AG criticises Matrix contract

| 08/09/2008

(CNS): There are various concerns surrounding the now controversial scrap metal contract awarded to Matrix International Ltd, a report from the Auditor General’s office tabled in the Legislative Assembly has found. Auditor General Dan Duguay says that not enough due diligence was carried out with regard to the people in the firm which could have revealed their inexperience, and he also questions the tender evaluation process.

Although the AG said that Matrix was the best of the three bids, he states that none of the proposals actually met the requirements of the invitation and that there was a failure to establish if anyone had the financial viability to actually do the job. The report says that given this situation the job should have been re-tendered.

The government signed a contract in March last year with Matrix for the firm to remove scrap metal from the Cayman Islands, which had accumulated since Hurricane Ivan in September 2004. Subsequently, the firm has run into various financial problems and has defaulted on its contract with the Cayman Islands Government and also allegedly left various local sub-contractors out of pocket.

The contract was awarded to this Canadian based firm after it made an unsolicited approach to the government and following invitations to tender, for which three bids were submitted. Matrix appeared to offer the best return, but the AG points out in his report that none of the bids actually met the terms of the tender.

“The invitation required that all submissions were to provide proof of financial viability. During the evaluation process, the tendering committee decided that none of the bidders had met this criterion,” says Duguay’s report. “We were of the opinion that when none of the bidders satisfied this mandatory requirement the process should have stopped.”

The report notes that the contract was awarded to Matrix subject to three new conditions being met but Duguay says these conditions were never fulfilled before work started. The AG’s report also points to the inexperience of the contractors and notes that had those involved in the tender process done their due diligence this would have been revealed.

“If more diligence had been done, it may have been more apparent that the principals involved with Matrix had little significant experience with the procurement, transportation and sale of scrap metal in international markets.”

Duguay also questions whether the advertising process, which included two adverts over a two week period, on the invitation to tender was sufficient. He also notes that while the tender preparation was done well the evaluation criteria and weightings used in the selection process were not, as is required by the Financial Regulations, included in the tender document.

Duguay says he was asked to examine the tendering process regarding the scrap metal issue following public interest regarding why an international bidder was selected over a local firm. In his report Duguay reveals that the one local firm bidding on the contract submitted one document merely stating the price it would give for the scrap metal.

“None of the other required information relating to past experience, workload, availability of equipment, technical qualifications or financial profile was submitted," said Duguay. “The company later complained that it was not awarded the contract.”

In February 2008 the Public Accounts Committee asked the AG’s office to review the process leading up to and the awarding of the contract. Duguay says that at the time he was not asked to look at the performance or the contract or the failure of Matrix to meet its obligations.

Previous attempts by the Ministry of Public Works to remove the massive amounts of accumulating scrap metal at the George Town land fill had never involved earning money for the waste, but had focused on simply reducing the growing mounds of scrap metal. Matrix was the first firm to approach the government and suggest there was value in the metal. The firm eventually offered $1.25 million to remove all of the scrap at the fill. After winning the contract but before any of the conditions were fulfilled Matrix shipped 6,500 tons of metal off island and paid the government $310,000. On 1 November the government suspended all operations by the firm after it was found to be in default of its contract, which has yet to be resolved.

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  1. Anonymous says:

    Unfortunately it is correct that constitutionally Cabinet does not have authority or oversight over the Police Commissioner or exactly how he spends the funds that have been voted. The Governor does. This is one reason our Constitution needs to be modernized, otherwise Cabinet is placed in the impossible position of being held responsible for a matter in respect of which it has no authority.    

  2. Anonymous says:

    A while back we read of the possibility that the spending of some government departments has been inadequately reported for years. To the tune of well over $1 billion. That is BILLION not million! That is a staggering amount of money to play loose and fast with in my opinion. The Government denied this was true saying that the billion plus dollar figure was just not correct, only to have the figure officially confirmed.  That means Government did not have a clue as to the amount. That is incredible!

    Last week we read that poor due diligence and lack of proper oversight on spending on the part of Government resulted the squandering of over $2 million on an unsuitable helicopter. Not a billion dollars but still a lot of money to to play loose and fast with. Government tried to place sole blame on the Police Commissioner. Nice try, guys. But we know he was not the one who appropriated the funds for the purchase, that was the responsibility of the ministry and the buck stops at the Minister’s desk when it comes to fiscal responsibility as to how the money is appropriated and spent. And what of the tendering process for supply of the helicopter?  No due diligence there either, huh?

    Now we read that poor diligence on the part of Government has resulted improper tendering of a contract which ultimately ended in default. Who will Government try to blame this time?

    Is anybody seeing a pattern here, folks?

    We have placed these politicians in a position of trust and responsibility and it is clear that there have been some serious violations of that trust. I say "we" as I voted in support of this government. However, with responsibility comes accountability.  I think they must be held responsible and accountable for their lack of oversight and should at least be required to offer a plausible explanation rather than trying to shirk their responsibility and blame it on someone else.

    These ministers are very well paid (some, including me say TOO well-paid) but it seems they are having trouble performing up to executive standard. They are beginning to remind me of the toddler who spills his milk and tries to place the blame on his imaginary friend. While this may a cute scenario for a two-year-old, one would think our elected officials should have outgrown such behaviour.