Guam public procurement criticised by watchdog

11 November 2010

11 November 2010 | Peter Searle 

Major procurement failings by the Department of Public Works (DPW) in Guam have been uncovered by the Pacific island’s Office of Public Accountability (OPA).

The independent report highlighted five major issues in procurement processes including the preferential selection of 10 contractors for certain projects and the “artificial division” of $6.6 million of contracts into smaller ones to avoid the need for a bidding process.

From fiscal years 2007 to 2009, the DPW spent $25.9 million on 566 capital improvement projects. An OPA audit of the department’s construction purchasing for this period revealed projects totalling $16.1 million breached procurement regulations. The largest chunk of this ($14.1 million) was the result of preferential treatment of particular suppliers.

Problems highlighted in the report include:

•    The preferential selection of 10 contractors who received 184 capital improvement projects worth $14.1 million, or 54 per cent of the deals.

•    262 projects totalling $6.6 million were not advertised.

•    Emergency procurement was used to circumvent the competitive sealed bid process, including the $199,200 purchase of eight sports utility vehicles from a contractor who is not an authorised automotive dealer.

•    $226,926 in routine maintenance work was contracted as capital improvement projects.

•    Documentation for $10.5 million of projects was either missing or incomplete.

Procurement failings were the result of “conflicting advertising requirements, the artificial division of procurement, poor planning, and inadequate training of procurement staff”, the audit said.

It recommended the practice of “artificially dividing” contracts be halted, that projects over $25,000 be advertised and a proper list of contractors be produced to stamp out preferential treatment.

DPW director Andrew Leon Guerrero said: “DPW embraces this audit, its findings and recommendations.”

A ‘plan of corrective action’ produced by the DPW in reaction to the audit’s recommendations stated that they “will immediately discontinue the practice of dividing work request and collectively combine all similar/like projects”. The plan also agreed to procurement training for staff to make them aware of Guam’s regulations.

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