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RA denies conflict over IT contract with board member

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A company owned by a Regulatory Authority board member has been paid almost $112,000 for IT services after the watchdog failed to put the work out to tender, The Royal Gazette can reveal.

A public access to information notice on the Regulatory Authority website showed that Smith Technologies – owned by Dion Smith – had a contract listed as “ongoing” and was paid $111,757 from April 2019 to March 2021.

Regulatory Authority commissioner Dion Smith (Photo from Smith Technologies website)

Notices published earlier in the Official Gazette showed the company got $250,015 from April 2015 to March 2019 from the watchdog for the electricity and telecommunications sectors.

Mr Smith became a Regulatory Authority commissioner in May 2018.

Regulatory Authority chairman Mark Fields (Photo from Bermuda Government website)

But Mark Fields, the RA chairman, highlighted that Smith Technologies was awarded the IT business before Mr Smith became a commissioner and “therefore, a discussion regarding a conflict of interest was not required at that time”.

Mr Fields said that no discussion of a potential problem was needed when Mr Smith was appointed to the board.

He added: “Based on the Regulatory Authority Act, services derived by Mr Smith through Smith Technologies do not create an eligibility issue.”

Mr Fields said: “The RA’s board of commissioners does not appoint commissioners. They are appointed by an independent selection committee.”

Public authorities, including the RA, must publish notices of contracts worth more than $50,000 under the Public Access to Information Act.

The notice on the RA website listed Smith Technologies as a contractor for IT services.

But Mr Fields said: “Smith Technologies does not have a contract. They operate solely on a cost and charge basis.”

But he added that the company still did work for the RA because a tendering process for the IT services contract was delayed by Covid-19.

Mr Fields said: “IT services are provided to the RA on a month-to-month basis by Smith Technologies until a formal request for proposal is conducted in fiscal 2021-22.”

He added the RA operated a conflict of interest policy.

Mr Fields said: "In determining whether an actual, potential or perceived conflict of interest exists, each situation is evaluated based on the circumstances.“

He added: “On an annual basis, each commissioner is required to declare conflicts of interest.

“Where there is a conflict of interest, the board of commissioners makes the decision of whether to accept the conflict and, if so, how it should be managed.

“In this instance, the IT services are managed directly through RA staff.”

Mr Fields said there were other IT services companies on island who could provide the same services as Smith Technologies and they would have “an opportunity to participate in the upcoming request for proposal”.

There were three commissioners when the RA was launched in 2013 and the number increased to five a few years later.

The other commissioners are Philip Perinchief, Gregory Swan and Michael Wells.

Commissioners are each paid $72,000 a year, except the chairman, who gets $108,000.

The RA last October proposed trimming its $6.38 million budget by about $600,000 – 9 per cent – for the next financial year.

It also recommended a freeze on the fees that funded it, which come from companies and consumers in the power and telecommunications industries.

But the RA announced earlier this month it would temporarily increase the fee it added to Belco electricity bills to implement new electricity tariffs and fund a series of wind studies.

The Pati notice showed spending of $2.2 million on contracts, with the majority going on consulting fees.

More than $1.5 million went to overseas companies based in the United States, Canada and Europe.

Mr Fields said: “The rationale and justification for each consultation contract is detailed in each of the RA’s annual work plans.

“The geographic location of the RA’s consultants is largely dependent on the nature and scope of the individual project.

“The areas of the RA’s specialisation is unique in Bermuda. As a result, there are not many local firms available who are able to provide the required level of expertise.”

He added: “As the regulated sectors continue to develop and evolve, the RA may seek expertise from consultants who are located either on island or off island.”

The Pati notice said that the contract values given for April 1, 2019 to March 31, 2021 were drafts and had not been audited, so could change.

Mr Fields said: “The financial statements for both 2018-19 and 2019-20 are currently with the Auditor-General.

“The 2020-21 statement will be submitted to the Auditor-General by June 30, 2021.”

To see the Pati notice listing all the contracts and the RA’s conflict of interest policy, click on the PDFs under Related Media.

Mr Smith did not respond to a request for comment.

Regulatory Authority - the big contracts

* $653,850 for rent and building services to local firm Sound Endeavours – for the period June 1, 2019 to June 30, 2024. The charges for the first floor of Craig Appin House, in Hamilton, where the RA is based, work out to a monthly cost of almost $11,000.

* $271,500 for regulatory technical consulting services to Squire Patton Boggs (UK) LLP – March 16 to October 10, 2020. Authority chairman Mark Fields said the company “provides specialised legal advice to the RA for both electricity and electronic communications regulatory matters”.

* $258,000 for ongoing regulatory technical consulting services to Oxera Consulting LLP, which has offices across Europe – start date June 29, 2017. Mr Fields said the firm “provides the RA with economic data for various regulatory projects”.

* $115,000 to Oxera for more regulatory technical consulting services – March 19 to August 26, 2019.

* $210,943 to global company Ricardo Energy & Environment for ongoing regulatory technical consulting services – start date April 17, 2019. Mr Fields said Ricardo “is the RA’s consultant for matters related to the electricity sector”.

* $185,000 to London-based Frontier Economics for ongoing “universal service obligations policy” – start date September 30, 2019.

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Published May 10, 2021 at 8:22 am (Updated May 10, 2021 at 2:57 pm)

RA denies conflict over IT contract with board member

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