Clearing the air on JDIP

Today, we bring you the full text of the national address to the nation by Prime Minister Andrew Holness Saturday night.

My fellow Jamaicans, I speak to you tonight on a matter that is of concern to all of us, the matter of public openness, transparency and accountability in Government and the application of these vital principles to the Jamaica Development Infrastructure Programme (JDIP).

Jamaica has the second-highest road density in the world, next to Japan in terms of roads per square kilometre. This shows our heavy dependence on roadways for transportation.

In the last 20 years, the number of cars and housing developments has increased the demands on our roads significantly. We must also bear in mind that Jamaica is a tropical country and that we are in a zone that is highly susceptible to natural disasters.

Roads once built have to be maintained and generally a well-constructed road should have a 20-year cycle before major rehabilitation is needed. Given our local conditions and heavy usage, our roads deteriorate more rapidly. Whilst capital outlay is high at the construction phase, regular maintenance is necessary to preserve this capital outlay and life of the road, otherwise the investment will be wasted. However, historically as a country, we have not been able to sustain a programme of routine maintenance, given our fiscal constraints.

Roads are a significant political pressure point for governments and are the cause of more protests and demonstrations than the lack of other critical infrastructure or services. In our democracy, administrations are ultra-sensitive to the demands for roads.

This Government, in responding to the issues, devised a mechanism through the allocation of a portion of the inflows of the Special Consumption Tax on fuel to secure a concessionary loan from the People's Republic of China - which has demonstrated a fraternal approach to assisting developing countries. The nature of such bilateral arrangements would usually entail a Chinese company, and possibly the use of Chinese labour and materials, in implementing the project. However, the specifics of the JDIP arrangement is that the Chinese state-owned company, China Harbour, would be the contractor which would undertake major projects themselves, and on smaller projects, they would utilise local subcontractors while retaining responsibility for design, engineering supervision, and quality control.

JDIP was designed to be executed over four years and would focus on rehabilitating major roadways. The JDIP loan is US$400 million, and whilst this is a substantial sum, it cannot fully address even 10 per cent of Jamaica's road network rehabilitation and maintenance needs.

Unfortunately, the JDIP was billed as the largest road rehabilitation programme undertaken by the Government, and that created expectations that JDIP would solve all problems. Tonight, I want to moderate those expectations.

In the management and administration of JDIP, various demands for all kinds of roads and projects, which were not in the original concept, have been made on the Government. In addition, several natural disasters have forced the Government to adjust the scheduled programme to facilitate recovery from the dislocating effect of these events. The JDIP programme has the potential to be a flagship project if properly managed. Going forward, I have decided to refocus JDIP to its original mandate, which is the rehabilitation of main roads and some main community roads and supporting infrastructure. The Government will honour existing contracts.

Management criticised

The management arrangement of JDIP has been severely criticised, where the main contractor is allowed to subcontract with local contractors without utilising the GOJ procurement procedures. The original position of the Government was that all subcontractors should be grade-one contractors as classified by the National Contracts Commission. However, some of the selected grade-one subcontractors were subsequently downgraded from their grade-one status during the contracting period. In these instances, the subcontractors were still under contract and had contractual obligations to fulfil.

In my review of the JDIP, we have started to explore the introduction of a more robust and competitive selection process. I have given directions to my permanent secretary to devise a plan that will introduce competitive tendering which will be presented to the Cabinet.

The auditor general has presented a comprehensive report on JDIP which raises serious questions about the management and implementation of the project. I commend the auditor general and her team for this work. The Government has accepted the major findings and has already taken steps to rectify the breaches.

There are long-standing institutions and systems in place in managing a programme such as JDIP. What has been revealed to date suggests that functional gaps exist in these institutional arrangements which relate to the role of executive agencies and their relationship to ministries. The greater degree of latitude and independence afforded to CEOs of executive agencies can, in the absence of adequate oversight by ministries and in the context of significant political pressure and public demand, increase the risk of breaches.

Regardless of the context in which breaches occurred, I am certain that significant expenditure and contract negotiation decisions were made without proper reference to the Cabinet.

The auditor general has pointed out that JDIP utilised unstructured project selection criteria. There are also concerns and suspicions in the public domain regarding misappropriation, breaches of procurement procedures, cronyism, and abuse of public office.

The Government has decided to locate JDIP under the Office of the Prime Minister, where greater oversight will be placed on the selection of projects, a reformed contracting process, change in personnel, and tighter reporting controls are being implemented.

The auditor general continues to monitor JDIP and the implementation of key recommendations. The contractor general is investigating alleged breaches of procurement and we await his findings. As matters arise they will be dealt with within the law and with appropriate measures.

Protecting public interest

I want it to be clearly understood that my duty is to ensure that the law is followed and that the systems and institutions are in place to protect the public interest and to work to ensure that where gaps exist in systems and laws, they are corrected. There will be no attempt to cover up any matter. I believe we have demonstrated this in our actions to date.

I am aware that each new discovery can create public alarm and disgust. Rest assured that the goal of this Government is to create a transparent and frugal public service and I am committed to ensuring that this is achieved.

We are well under way with the engagement of an independent consulting firm with strong technical competence in infrastructure management, which will provide technical oversight of JDIP and will provide an assessment as to whether value for money was obtained.

Further, in the light of the importance of JDIP to national development - to assure the Jamaican people of transparency in the expenditure of public funds and taking into account the strong bilateral commitment of our partner, the People's Republic of China - in this flagship project, the Government of Jamaica will undertake a forensic audit of JDIP and lay bare its findings.

Regardless of all the surrounding issues, JDIP so far has completed several main roads, and 44 projects are currently in progress islandwide - which include works on supporting infrastructure, bridges and drainage.

All of these projects have helped to improve the quality of life in Jamaica. I will ensure that we use public funds effectively to obtain maximum benefit for all Jamaicans. We are committed to a path of public-sector efficiency, transparency and accountability. With your interest and vigilance, we will achieve this goal.

Good night, and may God continue to bless Jamaica, land we love.