Mon | Dec 18, 2017

'Scandalous mess' - Contractor yet to deliver 200 police vehicles, despite receiving over $200m in payment

Published:Thursday | November 30, 2017 | 12:00 AMErica Virtue

A "scandalous mess" is how Parliament's Public Administration and Appropriations Committee (PAAC) described the failure by a contractor to deliver 200 pre-owned motor vehicles to the Jamaica Constabulary Force (JCF), having missed two deadlines despite receiving payment of more than $200 million.

Permanent Secretary in the Ministry of National Security Diane McIntosh told the PAAC that to date, only 30 of the 200 vehicles had been delivered and that the contractor was requesting waivers of general consumption tax (GCT) and special consumption tax (SCT), which were not part of the agreement.

The committee was told that 66 vehicles were at the wharves waiting to be cleared. The contractor, as per contract, was required to pay all relevant fees for the release of the vehicles. It was revealed that the contractor said that he was facing problems honouring the contract.

"The delivery period of 90 days for the vehicles expired on June 5, 2017, and only 30 vehicles have been delivered to date," read a section of the security ministry's letter to the PAAC.

 

MINISTRY ASKED TO PAY TAXES

 

According to documents, on January 25, 2017, the Ministry of National Security awarded a contract to O'Brien's International Car Sales & Rentals Ltd worth $426,930,400 for the supply of 200 pre-owned motor vehicles - 80 Toyota Corolla Axios and 120 Toyota Double-cab Pickups - for the JCF.

Responding to a letter dated June 14, 2017, from the ministry, the supplier, on July 5, 2017, outlined challenges and requested a 90-day extension, with effect from June 6, 2017, for the delivery of the remaining vehicles.

Among the challenges outlined were sourcing the vehicles consistent with agreed specifications from approved suppliers; shipping and Customs clearance delays; and difficulty in the acquisition of waivers for GCT and SCT being charged on the vehicles.

The 90-day extension was granted, with effect from June 6, 2017, to September 4, 2017.

In a letter dated August 25, 2017, O'Brien wrote to the security ministry, requesting that the GCT and SCT being charged by the Jamaica Customs Agency on the vehicles be paid by the ministry as they were unable to absorb the costs.

The ministry, in an internal meeting, decided that it would "not bear these costs as it is the obligation of the contractor to pay the relevant duties and taxes associated with the clearance of the vehicles as per contract".

The ministry, however, overruled its own decision, writing to the finance ministry for the taxes to be waived.

The security ministry required the contractor to provide an extension of the Advance Payment Guarantee, with effect from September 26, 2017, to December 25, 2017, and an invoice with the description of the vehicles, cost, engine numbers, chassis numbers, and the amount for the taxes.

On receipt of the document, the ministry wrote to the finance ministry on October 27, 2017, requesting that the taxes on the vehicles be waived.

However, on November 2, 2017, the finance ministry advised that the request had not been supported.

The security ministry then wrote to O'Brien's, advising of the situation and demanded that the vehicles be delivered no later than November 24, 2017. It said that failure to meet the deadline would result in the ministry taking the necessary actions, in keeping with the terms of the contract.

 

SOUGHT LEGAL ADVICE

 

McIntosh said that the security ministry had written to the attorney general, seeking legal advice on how to proceed.

PAAC chairman Wykeham McNeill described the situation as a "scandalous mess".

Committee member Mikael Phillips was caught in a face-off with the permanent secretary during the deliberations.

"Don't shout at me!" McIntosh told Phillips.

"I am not shouting at you, madam PS, but this is a mess," he said.

He expressed annoyance that other bidders had been rejected "simply because their bids were higher because it included costs associated with GCT and SCT".

O'Brien's bid was the lowest, but the security ministry said that it was expected that all costs associated with clearance would be included.

Phillips also noted that the ordered vehicles all have continuously variable transmission - also known as a single-speed transmission - despite caution from the police not to buy them.

He said it would cost at least $1 million to replace the transmission should they become faulty.

According to him, the police garage was filled with vehicles that were too costly to repair.

erica.virtue@gleanerjm.com