The Bermuda Housing Corporation rarely adhered to its policies and procedures when awarding and administering contracts, Auditor General Larry Dennis claimed.

He said often contracts were awarded to companies with only a general description of work to be carried out and a price, making accountability virtually impossible and increasing the risk of insufficient and unsatisfactory work; not to mention leading to increased costs to both the taxpayer and corporation clients.

Mr. Dennis said a Government-owned corporation with the mandate and mission of the corporation should have approved policies and procedures in place to be able to demonstrate that as a minimum:

Suitable suppliers have opportunities to submit tenders or quotations for work and services;

tenders and quotations are treated fairly and awarded properly;

formal contracts are executed that protect the corporation's financial interests;

payments are made on contracts only where work is performed;

claims for cost overruns are assessed; and

the Corporation is seen by the public as conducting its business properly and openly.

But the Auditor General said while such policies were in place, they were largely ignored.

"The corporation has policies and procedures for awarding and administering construction and maintenance projects that satisfy the above criteria," he said.

"The problem is that it rarely fully adheres to them."

Mr. Dennis said, for example, the corporation's policies call for formal contracts to be executed for projects in excess of $50,000.

"The investigation revealed that contracts were executed for all projects under the Vacant and Derelict programme, but not for all other projects in excess of $50,000," he added.

"As well, an examination of a substantial selection of the corporation's recent projects and related payments revealed that it has failed to satisfy virtually all of the above listed criteria."

Mr. Dennis said he acknowledged that Government had relaxed its policy requiring tenders to be obtained for all large contracts, particularly where tendering might diminish the chances of smaller less-established contractors.

But he added: "In my view, however, this does not relieve the Corporation of its responsibility to obtain reasonable and competitive prices for its projects.

"This could be achieved, for example, by obtaining a selection of quotations and a process to ensure that the best value is chosen. Whatever the method of process, it should be seen to be fair and consistently applied."

In practice, Mr. Dennis said the Corporation only used a tendering process for the very largest projects, and even then, it was not always used fairly.

For example, he said, tenders were obtained for the construction of a large number of housing units. It was then decided to construct a substantially smaller number of units and the contract was awarded to one of the original bidders.

"Aside from there being no documentation to show how the successful tenderer was chosen, this was unfair to potential contractors who did not tender because of the size of the project, or who could perhaps have tendered a better price for a smaller project.

"A larger concern is that the majority of the Corporation's construction projects were initiated without obtaining a selection of quotations, or executing a formal contract.

"Many construction and repair projects were initiated by issuing a purchase order with only a general description of the work to be performed and a price. A lack of detailed job specifications, at this stage, increases the risk of incorrect or unsatisfactory work being performed.

"It also precludes the Corporation demonstrating, and prevents auditors or others assessing, whether prices paid are reasonable."

The Auditor General said some purchase orders were supported by the contractor's written quotation for the work, but he said there was rarely evidence that other suppliers had an opportunity to submit quotations, or that the quotation represented a competitive price.

"This practice is unfair to contractors who do not have an opportunity to compete for Government business," he added.

"It is also unfair to taxpayers who are paying more than necessary to construct the Housing Corporation's own assets, and to the Corporation's clients who are paying more than necessary to refurbish and repair their properties under the Vacant and Derelict and property management programmes."