By NEIL HARTNELL
Tribune Business Editor
Construction industry regulation will eliminate the typical 50-100 per cent cost overruns on public works projects, Tribune Business was told yesterday, creating instant multi-million dollar taxpayer savings.
Leonard Sands, the Bahamian Contractors Association’s (BCA) president, told Tribune Business that the Construction Contractors Act would “absolutely” eliminate the wastage and cronyism highlighted by the Minister of Works on Wednesday night.
Desmond Bannister, in his Budget debate presentation, revealed how the $6.5 million construction contract for the new Lowe Sound Primary School was given to three “inexperienced” persons, with the Christie administration ignoring warnings from Ministry of Works officials that this endangered the project’s success.
Mr Bannister said one had never been involved in construction, while the other two were a plumber and someone who had only worked on much smaller construction projects.
He added that all three, whom he described as Progressive Liberal Party (PLP) supporters, had initially submitted individual bids that were all rejected. However, the Christie administration told them to work together as a team and awarded the trio a contract, under the supervision of a contractor “who had not finished the last big job he received from the Government”.
Mr Sands said the Lowe Sound primary contract debacle highlighted why construction industry regulation should be the Minnis administration’s “number one priority”.
“What you have just read is the number one reason why there is an urgency, and need, for the Construction Contractors Act to be given number one priority by the Government,” the BCA president told Tribune Business.
“There is a need to ensure practices like that cease, do not happen again, and do not happen in our country.”
The Act, which was passed by the previous Parliament but has yet to be given effect, will register and license contractors according to capability, experience and the size of projects they can undertake.
This, if enforced, would prevent the inexperienced, unlicensed contractors - such as those selected for the Lowe Sound project - being handed such a major contract.
This, though, depends on the Government and Ministry of Works following the rules. The debacle outlined by Mr Bannister effectively shows that the Ministry and its former minister, now-Opposition leader, Philip Davis, were in non-compliance with the very Act they were - at the same time - pushing through Parliament.
“You can’t say you will get this contract because you’re a friend of the Minister or a friend of the party,” Mr Sands said, explaining how the legislation would work in practice.
“He has to be a registered contractor, and that means he has to have a license. They only way he’s able to be granted a license is to be a practicing contractor for a number of years, and then he is grandfathered in based on qualifications, expertise and experience.
“You can’t have someone who is inexperienced be awarded a contract for $6.5 million,” the BCA president continued. “That will not happen, because when the Act comes into force we will never have challenges like this in contract awards.
“It will bring in higher standards, it will bring in accountability, and cleans up the industry - including all the taxpayer dollars spent willy nilly on all manner of contracts.”
Mr Sands emphasised that $6.5 million “is not a small contract”, with the level of financial management involved requiring a contractor who was familiar with “a detailed level of accounting” and cash flow management.
“You need experience already to do a job of that nature,” he added.
Mr Bannister’s address highlighted how cronyism in the awarding of public construction contracts, via awards to family members, friends and political supporters, has cost the Bahamian taxpayer dearly to the tune of hundreds of millions of dollars.
The problem has been given sharper focus by the Bahamas’ fiscal crisis, with annual deficits above $300 million and the $7 billion-plus national debt continuing to rise.
The cost of politically-led decision-making, and placing this above taxpayer ‘value for money’, has only served to exacerbate these problems, and shows the need for the ‘change in governance culture’ repeatedly promised by the Minnis administration.
“We see this as a clean up,” Mr Sands told Tribune Business, “and getting the Construction Contractors Act into force and running properly will help save millions from government expenditure in the future.
“If the Act comes into force, the Government could see potentially a 50 per cent reduction in the capital Budget overruns. We need this legislation to be enforced, as every day the country will benefit economically.
“You will see us as a country reap the benefits in terms of millions of dollars within the first 12 months of the Act being enforced.”
Giving a numerical estimate for the loss to Bahamian taxpayers and the Government, Mr Sands took an annual Ministry of Works capital budget of $125 million.
Suggesting that overruns on projects were often “at least 50 per cent, sometimes double”, the BCA president said the cost of no construction industry regulation could be as high as $312.5 million to $625 million over a five-year period.
Mr Bannister had previously told Tribune Business he wanted to make sure the Construction Contractors Act would work as intended, and was capable of being enforced, with all concerns addressed before the Minnis administration moved to implement it.
Mr Sands said the BCA met Mr Bannister last week, with the Minister agreeing to bring the Act into effect as soon as possible.
“Part of the communication and commitment he gave to us, the BCA, is that he is going to lay the document on the table [of the House], which is the final step for it to become the law of the land,” Mr Sands said.
He explained that while the former Parliament passed the legislation, it had not been ‘gazzetted’ and laid in the House. The Board, and Registrar, who will oversee the registration/licensing process, and the self-regulating Act, also have to be appointed.
Mr Bannister gave several other examples of alleged construction contract mismanagement, waste and inefficiency by the former Christie administration, particularly as it relates to the Bahamas Agriculture, Marine and Science (BAMSI) Institute.
Suggesting that the project was a construction “free for all”, Mr Bannister focused on the $2.6 million contract for BAMSI’s female student dormitory, which was awarded without competitive bidding to a company called Andarco.
The company’s principals included former PLP Cabinet minister, Darrell Rolle, and the late Bishop Samuel Greene. The contract was eventually terminated, but Mr Bannister said the Christie administration “took the fool-hardy course” of paying Andarco’s sub-contractors when this was the company’s liability - not the Government’s.
He added that the Bahamas Development Bank (BDB) also had to “absorb a loss” on the loan granted to the contractor for the project.
As for the notorious male dormitory, which was destroyed by fire, Mr Bannister said the Government also offered to pay $220,000 to the sub-contractors involved - but, in so doing, offered a higher sum to persons who made claims as opposed to those who did.