good contract management;a municipality perspective

Download Good Contract Management;A municipality perspective

Post on 15-Aug-2015

33 views

Category:

Engineering

2 download

Embed Size (px)

TRANSCRIPT

  1. 1. 1ST LEGAL & FINANCIAL COMPLIANCE FOR CONTRACT MANAGEMENT IN GOVERNMENT & SOES DATE: 21 & 22 MAY 2013 VENUE: CSIR INTERNATIONAL CONVENTION CENTRE, PRETORIA PRESENTED BY JB NARTEY, bernardnartey13@yahoo.com, 073-7369034 Good Contract Management A Municipal Perspective
  2. 2. TABLE OF CONTENTS GOOD CONTRACT MANAGEMENT CONTRACT MANAGEMENT-DESCRIPTION PROBLEM STATEMENT CONTRACT MANAGEMENT TURNAROUND STRATEGY PROBLEM DIAGNOSIS(ROOT CAUSE ANALYSIS) ENVIRONMENTAL ANALYSIS(SWOT/SLEPT ANALYSIS) VISION,MISSION STRATEGIC OBJECTIVES STRATEGIC INITIATIVES/ACTIONS(SOLUTIONS) STRATEGIC PERFORMANCE MANAGEMENT SYSTEM CONTRACT MANAGEMENT TURNAROUND STRATEGY IMPLEMENTATION AND CHANGE MANAGEMENT REFERENCES
  3. 3. HUMOUR
  4. 4. GOOD CONTRACT MANAGEMENT Contract Management Regulations/ Legislation/Guidelines/Standards Good Contract Management (system, practices, processes, controls etc) SA Constitution-Section 217(1) - Principle of contracting for goods and services in a manner that is fair, equitable, transparent, competitive and cost-effective COMPLIANCE
  5. 5. CONTRACT MANAGEMENT- DESCRIPTION TypesofcontractsintheMunicipality PublicBody OtherPublic BodiesSuppliers Contractors Consultants Employees Banks Otherservice providers CONTRACT MANAGEMENT REGULATIONS/LAWS/LEGISLATIONS SA Constitution Section 217(1) Contract Management Regulations/guidelines/standards MFMA,SCM Regulions/Policies,CMF,MSA,CIDB Act,BBBEE Empow erment Act,CIDB Guidelines,ECM Guidelines,Treasury instruction notes/guidelines etc Formal,standardized and structured contract management procedures/processes
  6. 6. CONTRACT MANAGEMENT PROCESS- CREATION Contract Identification & Classification System(ERF)? Contract Inventory/Registration System? Contract Mgt Plan/strategy? Contract documents Ambiguities? Expect Judgment? Risk Analysis? Risk Analysis? Risk Analysis? Risk Analysis? Value for money analysis? Sensitivity Analysis? Stakeholder Involvement? Risk Analysis? Excessive Delays? Deviations? Market Research? Soft wares; ECM,ERP? Political Influences? Quality Mgt. Systems? Transparency? Leadership oversight/Monitoring? Fierce tender competition? Very Slow? Record Keeping? Contract Performance Mgt./feedback Systems?
  7. 7. CONTRACT MANAGEMENT PROCESS-CONTRACT EXECUTION Soft wares; ECM,ERP? SMMEs? Organisational technical capacity/competence? Stakeholder Involvement? Political Influences? Record Keeping? Contract Performance Mgt./feedback Systems? Risk Monitoring & Control?
  8. 8. . . . . . . . . Not Attended/ Not yet to completed Attended E Attending Snag and Defects (if any identified) during defects Liability Period By Contractor (Supervision PSP, PMU) Attended Snags and Defects (End of Defect Liability) By Contractor Submission of Project Completion Report, As-built Drawings; Issuance of Completion Certificate and Final Payment Certificate; Release of Guarantee and Retention By PSP (Supervision PMU, CFO) Project Completion Reports, As- built Drawings, O&M Manual Completion Certificate (Clause 51.4), 100% Release of Retention and Guarantee DEVELOPMENT COMPLETED ENTERED INTO OPERATION & MAINTENANCE (IN USE) Project Completed in all respect and enter into Operation & Maintenance Operation & Maintenance IN USE Defect Liability, Final Completion and Closing of project CONTRACT MANAGEMENT PROCESS- CONTRACT EXECUTION Completion Reports? Organisational technical capacity/competence? Stakeholder Involvement? Contract Performance Mgt./feedback Systems? Record Keeping? Risk Monitoring & Control?
  9. 9. PROBLEM STATEMENT/SYMPTOMS - KPMG FORENSIC PROBE Three service providers were initially contracted to execute a sanitation project but reportedly failed to finish, later abandoning the projects. The first contract went to Y contractor for the building of 2 483 toilet units estimated at R15.9-million in area 1, and the second to Z Contractor for construction of 1 442 toilets at an estimated cost of R9.2million in area 2. Y Contractor had quoted R6 443 per toilet and Z Contractor had quoted R5 682 for each toilet structure. According to the Bid evaluation report, only Z Contractor was meant to be appointed as they had the lowest price. However, the two companies were jointly appointed by a senior official who allegedly asked to deviate from regular tender processes, citing urgency in completing the unfinished projects as the reason. No irregularities in the payment to Y Contractor were identified in by KPMG. The report said it seemed highly irregular as the official had no authority to appoint suppliers, specifically for contracts above R10-million. The deviation was allegedly approved by one of the implicated officials. The report states that approval of the deviation was a result of gross negligence It also said it was irregular as it was not in line with the municipalitys supply chain management policy. Their actions constituted an act of financial misconduct in terms of the MFMA. The report reveals that on certain occasions, Z contractor allegedly submitted invoices way above what it quoted and also that it misinformed the council about the number of structures they had completed. According to the report, the municipality paid: R65 700 more to Z Contractor after it had submitted two different quotes to the company, with the municipality paying the highest quote; R15.3-million for additional work that did not relate to an emergency situation; R390 835 for inflated prices of complete toilet structures other than the price agreed with the municipality; and R850 519 for incomplete work, which the company claimed it had completed.
  10. 10. PROBLEM STATEMENT/SYMPTOMS -KPMG FORENSIC PROBE -CONTD The expenditure relating to these appointments was irregular in terms of section 1 of the MFMA, states the report. Further to that, the actions of [the senior official] to appoint these two service providers constituted an act of financial misconduct, with her actions further construed as gross negligence. We also established that Z Contractor made a misrepresentation to the municipality by presenting inflated numbers relating to work performed. That action was fraudulent and therefore constituted a criminal offence, so registering a criminal case against them in respect of their fraudulent conduct is recommended, continues the report.
  11. 11. PROBLEM STATEMENT/SYMPTOMS - AUDITOR GENERALS REPORT Irregular expenditure , High and increasing irregular expenditure due to not following SCM requirements/procedures Inadequate training of SCM officials. Inadequate SCM Controls; Internal control deficiencies Inadequate contract management Uncompetitive or unfair procurement processes High number of awards to close family members of employees and councillors without declaration in the financial statements-Non-prohibitive High number of awards to employees and councillors or other state officials-Prohibitive awards No written price quotations for transaction value between R10,000 and R200,000 as per SCM regulation 17a & c requirements. Service providers register non-compliance -Quotations accepted from prospective providers who are not in the list of accredited prospective providers as per SCM regulation 16b & 17b. Bid Specifications not always drafted by the Bid Specification Committee which were composed of one or more officials of the department as required by SCM regulation 27(3).
  12. 12. PROBLEM STATEMENT/SYMPTOMS - AUDITOR GENERALS REPORT Final awards/recommendations to the accounting officer were not always made by a BAC as per SCM regulation 29(2) Awards were made to suppliers who did not submit a declaration on their employment by the state or their relationship to a person employed by the state as per SCM regulation 13(c). Preference point system was not applied in all procurement of goods and services above R30,000 as per section 2(a) of the PPPFA and SCM regulation 28(1)a. The performance of contractors or service providers was not monitored on a monthly basis as per section 116(2)b of the MFMA. Contract performance measures and methods whereby they are monitored were insufficient to ensure effective contract management as per section 116(2)c of the MFMA. No sufficient and appropriate audit evidence to prove that construction contracts were awarded to contractors that were registered and qualified for the contract in accordance to the prescripts of the CIDB Act. No updating of prospective providers lists for procuring goods and services through quotations at least quarterly to include new suppliers that qualify for listing. Prospective providers were not invited to apply for listing at least once a year as per SCM regulation 14(1)(a)(ii) and 14(2).
  13. 13. PROBLEM STATEMENT/SYMPTOMS- SUMMARY This is blatant disregard of Supply Chain/Contract Management legislation It is time to do things differently. One definition of insanity, attributed to Albert Einstein, is doing the same thing over and over again and expecting different results.
  14. 14. HUMOUR
  15. 15. FLAWED ? CONFUSION?
  16. 16. CONTRACT MANAGEMENT TURNAROUND/TRANSFORMATIONAL STRATEGY Environmental Analysis(SWOT,SLEPT Analysis) Contract Mgt. Goal, Mission Contract Mgt. Strategic initiatives Contract Mgt strategic objectives Key strategy drivers/enablers Change Management Root Causes Countermeasures Problem Analysis(Root Cause Analysis) PMS
  17. 17. PROBLEM DIAGNOSIS -CAUSE-EFFECT ANALYSIS ISHIKAWADIAGRAM-CAUSE-EFFECTANALYSIS CONTRACTMGT.ETHICS PHYSICALRESOURCES CONTRACTGOVERNANCE CONTRACTENVIRONMENT CONTRACTMGT.SYSTEM NON-COMPLIANCETO CONTRACTMGT.REGULATIONS LEADERSHIP CONTRACTMGT.STAFF CONTRACTMGT.LAWS/ REGULATIONS/POLICIES/STANDARDS FRAUD/CORRUPTION STAKEHOLDERS
  18. 18. PROBLEM DIAGNOSIS- ROOT CAUSES Fraud/Corruption Institutionalised/Norm Contract Management System/Proces

View more >