The role of the regulator

9.8. Ms Herbert pointed out that although the State Enterprise Companies were not directly represented on the Committee, they had been involved in dialogue and representations were made by them to the Committee. The rationale for an over-arching regulator, as proposed was consistent with current best practice of separating the Executive from intrusion into details of public expenditure. The Regulator was not designed to be interventionist but to monitor procurement and to provide a means for resolving issues.

Mr Imbert pointed out that the complaint mechanism under the White Paper empowered the Regulator to investigate and arbitrate, whereas in the Government’s view parties should be left to their rights before the Courts. There was a general discussion on the right of an aggrieved party to challenge decisions under the present regime, where Udecott and other State Enterprise Companies may not be subject to Judicial Review proceedings. However, the challenge mechanism proposed under the White Paper would allow the Regulator to review the decision itself and not merely to apply the principles of Judicial Review. In Minister Imbert’s view this would defeat the objective of the State Enterprise Bodies. The Regulator, who was not an elected person, would have more power than the Government.

9.9. Mr Victor Hart stated that the Transparency Institute has always supported greater oversight in the construction sector. If the powers of the Regulator were seen as excessive, this should not lead to rejection of the White Paper as a whole. Ms Herbert stated that the White Paper was principally concerned with public expenditure where accountability, value for money and transparency were critical. Udecott was spending public money and ought to be accountable. Ms Herbert, supported by Mr Riley, argues in favour of the provisions for community involvement in assessing the need for a proposed project, where the Government’s policy may benefit from community input at the design stage. This was not to be seen as obstructing but providing inputs at critical points in the procurement process.

9.10. Minister Imbert said the White Paper would involve Committees sitting in judgement on the Government’s development programme and having the power, through the independently appointed Regulator, to determine whether projects should proceed or not, necessarily involving substantial delay. The question whether contracts were being awarded to the right persons would also be subject to scrutiny by the Regulator. This would render the Government incapable of regulating a national development programme. The Government itself was capable of managing a procurement system in a transparent, fair and equitable manner. The proposal for outside regulation was at odds with the democratic system.

9.11. Mr Riley responded by pointing out that the review process was advisory only. Under the present system there was no review at all of the economic benefit of projects being undertaken by Udecott. The Review Committee was carefully structured to provide a balance between Civil Society and Stakeholders. Mr Victor Hart drew attention to what he contended to be lack of transparency by the Government in relation to the Rapid Rail Project. Under the White Paper Proposals the matter would come before the Advisory Committee to consider the need for the Project. Minister Imbert pointed out that he had made a lengthy statement in Parliament and subsequently a broadcast address. There had been coverage in newspapers regarding the need for the Project. This had been one of he most transparent procurement exercises ever carried out, notwithstanding which, under the White Paper, the Advisory Council would continue discussing the Project, probably for years. The Project had been studied for the last 20 years.

9.12. Mr Joseph on behalf of the Contractors’ Association gave the Paper full support, while accepting there could be some amendment. There was a need for legislation such as this. Mr Calder Hart agreed that the objectives of the White Paper were laudable and commendable. However Udecott was committed to reduce bureaucracy and introduce a more commercial approach that would ensure things were done in a more timely manner. The need for Parliamentary oversight should not be diminished but Udecott had that degree of oversight, through the Public Accounts Committee, the Central Audit Unit or the Ministers themselves. Every activity of Udecott had Cabinet approval and there was accountability through the Parliamentary process. The need to standardise and to create a basic framework was accepted. The Government was trying to put facilities in place for the benefit of citizens of Trinidad and Tobago. It was unclear how the proposals of the White Paper, by the creation of a larger and more complex, apparatus, would enhance this process.

9.13. Mr Riley commented that the proposals of the White Paper would allow each organisation to be responsible from beginning to end of its process, subject to satisfying conditions of transparency, accountability and value for money. Mr Victor Hart commented that while consultations presently took place, there was not a culture of consultation in Trinidad and Tobago and the Government did not encourage it. The consultants which Udecott undertook arose from the negative reactions of those who felt adversely affected by Projects. The Transparency Institute encouraged a culture of consultation, to avoid adversarial situations developing.

9.14. Minister Imbert concluded by characterising the White Paper as promoting the creation of an over-arching bureaucracy with quasi judicial machinery of doubtful competence that would adjudicate on all projects in Trinidad and Tobago, advised by civil society and not by Government. This supreme adjudicator would have the power to stop a process, overturn a contract or prevent an award. The Cabinet had decided in July 2008 that the White Paper should be revisited and that the way forward was through the establishment of standardised rules. The Government recognised that there was a need for a framework and for a system of standardised procurement rules.

9.15. In a late additional submission on behalf of the TT Transparency Institute, Mr Victor Hart addressed the issues which TTTI thought should survive from the review of the White Paper. He emphasised the need for legislation which should cover all agencies spending public money, as well as the establishment of an appropriate Regularity System. The Regulator proposed by the White Paper would be independent of the Executive, in the same way as the Auditor General. In answer to Minister Imbert’s view that this would not happen and that the function of the Regulator would be to ensure that the procurement process was carried out in accordance with policies and guidelines approved by Parliament.

Initial conclusions

9.16. The Commissioners recognise that the decision whether to implement the White Paper, and if so to what extent, is for the Government. The White Paper had the support of Government in 2005 but since that date there has been no move to implement the proposals and the Government’s present intention, as expressed through Minister Imbert, is that there will be a much more limited review of procurement rules.

9.17. One of the major objectives of the White Paper proposals was to achieve greater transparency through the involvement of “civil society” in the review process. The debate in the Inquiry, including contributions under other issues, left us in no doubt of the demand for greater transparency both in the procurement process and in the antecedent consideration of whether a project requiring large sums of public money should proceed and if so in what form. Recognising the need for the Government to govern, it was evident that organised user groups such as the Artists’ Coalition had not been adequately consulted on decisions regarding the Academy of Performing Arts, an omission which Minister Imbert recognised. To the extent the solution embodied in the White Paper is not to be implemented, other safeguards need to be introduced to ensure that relevant views can be expressed at the appropriate time and taken into account before decisions are made.

9.18. The question whether a review system is parallel to the courts should be implemented is again for the Government. We share the apprehension of those who foresaw difficulties both in setting up the Regulator system and in operating it without subverting the power of Government to make decisions and without causing serious delay to projects. If the Government’s decision is to adhere to the present system of challenge through the courts, we believe that it is also incumbent on the Government to see that the system is effective. This should include review of the controversial decision in NH International (Caribbean) v Udecott, where a majority of the Court of Appeal held Udecott not to be subject to Judicial Review. The issues are well-known and have been addressed on many public occasions. We add only that it is unusual that a body responsible for decisions involving very large sums of public money not to be open to challenge on the usual grounds of Judicial Review, bearing in mind their limited area of application. It should be recalled that other bodies in the State Enterprise system, such as the Housing Development Corporation would appear to be open to such review, without apparently being overburdened with challenges. Were Udecott to be open to Judicial Review, it is to be expected that a proportion of challenges, at least, would be disposed of summarily at the stage of application for leave. If a contested case led to a decision being set aside on proper grounds, it would be even more difficult to argue that the delay was unjustified.

9.19. If the recommendation of the White Paper are not to be implemented, and other measures are to be considered in their place, it must be borne in mind that the problems of the Public Construction Sector which gave birth to the White Paper remain. Many of the problems are the subject of this Report and it may be that the Report has brought to light problems of which the Government was previously unaware. However, the Government has put forward alternative proposals which we generally endorse, including the standardisation of procurement regimes.

It is obviously right that Government Agencies, including Udecott should be consulted and their views taken into account in deciding which measures should be taken forward. In this regard it has been noted that Udecott considers that sufficient oversight and accountability already exists through the Public Accounts Committee, theCentral Audit Unit, through Ministers themselves as well as through Cabinet and through the Parliamentary process. To assess whether this theoretical degree of oversight is effective in achieving adequate accountability of Udecott will be one of the objectives of this Report.

10. Belmont Police Station

10.1. this was one of the projects selected for analysis in relation to a number of issues and which was cited by Minister Imbert as an example of failure of the design-tender system. It is thus put forward as illustrating the need for change in the Public Construction Sector. Extensive documentation was submitted by the parties involved, particularly Nipdec. The issues were dealt with on February 5, 2009 by round table presentations between Michael Bynoe, of Bynoe Rowe, the architect, Orr Liyanage of Civstruct, the contractor, and Wendy Ali with Margarita Hospedales of Nipdec.

10.2. Belmont was one of 14 new Police Stations commissioned by the Ministry of National Security in 2005 to be project managed by Nipdec, although it now appears they constructed only five and the remainder were handed over to Udecott . Before Nipdec took over Belmont, the Ministry had already appointed Bynoe Rowe as architects for six stations including Belmont. Nipdec advised that it was not provided with a user brief. The project had a budget of $13 million and a time estimate of 40 weeks (10 months). Four tenders were received, the lowest being from Civstruct at $11.8 million with a completion time of 10 months. The Contract was let in September 2005 on the FIDIC Short Form. The final outturn cost was $15.75 million and, of most concern, the time for completion was 28 months. Of the cost overrun, variations account for $2.27 million of which 62 percent represent client requests and 38 percent design changes. Nipdec identified the problems encountered as incomplete design, variations, management issues and contractor problems including shortage of manpower and materials, poor scheduling and bad weather.

10.3. The Architect blamed increased scope including the road link, a retaining wall, paving to a yard, a security wall, enclosed staircase and late addition of AC; also weather, lack of labour and materials, lack of co-ordiantion between the Main Contractor and Nominated Sub- Contractors, delay by the TT Electricity Commission (TTEC) and a large tree on the site. The Contractor had been paid additional preliminaries for a substantial part of the delay. The Architect also pointed out savings of $740,000 and states that some delay was caused by their sub-consultants for civil and electrical work.

10.4. The Contractor claimed that the delay and additional cost arose from: setting out problems, additional excavation (BOQ exceeded by 100 percent), changes to sub-structure, changes to roof beams and columns, roof frame, blockwork, stairs, tiling and external works; also scheduling and manpower shortages.

10.5. There was a surprising dispute about responsibility for Nominated Sub-Contractors who had been selected by NIPDEC. The Contract does include a special provision for the nomination with a right of reasonable objection, but no other protection for the Contractor, who nevertheless considered that he was not responsible for the lack of performance by Nominated Sub-Contractors. It appears that no negotiation has ever taken place between the professional groups as to the contract wording dealing with nomination, and it is indeed surprising to find such a debate, which is out of step with modern international practice.

10.6. It seems clear that there were omissions and deficiencies in the design drawings and it is irrelevant for the Architect to blame his sub-consultants for whom he is, of course, fully responsible. It appears the sub-consultants operate largely independently, visiting the site at separate times from the Architect with no one fully in control of design co-ordination.