Oct. 12, 2002 – – The V.I. government squandered nearly $1 million on the St. Croix health clinic that was never completed and did so in such a reckless manner that auditors are calling the fiasco "a case study on the inefficiencies and waste of public funds" that occur when procurement regulations are sacrificed to expediency.
The project is a highlight – or low point – in an audit by the U.S. Interior Department's Office of Inspector General of federal grants for health care facilities in the Virgin Islands.
The rush for a St. Croix clinic came in the summer of 1998, just a few months before a gubernatorial election in which former Gov. Roy L. Schneider lost his bid for re-election.
Procedures were unusual from the start. Normally a contract starts with the "user department," in this case, the Health Department. Then it goes first to Property and Procurement and then to Justice for review and approval and finally lands on the governor's desk for authorization.
Instead, Schneider signed the contract in July and sent it down to his subordinates.
By August, there was a splashy ground-breaking ceremony.
Unfortunately, the land the clinic was being built on didn't belong to the government. The Health Department had indeed entered into a lease-purchase agreement with the contractor-landowner to acquire the land over a three-year period. But that arrangement was missing at least two things: the mandated three appraisals for land purchases and an appropriation by the Legislature.
The project forged ahead without stopping for building permits. According to the auditors, Planning and Natural Resources issued only a temporary and limited building permit covering the slab for the clinic, pending approval of a complete set of drawings. But "this requirement was not met prior to the contractor commencing work on the project."
Problems didn't get any better after the election, and by the following spring, the new (Turnbull) administration scrapped the project.
Property and Procurement terminated the contract in June 1999 because, according to the audit, "permit and inspection problems existed, funds were not available to purchase the land on which the clinic was being constructed, and the proposed floor space for the new clinic was inadequate for the needs of the Department of Health."
By then, however, the government had already spent $449,400 on it.
And it lost another $421,300 in reimbursement costs.
That's because the Schneider administration had gotten the federal government to approve reprogramming grant money that had been earmarked for renovations to the Charles Harwood Complex on St. Croix to the construction of a new clinic. The local government had already spent $421,300 of that grant on the Harwood Complex, so it had to reimburse the federal government that amount.
That brings the grand total for the clinic-that-never-was to $870,700.
The saga of the clinic is only one of the audit findings. The report is a companion to one issued in 1996. Both trace two federal grants totaling $30.5 million which were awarded to the V.I. Health Department in 1991 and 1992 and were still being expended as late as February 2002.
The auditors found that some problems cited in the '96 report were still in evidence.
Specifically, they said they found no supporting documents for $1.1 million worth of expenditures, that the local government had failed to apply for $777,832 in fund "draw-downs" to which it was entitled, that it took up to two years for the V.I. government to record some expenditures, and that record-keeping was often lacking.

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