The former chair of PAC said he is concerned that without a Public Accounts Committee in place the recent damning report by the auditor general will not get the attention it deserves.That "damning report", from the Office of the Auditor General of the Cayman Islands, is here. It is, by its own admission, quite general in a top down sort of way, but promises more detail subsequently. A few excerpts arbitrarily chosen follow:
Management of Government Procurement 5 July 2011
Procurement is a key administrative function in a typical public sector organization that is as important in how it is managed as, for example, the finance, personnel and information technology functions. Procurement is normally carried out by officers who are highly trained individuals that have qualifications and specialized experience in the field of procurement.
The Financial Regulations were amended in 2007 so that the procurement regulations extended to all government entities including statutory authorities and government companies.
Procurement is not a clearly identifiable function in the Government. We were not able to find any individual at the centre of government or in the entities we visited during our audit that was responsible for managing the procurement function. Some senior managers claimed responsibility for managing certain aspects of the procurement process, but no one we interviewed felt it was their responsibility to establish and implement procurement policies and procedures for use throughout the Government or even in their entity and various departments.
As there is no individual or group responsible for government procurement, no assurance is being provided to the Legislative Assembly that the laws and regulations pertaining to procurement are being followed. In the absence of such an individual or group, Legislators must rely on all entities to not only individually develop, implement and operate good procurement principles and practices in
their respective organizations, but also rely on the individuals involved in the performance of the procurement functions to abide by these practices.
Recommendation #1: The Government should appoint someone as a Chief Procurement Officer who would be accountable for the overall development, management and reporting on the Government’s procurement activities. The reporting relationships for this individual would depend on the organization chosen by the Government to implement this crucial function.
Recommendation #2: The Government should develop policies, procedures and practices for procurement of supplies, services and assets that would ensure clear direction to officials.
We found that the Government does not have good information about its procurement activities. For example, we found that there is no information about how much business is done with one vendor across the Government. We would expect the Government to have good procurement information as part of a management framework for this function. Government entities are effectively working in silos with little or no information sharing between organizations which can potentially lead to a lack of information on supplier capability and availability.
Centralized and up-to-date source lists of individuals and firms, local and overseas, that do business with the Government do not exist and need to be developed and maintained to ensure consistency, economy, effectiveness and fairness in procuring best value.
For example, a construction company that was unsuccessful on one of the Government’s largest recent building projects when it had been found to be unqualified ended up as the contractor for another significant project without management knowing what had previously happened. Unfortunately, the contractor ended up being terminated before the project was complete which resulted in several million dollars in extra costs.
We found that procurement throughout the Government is generally being carried out by officials with little or no expertise to conduct the work required of them, or with little available advice on how to perform their day to day procurement management activities. Notwithstanding the expertise currently available in entities where there is significant procurement activity, such as Public Works, our interviews with several entities indicated that most individuals involved in purchasing supplies and services for their organizations do not possess the level of expertise one should expect to find in public sector procurement groups. As a result, it is not possible for these organizations to realize the benefits of procurement efficiency and effectiveness that would be associated with having highly skilled and knowledgeable procurement staff.
We were informed that approximately three years ago, there was a conference held by the Government to discuss good procurement practices and that it was attended by a number of senior government officials. Out of that conference, we were told that the Government implemented a formal training program at UCCI for the development of procurement officers in the Government. However we were informed that the program has had little take up and is not coordinated with any plan to develop additional procurement capability in the Government.
Recommendation #4: The Government should develop and implement a plan to develop the
expertise necessary for an effective procurement function both centrally and in the entities.
The Cayman Islands Government does not have fundamental principles for its management of procurement that would form the basis for the development of a management framework. These would, for example, include:
• value-for-money;
• open and effective competition;
• probity and ethical behaviour
Principles become the basis for the development of directives and guidance for how public servants should act and conduct their business. Without this kind of guidance, more direction cannot be developed.
We found no evidence of policies that covered all aspects of the procurement process. Other than a broad set of rules established in the Financial Regulations regarding preference to local suppliers and tendering for requirements over $50,000 and CTC guidelines for tenders over $250,000, the Government’s laws, regulations and policies are insufficiently detailed to provide the necessary guidance for how procurement should be conducted.
The development and use of standard procurement documents also plays a significant role in providing transparency and efficiency in the procurement process. Standard procurement forms ensure that the language used is simple and consistent; they eliminate redundancies and contradictions; and they present a common look and feel for suppliers doing business with Government. While they may not be appropriate for complex, one-time or innovative requirements which may need considerable research and drafting of specific terms and conditions, clauses or schedules, they are an important in ensuring efficient and effective procurement.
Standard form contracts are useful for the consistency, predictability and efficiency of contract development as well as other aspects of contracting such as finalizing the contract and its later management. There are benefits for staff that become familiar with their content and the way they operate and/or undertake training in regard to the use of the standard form. It is good practice to have standard form contracts when entities have common, ongoing contracting requirements.
There are no procedures in place to ensure that contracts are legal. We have found that in the absence of contract policies and procedures and without the benefit of using standard contract forms, there is no assurance that contracts contain the necessary clauses and conditions one would expect to find in legally binding contracts. This is particularly important in high value, high risk contracts to ensure the Government’s interests are protected and that there is compliance with Cayman Island laws and policies. Legal advice should be sought early in the planning stage of the procurement process, particularly for the high risk, complex, or strategic procurements. Specific documentation may need to be developed, including a draft contract if necessary, to accompany procurement documents. Legal advisors should be involved in developing standard contract templates and also be consulted, when necessary, on development of business cases for particular procurements.
There are no procedures in place to ensure due diligence is undertaken of potential suppliers, either at the tendering or contracting stages. Suppliers must be held accountable for representations submitted in their offers and proposals in response to requests for tenders or quotes. Appropriate wording should be used in contracts to ensure that these assertions are formally acknowledged by the supplier and represent accurate and truthful statements. Project authorities, or their authorized representatives, in entities must be thorough in ensuring that deliverables of supplies or services are in strict accordance with contract terms and conditions. Contractors should be officially notified without delay in situations where there are concerns that contract expectations have not been met.
There is no formally documented appeal process for bidders to the tendering process and suppliers providing supplies and services to the Government. Arrangements should be in place that describe to whom and where a complaint should be addressed as well as the entity’s procedures for responding to the complaints. In cases where the supplier is not satisfied with an entity’s official response, it may be appropriate for an independent review to be conducted. All entities should have a process in place to deal with these situations to avoid the perception of unethical and nontransparent behaviour in the procurement process by suppliers and the general public.
While internal audit has done some limited work on procurement activities in the past, they have no intention at this time to audit these activities in the near future. Reporting to senior management on the effectiveness of its operations is a key component of the accountability framework to ensure the economy, efficiency and effectiveness of government programs or, in other words, due regard for value-for-money. there is no government-wide regularized internal audit program for procurement activities.
Recommendation #10: Because of the significant risks and lack of controls identified with the management of the procurement function in the Government, we strongly urge that a compliance audit regime be implemented to conduct a rigorous review of government procurement.
There is much more. As I said, this is an arbitrary selection of excerpts, but I imagine they would be salient issues for anyone anywhere reviewing their own procurement regimes.
Guam scores relatively well on the factors mentioned, but could use some refresher courses, too.
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