Prof Uff thanks media for generating public interest

2.25. Udecott’s application for Judicial Review against the remaining Commissioners, Mr Sirju, Mr Thornhill and Prof Uff was heard by The Hon Madam Justice Deane-Armorer in Port-of-Spain between January 18 and 26, 2010. Judgment was given on March 5, 2010 dismissing the accusation of apparent bias. The Learned Judge held that the remaining Commissioners (Professor Uff and Mr Thornhill) constituted a quorum under the Terms of Reference and that “there is no reason why they should not proceed to complete and to submit the report of the Commission of Inquiry to His Excellency.” In the judgement, the accusations against Mr Sirju alleging actual or potential conflicts of interest were also dismissed by the Learned Judge.

2.26. This report now proceeds to consider the issues set out in the Terms of Reference, which will be addressed initially in the order set out in the original Terms of Reference dated September 9, 2008.
Cleaver Heights issues are addressed separately at the end, along with certain general issues which emerged during the course of the Inquiry.

3. Issue (i)
Procurement practices in the Public Construction Sector

3.1. Procurement in the public construction sector in Trinidad and Tobago is substantially in the hands of a number of “special purpose companies” which, in different areas of the public sector, undertake procurement on behalf of the Government of the Republic of Trinidad and Tobago (GORTT). It is appropriate to set out the events which have led to the setting up of these companies. The key to understanding the purpose of these companies is the Central Tenders Board (CTB), which was originally established by statute in 1961, subsequently amended in 1979 and further amended in 1991. The CTB Act applies, with exceptions, to all Government Ministries and Departments and to many other corporations and bodies including the Tobago House of Assembly. Pursuant to section 4 (1) of the CTB Act, the Board is the sole and exclusive authority for tendering for the supply of articles or the undertaking of works or services for carrying out the functions of Government or any statutory bodies. As described in the statement of Bernard Sylvester, the CTB Act was perceived to be responsible for delays and cost overruns first by reason of bureaucratic delays in the tendering process and thereafter by reason of the CTB having no further responsibility for the design stage at which critical decisions involving public expenditure are taken. In addition, the CTB had no responsibility or the monitoring of project implementation. The more recent course of public procurement thus traces various means by which the application of the CTB Act has been circumvented.

3.2. The CTB Act has been amended, adding a new section 20A, to empower the Government to act in its own behalf (without going through the CTB) in the procurement of works and services where:
(i) under an agreement for co-operation between GORTT and the Government of a foreign State, the foreign State designates a wholly owned and controlled company to undertake works or services (Act No 36 of 1979);
(ii) articles, works or services are to be supplied by a company wholly owned or controlled by a foreign state (Act No 36 of 1979);
(iii) in cases of emergency or natural disaster (Act No 22 of 1987);
(iv) the Government enters into a contract with the National Insurance Property Development Company Limited (Nipdec) or a company wholly owned by the State for the supply of articles or the undertaking of works and services (Act No 3 of 1993).

3.3. Nipdec is currently one of the primary public procurement agencies and, as appears later in this Report, has taken on a number of major projects acting both as procurement agency and as Project Manager (a term which is considered later in more detail). Nipdec, as its name indicates, is a wholly owned subsidiary of the National Insurance Board of Trinidad and Tobago, established by statute in 1971. Nipdec was incorporated in July 1977 as a private limited liability company. The objects of the newly formed company included undertaking construction, maintenance and furnishing of buildings to be leased or sold, particularly houses and flats for middle and lower income groups of the community. Through these activities Nipdec acquired expertise in construction projects and became involved in other government construction projects from the 1970s, with its portfolio of activities continuing to expand during the 1980s and 1990s, despite the formal amendment to the CTB Act being made only in 1993.

More recently Nipdec has undertaken the upgrade of the Eric Williams Medical Sciences Complex, the upgrade of the Port-of-Spain General Hospital, the upgrade of the San Fernando General Hospital, the rehabilitation centre for socially displaced persons at Piparo Estate, construction of police stations in Mayaro, Gasparillo, Toco, Belmont and Tunapuna, construction of community centres at Beetham Gardens, Morvant, Maracas Bay, Thicke Village and Preysal, the Mayaro indoor multi-purpose sport facility and the St James youth centre. Nipdec is the employer and project manager for the Scarborough Hospital project, Tobago and for a number of housing projects in Trinidad and Tobago.

3.4. The reference in section 20A of the amended CTB Act to a company wholly owned by the State for the supply of articles or the undertaking of works and services predicated the creation, from 1993, of other such companies, which were to become known as special purpose companies. Accordingly, in early 1993, a Committee was appointed to make recommendations for the establishment of a new special purpose company to be called the Urban Development Corporation of Trinidad and Tobago (Udecott). Details of the creation and subsequent operations of Udecott are set out in a later section of this Report. Udecott began to be involved in large-scale projects in 2002.

3.5. Another state agency which has undertaken substantial developments on behalf of the Government is the National Housing Authority (NHA) which carried out the programme of social housing development throughout Trinidad and Tobago for the Ministry of Planning, Housing and the Environment. In 2005, the NHA was replaced by a new statutory body called the Housing Development Corporation (HDC) which acquired the assets, rights and obligations of the NHA, including responsibility for a number of projects which are considered later in this report. It is to be noted that at the date authority to proceed with the Cleaver Heights Development Project was given, in April 2005, the National Housing Authority was still in being and reporting to the Minister of Housing, Dr Keith Rowley.

3.6. The Estate Management and Business Development Company Limited (EMBD) was formed in August 2002, to provide project management and development services in the public and private sectors related to industrial development, both in residential and agricultural infrastructure. The Tender Rules employed by EMBD include, significantly, a requirement that all contracts over $5M, are to be subject to the approval of the Minister of Finance. Invitations to tender may be public or limited to selected pre-qualified tenderers. Services may be procured without tender where there is a limitation of sources of supply or performance. EMBD maintain a list of pre-qualified and approved consultants and contractors. Over the past five years EMBD has undertaken 21 residential infrastructure developments including two major projects (La Romaine and Picton III) each being approximately 50 percent complete to date. EMBD provided information on time and cost overruns which are summarised in Section 19 below.

3.7. Two further special purpose state owned companies undertaking construction work were set up in 2005. One is the Education Facilities Company Ltd (EFCL) whose mandate includes design, construction, maintenance, equipping and outfitting of community educational facilities. The facilities include Early Childhood Care Education (ECCE) Centres, primary schools, secondary schools and education district offices in Trinidad. The current work programme of EFCL comprises 601 ECCEs, 40 primary schools, 74 secondary schools and seven district offices.
As at January 2009, seven primary schools were at various stages of construction including one completed (Icacos Government Primary School) and 13 Secondary Schools were under construction including one completed (Chaguanas North Secondary School). Of the ECCE Centres, 20 have been completed to date, another four are under construction and a further 50 are in the course of award.

3.8. The second company set up in 2005, is the Rural Development Company of Trinidad and Tobago (Rdecott), whose constitution mirrors that of Udecott, Rdecott was established in May 2005 with a mandate of project managing the development and upgrading of infrastructure, utilities and community facilities in rural communities under the line Ministry initially of the Ministry of Planning and Development and thereafter the Ministry of Local Government.

3.9. With regard to procurement practices, Nipdec uses the design-tender approach and has its own tender rules and regulations. Nipdec may be required to follow other rules, for example, those of the Inter-American Development Bank (IDB) for projects funded by other agencies such as the IDB. Nipdec uses four modes of tendering for public construction: (i) pre-qualification (ii) one-envelope system (iii) the two-envelope system and (iv) expressions of interest. In addition, there is a selective tender process and a sole selective tender process which are used in special cases where time is critical. The procurement process is said to be designed, through the tender rules, to achieve transparency and fairness. The tenders committee may invite tenderers and other interested persons to attend the opening of tenders. Guidelines are given for the consideration of tenders.
3.10. In June 2005 the Ministry of Finance (MOF) issued a document entitled “Standard Procurement Procedure for the Acquisition of Goods, Services to be provided and works to be undertaken and for the disposal of unserviceable items in state enterprise/statutory bodies.”
This document stated that the procedures were to apply to all state agencies (other than those falling under the purview of the CTB Ordinance) for the procurement of goods and services or the undertaking of works of a recurrent and capital nature, and that the procedures were to be placed before the Board of Directors to be approved.
The MOF Standard Procurement Procedure comprises a framework for drawing up of rules and procedures by state agencies. EFCL was in the process of being established and accordingly drew up its procurement rules following the MOF framework. The EFCL rules were approved by the Board on October 24, 2005.

3.11. The MOF document and the EFCL Rules permit either open invitation to tender or invitation limited to selected or pre-qualified companies. Furthermore, while the MOF Procedures permit an award without following the tender procedures in cases of emergency, in the EFCL rules this power is enlarged significantly to include circumstances:

(a) Where there is a limitation of source of supply or goods comprise part of a system already in use by the Company.
(b) Where Bid Prices received are significantly in excess of the in-house estimate.
(c) Where no responsive bids have been received.
(d) Where only one contractor is capable or available.
(e) Where a consultancy service is a special assignment.
(f) In cases of emergency.
(g) Where it is expedient to conclude an arrangement with a preferred supplier.


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