City of West Palm Beach Internal Audit Department

Transcription

1 POST AUDIT REVIEW OF THE CITY S PROCUREMENT PROCESS Report No. PAR May 1, 2017 City of West Palm Beach Internal Audit Department Roger Strout, City Internal Auditor, CIA, CGAP, CRMA, CFE, CICA Beverly Mahaso, Deputy City Internal Auditor, JD, CFE Elena Georgiev, Senior Internal Auditor, CPA, CGMA, CIA Ellen Misita, Senior Internal Auditor

2 05/01/2017 Audit Committee City of West Palm Beach 401 Clematis Street West Palm Beach, Florida RE: POST AUDIT REVIEW OF THE CITY S PROCUREMENT PROCESS Dear Audit Committee Members: On July 18, 2016 the Internal Audit Department released the audit of the City s. We performed certain procedures, as enumerated below, with respect to the activities of the Procurement Department in order to render a conclusion on the status of the recommendations made as a result of the City s audit. This Post Audit Review (PAR) consisted primarily of inquiries of City personnel and examinations of various supporting documentation. It was substantially less in scope than an audit in accordance with generally accepted government auditing standards. The evidence obtained provided a reasonable basis for our conclusions; however, had an audit been performed, other matters might have come to our attention that would have been reported to you and our conclusions may have been modified. The review contained eight (8) recommendations that addressed the review s findings. Based on the post audit review performed, we concluded that recommendation 4 was implemented and recommendations 1, 2, 3, 5, 6, 7 and 8 were partially implemented. 1

3 Recommendations Status with Priority Medium (1) Medium (1) (6) Implemented Partially Implemented Not Implemented We have enclosed a table listing all the recommendations with the current statuses. We found that management has made significant progress with respect to corrective action. However, additional tasks remain to be completed. We thank the personnel in the Procurement Department for their assistance in conducting this review. We encourage them to continue their efforts and fully implement the recommendations provided. Respectfully submitted, /s/ Roger Strout City Internal Auditor cc: Cory Neering, Commission President Keith James, Commissioner Shanon Materio, Commissioner Sylvia Moffett, Commissioner Paula Ryan, Commissioner Jeffrey Green, City Administrator Dorritt Miller, Deputy City Administrator Frank Hayden, Procurement Director Mark Parks, Chief Financial Officer Encl. 2

4 AUDIT RECOMMENDATIONS 1 The Procurement Department should We Agree. We are already meeting Partially Implemented: The develop formal written procedures and with our customers internally and Procurement Department held goals for defining how it will meet, externally. We will develop a process meetings with departments in order to measure and track the requirement of train staffs on how to use the contract to track user and vendor satisfaction. establishing and maintaining a close database. liaison and coordination with departmental staff to timely meet their procurement needs and requirements. 2 The Procurement Department should develop KPI s that define how it will achieve and measure the requirement of procuring goods, services, and construction that meet departmental requirements at the least cost to the City The Procurement Department should improve its training, monitoring and practices to ensure that its procedures are being followed by all user departments and proper supporting documentation is being maintained to demonstrate this. 2. Guidance should be added to the City s Procurement Code and Procurement s formal procedures defining the conditions under which We agree. We have developed Procedures to enable procurement of goods and services, at the least cost to the city. We participated in cooperatives that allow us to view prices that others are obtaining to ensure the city is getting the best price. We will continue to improve on this and continue to seek other alternatives. As part of the budget, we will develop performance guidelines. Performance will be tracked. We agree. We have begun training to ensure that our procedures are being followed. This is an ongoing training. We will develop a quality control monitoring program to help ensure that documentation is maintained that supports the selection of vendors, and is based on procuring goods and services that meets departmental requirements at the least cost to the City. Partially Implemented: The Procurement Department has begun using SmartProcure, a company providing comprehensive, highquality government purchasing data. The Department is able to see online what other governments have paid (recently) for products and services similar to the ones the City is looking to procure. Partially Implemented: (1) The Procurement Department has begun holding training sessions with individual departments to ensure that they follow the established procedures. In the past months the process has reversed - departments are actually seeking help themselves. (2) Guidance related to piggybacking has been added. (3) The Department has begun using SmartProcure, it is able to see online 3

5 competitive bidding/rfp procedures what other governments have paid are suspended and piggybacking other (recently) for products and services State or local contracts is allowed. similar to the ones the City is looking 3. A quality control program should be to procure. developed to help ensure: - Documentation supports that the selection of the vendor was based on procuring goods, services, and construction that will meet departmental requirements at the least cost to the City. - All required procurement documentation is properly completed and on file. - are approved prior to purchase. - The status of all PO s is tracked from initiation to close of the purchasing transaction. 4 The Procurement Department should develop formal procedures and schedules for conducting procurement seminars for departments within the City government. Additionally, feedback should be obtained from the attendees, to help ensure that the training is effective and meeting user needs and expectations. 5 The Procurement Department should obtain the necessary tools and develop formal procedures to adequately meet the requirement of maintaining the vendor database and supplier list information in Oracle. The Procurement Department should evaluate vendor management software We agree. On January 6, 2016 at the City s Leadership meeting, we trained supervisors and above, on the. We have also trained employees from Public Utilities and a number of other departments. We have also implemented training at staff meetings. This will be an ongoing process. We agree. We have begun reviewing recommendations of vendor management tools. Implemented Partially Implemented: Per discussion with the Procurement Director, the IT Department is bringing in a specialist to build a "bridge" between Prism (the vendor database) and Oracle. In addition, the Department is already using Demand Star. Medium 4

6 tools to determine if a suitable electronic product is available to meet its needs. Additionally, the Procurement Department should investigate utilizing Internet based vendor notification solutions such as Demand Star, BidSync, or other electronic RFP distribution tools. Some of these are low or no cost and provide access to thousands of vendors. 6 The Procurement Department should review and update its formal procedures and establish a periodic review interval for its procedures. Specifically, individuals should be assigned responsibility to periodically review and update Procurement s procedures. We agree. We are in the process of reviewing and updating our policies and procedures. We expect completion by Partially Implemented: The Procurement Department has updated its policies and procedures, which are currently awaiting the approval of the Deputy City Administrator. In addition, it belongs to a co-op, which allows it to compare itself to other governments. Medium The Procurement Department should consider comparing its formal procedures with those of other municipalities and government organizations to gauge completeness, design, and coverage of the Procurement Department s procedures. 7 The Procurement Department should update its procedures to define what review is required and the documentation to be maintained to support a vendor s qualifications for doing business with the City. We agree. We presently review vendor qualifications before recommending an award. We just recently purchased software which will allow us to maintain a vendor and supplier database. The prime software enables us to track payments to our SBE s. We Partially Implemented: The Procurement Department has updated its policies and procedures, which are currently awaiting the approval of the Deputy City Administrator. In addition, it belongs to a co-op, which allows it to compare pricing to other governments. 5

7 See the Appendix (page 26 of this will be able to maintain a database of report) for an example Award and qualified vendors. Renewal Checklist provided by the Hillsborough County, Florida, Procurement Department. Hillsborough County uses this checklist to help ensure that proper steps are taken and documented for vendor evaluation. Other local governments may have similar checklists, which could be used as models in the development of a similar checklist for the City of West Palm Beach. 8 The City should develop a contract oversight and guidance function, with related formal procedures for carrying out that function s responsibilities. The role should help ensure that departments monitor their contracts and ensure that they receive their goods or services in accordance with contractual requirements and obligations. The contract oversight and guidance provided should address responsibilities such as how the function will: - Serve as the point of contact on contractual matters. - Coordinate negotiations with vendors. - Maintain contractual records and documentation. - Provide guidance on contract matters and train employees in contract monitoring practices and procedures. We agree. The Contract Management function for Engineering, Utilities and Public Works resided in engineering until this year. These duties, as well as the staff, have been assigned to Procurement. Procurement developed a formal procedure for carrying out a Contract Management function. We have a manual for Project Management which assists in the management of these projects. We will periodically perform check-ins with user departments managing contracts. Partially Implemented: This is currently performed by the contract specialists, however, it is really a responsibility of the individual departments to monitor their contracts. The Procurement Department is currently training project managers within the different departments on how to perform these functions. 6

8 - Develop and implement procedures for contract oversight and administration. - Monitor user departments compliance with established procedures. - Coordinate contractual insurance requirements. - Help ensure monitoring of competitive terms. - Ensure that signed contracts are communicated to all relevant parties. - Ensure users monitoring of transaction compliance (milestones, deliverables, invoicing etc.). 7