2022 Auditor General report: Govt recovers over $50M in undisputed overpayments on contracts

The content originally appeared on: INews Guyana
The road project in Mahdia that was terminated this year

Overpayments on contracts, which have been a sore issue for years for successive Auditor General reports, appear to have turned a corner, with Auditor General Deodat Sharma reporting in his 2022 report that the Government was able to recover over $50 million in overpayments, without dispute – a first in Guyana’s history.

According to the Auditor General’s report, a total of 466 contracts being undertaken by Ministries and the regions for 2022, were examined. The Auditor General found that as much as $52.8 million in payments were made on measured works for 33 of these contracts.

“Sums totalling $14.146 million were in relation to Ministries of which the entire amount was recovered at the time of reporting, whilst sums totalling $38.681 million was in relation to Regions One, Two, Five, Six, Eight and 10 of which $17.121 million still remained outstanding in respect of projects for Regions One and 10.”

“It should be noted for the year 2022 except for Regions 1 and 10, all overpayments were recovered. This is the first time these overpayments were not disputed,” the Auditor General further detailed in his report.

Meanwhile, the Government was also forced to take action on several contracts that had been issued but were not being executed according to the agreement by the contractors involved. This includes a $87.1 million contract for Lot 30 of a material stockpile and phase two of the rehabilitation of the Mahdia main access road.

The termination of this contract stemmed from earlier this year, when Minister within the Public Works Ministry, Deodat Indar was accompanied by Amerindian Affairs Minister Pauline Sukhai during an outreach to Mahdia, Region Eight (Potaro -Siparuni). While there, residents raised with the Minister several issues they have with the roads. The Minister was accompanied by local leaders and engineers during his inspection.

Meanwhile, another contract on the chopping block was one for the construction of a Timber Wharf and Landing for Fishermen Cooperative Society for $26.420 million. This contract was terminated on August 29, 2023.

It was explained by the Auditor General that this contract was awarded by the National Procurement and Tender Administration Board (NPTAB) and that $3.9 million was paid to the contractor as of December 2022.

“Physical verification was conducted on 06 July 2023 revealed that the works were incomplete and only one excavator and one staff of the Contractor was on site, despite the fact that seven months had already elapsed on a ninety-day duration project. In addition, it was observed that sub-standard timber deck planks with defective fall edges were installed, while most of the others were found to have cracks along the grain of the timber.”

“Further, it was noted that the Contractor was not executing the works in accordance with the specifications of the Contract, whereby a 320 excavator was being used to drive the piles. This is unacceptable and is not in keeping with Item 1.1 of the Preliminaries bills,” the Auditor General explained.

According to the report, this states that the contract must include the provision of a barge and other equipment to allow for pile driving on water. Despite this, however, no barge was being used and “it is unclear how the Ministry is confirming that the piles are embedded to the correct and required depth, since the method being used by the Contractor cannot provide any indication of the number of blows per foot of installation.”

Another observation made by the Auditor General was that many of the piles being driven were not vertically positioned as they should be, which the Auditor General noted will affect the bearing capacity of the pile.

“This is a very serious matter and it is unclear why this situation is being tolerated by the Ministry,” the Auditor General noted. However, the Ministry in its response said that the contract has since been terminated.

Similarly, a $62.9 million contract for a packing facility to be constructed in Sophia for the Guyana Marketing Corporation (GMC) was also terminated… this time on August 17, 2023. It was explained that up until December 31, 2022, the Contractor received payments totalling $45.9 million.

“Physical verification conducted on 09 August 2023 revealed that the works were substantially completed; however, several defective and poor-quality works were observed on the building,” the report stated.