The Office of the Virgin Islands Inspector General has issued the audit report of contract administration at the Juan F. Luis Hospital. The objective of the audit was to determine if the Hospital solicited, awarded, and monitored contracts per its policies, applicable laws, and regulations.
We found that Hospital officials did not always follow the internal controls put in place to safeguard the procurement of goods and services. Specifically, officials did not always follow: (i) procurement procedures for competitive bidding and the approval process for purchases; and, (ii) the Board’s requirement that all expenses and contracts exceeding $100,000 be approved by the Board and any corresponding changes or amendments have the Board’s approval. In addition, the Hospital’s management between 2017 and 2019 made questionable decisions that resulted in the Hospital paying $1.4 million on a temporary operating room never utilized; a two-year delay, and lost revenue related to the temporary hospital (known as JFL North); and, paying $1.3 million for services obtained under an emergency contract that has lasted more than three years. Furthermore, the Hospital experienced a high management turnover among key positions and lacked a continuity plan to ensure limited disruption of its operations. Over five years, the Hospital saw 5 CEOs, 3 CFOs, and 3 Chief Legal Counsels, and did not have full-time staffers in the administrative/middle management positions to maintain the continuity of the Hospital’s daily operations when those key employees left.
We attribute these conditions to the Hospital management team’s (i) not following its procurement policies and regulations consistently, (ii) not fully understanding its procurement needs, and; (iii) not effectively planning and executing its scope of work and contracting needs, and (iv) not ensuring that proprietary information held by former key employees were turned over to the hospital to ensure its smooth operations, and not having adequate middle-management staff to maintain the Hospital’s operation.
As a result, officials procured goods and services outside of the normal procurement process, purchased goods, and amended contracts without proper approvals. Also, officials made decisions that significantly delayed the temporary hospital’s opening, resulting in lost revenue due to patients being sent off-island for services usually performed by the hospital.
Finally, the Hospital lost valuable time when new staff did not have access to files and electronic records established by a previous management team.
We made several recommendations to address the conditions and causes cited in the report. Our recommendations addressed the following areas: (i) following procurement procedures, (ii) payment reporting, (iii) maintaining files, (iv) obtaining professional Capital Project services, (v) adequate staffing, and (vi) continuity plan for critical management functions. To view the report, click here.