DOI warns CNMI over delays in paying CIP project contractors

Citing several complaints, the U.S. Department of the Interior has asked the CNMI Department of Finance to explain the “substantial delays” in payment to capital improvement project contractors.

“If payments continue to be delayed, it can have a negative impact on the CNMI’s allocation of 702 CIP funding. Please respond as soon as possible…of actions planned or being taken to ensure timely payment of contractors,” said Office of Insular Affairs director for budget and grants management Dave Heggestad in an Oct. 21 letter to Finance Secretary Fermin Atalig.

The OIA official said his office has received “several complaints from contractors regarding substantial delays in the issuance of payments by the CNMI Treasury for CIPs.”

He said that based on a follow-up review and discussion with CNMI staff, “it has been determined that these delays are not isolated occurrences.”

Heggestad reminded Atalig that federal laws require the grantee—in this case the CNMI government—to make payments “as quickly as possible after receipt of federal funds.”

Normally, he said, this process should not take more than one week.

“OIA’s policy is to approve drawdowns and process wire transfers as soon as requests arrive in our office,” he said.

Heggestad said prompt payment to vendors does not only meet federal requirements but also ensures that reputable contractors remain on their current job and bid for future CIP-funded projects.

“While I’m sure your organization shares our goal of timely payment, a history of contractor complaints is evidence that a bottleneck exists. It is in the best interest of both the CNMI and OIA that the problem be remedied so that the Commonwealth is not in violation of applicable federal laws,” said Heggestad.

Atalig said in an interview yesterday that there are a number of factors that contribute to the delayed payment.

For one, he said that Finance “is only part” of the process involved in the issuance of payment.

“Sometimes, it gets delayed in other agencies. Sometimes, Washington’s [OIA] transferred amount is not the same amount as requested in the drawdown. So there are many steps involved in dealing with this. A lot of times we have to wait,” said Atalig.

Normally, he said that when a project is done satisfactorily, it is forwarded to Finance for payment processing.

Finance requires pertinent documents that are sometimes not readily provided by other agencies.

He said Finance would only forward a drawdown request to OIA in Washington D.C. when all documents are submitted.

“Washington would now transfer the amount but sometimes, this amount is not exactly the same,” he said.

Atalig said he has drafted a response letter to OIA on the issue.

In May 2003, the Babauta administration said that it already fixed the payment system for the Commonwealth’s CIP contractors to ensure a more updated and timely payment of services.

This came about after the CNMI Contractors’ Association raised the issue of delayed payments in response to Gov. Juan N. Babauta’s directive requiring contractors engaged in CIPs to pay their minimum wage workers the U.S. minimum wage level of $5.15 an hour.

The administration said that Finance had issued a memorandum to all individuals and agencies concerned with CIP projects, outlining a revised process in the issuance of payments for CIP projects.

The revised procedures provide that 702 CIP contractors or other vendors receive payment within 30 days of the approval of their payment application by the expenditure authority.

Before, Treasury would get a lump sum of CIP monies but it would not know how much goes to which project, causing some delays in payment.