Auditor General On Heritage Wharf Cost Overruns

December 4, 2015

Auditor General Heather Jacobs Matthews today [Dec 4] released a Special Report on the Royal Naval Dockyard Cruise Ship Pier, with her office saying “the report highlighting the planning and other deficiencies which resulted in cost overruns and subsequent spending on the $60 million project.

“The report also noted construction deficiencies which have called into question the adequacy and quality of the facility,” a spokesperson said.

“As noted in other major capital development projects during this period, this project was not delegated to the Ministry of Works and Engineering which has the mandate and expertise to carry out such projects.

“Instead, this project was delegated to the Cabinet Office and the Ministry of Tourism and Transport, neither of which had the capacity or the legal authority under Financial Instructions to undertake this project.

“The Auditor General found that the Government did not use effective practices in planning and managing the spending of public money to build Heritage Wharf.

“Additionally, inadequacies in the management of the Project did not protect the Government’s interests or provide the Government with the ability to measure whether value for money was achieved in many areas.

“The Auditor General concluded that the blatant disregard for the policies, rules and procedures designed to protect the public purse is unacceptable and violates principles of good governance, accountability and responsibility.

“Those guilty of such violations and neglect must be held to account and the appropriate sanctions should be applied, including appearance before the Public Accounts Committee.”

Addressing the costs, the report said:

The original estimate of costs as indicated in contract documents was $38.9 million. Upon completion of the Project, the Government recorded expenditures of $59.7 million in the Consolidated Fund.

The report’s findings said:

  • Government did not follow approved policies and procedures for tendering (4.1.1);
  • Cabinet did not approve the construction contract (4.1.2),
  • Government did not critically assess the priority and affordability of its major capital projects (4.2.1);
  • Government did not conduct a comprehensive financial assessment of the Project before awarding the contract tothe preferred contractor (4.2.2);
  • Appropriate planning and design was not conducted before construction began resulting in significant cost overruns (4.3.1/2);
  • The Ministry did not protect the financial interests of the Government when it accepted the preferred contractor as its own guarantor and failed to perform financial due diligence (4.4.1); and
  • Appropriate oversight of construction or costs was not performed by the Ministry (4.4.3).

The report’s conclusion said:

We concluded that the Government did not use effective practices in planning and managing the spending of public money to build Heritage Wharf and its related infrastructure. Inadequacies in the management of the Project did not protect the Government’s interests or provide the Government with the ability to measure whether value for money was achieved in many areas.

The blatant disregard for the policies, rules and procedures designed to protect the public purse is unacceptable and violates principles of good governance, accountability and responsibility. Those guilty of such violations and neglect must be held to account and the appropriate sanctions should be applied including appearance before the Public Accounts Committee.

The full report from the Auditor General is below [PDF here].

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Comments (57)

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  1. O'Brien says:

    PLP, this is your legacy.

    • David says:

      You really have to question the brain cell count of anyone who can a. read, b. remember, and then c. go on to call OBA supporters names.

      The recent various reports coming out of the AG’s office are the direct result of….. Speaking of, where was the self-proclaimed “keeping them honest” columinst, Chris Famous, during all this?

      • Black Soil says:

        Chris Famous has publically said he will support PLP “no matter what” or “come hell or high water”. So this is a twisted dude who will wait this out till next year.

    • meh. says:

      Can’t wait to hear their response to this. This isn’t even just embarrassing its serious. Now go get them.

      • Barbara D Cooper says:

        Don’t hold your breath for a PLP response !

  2. jt says:

    Burt questioning Doc. Beautiful.

  3. Justin says:

    The PLP should just disband now. Ewart Brown took out the UBP and the PLP. That’s an impressive legacy!

    • Family Man says:

      But the views from Martha’s Vineyard are lovely.

      • Justin says:

        Yup, enjoying his boasty gov’t pension compliments of us lot in Bermuda which I’m sure is enough to put a few very nice presents under his tree this Christmas!

      • Earth watch police says:

        Bermudians payed for that property but somebody else owns it.

        • Triangle Drifter says:

          If you know where it is, take a look at it on Google Earth or Bing.

          Very impressive. Puts some Tuckers Town propertys to shame.

      • Triangle Drifter says:

        The views from a certain Dockyard location are nice too. The view from inside the walls, not so nice.

  4. Double S says:

    So it went $20mn over budget despite the fact that the recently released engineer’s report noted the shoddy work and shortcuts (i.e. no rebar in the pilings, using sand instead of concrete to stabilize the pilings, missing pilings etc.) used by the contractor.

    The work was so under par that the thruster wall came apart in a weak category 1 hurricane.

    Lets not forget that due to this ineptness the pier had to be repaired to the tune of another $25mn in early 2013 by this Government.

    So by my count that makes three special AG reports (TCD, Port Royal and Dockyard Pier) highlighting malfeasance and massive overruns all of which was moved under the remit of the ministry of Tourism/Transport as opposed to under the ministry of Public Works. Things that make you go hmmmm..

    Now are some beginning to understand how we got to where we are in terms of Government finances? Probably not.

    Is this another example of what the PLP leader recently labeled a Party lacking a ‘financial conscience?’

    Thanks PLP.

  5. John E. Thorne says:

    We know what we the taxpayers had to pay on this project but because of how it was handled how do we know that corruption did not come into play here?
    We the taxpayers demand answers and we want those involved to be held accountable not only to the Public Accounts Committee but also in a court of law if wrong doing can be proved?

  6. I heart 441 says:

    Someone needs to be locked up NOW! White collar crime is just as hurtful as blue collar crime!

  7. Starting Point says:

    Not been a good week for the old PLP…….when it rains it pours…

    “The Auditor General concluded that the blatant disregard for the policies, rules and procedures designed to protect the public purse is unacceptable and violates principles of good governance, accountability and responsibility.

    “Those guilty of such violations and neglect must be held to account and the appropriate sanctions should be applied, including appearance before the Public Accounts Committee.”

    • jt says:

      Doesn’t look like the CS can be the scapegoat here.

      • umok says:

        No not on this particular issue. On other issues yes.

        • jt says:

          All large capital project overspends under the PLP are highly suspect and cannot be blamed on the CS given what the AG is saying.

  8. high road says:

    It is time that those responsible are made to pay for their actions

  9. Triangle Drifter says:

    I am sorry but as one gets up in age the memory sometimes is not what it used to be.

    Maybe somebody from the PLP camp, Chris Famous maybe, can remind us of which party was in power at the time &, more importantly, who was the Minister of Transport & Tourism who overode all established good practice protocalls & signed off on these projects?

    • blankman says:

      While he’s at it can Mr. Famous tell us who the contractor was? And what his professional qualifications are?

  10. Excerpts says:

    “Instead, the ultimate responsibility for the Project was delegated to the Ministry. At this point, the Ministry had not demonstrated the capacity (systems, processes and qualified personnel) for the oversight or management of a project of this magnitude.” – page 6

    “Instead, the ultimate responsibility for the Project was delegated to the Ministry. At this point, the Ministry had not demonstrated the capacity (systems, processes and qualified personnel) for the oversight or management of a project of this magnitude.” – page 6

    “Senior officials in Works and Engineering highlighted the fact that the contracting process did not adhere to Financial Instructions and noted that there were significant unmanaged risks. As well, the Government was warned that the lack of a detailed design as well as proceeding with a contract without sufficient information (such as geotechnical, environmental and other types of surveys and analyses) could detrimentally affect the cost and delivery of the Project.” page 12

    “Cabinet did not approve the negotiated contract terms. The Ministry admits that this failure to obtain Cabinet’s “further approval” was due to an administrative oversight.” – page 13

    “Government did not critically assess and prioritize capital projects within its resource constraints. While individual capital project requests from Ministries were assessed, the Government did not conduct a coordinated analysis over ministries nor did it prioritize its capital needs across the Government as a whole.” – page 13

    “The thruster wall built at a cost of $6 million (originally estimated at $600 thousand) experienced failure during a storm in September 2010 which it should have easily withstood” ‘- Page 17

    “The mooring apparatus suffered failure to the northern mooring under load with the noticeable bending of the walkway; and’ – Page 17

    “There was poor documentation of the review of structural capacity.” – page 17

    “In November 2012, a subsequent report not only confirmed these findings but determined that the thruster wall did not serve any structural significance with respect to the maneuverability of the cruise ships and recommended remedial work to address the concerns. ” – page 17

    “Changes initiated throughout the Project have been blamed for the additional costs. Senior officials told us that costs were verified by the project manager. However, given the Ministry’s lack of experience in the management of capital projects, it would have been expected that some level of independent oversight would have been undertaken to protect the Government’s interests. We found no evidence that the Ministry performed due diligence on the amounts submitted.” – page 18

  11. UmJustSaying says:

    Unethical behavior. Are those two words super substitutes for, not guilty?
    Name and Shame all those responsible and hold them accountable. PATI, is a wonderful tool!

  12. rudy says:

    Well what will come of this? Probably nothing.

    What do you think OJ?

    Perhaps this was “unethical” behavior at best???

  13. Noncents says:

    And the PLP have the gall to bang on about the Airport project…

  14. Warwick pond skink says:

    Well at least we now known what Ewart meant when he said he had “come back to settle some debts” !!!

  15. Terry says:

    And who was the Minister of Tourism during this period.

    Public Accounts Committee my a***.

    ‘PAC’ ?

    Should read Police Action Committee.

    PAC. Bawahaaaaaaaaa
    Pac of crap.

  16. Bermyman says:

    David Burt needs to resign from the PAC and as Shadow Finance minister. – There is no way he can retain any shred of integrity or credibility with regards to the public’s finances. He was Jr Finance Minister while this happened.

  17. Are you kidding me? says:

    Someone once said that Bermuda was in a very strong position to ride the storm of the recession ,now we know had these accounts been spent wisely we would have had quite a lot of money to avoid the recession ,but who cares they. attitudes were not my money…..

  18. skytrain says:

    Where is LaVerne? No Comment?

    • Widget says:

      Funny I was thinking the same thing. No onion juice or the other gal as well. Must be nap time.

  19. True Onion says:

    Seems the contractor has some explaining to do aswell. If they were building for me I would be very worried.

  20. jeremy deacon says:

    The Premier told Bernews that he has no desire for a witch hunt into previous administrations. Sorry, but thst that does not cut it. Yet again, a dammning report into the handling of public finances and yet again a deafening silence from those in positions of power.
    Not good enough

    • Toodle-oo says:

      All we can hope for is that Prem Dunkley was being as politically correct as he could while not admitting that it is the role of the police and DPP to pursue these matters , and that they ARE being pursued . Just without the general public knowing about it .

      Dunkley and the rest of the OBA know full well that if they were to spearhead the pursuit of investigations and prosecutions it would be viewed as complete political hostility and an ‘act of war’ by PLPers (who would never vote for them anyway).
      Ironic as it seems , it could almost be viewed as a potential loose , loose situation in terms of politics.

      But , like all right minded people , I really do hope that something is quietly going on that ‘we’ don’t know about yet.

    • taxpayer says:

      Well the rest of us “desire” all concerned with this BS to be made accountable. As the AG points out this is the “public purse” and I am a member of the public. Should I call the cops and tell them to get started?

    • Andrew Little says:

      … heads will roll, like dominoes, maybe.

  21. Mike says:

    I’m not sure what is worst.

    Knowing you have been screwed, or knowing that some are laughing at us because they screwed us.

    Enough to make you vomit.

  22. Paul Revere says:

    Go AWAY Jeremy deacon, FAR FAR AWAY
    I’ve stated it before and i’ll state it again you were part of the problem when you worked elsewhere
    Now you wanna act like you care
    We don’t need our kind here

    • jahmani says:

      “We don’t need our kind here” well said Paulie, get on your horse and ride hater .

  23. jahmani says:

    You aint seen nothin’ yet folks .

  24. SOMEBODY GOT RICH says:

    I think if the premier wants to make a good name for himself he better push some buttons and get to the bottom of this. Grow some ballingas Mr. premier.

  25. If Guilty says:

    The guilty in both the Civil Service and Government need to have their pensions removed as a minimum. That would help us going forward.

  26. Keith says:

    I worked in Bermuda for a number of years, all of my time under the PLP government. I remember clearly talking to a British guy in a bar one night who was from the Foreign and Commonwealth Office and who was visiting the Island for a few weeks. He was just back from Turks and Cacaos, where the FCO had put a stop to government level fraud and theft of public money. He told me that they were staying in Bermuda for a few weeks to do an audit here. But what was really interesting was that he said for an island like Bermuda that was so dependant on trust for it’s financial industry survival, fraud and corruption would have to be handled in a much quieter way, out of the public eye.

    A certain someone left office shortly after the FCO visit if I remember correctly, and quite suddenly too. I always wondered if the FCO and the departure were connected.

  27. serengeti says:

    Bean and Burt running the PLP gives us the best chance of never having this type of thing happen again.

  28. rudy says:

    I cannot seem find it in my notes….who was the minister of transport and tourism at the time?

  29. rhonda says:

    As the World Turns, fast forward 3 years. Airport project moved to the Cabinet Office, no oversight for on value for money etc……

    • A few queries says:

      Assuming you didn’t read the letter of entrustment from the UK or the Deloitte report which requires this issue to be addressed before construction.

      But deflect away Rhonda, deflect away.

      And let’s not forget that there wil not be the customary millions of dollars of overruns as was the case in each and every capital project undertaken by the PLP.

      I hope you and yours are finally beginning to see why we are broke.

      And let’s

    • Build a Better Bermuda says:

      The airport project is receiving more oversight and independent review than any other major government project in several decades… Deloitte, UK, over 2 years of contract negotiations… Just because you keep repeating misinformation at the request of your Alaska Hall masters, doesn’t make it true.

    • Earth watch police says:

      Yes that’s what the plp would do.

    • Triangle Drifter says:

      Oh look who is the first one to crawl out from under the Alaskan rock.

    • Sara says:

      Tha’s all you got to say on this report. LOLOLOLOL

    • Sara says:

      Not one comment in support or defense of the PLP. Cat has FINALLY got the tongue.

  30. max says:

    Nah… sorry- sickness here

    Step up in politics, get hold on contracts for 100 millons, and work with cronys and come out rich
    Ooo. …funny isn’t it ..

    You Steel a groceries you still go to court?

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