Audit of Procurement and Contracting Activities

INTERNAL
AUDIT REPORT
Audit of Procurement and
Contracting Activities
1
Audit of Procurement and Contracting Activities
Table of Contents
1.0 Background
2.0 Introduction
3.0 Audit Objectives
4.0 co!e of Audit
".0A!!roac# and $et#odo%og&
'.0 Audit (indings
).0 Com!%iance *it# +e,uirements of Pub%ic Procurement AC-
..0 Procurement and Contracting Activities / +esu%ts of (i%e -esting
0.0 Conc%usion
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Audit of Procurement and Contracting Activities
1.0 Background
Procurement
1.1 Procurement is the acquisition of goods and/or services by any person, entity
or institution. According to the Public Procurement Act 2006 PPA 2006!1
"procurement" means the acquisition by a public body by any "contractual means
of goods, #or$s, consultant services or other services%.
Pub%ic Procurement
1.2 Public Procurement is procurement conducted by a public body #hich is a core
activity in every type of government organi&ation. Almost all public organisations
purchase goods and services, often in large quantities and involving much money. 't
is favorable that the goods/services are appropriate and that they are procured at the
best possible #ay to meet the needs of the purchaser in terms of quality and quantity,
time, and location. At the same time, procurement is a highly sensitive area and is
sub(ect to criticism. )e# activities create greater temptations or offer more
opportunities for corruption than public sector procurement.
Overvie* of t#e Pub%ic Procurement Act 2PPA3 200'
1.* +he Public Procurement Act PPA! 2006 is operational since 1, -anuary
200. and has replaced the provisions of the )inancial /anagement /anual )//!
under the )inance and Audit Act -uly 10,1! and the 2entral +ender 3oard Act
2+3A 4 5ctober 2000! #hich regulated public procurement. -#e Act is
a!!%icab%e to a%% $inistries1 4e!artments and Agencies1 and #as injected best
!ractice into t#e Pub%ic Procurement &stem of $auritius.
1.6 +he PPA 20067
a! has repealed the 2entral +ender 3oard Act and put in place a ne# public
procurement legal frame#or$.
b! caters for all forms of procurement to be underta$en by public bodies.
c! has set up an independent Procurement Policy 5ffice #hich is
responsible to formulate policies and issue directives for the operation of
a transparent and an efficient public procurement system.
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Audit of Procurement and Contracting Activities
d! has established a 2entral Procurement 3oard, a body corporate to be
responsible for the vetting of bidding documents and notices, for the
evaluation of bids and a#ard of ma(or contracts above a certain
threshold.
e! provides for a bidder or potential bidder to challenge the procurement
proceedings at any stage of the procurement process.
f! has established an 'ndependent 8evie# Panel to resolve appeals from
bidders #ho are not satisfied #ith ho# their complaint has been
addressed by the 2hief 9:ecutive 5fficer 295! of the Public 3ody and
to #hich an aggrieved bidder may appeal against decisions of the 2hief
9:ecutive of the public body.
g! setting out the various procurement options that may be used and lays
do#n the basic principles and procedures applicable in a procurement
process.
2.0 Introduction
Procurement (unction at t#e $5I
2.1 +he /;' is responsible for the planning and conduct of its procurement
activities in compliance #ith the PPA 2006 and its regulations. 't is also
responsible for defining and choosing the appropriate method of procurement in
accordance #ith the provisions of Part < of the Public Procurement Act and
relevant regulations regarding the 3idding Process. +his responsibility has been
entrusted to the )inance =epartment under the headship of the 3ursar.
2.2 +he 'nstitute had a spending budget of appro:imately 8> 10/ 5riginal
estimates 2010! for the cost of running of office out of #hich a high percentage is
e:pended under contractual arrangements. A summar& of !rocurement activities
above +s 1001000 undertaken during t#e 12 mont#s under revie* is at anne61.
2.1 +he 'nstitute has established a =epartmental +ender 2ommittee under the
chairmanship of the =irector ;eneral #hich currently revie#s and approves all
procurement and contracts under 8s 600,000 and recommends all procurement and
contracts above 8s 600,000 to the finance committee for approval.
2.* +he procurement process begins #ith the )inance =epartment #ho issues an
internal memo at the end of a financial year to all the heads of departments to
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Audit of Procurement and Contracting Activities
submit their requirements for the coming year, in order to meet operational
requirements, the contracting of goods or services is required. An initial request,
statement of #or$ or description of the goods, is for#arded to the finance
department. +he )inance =epartment thus prepares its procurement plan for the
coming year.
2.6 +he )inance =epartment prepares the press notices, sale of bidding
documents, closing and opening of quotation bo:es, opening and evaluation of
bids, issue of ?etters of A#ard, follo# up of performance bond and process of
contracted #or$, as #ell as payment to contractions and determines #hich is the
best method for procurement to be utili&ed4 5pen Advertised 3idding, 8equest for
>ealed @uotation or the Aational 2ompetitive 3idding method.
3.0 Audit Objectives
1.1 +he ob(ective of this audit is to provide /;' /anagement #ith the
assurance that procurement processes and contracting activities are being
administered #ith due diligence and are compliant #ith procurement policies,
procedures and guidelines applicable in /auritius.
1.2 /ore specifically, the ob(ectives of the audit are to revie# and assess if the
procurement and contracting practices of the 'nstitute are conducted in a manner
that it7
i. complies #ith legislation PPA 2006! and regulations relevant to
procurement and contractingB
ii. results in best value or the optimal benefits for the 'nstituteB and
iii. encourages competition and reflects fairness in the spending of public
funds.
4.0 -#e audit sco!e
*.1 +he scope of the audit encompassed a revie# of the management practices,
system of internal controls, policies, and procedures pertaining to the 'nstituteCs
procurement practices and their compliance #ith established policies and
procedures. +he audit consisted of a revie# of procurement documents and the
e:amination of procurement and contracting files, contracts issued in the year
2010, related policies, procedures, guidelines and processes and the conduct of
intervie#s #ith officials involved in the procurement functionsB
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Audit of Procurement and Contracting Activities
*.2 /ore specifically, the scope included an e:amination of7
i. 8evie# of the procurement and contracting functionB
ii. Assessment of ris$s such as recurring suppliers, amendments, sole source
contracts, as #ell as the centrali&ed and decentrali&ed approachB
iii. 2ontracting responsibilitiesB
iv. /ethod of procurement usedB
v. =elegation of authorities and thresholdsB
vi. /onitoring and reporting mechanismsB
vii. +raining and guidance provided to procurement staffB
viii. 2ontracting performance evaluation and related mitigating activitiesB
i:. 2ompliance of the /;' administrationCs practices and documentation
pertaining to7 delegation of contracting authority, contract initiation,
contract posting, contract evaluation, contract tendering, a#arding of
contracts, accounts payable, contract amendments, contract
administration including7 dispute resolution, contract performance,
contract close out, and records management!B
:. Assessment of the value for money principle and its application in our
contracting practicesB and
*.1 According to the PPA 2006, every public entity should submit to the Public
Procurement 5ffice, a quarterly return in respect of contracts above 8s 100,000 in
a predetermined format. A sample of contracts from the quarterly return #as
e:amined. +he contracts selected for audit purposes #ere e:amined #ith a focus
on ensuring that the7
a! Appropriate procurement processes and procedures had been follo#edB
b! Procurement files contained the proper documentationB and
c! +he procurement activities complied #ith the provisions of the PPA
and Public Procurement 5ffice policies and directives.
*.* +he 'nternal Audit team also revie#ed a sample of procurement activities
#hich #ere dealt by the =epartmental +ender 2ommittee =+2! of the /;'.
".0 A!!roac# and $et#odo%og&
6.1 +he 'nternal +eam revie#ed a sample of procurement and contracting files
and documentations and intervie#s #ere conducted #ith staff directly involved
#ith the procurement of goods and services. +hese included intervie#s #ith the
Accountant, >enior )inance 5fficer responsible for procurement activities and the
Procurement and >upplies 5fficer.
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Audit of Procurement and Contracting Activities
6.2 +he follo#ing documents have been revie#ed7
i. Annual Procurement plan for 2010B
ii. Procurement and 2ontract )ilesB
iii. @uotation and 3idding =ocumentsB
iv. Profile of staffs involved in the procurement activitiesB
v. =ecisions of the )inance and =epartmental @uotation 2ommittee
/eetingB and
vi. /anagement letters from the Aational Audit 5fficeB
'.0 Audit (inding
'.1 Observation78imited egregation of 4uties
6.1.1 Dnder the current organi&ation structure, the responsibility for the
procurement function rests #ith the )inance =epartment, +he )inance =epartment
is involved in activities such as preparation of press notices, sale of bidding
documents, closing and opening of quotation bo:es, issue of ?etters of A#ard,
follo# up of performance bond and progress of contracted #or$, as #ell as
payment to contractors.
Im!%ication
6.1.2 +he involvement of )inance =epartment in almost all the above
procurement activities leads to a high control ris$. Contro% +isk 2C+3 relates to
effectiveness of clientEs control system in preventing, detecting, and correcting
errors. +he fact that there is inadequate segregation of duties in the procurement
function might lead to fraud/errors not being detected or prevented
+ecommendations
6.1.1 +he organisation and assignment of responsibilities #ithin the procurement
process is critical to the effective and efficient functioning of the procurement
function. +as$s should be properly allocated among the staff of different
department to allo# for proper segregation of duties in the Purchasing Process in
the follo#ing areas7
i. +e,uisition4An authori&ed individual ma$es a request for the required
good/>ervice #ithin his/her authori&ation limit via a purchase requisition
ii. Aut#orisation4 9ach company should have a policy, #hich requires
different levels of authori&ation for different amount of purchases
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Audit of Procurement and Contracting Activities
iii. Purc#asing4Purchases are coordinated through the purchasing department
to ensure goods are acquired in the right quantities at the lo#est possible
prices and documented on the Purchase order
iv. +eceiving 48esponsible for receiving counting and inspecting goods from
venders as documented on the receiving report
6.1.* Fe recommend that the 'nstitute creates a procurement Dnit at the /;'
and assigns responsibility for the day4to4day operations of the procurement and
contracting function to the procurement Dnit under the responsibility of a
procurement officer. +his person should be designated as the person #ith not only
overall responsibility for day4to4day procurement transactions but also as the
individual accountable for all other procurement functions including leadership
of the procurement team throughout the underta$ing. +he Procurement Dnit #ill
carry out the follo#ing functions7
i. /anage all procurement and tender activities of the /ahatma ;andhi
'nstitute e:cept ad(udication and the a#ard of contractB
ii. >upport the functioning of =epartmental @uotation 2ommitteeB
iii. 'mplement the decisions of the =epartmental @uotation 2ommittee and
)inance 2ommitteeB
iv. ?iaise directly #ith the Public Procurement 5ffice on matters #ithin its
(urisdictionB
v. Act as a secretariat to the =epartmental @uotation 2ommittee and )inance
2ommitteeB
vi. Plan the procurement and tender activities of the /ahatma ;andhi 'nstituteB
vii. 8ecommend procurement and tender proceduresB
viii. Prepare tendering/bidding documentsB
i:. Prepare advertisements of tender opportunitiesB
:. Prepare contract documentsB
:i. 'ssue approved contract documentsB
:ii. /aintain and archive records or the procurement and tender activitiesB
:iii. /aintain a register of all contracts a#ardedB and
:iv. Prepare reports for the tender procedures as required by the Public
Procurement Act 2006
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Audit of Procurement and Contracting Activities
'.2 9ua%ification of !rocurement taff
'.2.1 According to the Public Procurement Act 2006, every public body shall be
responsible for ensuring that procurement functions are carried out by persons
trained and $no#ledgeable in procurement, in accordance #ith guidelines and
qualification requirements prescribed or lay do#n by the Policy 5ffice.
Observation
6.2.2 +here is only one dedicated staff >enior )inance 5fficer! doing the
procurement functions and a clerical officer is attached to the procurement staff.
+hrough intervie# it #as determined that 5fficer has not all availed himself of any
speciali&ed training relating to their responsibilities for contracting and
procurement.
+ecommendation
6.2.1 't is recommended that all staff involved in procurement activities have the
necessary e:pertise and follo# the appropriate training in Public Procurement so as
to conduct procurement in an efficient and effective manner. Please refer to
2ircular number 10 of 2010 from the procurement Policy 5ffice for +raining in
Public Procurement by public bodies!
6.2.* All officers involved in procurement activities, shall complete the
2ertification Programme in Public Procurement and /anagement run by the
Dniversity of +echnology of /auritius in collaboration #ith the public
procurement office. +he aim of the programme is to enable participants to7
i. have a comprehensive understanding of procurement rules and regulationsB
ii. describe the roles, ma(or components and functions of public procurementB
iii. be proficient #ith areas such as financial assessment, bonds, guarantees and
conditions of contractB
iv. be able to prepare and assess tender documentation and conduct and manage
a complete tender processB
v. be competent to establish a#ard criteria and evaluate tendersB
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Audit of Procurement and Contracting Activities
vi. have the ability to prepare and (ustify contract a#ard recommendationsB
vii. recogni&e ho# public procurement adds value to the delivery of servicesB
and
viii. describe the cultural, social, political, economic and legal environments that
impact public procurement recogni&e the importance of ethics and
professionalism in public procurement
'.3 $onitoring of !rocurement and contracts and re!orting !rocesses
Observation
6.1.1 /anagement requires quality information to effectively e:ercise its
oversight role. 'f management is to monitor procurement and contracting activities,
it must have access to accurate periodic reports. 't #ould be very useful for
management to be a#are of, not only the numbers of contracts, but more
importantly, the types of procurement contract entered into and their progress.
>uch useful reporting information #ould include the number of sole sourced, the
number of contracts entered by sealed quotation, open competition and the number
of contracts that have been rene#ed.
6.1.2. +here is no specific monitoring of /;'Cs procurement and contracting
activities other than the preparation of the quarterly reports as requested by the
Public Procurement 5ffice. +he procurement and contract files do not provide
adequate information of the performance of contractors and suppliers. +he
monitoring of procurement activities and reporting processes must be improved to
demonstrate that contracting activities are consistent #ith policies and
requirements.
+ecommendation
6.1.* +here is a need to improve the reporting on procurement and contracts
a#arded to different suppliers or contractors. Fe recommend that the
'nstitute develops an effective mechanism to identify, assess, and manage
the day4to4day procurement and contracting activities by the setting up of a
Project $onitoring Committee P/2!.
6.1.6 +he P/2 #ill monitor the progress of the procurement/contracting
activities and prepare Periodic Activit& +e!orts to be submitted to the
council #hich highlight progress, problems, delays encountered by the
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Audit of Procurement and Contracting Activities
pro(ects and outcome of each procurement and contract activity. +hese
periodic reports #ould include details on the number of contracts, value of
the contracts, percentage of competitive versus non4competitive and the
number and value of amendments.
6.1.6 >ummaries of the contract revie# proceedings should be provided regularly
to the 2ouncil members and heads of departments so that they can determine
#hether pro(ects and contracts are being properly administered. =ecisions made by
these revie# units need to be recorded and available for subsequent internal audits
and for the periodic audits or evaluations conducted by the Aational Audit 5ffice.
'.4 (i%e 4ocumentation
+he basic ob(ective of a good filing system is to be able to find the record you need
quic$ly and economically, regardless of its format. +he aim of a good filing system
is to provide quic$ access to information.
Observation
6.*.1 +he )illing system is not adequate, staffs should be trained on registry
procedures and filling system.
6.*.2 +he 'nternal Audit +eam had difficulty in obtaining all the required
documentation i.e., a complete audit trail containing information necessary to
#ithstand public scrutiny in #hich there is a history of the contract approval from
initiation to final approval #hich allo#s a revie#er to observe the chronological
process. 9fforts are made to a#ard and manage procurement and contracts in
relation to best value, open access, fairness and transparency.
+ecommendation
6.*.1 Procurement and 2ontract files should provide a complete audit trail
containing details on matters such as options, decisions, approvals, amendments
and identifying the officials or authorities #ho made them. +hese documents are
needed to ensure that $ey elements of the control frame#or$ are in place and
comply #ith applicable policies and guidelines. 2ontract (ustification, approval
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Audit of Procurement and Contracting Activities
forms, statements of #or$ or specifications, amendments, proofs of security and
evaluations on contractor performance are notable e:amples. Fe recommend file
management and documentation system should be revie#ed and enhanced.
6.*.* +he procurement Dnit to be established should develop and implement a
contracting chec$list to ensure that all pertinent steps in the contracting process
have been follo#ed and that the procurement and contract files contain all the
required documentation, including evidence of sole4sourcing (ustification.
6.*.6 Fe also recommend that the registry for $eeping files should be centrali&ed
at the central administration and that all the files be $ept in a systematic manner.
'." Contractor Performance
6.6.1 2ontractor performance needs to be evaluated at different stages especially
at the completion of each contract. 2ontractors #ho have failed to comply #ith the
terms and conditions of contracts should be disqualified to bid in the future.
According to section 16 of the Public Procurement Act1 every public body shall
ensure that no disqualified supplier, contractor or consultant is permitted to receive
a procurement contract or other#ise participate in procurement proceedings. +his
section also applies to all suppliers
Observations
6.6.2 2ertain suppliers or contractors #ho have defaulted previously are allo#ed
and requested to bid for different procurement contracts
+ecommendation
6.6.1 Fe recommend that the officer in charge of the procurement function
prepares a report on all contractors #ho have been allotted contracts for the
provision of goods and services including #or$s to the /;'. >uch reports should
be presented to council in order to monitor the performance of contractors and
suppliers.
6.6.* 'n order to obtain value for money, it is recommended that the 'nstitute sets
up a contract/pro(ect monitoring unit #hich #ill monitor, revie# and report
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Audit of Procurement and Contracting Activities
quarterly on the physical and financial progress made on all the pro(ects
underta$en by the /;' and the achievement of results.
'.' C#oice of Procurement $et#od
6.6.1 According to the PPA 2556, the choice of procurement methods available to
a public body for the procurement of goods, other services and #or$s are7
i! open advertised biddingB
ii! restricted biddingB
iii! request for sealed quotationsB
iv! direct procurementB
v! community or end4user participationB or
vi! departmental e:ecution.
Observations
6.6.2 +he request for sealed quotations method is the most common procurement
method used by the 'nstitute. According to the PPA 2006 sealed quotations shall be
requested in #riting from not less than 1 bidders, unless the item in question is not
available from 1 suppliers. /ost of the time, the same group of suppliers have been
requested to quote for the procurement of goods, services and #or$s of particular
nature.
6.6.1 According to the PPA, the request for sealed quotations method shall only be
used for the procurement of 4
(a) readily available commercially standard goods not specially manufactured to
the particular specifications of the public bodyB
(b) small #or$sB or
(c) small other services,
#here the estimated value of the procurement does not e:ceed the prescribed
threshold 8s 6 /! and #here the public body has reason to believe that open
advertised bidding 4
i! #ill not be efficient or practical for the procurement in questionB or
ii! #ill be too costly to apply given the value of the procurement.
+ecommendations
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Audit of Procurement and Contracting Activities
6.6.* 't is recommended that a regular rotation of suppliers be made #hen
requesting for sealed quotations so as to provide good competition and also to
enable the 'nstitute to get value for money.
6.6.6 'n the case of certain goods, services and #or$s, the 'nstitute can also use the
open advertised bidding method, so as to give equal access to all eligible and
qualified bidders #ithout discrimination.
).0 Com!%iance *it# +e,uirements of Pub%ic Procurement AC-
).1 Procurement P%anning
,.1.1 Procurement planning is done to enable an organisation to meet its specific
purchasing ob(ectives in an economic, efficient and effective manner. +he
procurement plan comprises of type of goods to be procured, their quantity, value,
delivery date and other relevant information. ?ac$ of proper planning may lead to7
a) Non availability of goods when required for the project,
b) Excess procurement,
c) Procurement of unsuitable or obsolete goods,
d) voidable emergency procurements,
e) !nauthorised procurements and uneconomic purchases"
,.1.2 +he Public Procurement 8egulations 200.! requires all public bodies to
publish on its #ebsite an annual procurement plan and to update and revise it
periodically.
Observation
,.1.1 +he 'nstitute prepares an annual procurement plan but the plan is not
published on its #ebsite and hence is not publicly available. +his is clearly non
compliance #ith procurement guidelines.
+ecommendations
,.1.* :e recommend t#at t#e institute starts !ub%is#ing its Annual Procurement
Plan on its #ebsite #hich #ill ensure good practice and also provide potential
suppliers the most up to date information available about intended procurements
).2 Bid ;va%uation +e!ort
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Audit of Procurement and Contracting Activities
,.2.1 +he Bid ;va%uation Committee set up to evaluate a procurement e:ercise
ma$es a report commonly $no#n as the bid evaluation report on the bid
evaluation process, comparison of bids and its recommendations that is signed by
all committee members present.
,.2.2 According to Public Procurement 5ffice, the 3id evaluation report should
comprise of the follo#ing7
i. 2ontract Aumber
ii. >cope of #or$
iii. 9stimated cost
iv. Procurement method used
v. =ate of invitation of bids
vi. 2losing date for submission of bids
vii. =ate and place of opening of bids
viii. Aumber of bids received by closing date
i:. 8esponsiveness of bids
:. 3est 9valuated 3id
Observations
,.2.1 't is observed that most of the 3id 9valuation reports do not contain the
required information because most of the required information is usually seen in
the technical reports of consultants.
+ecommendations
,.2.* 't is recommended that the 3id 9valuation 8eport should be prepared in line
#ith the model proposed by the Public Procurement 5ffice. +he technical report is
only a supporting document prepared by a consultant or a technical person and
should not replace the contents of a 3id 9valuation 8eport #hich is signed by all
the members of the 3id evaluation 2ommittee and can be used as evidence in case
some suppliers are not satisfied #ith the evaluation process of the supplier to
#hom the contact #as a#arded.
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Audit of Procurement and Contracting Activities
..0 Procurement and Contracting Activities / +esu%ts of (i%e -esting
..1 +e,uest for sea%ed ,uotation for se%ection of service !rovider for
!rovision of Packed $ea% to students of t#e 5and#ian Basic c#oo%3
..1.1 >i: 6! selected service providers #ere invited to bid through >ealed
@uotations for the selection of service provider for provision of Pac$ed /eal to
students of the ;andhian 3asic >chool ;3>!. )our *! bidders submitted their
bids and #hich #ere evaluated accordingly.
Observations<
i. +he bid evaluation committee comprising of the =irector >chooling, the Ag
Gead, ;3>, the Accountant, the >enior Guman 8esource 5fficer, an
Administrative and a >enior 9:ecutive 5fficer set up to evaluate the bids,
recommended that the contracted be a#arded to the second lo#est bidder4
Aprima )oods ?td as the catering service provided by the lo#est bidder /r.
/. 8agavooloo the actual caterer at the ;3>! #as not to the satisfaction of
the ;3> and several shortcomings in the service provided #ere noted as
follo#s.
a. )ood stuffs #ere not according to specificationsB
b. Gygienic conditions #ere impairedB and
c. +he caterer failed to ta$e remedial actions #hen shortcomings #ere
communicated to him.
ii. =espite several representations from management of the school, the caterer
failed to ta$e remedial actions on the short comings noted. Go#ever, /r. /.
8agavooloo #as again selected to bid for the pro(ect despite the fact the
;3> #as not satisfied #ith the service provided earlier. +he service provider
should have been disqualified from bidding
iii. According section 11 of the terms and condition of the contract agreement
bet#een the /;' and the contractor, the /;', by notice sent to the service
provider may terminate the contract at any time if it is not satisfied #ith the
service of the service provider. 't is not clear #hy the caterer #as allo#ed to
provide his service despite the impairment of Gygienic conditions.
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Audit of Procurement and Contracting Activities
iv. +he 3id 9valuation 2ommittee did not request an independent opinion on
the submissions of the bidders #hich concerned foodstuffs for school
children. 't is not clear #hether the composition of the pac$ed meal #as
prepared by a nutritionist.
+ecommendations
..1.2 +he advice of technical persons #ith specific qualifications should be
sought to prepare end evaluate bids of specific nature.
..1.1 According to section 3" of t#e !ub%ic Procurement Act1 every public body
shall ensure that no disqualified supplier, contractor or consultant is permitted to
receive a procurement contract or other#ise participate in procurement
proceedings. +his section also applies to suppliers. 2ontractors #hose services are
not to the required standard should not be selected to bid.
..2 9uotation for t#e making of a documentar& video fi%m7=>indi in
$auritius7 A +estros!ect?
..2.1 +he contract for the above pro(ect #as a#arded to / 8oad 2reations for the
sum of 8s 200,000 on 20 >eptember 2001 on the follo#ing terms and conditions
among others7
a. +he duration of the film #ill be 62 minutes, edited in t#o parts and in
t#o versions, i.e. Gindi and 9nglishB and
b. +he duration of the pro(ect #ill be t#o months as from the date of start
of #or$
Observations
i. 5n 21.10.01, the For$ing 2ommittee decided to postpone the ma$ing of
the film to early ne:t year i.e. 200* and the programme #as fi:ed as 11
)ebruary to 11 /arch 200* location shooting, 1* /arch to 1* April
200* 9diting, Production and post Production.
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Audit of Procurement and Contracting Activities
ii. 5n , August 2006, the officer in charge of the pro(ect informed the
=irector ;eneral of the /;' the pro(ect #ill be completed by the end of
August 2006.
iii. 5n 10 >eptember 200., the 5fficer in 2harge of the finance H
infrastructure department requested a status report on the pro(ect
#hereby it #as determined that only ,6I of the pro(ect has been
completed.
iv. +he pro(ect #hich #as supposed to be completed in t#o months time
has not yet been completed i.e. more than seven years after.
+ecommendations
..2.2 +his is a clear case of pro(ect mis4management. Pro(ects should be closely
monitored so as to be completed in time and obtain value for money.
..2.1 =elays in implementing pro(ects usually cause loss of interest in a particular
pro(ect as #ell as increase the costs of that pro(ect.
..2.* 't is high time that the 'nstitute establishes a pro(ect monitoring
committee/unit. +he Pro(ect /anagement committee/unit #ill be responsible for
monitoring, co4ordination, and control of all pro(ects underta$en by the 'nstitute. 't
decides upon high4level management issues including technical direction, strategic
issues, pro(ect planning, financial and e:ploitation matters.
..3 -ender for t#e !rovision of c%eaning services
..1.1 +he 'nternal Audit revie#ed the tender procedures for the provision of
cleaning services for the period 11 =ec 2010 to 10 =ecember 2011 and noted
that cost has been a determining factor in the a#ard of the tender.
..1.2 16 contractors #ere selected for invitation to bid for the provision of
cleaning services at the /;' and the ;3>. +he 3id 9valuation 2ommittee set up
to evaluate the bids recommended that the contract for the provision of cleaning
services at the /;' and the ;3> be a#arded to the lo#est evaluated substantially
responsive bidder namely, 2lean plus ?td based on lo# price and also on a report
presented by the /aintenance 5fficer of the /;'.
Observations
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Audit of Procurement and Contracting Activities
..1.1 2lean plus ?td, had been initially a#arded the contract from 1 August 2000
to 11 -uly 2010.5n 11 -uly 2010, the /;' agreed to rene# the contract on a
strictly months to month basis #ith effect from 01 August 2010 on the same terms
and conditions and price as the tendering e:ercise #as in process for the ne#
financial year.
..1.* =uring the initial period of contract, several shortcomings #ere noted #ith
the services being provided concerning mainlyB shortage of labor force on
site, lac$ of supervision on #or$ being performed, cleaning not done properly and
delays in cleaning #or$s.
..1.6 =espite the above shortcomings, the maintenance officer reported that the
service provided #as satisfactory since the company had changed its supervisor
on site. 5n 0* )ebruary 2011 the 3ursar again informed the contractor about
several shortcomings in the services being provided.
+ecommendations
..1.6 >uppliers/contractors #ho do not provide a reliable service to the institute
should be disqualified and not permitted to receive a procurement contract or
other#ise participate in procurement proceedings.
..1., According to terms and conditions of the 2ontract Agreement, the institute
may terminate the contract at any time during the year if it is not satisfied #ith
the services of the contractor by giving one month notice. After so many
complains, it is advisable that the institute terminates the contract #ith the present
contractor and a#ards the contract to the second lo#est bidder.

..4 -#e contract for securit& services at t#e $5I and t#e +-I
..*.1 +he contract for security services at the /;' and the 8+' #as a#arded to
8>? >ecurity >ervices ?td for an initial period of one year as from 10 August 2000
to 00 August 2010 for a monthly fee of amount of 8s106, 026/4 inclusive of <A+,
rene#able for another year on satisfactory completion of the contract.
..4.2 Observations<
a. +he performance of the 2ontractor had not been satisfactory. +here #ere
frequent absences of the 2ontractorCs guards on the various compounds of
the 'nstitute especially those on night duty. Go#ever no mention is made
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Audit of Procurement and Contracting Activities
#hether any amount #as deducted from payments made to the 2ontractor on
account of absences.
b. >ome losses #ere also reported on the premises of the 'nstitute and also a
case of larceny #as reported on 16 /ay 2010 at the office of the
maintenance officer. +here is again no evidence that losses incurred had
been reimbursed by the contractor or deducted from payments made to the
2ontractor for security services.
c. According to the terms and conditions of the 2ontract Agreement, the
contract may be terminated at any time during the year, if the 'nstitutes #ere
not satisfied #ith the services provided by the contractor by giving one
monthCs notice. 'n case the agreement is terminated, the contractor #ill not
be entitled to any compensation other than payment on a pro4rata basis for
services already rendered. It is not understood *#& t#e contract *as not
terminated des!ite severa% s#ortcomings.
d. +he contractor has stopped submitting monthly reports regarding security
services being provided at the different sites.
e. +he finance committee held on 20
th
/ay 2010 agreed that 8>? >ecurity
services ?td #ould not be requested to bid for the contract for the security
services at the 'nstitute as it had defaulted on the terms and conditions of the
contract.
f. 4es!ite t#e unsatisfactor& !erformance of t#e contractor1 on 13 @u%&
20101 t#e contract for securit& services *as rene*ed for anot#er one
&ear !eriod as from 10 August 2010 to 00 August 2011 at t#e same
mont#%& fees and on t#e same terms and conditions based on t#e
memorandum t#at *as !resented to t#e finance committee *#ic#
conc%uded t#at t#e services of t#e contractor #ad im!roved.
+ecommendations
..*.1 +he contract should not have been rene#ed because of the various
shortcomings noted during the initial contract period.
..*.* 2ontracts should be terminated, in cases #here contractors still
underperform after having been apprised of their shortcomings and #here
improvements have not been noted by the 'nstitute.
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Audit of Procurement and Contracting Activities
..*.6 2ontractors should be made liable to reimburse any loss or damage that the
'nstitutes suffer during the contract period
0.0 Conc%usion
0.1 +he purchasing function acts as the primary agent for acquiring goods and
services used in an organi&ation and can be especially vulnerable to fraudulent
transactions because it involves cash disbursement
0.2 Procurement function is often the function that a business enterprise pays the
least attention to. 'ts importance in the business is not totally understood and many
businesses have little reali&ation, appreciation and ac$no#ledgment of the value an
efficient procurement scheme can have on the performance of the business
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