Public Works

The way public works contracts in Anguilla are awarded.  The Anguilla Government is in the process of awarding contracts for the construction of a 500 metre “Runway End Safety Area” or “RESA” at Wallblake Airport.  The cost of constructing this safety area is expected to be in the range of EC$10,000,000.00 and upwards. 

I have learned that there will be no ‘bidding’ or ‘tendering’ for any of the contracts.  Instead, the Ministry of Infrastructure has divided the project up into several separate contracts, and proposes to share them out “equitably and without regard to politics” according to who’s got the required equipment.  Junior Fleming is on the list, but so is Greig Hughes.  That is supposed to mean that the process is fair and equitable!

As I understand it, the Ministry of Infrastructure will carve up the RESA project into, say, for the purposes of this discussion, 5 equal separate contracts, allocating prices to each of them.  As I understand the proposed “fair and equitable” award procedure, a Ministry of Infrastructure agent will go to Contractor A and say, “We have decided to award you Contract A for $2 million.  That is your fair share of the RESA project.  Do, you accept it?”  Contractor A does his sums.  Let us say he realises he will make a 50% profit.  Of course he says “Yes”.  The same happens with Contractors B, C, D and E.  Everybody is happy!

Now, let us look at how the tenders procedure was supposed to work.  Suppose that there are several Anguillian contractors, all equally competent and qualified.  Suppose they are all interested in one or more of those 5 separate contracts.  Say, Contractor A studies the tender documents for one of the contracts, and thinks he could do it for $2 million, and make his profit.  Contractor B might have fewer overheads than Contractor A, and concludes that he could do it for $1.8 million.  Unknown to them both, Contractor C is prepared to shave his profits down, and he puts in his bid at $1.5 million.  All qualified Anguillian contractors put in their various bids.  Their bids are opened by the Tenders Board.  The Board awards the contract to the most competitive bidder, in this case Contractor C. 

Public works contracts are not supposed to be awarded by government officials to chosen recipients at a price determined on a Heaven-alone-knows-what basis.  Government contracts are supposed to be bid on competitively.  The correct and proper process is called ‘tendering’ for government contracts.  The mandate of the Tenders Board is to protect the public purse in the award of public works contracts.  The independence and procedure of the Tenders Board is meant to be guaranteed by a statute.  The Tenders Board is not expected to act like anybody’s pet poodle.  They are not supposed to award contracts on the basis of whether they will get government the most favourable publicity and popularity.  Their duty is to select the bid that will be in the best interests of the people. 

Tendering is the only known and proven way for government to be transparent and accountable in the award of public works contracts.  Tendering for public works contracts happens in every Commonwealth Caribbean country, except Anguilla. 

In my view, the procedure that government intends to follow in awarding these major pre-election airport contracts is the opposite of fair, transparent and accountable.  The award procedure may be politically safe and popular with the contractors.  But, it is not fair to the consumer, that is, to you and me.  It is a system of pre-selecting contractors that must by its nature and effect be the opposite of fair, transparent and accountable.  If you want all 5 contractors to have a fair chance at each of the 5 contracts, let them bid on each one of them.  Let the best bid win in each case.  That is fair, transparent and accountable.

Let the contractors do what they are supposed to do.  Let them compete for public works contracts.  Award each contract to the one with the best offer.  The present system reminds me of a dog-owner handing out treats to his pets.  It is a contemptible failure of a system. 

The procedure proposed for the award of the RESA contracts rewards the inefficient.  It punishes the public by failing to ensure the best bang for the buck.  No doubt, it has evolved partly out of ignorance of the proper procedure.  It has also evolved partly to ensure that the party in power is popular among all the contractors who are invited to do public works contracts.  They each control a lot of votes.  In the case of the RESA project, no one notices that $10 million is going to be paid out for contracts that may really only be worth $7 million. 

Consider this.  Not all public works projects are this big.  Not every project can be divided up into separate contracts and shared out to several contractors.  There have been hundreds of smaller contracts over the years that have been awarded to pre-selected contractors.  Tell me why this should not be described as an intrinsically corrupt system.

Consider this also, how many of our politicians have brothers, sons, and campaign managers who are either building contractors or heavy equipment contractors?  How many Anguillian politicians have shares in construction companies?  Do these politicians allow Public Works to treat their companies in the same way as all other Anguillian contractors in the award of public works contracts?  They would have to be all angels for that to have happened!

And, yes, the procurement process, even when protected by statute, can be corrupted by crooked contractors, public servants and politicians.  At least then we know who to prosecute.  Under our present weak and inefficient system, no one commits a crime while doing the same thieving and wasting of public funds.

Meanwhile, may the public see a copy of the Medium-Term Air Transport Sector Plan 2004-2008 done in connection with EDF9?

Related posts:

RESA - 18 October 2009

Construction - 13 October 2009

FCO Response - 2 October 2009

Airport - 23 August 2009

PAC - 28 May 2009

Airport News - 24 May 2009

Airport Costs - 21 May 2009

Construction

Transparency and accountability have never been a prominent feature of Anguilla’s Ministry of Infrastructure.  If we have managed up to now to avoid wholesale corruption in the public service construction sector, this has been a result of the personal ethics of individual managers.  It is not a built-in characteristic of the service, buttressed by procedures that guarantee transparency and accountability.  On the contrary, public procurement of goods and services goes on in secret.  Major contracts are awarded on what basis nobody knows.  Outcomes of the implementation of public works, whether of success or failure, are studiously concealed.  Everyone in Anguilla takes this state of affairs for granted.  It has been the norm for decades.  In this environment suspicion and rumour abound.

So, I was interested recently to read a speech given by Chairman of the Trinidad and Tobago Transparency Institute, architect Victor Hart, to the Association of Commonwealth Societies of Architects in the Caribbean.  They were meeting in Trinidad to consider the problem of transparency and accountability in construction procurement.  Mr Hart dealt at length with the problem, mainly from an architect’s point of view.  Of particular relevance to us was his description of some of the transparency tools that have been developed for this area.  This is part of what he said:

The introduction of greater transparency in the construction sector requires the use of tested and proven tools and strategies by trained persons. Over the years, TI and others, such as the Global Infrastructure Anti-Corruption Centre, have researched the problem and developed tools and strategies that can be applied locally. TTTI recommended the adoption of three such tools/strategies to the Commission of Enquiry, which hopefully will be included among the Commission’s recommendations in its report to government:

a)         TI’s Integrity Pact the details of which are on website: www.transparency.org/tools/contracting.

b)         The Global Infrastructure Anti-Corruption Centre’s Project Anti- Corruption System (PACS) the details of which are on website www.giaccentre.org.

c)         The UK Anti-Corruption Forum (ACF) model the details of which are on website: www.anticorruptionforum.org/acf/news/publications/. Of particular interest on that website is the paper recommending greater transparency on construction projects ‘Transparency in Public Sector Construction Projects’. Also of interest is the paper entitled ‘Preventing Corruption – Guidance for Professional Bodies’.

The links are fascinating.  They would be of advantage to Anguilla's managers if only they could be persuaded to read them and to take up some of the suggestions.  

Anguilla’s public works are frozen at present.  This is a temporary reprieve from the usual full-steam-ahead system.  The financial crisis that we have partly caused by giving away to foreign developers all of our tax revenue for the next twenty-five years means that we no longer have the credit surpluses to spend on necessary construction.  Borrowing is being proposed as a solution to the problem of lack of income.  The British have said they will permit us to borrow more money if we can demonstrate how we will down-size the public service and increase our taxes starting next year.  Our government and their financial advisers are working on complying.  We can expect that they will come up with a way to ensure that the cash will begin to flow well before the next general elections which are due in five months time.

When that happens, it is highly unlikely that we will be in any better position than we are now.  Government still refuses to reveal the details of expenditure on the last airport expansion project of 2004, despite promises from the Minister of Finance in the House of Assembly.   

There are no plans to improve accountability and transparency.  No one in Anguilla is even looking at any of the three tools described on the websites above.  No one either knows or cares about the problem.  Instead, everyone is jockeying for position.

The Anguilla public sector construction arena will continue to be one in which there is no level playing field, with contracts being routinely awarded to party favourites.  Contractors will be forced to spend time and energy on worrying about bias and nepotism instead of concentrating on delivering projects on time and within budget.  We will continue to wonder what deals are being struck behind closed doors.  While some contractors will struggle to collect payment for services rendered, others will appear to be receiving favoured treatment.  Foreign consultants and contractors bearing generous gifts will mysteriously be preferred above local equally qualified ones. 

Fair play, transparency, and accountability will continue to be unknown in the Anguillian public sector construction sector. 

That is my gloomy prophesy for when the new airport expansion, the new government headquarters, and The Valley road repair contracts are awarded.

Banking

I heard a lie on the Chief Minister’s press conference today.  He said that the only way our two local banks can compete on the regional scene is if they amalgamate.  The local banks he was talking about are the National Bank of Anguilla and the Caribbean Commercial Bank.  The suggestion from the Hon Chief Minister (and, by the way, active Chairman of the Board of Directors of the Caribbean Commercial Bank) was that there is a need for the NBA and the CCB to come together.  We should get rid of the NBA and CCB as separate entities.  Somehow, this coming together of these two sprats will make them big mackerels and more capable of resisting the present financial crisis. 

In my opinion, there is nothing that is further from the truth.  Would our two small fry together be bigger than the American giants that failed and went bankrupt this year?  Absolutely not!  Size is no guarantee.  Competition and carefulness wins out every day.  The integrity and caution of the Boards in dealing with all the wonderful-sounding applications coming forward from the loans committees was what counted.  I want to know, what is the Chief Minister/Chairman of the Board hiding from us ignorant little people?

What we know for certain is that the CCB and the NBA working separately over the past 25 years have done wonders for the Anguillian people.  Competition has been good for the Anguillian consumer.  We have done well having these two banks competing with each other.  The consumers have been the ones to benefit.  That is you and me.  The two banks themselves have stayed lean and mean.  That was good for their shareholders.

Have you travelled by air recently?  Since Stanford’s airline went under and was bought by LIAT?  Service by the remaining monopoly provider sucks.  Prices have risen astronomically, and service has dropped precipitately.  There is no doubt that the absence of competition in the local airline service has been hard on the consumer, that is, you and me.  It will always be the same whatever the service industry.

God help us all in Anguilla if NBA and CCB should amalgamate.  The consumer, ie, you and me, will be the victim.  We will be at the mercy of avaricious, dangerous monopoly.  The shareholders of the strong will buy out the losses of the weak.  Naught times one always equals naught.

I kid you not!

Is the truth that one of the two local banks made too many bad loans?  Is one of them about to go under?  Well, so be it.  What is left after the bankruptcy will have to be bought out by someone.  Fire the Chairman and the Board of Directors of the bankrupt company.  But, no amalgamation between a failed bank and a successful one should be allowed while pretending it is a joining of equals, please.  Just my opinion.