The Office of the Auditor General has uncovered a string of weaknesses in procurement practices at the National Conservation Commission (NCC) and a case in which a senior official there contracted his own company to do work for a national clean-up programme.
In his 2022 report, laid in Parliament last week, Auditor General Leigh Trotman flagged the procurement and payment for services provided by at least two suppliers to the NCC during the January 1 to December 31, 2022 period under review.
He said that in a “clear conflict of interest”, the supervisor of the clean-up initiative, dubbed the 360 Programme because of the number of people contracted to be part of the initiative, utilised his own trucks to remove debris, engaged the services of another supplier and set rates for that supplier.
“This is a dangerous precedent, which should be corrected,” Trotman said as he urged the NCC, which has an annual budget of more than $25 million, to establish procurement policies to govern its operations.
According to the Auditor General, an audit of certain procurement activities of the NCC was requested by the Permanent Secretary of the Ministry of the Environment and National Beautification based on concerns outlined by the NCC chairman.
In a report to the minister, the chairman indicated that only one firm was performing grease trap and septic well cleaning across NCC facilities and that the company was paid approximately $1,553,402 over the ten-month period, January to October 2022.
“The chairman and deputy chairman expressed their concerns at the absence of contractual arrangements and the lack of proper oversight for these services,” said Trotman, as he outlined the reasons for the audit into the operations of the NCC.
The NCC’s arrangements with two entities in particular had concerned the Board. The audit revealed that there were a number of issues regarding the services provided, including the NCC’s failure to agree to rates before starting routine maintenance, the absence of a competitive selection process, the lack of authorisation, and work not being verified.
“There was no evidence of a competitive selection process for the services provided by these entities and, as a result, there was no way to determine if the rates charged were the best value for money,” the Auditor General said.
“The payments made to both entities for removal of debris in the 360 Program were approved by management without evidence that the appropriate checks and balances were conducted to verify that the work was done,” he said, adding that no logs existed for the services provided to allow for verification of work done as per the invoices submitted.
“As a result, there is a lack of transparency and internal controls along with the risk of unnecessary costs being incurred.”
Further, the audit found that one of the entities, which is owned by the supervisor under the 360 Programme, removed debris in the constituency which he supervises and also set the rates for this service.
“This is a conflict of interest which has allowed the owner of the entity to perform tasks without appropriate checks and balances by NCC to ensure the work was carried out and at an economic cost,” Trotman noted.
The supervisor also engaged the trucking services of the other entity and the NCC facilitated payment.
“There was no evidence that any authority was given by the NCC, to the supervisor, to engage this service. In addition, no logs existed for the services provided to allow for verification of work done as per the invoices submitted. Nevertheless, approval for payment for this service was given by management,” Troman detailed.
“By accepting this situation, the management of the Commission abdicated its responsibilities and the risk increased that payments were made for unauthorised services of which it had no way of determining if it was performed.”
He added: “There was no need for the trucking services provided by the two entities for the removal of debris, according to personnel with responsibility for NCC’s fleet of trucks and oversight of the 360 Programme. Personnel from the NCC also expressed concerns that when they attempted to remove debris generated by the team, supervised by the owner of one of the entities, they were not allowed to perform this duty.”
In its response, the NCC said the selection process for contractors removing debris “would have come as an instruction from the Chairman of the Board of Directors when concerns were raised at the ministerial level”.
“This occurred after bags of garbage and debris were not collected in a timely manner by the NCC fleet of vehicles,” it added.
Another concern regarding the procurement practices of NCC was the failure to obtain a schedule of fees for services provided. There was no evidence provided to indicate that fees payable for services provided were established prior to the engagement of suppliers, said Trotman.
However, the NCC gave the assurance that “fees for services are checked by receiving quotations from multiple suppliers or informally by the officers requesting the engagement of suppliers”.
“This gap has been filled by sending the above service requests out to tender and a service provider selected. It has been established that tenders will be conducted annually for such services,” it said.
Among the Auditor General’s other concerns were the weaknesses in the NCC’s accounting system; and the change from an ad hoc maintenance programme to a preventative one for certain plumbing services which resulted in an increase in the costs, even though there was no evidence of a cost benefit analysis being done to substantiate the decision.
Trotman recommended that the NCC establish a clear procurement policy; replace the accounting system; implement a competitive and transparent selection process for suppliers; and obtain rates for services being procured.
He also recommended the implementation of a documented authorisation process which allows for cross-checking of information submitted on invoices by suppliers; and the establishment of a transparent system for the certification of invoices.
Trotman said the NCC should also review the rates charged to tenants at the Oistins Bay Gardens and Worthing Beach, given the high levels of operational costs incurred for the maintenance of those sites.