Spend Matters is a private/public purchasing website that a lot of procurement insiders from around the world go to. It can be an insightful resource for practitioners and students of contracting, both government and private. This post began with a piece from that site.
The Public Sector and the Cost of Resisting Change, a guest post from Mark Digman.
I know I occasionally fall into the trap that organizations must be on-board with what we so clearly see as necessary (if not obvious.) But then I read about the recent procurement struggles of a great American city like New Orleans, and I snap back into reality and the hard truths of the world: change is hard. As it stands, the Office of the Inspector General in New Orleans is making recommendations – what amounts to a slap on the wrist – but it’s easy to envision a scenario where failure to turn it around will result in very unfavorable results.I'll leave it to you to read the rest of his piece at the link, and here turn to his link to the situation in New Orleans.
In fact, we’re starting to see increasingly strict regulations placed on state and federal organizations – regulations with real teeth that go much farther than the recommendations of the Inspector General in the case of New Orleans. Illinois, for example, recently enacted into law a procurement reform bill. As a result of that legislation, much tighter controls have been put into place in regards to vendor restrictions, subcontractor requirements, and transparency provisions. The state has, in essence, legislated procurement accountability.
IG finds problems remain with city purchasing, payment procedures
The Office of Inspector General issued an audit report in May on the city’s internal controls related to budgeting, bids, purchasing, contracts, disbursements and wire-transfer processes and found several issues with those procedures.It is nice to say that procurement should be accountable and transparent and maximize the public dollar. But principles become pap unless given effect. And that requires effort. But it comes with a pay-out to the taxpayers.
Controls put in place to separate ordering and receiving processes were not functioning since 84 percent of the purchases the OIG tested only had one person placing and receiving the order. City policy requires more than one person within a department to participate in the ordering and payment process.
OIG suggested that the city put in place a process to determine if vendors were delinquent in paying city taxes before they were paid for services.
The initial OIG report also found that vendors who registered with the city did not go through a verification process to determine if they were valid vendors or that their tax ID number was valid.
The OIG suggested that the city create a policy to manage the vendor master file by determining the company’s existence through the Secretary of State’s Office and obtaining federal tax ID numbers from the IRS.
While the OIG found that the city’s financial system did not provide an adequate audit trail for auditors, the city did find a way to make that possible. The city also began to amend contracts only after it reviewed if changes would not be better than rebidding the contract. And while the city previously was not required to verify that vendors were current on tax payments, the city implemented corrective actions and got tax compliance certificates for all contracts, including amended contracts.