The Office of the Virgin Islands Inspector General has issued the audit report of contract administration at the Virgin Islands Waste Management Authority. The objectives of the audit were to determine if Waste Management officials: (1) followed their procurement guidelines in awarding contracts and (2) ensured that contracted services were performed in accordance with contract terms and conditions.
We found that Waste Management did not always follow its procurement policy requiring competitive bidding. Specifically, in some cases, Waste Management operated its solid waste collection services with expired contracts and verbal/informal agreements. At least ten contracts expired, and services continued on a month-to-month basis for up to six years. Also, at least two vendors provided services to Waste Management based on verbal/informal agreements. In addition, Waste Management did not adequately maintain its procurement files.
Furthermore, Waste Management officials did not (i) ensure that some of its Solid Waste contracted services were adequately monitored for compliance per contract terms; (ii) always document the results of their worksite visits; and (iii) establish uniform policies and procedures in both island districts to monitor its contractor’s work performance. In addition, Waste Management paid some contractors for billed services that were questionable and unsupported. Finally, from 2017-2019, Waste Management paid its contractors an average of 10 to 38 months late.
Waste Management’s officials did not (i) prioritize the solicitations of bids to ensure that its operations were done at the most economical cost and benefit; (ii) establish an adequate record maintenance system; (iii) establish written procedures to monitor contract services; (iv) require its responsible personnel to document when they performed worksite inspections; and (v) ensure that that contractor claimed work was reviewed and inspected for reasonableness.
Moreover, Waste Management officials did not document changes made to contract terms. In addition, they did not adequately review contractors’ bills before approval and payment. Also, Waste Management did not receive anticipated revenues from some of its funding sources, nor did they have valid contracts in place to allow the agency to anticipate its contract cost adequately.
As a result, Waste Management expended at least $15,593,860 without ensuring that it obtained the best price for its services. In addition, Waste Management could not ensure that its bin sites were adequately maintained and billed services were correct, reasonable and for work done. Also, Waste Management: (i) paid $452,762 for services that were based on a verbal agreement; (ii) paid unsubstantiated charges of at least $95,304; (iii) paid at least $23,539 for services that were not adequately supported; and (iv) could not ensure that payments to some contractors were for services that were rendered. Also, as of March 2018, Waste Management had incurred an outstanding debt of $14,193,145. This led the VI Legislature to increase its 2019 budget by $7,000,000 to pay its vendors.
We made several recommendations to address the conditions and causes cited in the report. Our recommendations addressed the following areas: (i) prioritizing soliciting bids for expired contracts, (ii) maintaining files, (iii) monitoring procedures, (iv) contractor billings, (v) utilizing scale house, and (vi) outstanding debt. To view the report, click here.