St Helena : St Helena ASPHALT PLANT WRITE-OFF
Submitted by Saint Helena Herald (Public Relations Information Office) 28.09.2013 (Article Archived on 26.10.2013)
This press release outlines a high profile case where the previous SHG procurement process failed, resulting in a ‘write off’ of the acquired asset. The procurement in question relates to the Asphalt Plant which has been the subject of much concern in the recent past.
ASPHALT PLANT WRITE-OFF
This press release outlines
a high profile case where the previous SHG procurement process failed,
resulting in a ‘write off’ of the acquired asset. The procurement in question
relates to the Asphalt Plant which has been the subject of much concern in the recent
Losing money through mistakes is
painful but in the round, lessons have been learnt and SHG’s approach to
procurement has improved. New Procurement Regulations developed with the help
of TC funding have been approved by the Governor and came into effect on 12
July 2013. These will ensure appropriate measures to mitigate the risks
associated with procurement, thus minimising any such waste of resources in the
The Plant arrived on Island in
April 2011 at a total landed cost of £116,119 and in June 2011, engineers from
the manufacturer arrived to assemble the Plant and make it ready for use.
However, due to vital missing parts, and serious safety issues associated with
the different component parts, the engineers were unable to commission the
These issues were raised with the
supplier and some of the costs were recovered (around £11,000), with SHG
retaining ownership of the Plant.
In a report to the Public Accounts
Committee in January 2012, the then Director of Infrastructure and Utilities
stated that: “the risk of danger to operatives still remains.” And that
“concerns about the safe operation of the plant still remain and any sale of
the whole plant would have to be to someone who had the knowledge and
capability to make it safe before operating the plant.”
Regrettably therefore, SHG has
concluded that the Asphalt Plant is not fit for purpose or safe and that it
will not be cost effective to take any remedial action when there is no
guarantee that the Plant can be made operable or safe.
Whilst suggestions have been made
as to possible sale of the Plant, it would be irresponsible of SHG to pass on
any liability to a third party.
Clearly all of this results in a
significant loss of public funds emanating from inefficient procurement
procedures and poor judgement on the part of officers (no longer with SHG) who
failed to undertake the necessary checks before procuring the Plant. However,
with the introduction of new Procurement Regulations, SHG now have more robust
processes and procedures for officers to follow which should prevent future
occurrences of this nature.
The main features of the new
procurement system are:
shift in focus from the value of the procurement to the risk associated with
checking facilities which must be used for all international suppliers
scrutiny of the upfront procurement processes where medium and high risk
procurements must be authorised by the new Procurement Board
Procurement Board will oversee contract specifications to ensure fitness for
payment can be made up front, unless specifically authorised by the Financial
guidance on the advertising and tender processes, ensuring fair and transparent
high risk procurements will be carried out by procurement services, who have
the professional expertise and who will exercise due diligence
delivery to St Helena, there will be scrutiny by a relevant qualified
professional to ensure goods and services for delivery are in accordance with
the agreed specification and are fit for purpose
focus on these controls prior to the commencement of the procurement process.
Compliance with these new
Procurement Regulations is compulsory, regardless of the size or timing of a
project. If steps are waived or modified, supporting evidence must be provided
to the Procurement Board. SHG will now publish all waivers from the new
SHG apologises to the
public for this failed procurement and significant loss of public funds, and in
so doing, assures the public that systems and processes are now in place to
prevent this happening again.
20 September 2013