be distributed in a handbook form, should help contractors submit competitive bids, he explained.
Walwyn attack
At his press conference earlier this month, Mr. Walwyn noted that he supports the auditor general and appreciates the importance of her office.
“I, however, do not believe that the audit function should be adversarial in nature,” he said, adding, “The audit function should not in and of itself be punitive in nature. And this has to change about the way the office of the Auditor General functions, because if this continues it will paralyse the actions of the civil service because accounting officers and other senior personnel will be fearful about moving much-needed projects along.”
The minister went on to say that he believes the Office of the Auditor General is not properly staffed and should hire or engage a quantity surveyor. He called for “checks and balances” on the office, saying that it should be forced to include appendices containing the responses from any ministry on which it publishes a report.
After calling her report “severely lacking,” Mr. Walwyn also accused the Office of the Auditor General of not even visiting the wall during its investigation.
That claim, however, was directly contradicted by his own ministry’s responses to the draft audit report, in which MEC senior officials describe a “site visit” from Ms. Webster’s office. Her report also ends with six pages of photos of the wall.
Despite the minister’s attacks, the auditor general stood by the entirety of her findings.
“I think the content of the report speaks for itself,” she said.
Premier and governor criticise Walwyn
During a radio show on Oct. 19, the premier reportedly criticised Mr. Walwyn for publicising the audit reports and thus breaching Cabinet guidelines, an act he said was “disrespectful to the governor.”
Dr. Smith (R-at large) also reportedly called on the minister to apologise. Mr. Walwyn offered a partial apology shortly afterwards.
“If the premier says to me that I must apologise for something that I did wrong, I trust him enough to make an apology, and I hereby make that apology,” he reportedly said.
Still, Mr. Walwyn noted that he had his reasons for making the report public at that time.
Last Friday, Governor Gus Jaspert also criticised the minister’s behaviour.
“His Excellency is disappointed that the special audit report into the Elmore Stoutt High School Wall was publicised before being presented to Cabinet or laid before the House of Assembly as per the process set out in the Audit Act, 2003,” wrote Arliene Penn, the governor’s acting executive private secretary, in a message to the Beacon. “It is important that due process is followed in dealing with the report.”
Mr. Jaspert plans to have the report tabled in the House in line with correct legal procedure, Ms. Penn added.