Huge losses caused due to terminated contracts: audit report

An audit report on the Education Ministry’s spending has shown that the government faced huge losses due to the cancellation of contracts over high project costs.

According to the audit report, four projects that were awarded to parties via the National Tender Board were cancelled in 2016. The report said four contracts awarded to a company named Swift Engineering totalling MVR 48.4 million in 2016 were cancelled over the next year on the order of the Finance Ministry.

The projects include the construction of F. Atoll Education Center, Madrasatul Ifthithah of Lh. Naifaru, L. Maavashu School and Dh. Kudahuvadhoo school. All four contracts were terminated after the project cost was deemed as too high. However, the report noted that the reason for termination was not listed as a valid reason to break the contract in the original agreement.

While the projects were awarded through the National Tender Board which is managed under the Finance Ministry, it was the Finance Ministry itself that had instructed for the cancellation of the contracts due to high project cost, the report noted. It further said that since such projects are normally awarded based on the Tender Board’s decision, any issues with the project cost should have been highlighted during the bid evaluation process, and the projects should not have been awarded to the company in the first place.

According to the audit report, until the termination of the contract, over MVR 4.5 million had been issued to the company as advance payments.

The audit report said the initial contract for the construction of Naifaru school was awarded to build a concrete structure. However, after the contract was terminated, the project was awarded to Road Development Corporation, but this time to construct the school using pre ab structures. An advance payment of MVR 2.78 million was issued for the purpose. However, the government in 2018 decided to dissolve the corporation, after which the construction of F. atoll Education centre was handed over to AIM Construction and Naifaru School to Vilukolhu Maldives. The advance payment issued to Road Development Corporation was not recovered.

Later in 2019, the contracts awarded to Vilukolhu Maldives were terminated, and the two terminated contracts were awarded to Swift Engineering. This time, the contract was awarded for the construction of a concrete building. While over half of the project had reached completion when the contracts with Vilukolhu Maldives were terminated, MVR 10.3 million had been issued to the company until then. Another MVR 832,100 was incurred to demolish the prefab building put up by Vilukolhu Maldives.

Therefore, the projects were not properly planned and thought out, and this cost the government a loss of over MVR 13.94 million, the audit report noted.