Report raises concerns on contract management capabilities of local councils – Auditor General

Yesterday evening the Auditor General presented to parliament an audit report over the contract management capabilities and practices applied across local councils.  The report also recommends a number of measures to be taken by both the Department for Local Government and local councils.

That NAO found out that no formal systems designed for the effective identification of needs have been implemented by the majority of sampled local councils. 

"The process of need identification is overly reliant on informal sources of information feeding into the decision-making process.  Consonant with the above are the findings relating to the systems of prioritisation, or absence thereof," the Auditor General said.

The report highlights the design of tender specifications as of "significant concern". According to the NAO, the Local Councils Tendering Procedures have not been updated to adequately address current needs and realities.

The NAO also found a "significant" number of active contracts that are expired.

"Issues also emerge on the award of contracts, particularly with respect to the evaluation criteria employed," the Auditor General said, adding that the system utilised in the selection of road resurfacing contracts ensures reliability of method as it closely ties in with the role of the technically proficient Council Representatives. 

On the other hand, NAO's analysis of the evaluation criteria utilised in the collection of mixed household waste tenders provided contrasting results. 

Scoring on performance criteria was carried out in a reliable manner, due to the guidance provided by the Department for Local Government, specifically in the form of an addendum to the Tendering Procedures. 

"However, the scoring system employed with regard to the financial criteria failed to appropriately classify the various tender bids, resulting in a method of classification that was heavily skewed," the report states. 

"While a few local councils exhibited significant good practices in the compilation of detailed evaluation reports, others were rendered conspicuous by their poor or inexistent documentation."

The NAO also raised concerns over contractual variations the exceeded the 20% capping. 

"Such circumstances should imply the immediate termination of the contract and the issue of a fresh call for tenders, or the issuing of a call specifically corresponding to the variations," the AG insisted.

According to the report, two distinct systems of performance measurement characterise the evaluation of technical and non-technical contracts. 

Externally appointed Council Representatives were entrusted with the evaluation of technical contracts, whereas other non-technical contracts were internally addressed, primarily through the input of Executive Secretaries, Councillors and Mayors.

Methodology:

The National Audit Office (NAO) adopted a comprehensive view of the entire contract management process, commencing at the initial determination of specifications/requirements in tender/contract documentation, to the tendering/contract award process and the actual management of the contracts. 

The audit focused on two types of contracts: those relating to road resurfacing and the collection of mixed household waste. 

Two local councils were selected from each of the five regions, one with a budgetary allocation of above or equal to €350,000, and another below the same indicated amount.

Recommendations and a copy of the full report may be accessed through the NAO website - www.nao.gov.mt.