Rampant inefficiencies in the Water and Sewerage Authority (WASA) project management department have led to the beleaguered State-owned company over procuring $81 million in pipelines they may not have needed.
This was just one of the shocking findings contained in a 35-page report by WASA’s Internal Audit Compliance Department (IACD) into the authority’s procurement of 38,480 lengths of pipes valued at $223 million from Chinese based firm Xin Xing Ductile Pipes Company Ltd since 2013. The 38,480 pipes cover a distance of 235.14 kilometres and it marked the largest purchase in WASA’s history.
The pipes were bought for the execution of 28 projects geared towards improving WASA’s reliability and regularity of its pipe-borne supply to its 400,000-plus customers.
Eight years later, however, the report, dated September 16, 2021 and obtained by Guardian Media, has found that 16 of the 28 projects are still incomplete after millions of taxpayers’ dollars have been spent.
The report also uncovered discrepancies in the procurement process for the pipes, irregularities in the shortlisting and evaluation procedures and lack of due diligence by WASA’s management.
The audit concluded that every aspect of WASA’s project management cycle had been plagued with inefficiencies which resulted in the over procurement of pipes valued at $81,284,659.74
The fact that 16 projects had not been executed, the report stated, demonstrated the authority’s inability to execute projects within planned timeframes, while management did not have the autonomy and ability to determine the prioritisation of projects.
“The authority’s failure to adequately conceptualise projects resulted in pipes being procured for 10 projects that are no longer required. The IACD is of the opinion that the controls over the procurement of the iron pipes were unsatisfactory,” the report discovered.
Public Utilities Minister Marvin Gonzales ordered the IACD to commission the audit in March, in order to verify whether there was a legitimate need for the number of pipes procured, the reason for a large number of unused pipes in stock and ascertain if the procurement process was executed as an arm’s length transaction.
A review of the detailed report showed WASA purchased the pipes under the then People’s Partnership administration.
Funding for the projects was allocated under the 12-month Water Development Plan and Infrastructure Development and Consolidated Funds from the T&T government.
The pipes, ranging in diameters eight to 43 inches, were delivered to WASA in five tranches between March 2013 and May 2014 and the average cost per pipe was listed at $5,801.
Apart from the over procurement of the 16,045 pipes, the audit showed that two projects, namely Caroni Dualling from Couva to San Fernando and Naparima/Mayaro Road, were never executed but estimated to use 8,167 pipes valued at $61,067,787.56.
“It appears that the authority procured 873 pipes valued at $5,064,814.26 in excess of the quantities approved by the TC (Tenders Committee) at the 219th and 225th meetings. The TC approved the procurement of 37,607 pipes, yet 38,480 pipes were procured.”
The report stated that “the former Head, Water Projects explained that since Xin Xing’s cost was less than the authority’s estimate (38 per cent) spare pipes were also purchased for repairs and future projects. However, this was not adequately justified via votes to the TC.”
Also, 8,883 pipes priced at $26,045,566.41 were also procured for ten projects that were no longer required.
Of these projects, four were completed prior to receipt of Xin Xing’s pipes and should not have been included in the 28 projects.
Pipes were also purchased for six other projects, three of which had been duplicated, while an additional three were cancelled/discontinued. WASA spent $6,322,947.56 on 1,650 pipes for the three duplicated projects.
“This brings into question whether management was negligent or deliberately misled the TC when requesting approval for the quantities of pipes required,” the report stated.
The report cited two projects—Beetham/Sea Lots and Castara to Runnemede—that did not require pipes as confirmed by the former head of Water Projects, yet 1,250 pipes valued at $3,294,898.58 were procured for the projects.
“It should be noted that the former Head, Water Projects subsequently contradicted himself by indicating that the Beetham/Sea Lots project was executed at a reduced scope but no documentation was provided to substantiate this claim,” the report found.
The report discovered that one project —South Central Road—which had been discontinued was estimated to use 983 pipes, having an approximate value of $3,499,615,25.
Further analysis also showed that 12 completed projects used 1,878 pipes less than what was estimated.
Among the 12 projects is the Caroni Dualling South Transmission Main project, which is now 91 per cent completed after starting in 2017.
“Based on documentation received from the executing department, although an estimated $289,412,088.89 of taxpayers’ dollars has been spent to date, of which $89,307,528.52 is for iron pipes, there is no confirmed plan to complete this project.”
It also found that as of May 2021, WASA had not used 24,269 of the pipes valued at $80,113,234.68 which are currently stored in Freeport, Caroni, Carlsen Field and two areas in Tobago.
“IACD was unable to accurately reconcile and validate the actual quantities of pipes that were used in the 28 projects. Utilising the Executing Department’s records, 16,550 pipes were calculated to be on hand. The variance of 7,719 lengths valued $44,782,704.78 between Inventory (Oracle) and the Executing Department’s records, may have resulted from inadequate and inaccurate project records,” the report found.
The report attributed that other control deficiencies would have contributed to the variances.
In reviewing the procurement process, the IACD picked up several discrepancies which brought into question whether “the process was conducted at arm’s length.”
Based on their investigations, the audit found the Tenders Committee and the board did not exercise due diligence in requesting adequate support from management to make informed decisions.
Irregularities were also identified in the shortlisting and evaluation process.
“The deficiencies noted in the procurement process possibly impaired the transparency and equity of the tendering process, negatively impacted the quality of pipes procured and prevented the authority from attaining value for money for WTC 46/2012,” the audit report said.
The report concluded that the tendering process for the procurement of the iron pipes was deficient, since the selection team failed to use the prequalification criteria under WTC 137/2011. The management team at the time justified the circumvention of the same, as three packages of the WTC only had two compliant bidders, which is the minimum required to facilitate a competitive e-auction. However, the report pointed out, this did not justify circumvention.
“This not only impaired the transparency and equity of the procurement process but possibly limited the authority’s selection of the most suitable supplier.”
The audit also picked up several variances between the pipes that were purchased and WASA’s inventory records.
To address the deficiencies, the IACD put forward several recommendations. One recommendation was that acting CEO Sherland Sheppard consider utilising the pipes in stock for future projects and revise its evaluation process and records management in readiness for the implementation of the Public Procurement and Disposal of Public Property Act 2015.
“It should be noted that the detailed issues were raised with the relevant managers for corrective action and will not be included as part of the outstanding Audit Recommendations. However, it is expected that corrective action will be taken to implement recommendations in the shortest possible time frame.”
Contacted on the audit report, Minister Gonzales said for weeks he has been pondering how best he can utilise his time to address the ills that occurred in WASA over the years,“including the pipeline debacle and scandal.”
“I think the public interest, at this time, will be better served by putting all the unused pipeline to use to improve transmission and distribution of water, especially in areas where there are high leakage lines,” he said.
He said many of the players who were involved “in this scandal are no longer in the authority and the transformation will address the internal shortcomings that facilitated this egregious and vexing state of affairs.”
Having seen the pipes, which are hidden from the glare of the public, some rotting away, Gonzales said, “It struck me that past executives were never interested in solving the country’s water crisis but used WASA as a cash cow to line their pockets.”
Gonzales said this fiasco went on for years “undetected” with no answers in sight.
“I was not getting satisfactory explanations from previous management. Now that a special audit is completed the findings are clear and startling,” he said, adding he will ensure that every piece of unused pipeline is placed in the ground to improve T&T’s water supply for citizens.
Pressed on if he will refer the audit to the T&T Police Service for an investigation, Gonzales did not respond.