procurement audit 5.5.2011

8/11/2019 Procurement Audit 5.5.2011

1/21

Audit of Procurement and Contracting Activities

INTERNAL

AUDIT REPORT

Audit of Procurement and

Contracting Activities

1


2/21


able 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 Conc%usion

2


3/21


4/21


d! has established a entral 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 procurementproceedings 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 hief 9:ecutive 5fficer 95! of the Public 3ody and

to #hich an aggrieved bidder may appeal against decisions of the hief

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 andrelevant 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> 0 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 100000 undertaken during t#e 12 mont#s under revie* is at anne61.

2. +he 'nstitute has established a =epartmental +ender ommittee under the

chairmanship of the =irector ;eneral #hich currently revie#s and approves all

procurement and contracts under 8s 00,000 and recommends all procurement and

contracts above 8s 00,000 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

4


5/21


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. +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 ational ompetitive 3idding method.

3.0 Audit Objectives

.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.

.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 andprocedures. +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

5


6/21


*.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. ontracting 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. ontracting performance evaluation and related mitigating activitiesB

i:. ompliance 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

*. 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 ommittee =+! of the ;'.

".0 A!!roac# and $et#odo%og&

.1 +he 'nternal +eam revie#ed a sample of procurement and contracting filesand 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.

6


7/21


.2 +he follo#ing documents have been revie#ed7

i. Annual Procurement plan for 2010B

ii. Procurement and ontract )ilesB

iii. @uotation and 3idding =ocumentsB

iv. Profile of staffs involved in the procurement activitiesBv. =ecisions of the )inance and =epartmental @uotation ommittee

eetingB and

vi. anagement letters from the ational Audit 5fficeB

'.0 Audit (inding

'.1 Observation78imited egregation of uties

6.1.1 Dnder the current organi&ation structure, the responsibility for the

procurement function rests #ith the )inance =epartment, +he )inance =epartmentis 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 C+ relates to

effectiveness of clientEs control system in preventing, detecting, and correctingerrors. +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. +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 inthe 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

7


8/21


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 #illcarry 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 ommitteeB

iii. 'mplement the decisions of the =epartmental @uotation ommittee and

)inance ommitteeB

iv. ?iaise directly #ith the Public Procurement 5ffice on matters #ithin its

(urisdictionB

v. Act as a secretariat to the =epartmental @uotation ommittee and )inanceommitteeB

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

8


9/21


'.2 9ua%ification of !rocurement taff

'.2.1 According to thePublic Procurement Act 2006, every public body shall be

responsible for ensuring that procurement functions are carried out by personstrained 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. '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

ircular 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

ertification 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 andconditions 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

9


10/21


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 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..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..* +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 aProject $onitoring CommitteeP!.

6.. +he P #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

10


11/21


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..6 >ummaries of the contract revie# proceedings should be provided regularly

to the ouncil 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 ational Audit 5ffice.

'.4 (i%e ocumentation

+he basic ob(ective of a good filing system is to be able to find the record you needquic$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.*. Procurement and ontract 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. ontract (ustification, approval

11


12/21


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 acontracting 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.*. 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..1 ontractor performance needs to be evaluated at different stages especially

at the completion of each contract. ontractors #ho have failed to comply #ith the

terms and conditions of contracts should be disqualified to bid in the future.

According to section of the Public Procurement Act 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..2 ertain suppliers or contractors #ho have defaulted previously are allo#ed

and requested to bid for different procurement contracts

+ecommendation

6.. 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 shouldbe presented to council in order to monitor the performance of contractors and

suppliers.

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

12


13/21


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 bidders, unless the item in question is not

available from 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. 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 ! 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

13


14/21


15/21


.2.1 +he Bid ;va%uation Committeeset 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. ontract umber

ii. >cope of #or$

iii. 9stimated cost

iv. Procurement method used

v. =ate of invitation of bids

vi. losing date for submission of bids

vii. =ate and place of opening of bids

viii. umber of bids received by closing date

i:. 8esponsiveness of bids

:. 3est 9valuated 3id

Observations

.2. '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 ommittee 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.

15


16/21


.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%

.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.

Observationschooling, 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.

16


17/21


iv. +he 3id 9valuation ommittee 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. According to section 3" of t#e !ub%ic Procurement Act every public body

shall ensure that no disqualified supplier, contractor or consultant is permitted to

receive a procurement contract or other#ise participate in procurementproceedings. +his section also applies to suppliers. ontractors #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 reations for the

sum of 8s 20,000 on 20 >eptember 200 on the follo#ing terms and conditions

among others7

a. +he duration of the film #ill be 2 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 21.10.0, the For$ing ommittee decided to postpone the ma$ing ofthe film to early ne:t year i.e. 200* and the programme #as fi:ed as 1

)ebruary to 1 arch 200* location shooting, 1* arch to 1* April

200* 9diting, Production and post Production.

17


18/21


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 1 >eptember 200, the 5fficer in harge of the finance H

infrastructure department requested a status report on the pro(ect

#hereby it #as determined that only I 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. =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 +he 'nternal Audit revie#ed the tender procedures for the provision of

cleaning services for the period 1 =ec 2010 to 0 =ecember 2011 and noted

that cost has been a determining factor in the a#ard of the tender.

..2 1 contractors #ere selected for invitation to bid for the provision of

cleaning services at the ;' and the ;3>. +he 3id 9valuation ommittee 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 substantiallyresponsive bidder namely, lean plus ?td based on lo# price and also on a report

presented by the aintenance 5fficer of the ;'.

Observations

18


19/21


.. lean plus ?td, had been initially a#arded the contract from 1 August 200

to 1 -uly 2010.5n 1 -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.

..* =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.

.. =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

..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.

.. According to terms and conditions of the ontract Agreement, the institute

may terminate the contract at any time during the year if it is not satisfied #iththe 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 200

to 0 August 2010 for a monthly fee of amount of 8s, 02/4 inclusive of


20/21


#hether any amount #as deducted from payments made to the ontractor 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

ontractor for security services.

c. According to the terms and conditions of the ontract 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 notterminated 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 20th 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. es!ite t#e unsatisfactor& !erformance of t#e contractor on 13 @u%&

2010 t#e contract for securit& services *as rene*ed for anot#er one

&ear !eriod as from 10 August 2010 to 0 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

.*. +he contract should not have been rene#ed because of the various

shortcomings noted during the initial contract period.

.*.* ontracts 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.

20


21/21


.*. ontractors should be made liable to reimburse any loss or damage that the

'nstitutes suffer during the contract period

.0 Conc%usion

.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

.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

21

procurement audit 5.5.2011

Documents