The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Top contractors yesterday argued that taxpayers would not be exposed to almost $3 million in extra costs as a result of the BAMSI fire if the Government had ended the construction industry’s 15-year wait for legislation to regulate it.

Godfrey Forbes, the Bahamian Contractors Association’s (BCA) president, said the proposed Contractors Bill would prevent companies from being licensed/registered to legally provide construction services if they did not have Contractors All-Risk Insurance (CAR) in place.

He told Tribune Business that if the Bill was already law it would have, at least in theory, prevented the Government from suffering ongoing embarrassment over the fire that destroyed BAMSI’s male dormitory.

Deputy Prime Minister Philip Davis yesterday admitted in the House of Assembly that the Ministry of Works breached established procedures by advancing the first contract (mobilisation) payment to the dormitory contractor, Audley Hanna, without having proof he had obtained insurance for the project.

Mr Davis also conceded that the Government, meaning the Bahamian taxpayer, will incur almost $3 million in extra costs to rebuild the Bahamas Agriculture and Marine Science Institute (BAMSI) dormitory.

This is because reconstruction costs have been estimated at $5.5 million, with the $2.55 million balance something the Government will attempt to reclaim from Mr Hanna and his firm, Paradigm Construction.

The additional $3 million taxpayer exposure could not have come at a worse time for the Government, given increasing public expectations and demands that it will exercise fiscal prudence, having imposed Value-Added Tax (VAT) on the Bahamian people.

Mr Forbes yesterday implied that the Government could blame itself further as a result of failing to pass the Contractors Bill, a piece of legislation that has passed through successive administrations - both FNM and PLP - without yet making it Parliament.

“We have been asking the Government to give some attention to it, and implement and pass it into law,” Mr Forbes told Tribune Business yesterday.

“If that is done, then the Contractors All-Risk insurance will be [something] required for a contractor to have, so they can be licensed and provide construction services.”

The Contractors Bill has been the victim of numerous delays, as the draft undergoes assessment and revisions between the Attorney General’s Office, Ministry of Works and the private sector.

It has left the Bahamian construction industry as virtually the last professional sector that is not self-regulating, and governed by its own specific statute laws.

“I have been informed that the Bill is being reviewed at the Attorney General’s Office,” Mr Forbes said, “and some final adjustments are being made at that level at this point.

“It’s expected to be handed back to the Minister [Mr Davis], who is intending to go ahead and have it tabled in Parliament some time soon.”

Indicating that the construction industry wanted the timelines to be better defined, Mr Forbes added: “How soon is soon is questionable.

“The time for it to happen has been long overdue. We’ve been trying to have this thing worked on, and brought into law, for 15 years.”

He then reiterated to Tribune Business: “If that [Bill] was indeed in place, what we are hearing over the airwaves now with BAMSI would not have been a problem.

“At the end of the day, the people’s money would have been protected; period.”

This newspaper yesterday obtained a 2011 draft of the Contractors Bill, which backs up Mr Forbes’s assertion that it might have prevented the BAMSI controversy if passed into law and adhered to by the Government.

Its Section 19, headed ‘Licensee to give evidence of insurance’, reads: “Before providing a construction contracting service to a client, a licensed contractor or licensed contracting firm must provide to the client a certificate of insurance, evidencing Contractors All-Risk Insurance and public liability insurance of $1 million.”

The certificate of insurance is precisely the document that is missing from the Ministry of Works file on the BAMSI dormitory fire.

While the file showed the contractor had obtained a quote for six months’ Contractors All-Risk Insurance from RoyalStar Assurance, there was no evidence the premium had been paid or that the policy/coverage was in force.

Mr Forbes yesterday said obtaining Contractors All-Risk was “a very standard procedure” in the construction industry for contractors of all sizes, as it ensured their projects - and their clients - were covered against all risks for the contract’s duration.

“That is one of the things that is extremely easy to get,” Mr Forbes said of Contractors All-Risk Insurance, “as easy as getting insurance for your vehicle. You just pay the premium.

“At the end of the day, any good contractor putting together his bid, his bill, he puts that [Contractors All-Risk Insurance] in as part of his bid.”

Mr Forbes was backed by his immediate predecessor as BCA president, Stephen Wrinkle, who echoed his words in saying that obtaining Contractors All-Risk Insurance should be “no problem at all”.

“It’s a very standard policy that is used throughout the world for construction purposes,” Mr Wrinkle told Tribune Business, adding that “virtually 100 per cent” of projects employed it.

He explained that whenever contractors bid on a project, the normal practice was to provide an insurance agent with the necessary details so a quote for Contractors All-Risk Insurance could be obtained.

Should the contractor win the bid, the quoted premium would be paid and the insurance certificate showing coverage was in effect for the contract’s duration issued. Simultaneously with the first contract payment, the contractor should provide evidence that the Contractors All-Risk Insurance was present.

Mr Wrinkle explained that the first payment made to contractors, often referred to as the mobilisation payment, was sometimes used to pay the Contractors All-Risk Insurance premium if the contract provided for it.

He added that such policies normally covered the construction contract’s length, from start to finish, and if work went beyond the projected completion date, further coverage was required.

Mr Davis yesterday said the Government sometimes paid the Contractors All-Risk Insurance itself, taking the premium from the mobilisation payment, but said there was no evidence such an agreement was in force over the BAMSI contract.

“It’s very unfortunate this has happened,” Mr Wrinkle told Tribune Business, “particularly on such an important project to the country.

“To obtain a Contractors All-Risk Insurance policy is not a big deal. It’s mot a complicated issue. Clear, concise instructions are normally given on government bids that it [the insurer] must be a reputable firm, a recognised entity, a licensed entity carrying on business in the Bahamas.”

Mr Wrinkle also questioned whether the BAMSI dormitory contractor had been required to lodge a performance bond, which was something Mr Davis did not refer to yesterday.

The Deputy Prime Minister yesterday appeared to blame his officials for the insurance oversight, saying: “There can be no plausible explanation for an administrative error such as that which has occurred in this case.

“What the file does not tell me is who took the decision to advance the [20 per cent] mobilisation without the requisite insurance, what intervention, if any, was made to ensure that this requirement was met once identified, and why the contract, which has been substantially delayed, was allowed to continue without this critical requirement.”

Describing the situation as an “avoidable error”, Mr Davis expressed hope that lessons had been learned.

“I am constrained to call out the actions of technical officers whose duty it is to be good stewards of the people’s money, and to lessen Governments’ exposure to potentially embarrassing situations,” he told the House of Assembly.

“Given the experience of my technical team and the checks and balances of our bureaucracy, there was no reason to suppose that such an administrative error would be missed for so long.

“Beyond that, the public fully and rightly expects all Government officials to be above reproach in protecting the public’s interests. These citizens, our constituents, depend on officials to act in the public good, to know their roles well, to do their jobs efficiently, and to be honest in their handling of public resources, avoiding even the opportunity for, or the appearance of, impropriety.

“The Public Service provides the remedies that should ordinarily flow from matters such as this, particularly how best to manage them and how best to learn from them.”