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OBA cuts consultancy fees

The Bermuda Government spending on foreign consultants has fallen steadily since the One Bermuda Alliance came to power but the amount could be on the increase this year.

More than $7.3 million is expected to be paid from the public purse to overseas experts during this financial year, an increase of more than 9 per cent compared to last year's revised estimate.

And annual spending on local consultants remains at a similar level to four years ago, soon after the OBA took over Government: $10.6 million then, compared to an estimated $10.4 million this year.

The Ministry of Finance said it could not provide a detailed breakdown of who would benefit this year from the funds — or who would be paid other consultancy and professional service fees — as some items had “yet to go out to tender”.

A central plank of the OBA's economic plan before the last election in December 2012 was to cut spending on “overpaid consultants”.

The party pledged to immediately “cut down on the use of consultants by Government” as part of a strategy to eliminate wasteful spending and get the island's economy back on track.

The promise came on the back of repeated criticism of the ruling Progressive Labour Party by the Opposition — both the United Bermuda Party and, later, the OBA — for its spending on consultants, here and abroad, after it came to power in 1998.

In 2010, Bob Richards, when shadow finance minister, accused the PLP of “spending the public's money like a drunken sailor”, including on “outside consultants to help them govern”.

The following year, Michael Fahy, now transport minister, described a “slashing of consultants” as “an absolute necessity across Government”.

A month after winning the election, in January 2013, Mr Richards pledged again to go after consultants.

He said. “We are fully aware that we have been very critical of the Government in years gone by about consultants and we intend to reduce the number and cost of them. I can say that without hesitation.”

As Bermuda heads towards another election, possibly before the end of 2017, figures provided by the Ministry of Finance in this year's Budget book show spending on professional services overall has been almost halved during the OBA's term in office.

For the financial year 2012-13, which ended on March 31, 2013, $95.9 million was spent on professional services, compared to the estimate for this fiscal year of just under $50 million.

Mr Richards said last night: “We have cut the professional services budget. In the last year of the last administration, the budget allocation was $115 million. Last year we had it down to $58.9 million and this year the budget is for $49.9 million.”

The Budget book gives a line item breakdown for that overall figure, which includes amounts for local and foreign consultants, contractors and lawyers.

The projected budget spending is across all ministries.

For 2012-13, $23.2 million was spent on overseas consultants. This year's estimate of $7.3 million, although an increase on last year, still represents a decrease in spending of almost 70 per cent during this administration.

The drop in spending for local consultants is far less significant: just 2 per cent, from $10.6 million in 2012-13, to an estimated $10.4 million this year. Spending on contractors in 2012-13 was $24 million and has been estimated at $14.6 million this year: a drop of almost 39 per cent.

A Ministry of Finance spokesman said the contractors' allocation included contracts for items such as emissions testing, IT contracts and cleaning and maintenance contracts.

There has been an increase in spending on legal services, a line item which the spokesman said included fees mainly for legal aid. In 2012-13, $4.3 million was spent on legal services, compared to an estimated $5.2 million this year, representing a 20 per cent rise.

Last year's Commission of Inquiry into the misuse of public funds was set up, in part, after the Auditor-General discovered that millions of dollars were paid to consultants without approval during the PLP administration.

Her office tested $2 million in payments to consultants during fiscal year 2012, out of a total of $33 million, and found none of the payments had the prior approval of the Cabinet Secretary, as required.

The Commission heard current practice was for the Cabinet Office to give the Accountant-General's Department copies of each approved consultant contract and for the latter department to keep a log of all such contracts.

But Accountant-General Curtis Stovell revealed to the panel that checks on payments worth more than $5K to ensure consultant contracts were on file had been temporarily suspended due to staffing shortages.

The Commission concluded that was a matter “which ought be addressed and corrected forthwith”. In their report, the panel wrote: “We would also endorse the Auditor-General's recommendation of an oversight committee on the retention of consultants, whether individuals, foreign or local, as well as companies.”

Minister of Finance Bob Richards (Photograph by Akil Simmons)

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Published May 05, 2017 at 9:00 am (Updated May 05, 2017 at 1:29 pm)

OBA cuts consultancy fees

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