‘Big coincidence’ - CMU staff gave figure and asked me to beat it, says boss of company formed when bids were invited
In early 2018, the Caribbean Maritime University (CMU) was getting ready to engage a company to procure specialised materials for the construction of a new $701-million, three-storey student block at its main campus in east Kingston.
Around the same time, a new logistics company was being incorporated in the state of Florida, in the United States (US), according to the findings of a special audit of the scandal-scarred university.
That company, a Gleaner investigation found, was Business Supply Source (BSS). The company began operations on February 23, 2018, according to records filed with the Florida Department of State and reviewed by The Gleaner.
The records listed Leo Gilling, Kimone Gooden and Balfour Peart – three Jamaicans residing in the US – as the principals of BSS. Peart acknowledged that he had been pals with CMU President Professor Fritz Pinnock from their days at Munro College in St Elizabeth.
Construction of the new block, which was expected to house five lecture theatres, 20 mini-halls/classrooms, and 40 tutorial rooms, was scheduled to start in February 2018 and end this month.
The Auditor General’s Department (AuGD), which conducted the audit, said that based on the decision to use panels of poly-isocyanurate, or sandwich panels, CMU wrote to the permanent secretary in the Ministry of Education on March 12, 2018, seeking approval to use the direct emergency contracting method.
But even before the permanent secretary gave her approval in writing on April 9, 2018, the special audit found that CMU began soliciting bids for price quotations for the sandwich panels.
The AuGD said information provided by CMU suggested that five entities, “including Logistics Company 1” – which The Gleaner has identified as BSS – were invited to bid for the right to procure the sandwich panels for the project.
“CMU was unable to indicate the basis on which the companies were pre-selected. CMU breached the procurement guidelines which require international competitive bidding and/or local competitive bidding for procurement of goods above $60 million,” the AuGD noted.
Notwithstanding, according to the audit report, CMU set a March 6 cut-off date for bids to be submitted. Further, it found that BSS, or ‘Logistics Company 1’, did not submit a bid until March 13 – one week after the deadline and just over a month after it began operations – but emerged as the successful bidder.
It said that BSS indicated that it could provide the materials for US$621,132, or approximately J$79.5 million (based on the March 2018 exchange rate), which turned out to be the lowest bid, but there were more unusual developments.
“Logistics Company 1 was incorporated in February 2018, the same month that CMU invited bids for the procurement opportunity,” the auditors found.
“Further, we noted that Logistics Company 1, which submitted the lowest quote, had attached the quotes of the other bidders with its submissions. We found no evidence that the four bidders authorised Logistics Company 1 to submit the bids on their behalf.”
“In addition, although three of the suppliers submitted quotes with dates prior to the submission deadline, the only responsive bid came from Bidder Company 2. This raises questions regarding the transparency and impartiality of the selection process,” the audit report lamented.
Despite this, CMU’s procurement committee, by memo dated April 11, 2018, recommended to the university’s president, Professor Fritz Pinnock, that Logistics Company 1 be awarded the contract to supply the panels.
The AuGD said its auditors requested the bid evaluation report, as well as minutes of the meetings of the procurement committee, to determine the basis on which the bidders were recommended but disclosed that no supporting documentation was provided.
On April 13, 2018, two days after the recommendation by the procurement committee, CMU paid BSS the full sum of US$621,132, “despite the absence of a formal contract, bank guarantee, or irrevocable letter of credit to secure CMU’s interest”.
“Further, the amount exceeded the 50 per cent deposit provided under the Government’s procurement guidelines,” the audit noted.
Gilling, who acknowledged that he is a managing partner in BSS, insisted that it was a “big coincidence” that his company was established at the same time that CMU was looking to engage a logistics company.
“Kimone [Gooden, his business partner] has been in the procurement business for many years ... . She procures in California. I said to her, ‘Kimone, why don’t we procure in Florida also?’ because she is here [in Florida] all the time,” Gilling told The Gleaner in an exclusive interview.
“It has nothing at all to do with CMU,” he insisted, dismissing the suggestion that he might have had inside information.
Further, Gilling said he could offer no comment on how the bids by the other entities were attached to the bid document submitted by BSS.
Explaining how his company became involved, Gilling said “some members of the CMU staff” contacted BSS with a figure for the project and asked, “Can you beat this bid?” He insisted that the March 6 deadline for the bids was news to him.
“First of all, I have no clues about any deadlines before I was given an opportunity to quote [on the project]. All I was asked was, ‘Can you beat the bid?’ and we set out to beat the bid.”
He could not recall if there was a signed contract between the two entities but insisted that “we did what we needed to do the way they asked us to do it”.
“Whatever they asked us to do, we did. With the quality of people that we were talking to, we hoped that we were going through the proper procedures.”
By June 6, the audit found that CMU paid BSS a further US$368,303 for “high beams, steel, and other assembly materials. This brought the total payment to the Florida-based logistics company to US$989,485, or $J125.37 million.
“Of note, CMU had not previously included high beams, steel, iron, and other assembly parts, essential components required to enable the construction of the building,” the AuGD said.
Gilling defended the additional payment, explaining that as far as his company was concerned, CMU had changed the order.
“The original order did not include those beams, so we had to go out and order more beams,” he said.
The AuGD said that CMU records indicated that the sandwich panels, along with other materials, were delivered between August and October 2018 and were being “stored outdoors at CMU’s main campus”.
The report revealed, too, that up to September 25 last year, CMU paid a total of J$98.5 million to various suppliers to provide materials and labour for the project. However, up to October last year, only the substructure or foundation of the project had commenced, the AuGD said.