CDB rescinds financing to St Vincent and the Grenadines controversial project

(MENAFN- Caribbean News Now) KINGSTOWN, St Vincent — The process of bidding and financing for the infrastructure rehabilitation and upgrade – River Training Works at Yarabaqua has received much public outcry.

The result was a CDB review, and declaration of ' mis-procurement, in accordance with Paragraph 1.13 of the Caribbean Development Bank (CDB) guidelines for procurement (January 2006),' and the decision that this 'Contract will be cancelled, and any amounts already withdrawn and paid in relation to the contract will be repaid by the Recipient, the government of St Vincent and the Grenadines, with interest. CDB will therefore no longer finance this contract,'

Prime minister Ralph Gonsalves attempted to calm public fears last week stating that 'the work has to be done and its urgent work so Cabinet has taken a decision to have attorney general have the ministry of works submit a draft contract for the outstanding works to be done by the same Reliable Construction for the attorney general to review,' adding, 'Naturally, we will have to pay for that. That's ok. I mean we have a lot of money with the CDB and we are not worried about that.'

A subsequent statement outlined the procurement process decision and way forward states:

Natural Disaster Management Rehabilitation and Reconstruction Project (December 2013 Trough Event Project: Infrastructure Rehabilitation and Upgrade – River Training Works at Yarabaqua.

(A) PROCUREMENT PROCESS AND DECISIONS MADE THROUGH IT

The National Disaster Management (NDM) rehabilitation and reconstruction project (December 2013 Trough Event) is financed by the Caribbean Development Bank (CDB). One of the important activities under this programme is the Infrastructure Rehabilitation and Upgrade – River Training of Works at Yarabaqua. The pre-bid engineering estimate for these works was EC $1,512,077. The Ministry of Transport and Works is the implementing agency tasked with the execution of the NDM programme in general including the Yarabaqua River Training works.

The Ministry of Transport and Works invited contracts to submit bids for the river training works to be carried out at the Yarabaqua River. Seven (7) bids were received on April 23, 2018, the details of which are as follows:

- OB Sadoo Engineering Services Ltd. $1,584,458.62

- Hutchinson Construction co. Ltd. $2,169,272.00

- Bailey Contractors Inc. $1,310,772.00

- Bally and Bally Investments Inc. $1,478,029(corrected $1,468,514.60)

- Franco Construction Ltd $1,574,797.00

- Reliable Construction Services Ltd. $1,421,567.00

- Kelectric Co, Ltd. $1,325,928.45

A design and supervision consultant, IBI Group of Canada, was contracted by the Ministry of Transport and Works to provide consultancy services under the NDM programme. This group of consultants were themselves selected through the independent tendering process of the Government of St. Vincent and the Grenadines (GOSVG) with 'No Objection' from the CDB; they are paid under the NDM project.

In keeping with their terms of reference, the IBI Group completed the Bid Evaluation Report of the seven (7) bids received for the Yarabaqua project. By memorandum dated August 10, 2018, the Chief Engineer submitted the Bid Evaluation Report to the Secretary of the Central Supply Tenders Board, Ministry of Finance, seeking approval to negotiate with Reliable Construction Services Ltd (RSCL) for the provision of river training works at Yarabaqua for an amount not exceeding EC $1,421,567 (VAT inclusive).

The submission from the Chief Engineer to the Tenders Board was accompanied by a letter of 'No Objection' from the CDB, dated August 13, 2018, indicating that the 'CDB has no objection to the Government of St. Vincent and the Grenadines awarding a contract to Reliable Construction Services Ltd. of St. Vincent and the Grenadines for the sum of XCD $1,421,567 (VAT inclusive)'.

The Tenders Board granted approach on 29th August, 2018 for the Ministry to negotiate with Reliable Construction Services Ltd. The negotiation for the works was conducted on September 05, 2018 with the NDM project staff and the principals of RCSL. On completion of the negotiations, the Ministry sought the approval of the Tenders Board on September 10 to award the contract to RCSL. The Tenders Board granted the approval for the award of the contract to RCSL on September 26, 2018 in the sum of $1,421,567 (VAT inclusive).

The decision by the Tenders Board to award the contract relied upon the Bid Evaluation Report prepared by IBI Group (the Consultant) and the letter of 'no objection' issued by the CDB.

The CDB, in a letter dated April 09, 2019, informed the Director General, Finance and Planning that a mis-procurement has been declared in respect of the Yarabaqua River Defence contract between the Government of St. Vincent and the Grenadines and RCSL. The CDB further stated, that as a result of the mis-procurement, the financing for the contract has been cancelled and the sum of EC$142,156.70 which was already drawn down will have to be repaid inclusive of interest. The CDB has subsequently waived the payment of the interest on the amount drawn down. The CDB has advised that funding for all other NDM project activities remains intact.

The mis-procurement was declared by the CDB consequent upon its internal review of its 'no objection' to the award of the contract; the review was triggered by a formal complaint by one of the losing bidders for the contract. The complaint focused on an allegation that RCSL did not have the track record and capacity to perform the contract as per the procurement guidelines.

It should be emphasised that a mis-procurement does not amount to corruption; indeed there is absolutely no allegation of corruption, fraud, impropriety or misbehavior in public office by any official in the Government of St. Vincent and the Grenadines or elsewhere. The CDB's review indicates essentially that the conditionalities and rules were not scrupulously applied, thus leading to its holding of unfairness in the process of competitive bidding.

It must be underscored that the value of the current mis-procurement represents a very small percentage of the total procurements undertaken by the Government with CDB and in no way characterizes the state of the Government's procurement system. Public procurement has always been conducted with the utmost transparency. In excess of eighty percent of Government's procurement are conducted using the Open Competitive method. Quarterly and Annual Procurement Reports are published in the print media and on the Government's website, showing the name of the contractor, the value and nature of the procurement and the procurement method used. Further, a modern Public Procurement Act was passed in the Parliament in December 2018.

The tendering process of the Government of St. Vincent and the Grenadines is an independent one and is not subject to any political or other undue interference. The Tenders Board carries out its obligations with due regard to professionalism, transparency, accountability, and the legal requisites of the process to the best of its ability. Both the tendering process and the work of the Tenders Board have a sound record.

The Tenders Board at the time of the award of the instant contract, and currently, consists of the following seven members: The Director General of Finance and Planning (Chairman), the Accountant General, the Permanent Secretary in the Ministry of Transport and Works, the Permanent Secretary in the Ministry of Trade and three non-public servants (Leroy Rose — a banker; Ashelle Morgan — a lawyer; and Joel Woodley — a small businessman). The non-public servants are appointed by Cabinet.

Dated the 22nd day of July 2019.

Edmond Jackson

Director General, Finance and Planning

(Chairman of Tenders' Board)

(B) THE WAY FORWARD

The river defence and river training works of the Yarabaqua River (the first river in North Central Windward as one enters the constituency at Belle Vue going northwards) still need to be done urgently. Time is of the essence in this hurricane season. The home-owners on the bank of the river are very vulnerable; their anxieties have been communicated to the Prime Minister. RCSL has already done much preparatory and actual work on the Yarabaqua Project. In fact, RCSL has been on the job for nearly six months; RCSL is actually out of pocket for work already done; and RCSL's work has been assessed as satisfactory.

The Government of St. Vincent and the Grenadines (GOSVG) has been advised by its relevant officials that RCSL has the capacity, personnel, and equipment to finish the job which it has started. The Ministry of Transport and Works is satisfied that under its ongoing supervision and that of the relevant professional staff of the GOSVG, the usual supervision of infrastructural works can be properly effected with RCSL as the Contractor.

Accordingly, the Cabinet under its legal authority has decided to permit RCSL to resume its work at the Yarabaqua River. The financing will be effected through the Consolidated Fund of GOSVG, not using CDB monies. The Ministry of Transport and Works has been directed by Cabinet to submit a Special Warrant to obtain financing for the work and to deliver a draft contract for the outstanding works to the Attorney General for urgent review.

Given that time is of the essence in this matter, it is not reasonable in the circumstances for the Government to take another year or so to go through the competitive tendering process again. In its decision-making, the GOSVG is very mindful of its obligations (including potentially legal ones) to the home-owners on the bank of the river on which works have started and stopped.

Meanwhile, the Cabinet took the decision to terminate the pre-existing contract to RCSL. Further, the Cabinet has requested the Ministry of Transport and Works and the Tenders Board to review the evaluation of the bids and the advice rendered by the consultants, the IBI Group. Such a review and legal advice of the Attorney General will address the matter of the IBI Group's professional advice on the bids in the first place and its potential liability to the GOSVG for any loss or damage incurred on suffered.

Since March 29, 2001, the GOSVG, at its highest levels, has taken very seriously the requisite for independence, transparency, and professionalism of the public tendering process. Indeed, within one week of taking Office, the current Prime Minister instructed the Chairman of the Tenders' Board to discontinue the practice of sending the Minutes of the meetings of the Tenders' Board to him. The Prime Minister has also instructed the Ministers to have a hands-off approach in respect of the independent work of the Tenders' Board.

They have complied with this instruction and no member of the Tenders' Board has complained to him over the past 18 ½ years that any Minister or anyone else has sought to exercise undue influence on their deliberations and decision-making. The best value for money comes through a properly functioning public tendering process. Cabinet may intervene to waive the tendering process in circumstances of urgency and necessity.

It should be pointed out that the objector/complainant to the award of the tender to RCSL was within its right to do so if it considered the award of the contract to be 'unfair' to it. Equally, it should be acknowledged that the Objector/Complainant, a local company known as Bally and Bally Investments Limited, has obtained many contractual awards through the very same public tendering process, inclusive of construction contracts financed by the very same Caribbean Development Bank (CDB). Indeed, that company is currently executing a CDB-financed contract awarded by the Tenders' Board after a process of bid evaluation by a Consultant, endorsement/recommendation by the Chief Engineer, and 'No Objection' by the relevant official at the CDB.

The CDB recognizes that the GOSVG has a sound public tendering process. That is one of the reasons why it continues to do huge business with the GOSVG. Indeed, only last week the CDB and the GOSVG (including the Prime Minister) were in detailed and advanced discussions on a loan of over US $100 million in respect of the co-financing of the proposed Modern Kingstown Port. The CDB also is actively involved in the massive Geothermal Project. So, too, is it engaged actively with the GOSVG in the financing of other NDM projects, other Sea and River Defence Projects, Road Projects, projects in Education and Training, Poverty Reduction, and other areas, and the Basic Needs Trust Fund (BNTF) Projects. The CDB remains a valuable partner to the GOSVG and is the source of most of the development loans to the GOSVG.

The GOSVG assures the people of St. Vincent and the Grenadines that it will continue to apply best practices to, and strengthen even further, the public tendering process. Long gone are the days when only a handful of companies obtained government contracts. And every quarter, and annually, the GOSVG publishes the summary details of all contracts awarded by the public tendering process. No government did that before. And recently Parliament enacted a modern Procurement Act.

The GOSVG reiterates that there is no undue influence, corrupt practice or impropriety in the award of the original contract to RCSL by the Tenders' Board. The award was done after an open public tendering process, evaluation by an independent consultant, a submission by the Chief Engineer, and a 'No Objection' by the relevant official of CDB itself.

Allegations to the contrary are pure political mischief by opposing political partisans and assorted fellow-travellers.

Dated the 22nd day of July 2019

Dr The Hon. Ralph E. Gonsalves

Prime Minister

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