AG probes tender process

| 29/10/2010

(CNS): The system by which government secures goods and services is to be reviewed by the Auditor General’s Office as a result of issues revealed during the bidding process for the National Closed Circuit Television contract. Alastair Swarbrick said on Friday that he had decided to take a closer look at the central tendering and procurement process as there were concerns that it was not achieving value for money for the public purse. Despite claims by the premier that it was as a result of difficulties he encountered when trying to secure government’s loan of $155 million that he had instructed the audit office to examine the tendering process, the auditor general said the decision follows audit work he had undertaken regarding the CCTV contract.

“As a result of a request by the governor, a discussion with the premier, and audit work I have recently commenced on the National Closed Circuit Television tendering process, I have decided to conduct a wider scope audit of the government’s procurement process at this time,” said Swarbrick in a statement released by his office on Friday morning. “There have been concerns raised that the current procurement process followed by the Cayman Islands Government does not obtain results that ensure the best value for money. Therefore, the audit will focus on this aspect and other areas of the procurement process.”

He added that the audit would commence immediately and would be reported to the Legislative Assembly early in 2011, and he said he would discuss the results of the audit once the report was public.

The central tendering process was brought sharply into the spotlight this week when it was revealed that the premier had elected to bypass recommendations from his own ministerial technical team which had been approved by the Central Tenders Committee over the deal to supply government with long term financing of CI$155 million.

In an address to the nation on Wednesday evening, in which McKeeva Bush justified his decisionbecause he said it would offer greater value for money and save the country millions of dollars, he suggested that the tending process was flawed. He said it did not allow for negotiation and this was why he was seeking to address the way tendering currently works.

“What this experience has taught me is that the tendering process needs to be revamped. With the support of my ministerial colleagues, I have already asked for the auditor general’s assistance in making recommendations for changes to the tendering process that will result in a more efficient, modern and sensible process,” he said.

At present the process of tendering involves both the technocrats in the ministry wishing to procure those goods or services and the Central Tenders Committee, but not the ministers or other elected officials involved in the policy decision.

Following the deadline on the request for proposals, the technical team from the government agency in question and the CTC meet to open the bids. The technical team and CTC make a preliminary examination of each of the bids that has been submitted, ensuring they are valid and have met the basic criteria.

Following that, the agency’s technicians then go away and examine the bids more closely and choose which one they feel best suits the needs of the job/service/goods required and which offers the best value for money. They then write a report justifying their choice, which is examined by the CTC, who vote on whether to agree or disagree with the technicians. If the CTC agrees with the technical team, the contract is awarded. If not, the technical team is asked to re-examine all the bids and try again or the process can be re-tendered.

It is not clear what the questions were that caused the AG concern regarding the CCTV bid but it is understood there were some delays in the process.

Questions have also been raised in the wider community about outside interference with the bids and that the way in which requests for proposals are written has the potential to be skewed towards a specific potential bidder.

The Commission for Standards in Public Life (CSPL) created under the Constitution has already stated that the central tendering process will be one of its priority areas as called for under the Constitution and that it would also be examining contracts which fall outside the remit of CTC (those worth less than $250,000) and how those public contracts are awarded. The CSPL, however, has indicated that it needs supporting legislation if it is to successfully call into question the way a particular contract has been awarded.

Print Friendly, PDF & Email

Category: Headline News

About the Author ()

Comments (19)

Trackback URL | Comments RSS Feed

  1. nauticalone says:

    Looks like Mac is once again ignoring due process and "transparency and accountability". If he is of the view that the process needs to be changed, then by all means take the steps towards same….but do so the proper way!

    To do so will promote "Good Governance". For anyone (especially at the level of Premier) to do whatever he/she wants will promote corruption. Period!

  2. Anonymous says:

    As I understand it, Bush met with Cohen when he was in New York to broker/arrange/discuss/negotiate the deal with Cohen. It would appear that as a result of this Cohen was able to give "a very competitive bid" for the loan business which the Government accepted. My question is " If the Premier had met with the local entities who submitted bids on the loan request, could they have come up with a similar or better deal?" It appears to me that the local banks did not have the benefit of the Premier sitting down with them and discussing his requirements and negotiating the deal with them. I may be wrong as I may not have all the information/details but from where I sit, it looks like the local banks had a distinct disadvantage. If so, then SHAME!!!!!!!!!

  3. Jumbles says:

    Wasn’t Glidden awful on Rooster?  I loved his legal analysis.  The gist of the argument was that if the law got in the way of money then it was better that money came first.  He really cannot be let near anyone of island representing our government. 

    • Anonymous says:

      I actually thought Cline Glidden was excellent as usual very clear and articulate. So much so that all of the callers that I heard even Paul the Lion agreed with his point. Which as I understood it was that if the country could save money by not following the recommendations of CTC then the Government should not follow the process but justify the reason such as the savings to the people.

      It seemed like even Austin agreed and simply said once they are shown that the country saved by not following the process then they are satisified that the Government acted as they should have and the only other question is if the process is not working then it should be changed.

      Maybe you heard a different coversation

    • Rab L. Rousa says:

      The gist of the argument was that the law should not stop a good deal.  Now, I thought that part of the reason for these laws were to ensure that not only should our government not be corrupt, but it should be seen not to be corrupt.  However this later principle did not seem to concern the UDP representatives justifying their own actions.  I would have thought that given their high standards of honest and integrity those principles would be important to them.

  4. Anonymous says:

    Perhaps we should start a pool as to how long this Auditor General will last seeing that he seems to naively be doing the same thing that got the last Auditor General "fired":  that is, doing his job.   

    • Jumbles says:

      Don’t let Mac get your home phone number AG.  You might be recipient of an unorthodox performance review.

  5. Anonymous says:

    When will the Premier sober up?

    "Despite claims by the premier that it was as a result of difficulties he encountered when trying to secure government’s loan of $155 million that he had instructed the audit office to examine the tendering process . . ".

    We all know that the Auditor General acts independently. He will listen to a request (as he apparently did in relation to the Governor) but he does not take instructions from the Governor or anyone else – not even the mighty Premier!! Yet he would try to make us believe that he has "instructed" the Auditor General. If you could buy him for what he’s worth and sell him for what he think he’s worth you wouldn’t need to borrow anything!!

  6. Anonymous says:

    Tender process? We don,t need no steenking teder process

  7. Bush Wacker by trade, realist by necessity says:

    This Administration is surely making the new Auditor General earn his salary. This along with the US$185 million financing deal should be of utmost importance to the Auditor General. I earnestly hope Mr. Swarbrick reads these post which are certainly enlightening.

    The sheer and utter arrogance of McKeeva is rather unbelievable, in fact, down-right scary insofar that in his xxxx mind, he truly believes that every resident within this small island nation are as trusting as his constituents in West Bay. It is reasonable to say that the majority of the West Bay electorate believes every utterance out of his mouth simply look at the election results. The majority of this electorate has unfortunately ignored some very good candidates with sound backgrounds, education and most importantly no-strings attached for over twenty-six (26) years simply to keep McKeeva and cronies in to continue as they have and are doing now!  


    As a matter of good governance and transparency, the AuditorGeneral and the residents of the Cayman Islands deserve to know who in fact were and or are the players and or actors in this entire process. One; who was the company and or point person that identified and negotiated with Cohen from initial contact to completion of this bid process, both bids? Two; was this same point person involved with the other bids as well and to what extent? Three; was there a finder’sfee charged by said entity and or point person? Four; what was the specific amount of the finder’s fee charged, if any? And Five; who paid the finder’s fee, when was it or will it be paid and by what method of payment?

    The aforementioned questions are not out-of-bounds as they are pertinent to open and transparent governance for the residents of the Cayman Islands, consequently said expense has a direct impact on the Cayman Islands’ purse. Furthermore it can either dismiss or confirm if there were any improprieties throughout this entire sensitive and important matter. If it is confirmed that this individual and or entity are in fact a member of the UDP or the Government and or an “advisor” to the Premier and or Government, this is sufficient grounds for a full investigation on the basis of Official Corruption and Officious Intermeddling. Furthermore if discovered that improprieties transpired consequently the interested Parties must be prosecuted to the full extent of the Law.
    It is clear that the above will not be obtained easily because both McKeeva and CG today the 29th day of October 2010 on Rooster and Radio Cayman articulated the most asinine remarks insofar that “so what if there was a finder’s fee involved; Caymanians are their own worst enemies because they simply begrudge someone for getting something”.
    This kind of illogical reasoning will undoubtedly bankrupt this small island nation not only financially, but morally thus prompting the next progressive yet harsh step if not halted immediately and that will be Administrative take over by the United Kingdom.
    Such actions are not farfetched, Turks and Caicos’ Constitution was recently suspended and the United Kingdom took over total Administration due to improper actions by their PM.
    The totality of this recent act along with others since or should I say from during the UDP’s political campaign of ignoring the highest Law in the Land being the Constitution could certainly prompt a serious look into the Administration of the Cayman Islands by the United Kingdom.
    Then where would this tiny little island nation be? Cayman Nepotism is your Achilles heel!!
    In closing, I hope someone finds the elixir soon to open the eyes, minds and hearts of the majority of the West Bay electorate. I sincerely hope that the elixir is not more and or better “gifts” as is the modus operandi of McKeeva and the UDP but a renaissance of PRIDE; be it district pride, self pride, or simply pride in knowledge and independence.  
    • Anonymous says:

      Your post is well reasoned and well written.

      However, you could have summed in up with one short phrase, "we suspect corruption".

      Remember, if the captain and his mates sink the good ship Cayman, they ain’t going down with it. The life boats are all in first class.

      I wish the auditor general well and good luck. He will need it.

  8. Mac Quack says:

     Surely it is "Tender Area Probed"??


    "Tender Process probed by AG"??


    "AG Probing Tenders…"


  9. Anonymous says:

    Maybe they should also investigate the award of the telephone system contract for the portfolio of internal and external affairs…XXXXX. A company with no track record in the cayman islands installing these systems in the cayman islands won against qualified incumbents and also felt confident enough to skip the vendor bid meetings….hmmm

  10. Anonymous says:

    The Auditor General needs to look at the deal with Cohen & Company as a priority.

    The following information was extracted from Cohen & Company’s last quarterly report to the SEC:
    In a related development, CCS received a subpoena on May 14, 2009 from the staff of the Securities and Exchange Commission (“SEC”) captioned In the Matter of Sentinel Management Group, Inc. CCS and the Company has cooperated with the investigation.
    On June 18, 2009, Cohen Brothers was one of a number of market participants to receive a subpoena from the SEC seeking documents and information in an investigation titled In the Matter of Certain CDO Structuring Sales and Marketing Practices. The Company has and intends to continue to cooperate with the investigation.
    In 2009, CCS was subject to a routine Financial Industry Regulatory Authority (“FINRA”) examination. As a result of that exam, the FINRA staff requested additional information and the testimony of certain employees concerning the mark-ups CCS charged in four transactions during the exam period. CCS and the Company intend to continue to cooperate with FINRA.
    Why would the Premier override the CTC to do business with a company under scrutiny by the SEC?
    14.6 Million Two-Year Senior Secured Credit Facility
    On July 29, 2010, Dekania Investors, LLC, another subsidiary of Cohen & Company, entered into a new $14.6 million secured credit facility with TD Bank, N.A. The new credit facility expires in September 2012, and replaces Cohen Brothers, LLC’s previous $30 million revolving credit facility that was due to expire on May 31, 2011. Proceeds of the credit facility will be used to finance working capital requirements and for general corporate purposes. Cohen & Company, and its affiliates, continue to grant TD Bank a security interest in certain of their assets, including their rights in the three-year Services Agreement discussed above. The current minimum annual interest rate of the credit facility is 6.0%, which is less than the minimum annual interest rate of 8.5% on the previous $30 million revolving credit facility.
    You can look at the financial statements of Cohen & Company and see that they do not have money to lend, so in effect they would only be brokering a deal with the Cayman Islands Government. If 6% is the absolute best deal that they can get for their own company, what does the Premier think they are goingto get for Cayman?
    Either the Governor or the other four Members of Cabinet need to step up to the plate and do something in a hurry.
    • BORN FREE says:

      I sincerely hope that the AG will probe the whole financial package deal between the premier (the UDP government) & Cohen & Company. As happy as I am to hear that the Governor has ordered the AG to probe government’s deal with the Security Centre for the instilation of the CCTV’s, I really hope to see a comprehensive AG’s report on the Cohen & Co. deal.

    • Anonymous says:

      This needs to be taken apart and analyzed atom by atom folks. I very simply would NOT accept it purely by ANYONE’S word of mouth that their own improperly conceived ‘deal’ is going to save this country "tens of millions of dollars" over the nearest competitor. We need to know the truth and nothing but the truth about this.

  11. Dennis Smith says:

    Transparency makes it hard for a government to function because everyone has an opinion, informed or otherwise that makes it difficult to complete any process. But a lack of information, especially in areas of public spending, leads to speculation and a lack of trust.


    Cayman needs to arrive at a workable solution, somewhere between the two extremes. Regular and rigorous audits are one part of the solution. Professional and aggressive procurement is another. No business simply accepts a supply proposal without a good understanding of how much the goods or services it is buying should cost.


    Procurement is a profession, one focused on buying well. If you don’t know how much something should cost how do you know if you are getting value for money? Simply choosing between competing bidders is a sure road to bankruptcy.


    Of course governments don’t go bankrupt; they simply raise taxes. Since the population is ultimately paying for all government expenditures it is understandable that they demand an efficient and competitive procurement process.


  12. Pending says:

    Quick question; does Bostock (who owns Security Center) not serve on the CTC Board? Or is it the business development counsel that he sits on?

    CNS: No to the first question -see Central Tenders Committee. He is the president of the Chamber of Commerce.

    Google is your friend.