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Government May Have to Pay Back Grant for Pier Construction

Sept. 13, 2005 – The U. S. Department of the Interior, Office of Inspector General's recently released an audit report to determine if the grant awarded to repair the Frederiksted fisherman's pier and boat ramp was used in accordance with applicable laws and regulations. The reconstruction of the pier and boat access ramp was funded under a grant from the Fish and Wildlife Grants for Boating Access Facilities.
According to the report, ALJ Construction "did not satisfactorily rebuild the pier… the construction work was not acceptable… and the Virgin Islands government incurred at least $20,028 in additional project management costs because of construction delays."
"As a result, the general public and commercial fishermen on St. Croix were deprived of badly needed boating access that was to be provided by the new pier and the safety of potential users was put at risk by unsafe conditions at the construction site," the audit reported.
The audit provided background information on the project.
In March 2001 the V.I. Department of Property and Procurement awarded a $26,700 contract for architectural and design services to CAPE Associates. CAPE prepared plans and specifications for a structure that would withstand a category 5 hurricane and have an extended life expectancy of 25 to 30 years.
In October 2002 Property and Procurement awarded ALJ Construction a $287,000 contract to rebuild the fisherman's pier and boat ramp. The project was originally scheduled to begin in October 2002 and to be completed in February 2003.
The audit reported that ALJ did not have marine construction experience and was required by the government to hire qualified subcontractors, which ALJ did not do. According to the report, "ALJ completed the construction of the pier's basic structure but failed to meet construction specifications on three separate attempts to pour the concrete boat ramps on the north and south sides of the pier."
The report continues, the government "extended CAPE's project management contract three times, most recently in June 2004. CAPE was initially paid $6,675 ($1,669 per month) to administer the contraction contract for four months (October 2002 to February 2003). Extension of the construction contract also extended the need for project management services, resulting in an additional project management costs of $20,028 from July 2003 to June 2004."
The report states that the government did not access "liquidated damages" against ALJ for the construction delays although the contract said $100 per day would be deducted from ALJ contract payments. Furthermore, the audit found that government officials "often took a supportive role with ALJ throughout the project period giving the company numerous opportunities to satisfactorily perform under the contract."
The report determined that the government should have charged ALJ $100 per day for 306 days, for a total of $30,600. "This amount would have more than covered the additional $20,028 in project management costs incurred because of ALJ's construction delays," the report stated.
Fish and Wildlife officials said when the project is completed they would conduct an inspection and if the project was not completed by the September 30 deadline the government would have to repay the grant funds.
The audit recommended that Governor Charles W. Turnbull require Property and Procurement to access and collect liquidated damaged from ALJ.
Turnbull responded to an advance draft copy of the recommendation in a May 27 letter to Michael P. Colombo, U.S. Department of the Interior regional audit manager. Turnbull wrote that he instructed Property and Procurement's legal counsel to "immediately commence with the necessary steps to secure the full amount due… from ALJ Construction's bonding agent."

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