Adrian Strachan, Auditor General. - File

Gareth Manning and Tyrone Reid, Sunday Gleaner Reporters

Jamaican Auditor General Adrian Strachan is accusing several government agencies of awarding governmentcontracts valued well over half a billion of tax payers' dollars to favoured parties.

In his latest audit report on the financial transactions, accounting records and financial statements of Government entities and agencies, Strachan indicates that there continues to be instances where no recommendation is sought from the National Contracts Commission (NCC) or approval from Cabinet for contracts awarded for the procurement of goods and services as required by law.

He notes that one of the most prevalent infractions is a failure to invite the required competitive price quotations before awarding contracts for less than $4 million, making it difficult to ascertain whether the prices quoted for services were fair and reasonable. These entities have also continued to do business with suppliers, who are not approved by the NCC or have not submitted tax-compliance certificates.

Blatant breaches

"It is a complaint that the contractor general has made too. We find frequent, blatant breaches of the procurement provisions, but then no sanctions are applicable at present," Strachan told The Sunday Gleaner recently.

"I believe it is a total disregard and people believe that they are not bound to follow the rules and sometimes we believe it is a deliberate attempt to probably place business with favoured parties ... some element of cronyism," he adds.

Among the entities accounting for the greatest portion of procurement breaches was the Ministry of Education which accounted for 45 instances, the audit identified, in which contracts for goods and services costing $69.4 million and US$195,314.17 (J$13,281,364) were awarded without evidence of compliance with Government's guidelines. "As a result, the objectives of ensuring equity, transparency and economy in the use of public funds were compromised," the Auditor General noted in his report.

Another contract totalling $4.4 million for the acquisition of computers and accessories for youth-information centres appeared to have been fragmented into two separate contracts, the auditor general also pointed out, circumventing the requirement for submission to the NCC.

There were also several other contract concerns as it relates to the ministry, Strachan indicated in the report, including a contract costing CND$35,040 (J$2,242,560) per annum, which started in 1999 for the assignment of copyright for four literary works. No information was provided on the benefits to be derived from such a contract, and so there was no way to verify whether those benefits were being realised.

Procurement breaches a challenge

Responding to Strachan's allegations, Maria Jones, permanent secretary in the ministry, acknowledged that procurement breaches were a challenge the ministry was faced with, but was trying to rectify it. She said manuals outlining the Government contract procurement procedures were distributed to 1,100 schools across the island eight months ago.

"The entire school system was operating outside the procurement guidelines, so at the time when the auditor-general's report came up, we agreed that we would set out to procure the books, and so we did," she told The Sunday Gleaner news team.

Jones was careful not to suggest that the funds were being used improperly, noting however, that the problem was merely a lack of knowledge of the guidelines by school management.

The Registrar General's Department was also mentioned, with goods and services acquired totalling over $71 million in four separate instances. In one instance, the report states, there was no documentary evidence to verify that approval had been obtained from Cabinet and the NCC for the award of a contract in excess of $20 million.

There was no evidence that a written agreement was in place. No evidence of approval was presented either for the engagement of three courier services which were paid $18.85 million for their services.

With respect to the third major offender, the Jamaica Fire Brigade, a review of payments showed breaches totalling $67.7 million. In one instance, approval was not sought for a contract in excess of $15 million, while in a number of other instances it was clear that the suppliers for other contracts were not those on the list approved by the NCC; nor were contractors selected through a competitive process.

No response

Up to press time, no response had been received from the RGD in respect to the allegations, but Commissioner Fredrick White of the Jamaica Fire Brigade noted that while his entity did in fact breach the guidelines, it had no choice but to do so at the point in time. He said in 2005, most fire trucks were out of service, particularly those in rural parts of the island, and with only six garages registered with the NCC - all of which were based in Kingston - the Fire Brigade was forced to circumvent the process to ensure the trucks were fixed urgently.

"We couldn't do better. We had an emergency and we had to patch up the vehicles," said the commissioner. He disclosed that a letter was subsequently written to Contractor General Greg Christie, requesting permission to contract entities not approved by the NCC. Permission has since been granted by the Ministry of Finance and Planning for contracts under $275,000. The fire brigade has also sought to get more garages registered with the NCC which now has 14.

Under the existing Public Bodies Management and Accountability Act, there are no sanctions for breaches of the procurement guidelines. As such, Christie is calling for the guidelines to be elevated to law. Speaking with The Sunday Gleaner, he said the appropriate sanctions, including criminal action for deliberately breaching procurement procedures, should be applied. Until those sanctions are applied, he argued, entities will continue to breach procurement guidelines.

gareth.manning@gleanerjm.com