Kikau probe proposed
26 July, 2017, 12:00 am
THE Office of the Auditor-General (OAG) has recommended that the Republic of Fiji Military Forces carry out an investigation to determine why the maintenance and upgrading of naval ship RFNS Kikau was not completed despite the contractor being paid from public funds.
In its 2016 audit report, the OAG noted that a sum of $2 million was allocated in the 2013 budget for the life expectancy program for the maintenance and upgrading of the naval ship.
According to the OAG, contrary to the payment schedule in the contract, the Commander of Fiji Navy approved the final payment of $119,110 to the contractor after the recommendation from an officer.
The audit noted that the RFMF paid the contractor the contract amount of $549,146. However, 78 per cent of the contractual scope of works — valued at $427,428 — was not performed by the contractor.
“Furthermore, the clause for delay/liquidated damage is not incorporated in the contract, as a result the RFMF was unable to claim the delay damage from the contractor who failed to complete the work within the agreed timeline,” the OAG noted.
“The above findings indicate that there is a lack of proper planning and monitoring for the upgrading of the vessels.”
The report stated that this led to the considerable delay in the upgrading works and payment to the contractor for the incomplete works resulting in value of service not being obtained for public funds totalling $1.9m.
The audit noted that the Government Tender Board approved the waiver of tender for slipping the RFNS Kiro on February 15, 2016.
“The audit noted that the RFMF engaged the contractor on November 20, 2015, to December 8, 2015, prior to the approval of the Government Tender Board. A total of $283,351.95 was paid to the contractor following the approval of the Government Tender Board.”
The report said it was evident that the request for the waiving of tender was made to regularise the procurement process and facilitate the payments to the contractor. The OAG recommended that all capital projects were properly planned and implemented within the year in which funds were provided, investigation was carried out to determine the reasons the projects were not properly monitored, important clauses such as delay damage claim were included in the contract and instructions stipulated in the procurement regulations were complied with.
In response, RFMF acknowledged the recommendations from the OAG.
“In 2010, the Pacific Patrol Boats (PPB) Class RFNF Kiro was due for its Life Extension Program (LEP) refit works,” the RFMF said.
It said the progress of the LEP project was hampered by the departure from the project in late 2012 of the Australian project consultant, who had vast experience in the PPBLEP and the sanctions by the Australian Government on all assistance rendered to the LEP by all Australian commercial companies that the Fiji Navy was engaging, given that the vessel was built in Australia and had all the spare and maintenance parts for the projects.
“The Fiji Navy was left with no choice, but to seek other alternative service providers locally to carry out the project.
“Given the magnitude of the project and the cost involved, proper due diligence had to be done, apart from the extensive search for reputable naval architectural, engineering and associated technical experience to be engaged for the project.
“The process took the Navy approximately eight months to establish, in which some local companies were identified.”
The RFMF said the time it took to complete all the activities exceeded the State’s financial year and it was unfortunate that funds could not be rolled over to the next financial year.