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Procurement Perspectives: Emergency procurement still needs controls

Stephen Bauld
Procurement Perspectives: Emergency procurement still needs controls

For government purchasing departments across Canada, emergency procedures are followed in unforeseen situations because immediate procurement materials or services is necessary in order to continue operations of an essential department.

Several other reasons can be used in order to use this process such as, the preservation of health, safety and welfare of the people, or protection of property, when there is a present immediate and existing danger. Depletion of stock through normal routine usage is not considered an emergency for the purpose of invoking such procedures, nor is poor planning.

Unfortunately, the abuse of the emergency procurement procedure is not only notorious but extensive, and it seems to be omnipresent in all municipalities in North America. Living up to her role as the state auditor of the “Show Me State”, Missouri Auditor Susan Montee once published a report dealing with questionable emergency purchases within the City of St. Louis Supply Division.

Her findings would likely be replicated in any major city in Canada. It appeared that some city departments may be using emergency purchases to circumvent normal city purchasing procedures. Auditors reviewed 28 emergency purchases, totalling $371,845, made by various city departments that were processed through the Supply Division and approved by both the Supply Division and the Comptroller’s Office. Of the 28 items reviewed, 22 did not appear to meet the city’s definition of an emergency. Some of these purchases included the following:

  • The Street Department purchased a traffic detection system for $234,215. It appears this purchase was delayed to the point where an emergency purchase was required to complete the project on a timely basis, and there was no documentation to indicate why the purchase had been delayed.
  • The Supply Commissioner purchased a new car for $25,567 for the newly elected President of the Board of Aldermen.
  • The Health Department purchased satellite telephones for $9,390, a digital camera for $4,034, and other photo equipment for $1,131.
  • The information Technology Services Agency purchased W-2 forms for $626. This purchase included all W-2 forms needed for city employee tax records for the current year. A similar purchase was made for the previous tax year.
  • Other items that did not appear to meet the definition of an emergency purchase included a sno-cone machine, magnetic baseball schedules, fleece blankets, polo shirts, and couches.

For 13 of the 22 items purchased that did not appear to meet the definition of an emergency purchase, justification of the emergency nature of the purchase was not adequately documented, and no justification was documented for two of the 22 purchases. Nineteen items purchased included invoices with dates prior to the creation and approval of the emergency requisition form. Further, 26 of the applicable 27 emergency purchases were not bid as required. In addition, two of the six applicable purchases did not have a letter requesting waiver of advertising for bids, including one purchase exceeding $200,000. Invoice prices for some purchases did not agree to the applicable contracted bid prices. In addition, some invoices did not provide specific pricing information to allow invoices to be verified for accuracy.

Although the need to move quickly in the face of an emergency is obvious, the negative financial impact of emergency contracting is often staggering. Contracts entered into when the wolves are at the door are often one-sided, in favor of the supplier, and often involve minimal oversight.

Common sense would seem to dictate that emergency expenditures should be kept to a minimum through properly planned procurements and the monitoring (and replacement) of inventory.

Instead, all too often regular maintenance of capital items is deferred, and life cycle replacements costs are put off in the hope that worn out and obsolete equipment can be used for a few more years.

 

Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com.

Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.

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