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PUBLIC PROCUREMENT : - Verifications – Audits of Operations (checklists) - Main irregularities

PUBLIC PROCUREMENT : - Verifications – Audits of Operations (checklists) - Main irregularities Audit and Control Unit 27-05-2014. INTERVENIENTS / ACTORS .

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PUBLIC PROCUREMENT : - Verifications – Audits of Operations (checklists) - Main irregularities

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  1. PUBLIC PROCUREMENT: - Verifications – Audits of Operations (checklists) - Main irregularities Audit and Control Unit 27-05-2014

  2. INTERVENIENTS / ACTORS • ApplicationForm - InformationaboutthePublicProceduresrelatedwiththeoperation– ongoingproceduresandfinishedprocedures • Sends to MA relevanttender documents Beneficiaries Management Authority / Intermediate Bodies • An MA example… • Internal control procedures - Validation of expenses includes Checks for all Public Procurement Procedures, with application of the Commission guidelines for determining financial corrections, if financial corrections are necessary. • Guidelines to the beneficiaries with alerts for the main audit findings on Public Procurement matters • Certifying Authority • AttestthatallPublicProcurementProcedures are checkedbeforeexpenditureiscertified to theCommission Cohesion & Development Agency • AuditandControlUnit – SegregatedControlStructure • PublicProcurementchecks - Auditsonoperations Audit Authority • PublicProcurementchecks - SystemAudits / SpecificAudits • Auditopinionsontheworkofotherentities • European Court Accounts • European Commission - 2 -

  3. AUDIT AND CONTROL UNIT - CDAGENCY Responsibility for audits of operations: ERDF, CF, ESF How do we check PPP (Public Procurement Procedures)? Procedures Manual Public Procurement specific checklists approved by AA - 3 -

  4. PP specific checklists approved by AA  Entity Framework / Scope / Extent Contract Framework / Scope / Extent Direct Award (Simplified / Regular) Open Tender Procedure Restricted Tender Procedure with pre-qualification Framework Agreements Negotiated procedure Competitive dialogue - 4 -

  5. Main Contents - PP specific checklists approved by AA Checklists are organized considering the two main phases of the public procurement procedures: • 1 – Pre-contractual procedures • 2 – Contract performance procedures Auditing operations are based on the documentation collected from the beneficiary’s records and information’s. 1 – Main concerns while auditing the pre-contractual procedures : A - Qualified authority B – Advertising • Non adequateand/orinexistentdegreeofpublicity; • Non-compliancewithtime limits for receiptoftendersorrequest to participate; • Non-compliancewithextending time limitsadvertisingactions; • Insufficientdetailofselectionandawardcriteria; • C – Artificial splittingofworks/services/supplies • Non-complianceofthewhole set ofworks/services/suppliesregardingthechosencontractnotice (requiringpublicationonOfficialJournaloftheEuropeanUnion); - 5 -

  6. Main Contents - PP specific checklists approved by AA 1 – Main concerns while auditing the pre-contractual procedures (cont): D – Tender Documentation • Non-compliancewithall legal bindingrequiredinformation; • Unlawfuland/ordiscriminatoryselectionand/orawardcriteria; • Discriminatorytechnicalspecifications E – Tender Evaluation Unlawfulevaluationofeachbid; Rejectionofabnormallylowtenderswihtoutjustification Unclear, unjustifiedandlackingtransparencyofthe score given to eachbid; F – Contract Qualification documents of the chosen supplier; Compliance of the contract terms with the tender documentation; - 6 -

  7. Main Contents - PP specific checklists approved by AA 2 – Main concerns while auditing the contract performance procedures : A – Startupprocedures Compliancewiththecommitted timings; Compliancewiththe formal proceduresregardingthestartofworks; B – Ongoingcontractprocedures Illegalawardofadditionalworks/services/supplies; Additionalworks/services/suppliesexceedingthelimitslaiddown in thecontractprovisions; Illegalsuppressionofworks/services/supplies; Revisionofprices; C – Final contractprocedures Due time for works/services/suppliesdeliverance; Final contractevaluation (values/works/failings/etc) - 7 -

  8. Main Results / Findings on NSRF • 1 - ERDF/CF : • Main Findings • Incorrect Procedure (wrong choice) • e.g. due to • artificial splitting of contracts • additional works/services that didn’t result of unforeseen circumstances • procedure without prior call for competition/Direct award • Non adequate degree of publicity (mainly due to inexistent publicity of extending time limits) • Illegal Award Criteria • Principles of the Treaty (equal treatment, non discrimination, transparency, proportionality) - 8 -

  9. Practical examples - NSRF (Corrections based on EU guidelines) • 1 - ERDF / CF • Example 1: PrinciplesoftheTreaty • The content of the Preliminary and Final Reports, which specifies the tenders analysis, doesn´t allow to determine the way that the “Commission of proposals” reached the final score (the way the qualitative judgment in technical merit was transformed into a quantitative expression, relevant and indispensable to assign a score to the proposals). • Subsequently, it was considered that the principles of equality, transparency, fairness and competition, were violated, thus should be applied to the expense subject to co-financing a financial correction of 25%, in accordance with paragraph 16 of the Financial Corrections table annexed to the EC Decision C (2013) end of December 19, 2013 9527. - 9 -

  10. Practical examples - NSRF (Corrections based on EU guidelines) • 1 - ERDF / CF • Example 2: Artificial Splitting • There were 5 contracts, awarded by direct setting, with benefits of the same type (public works contracts), making up, in the whole set, a total charge of 556.578,96€; • The respective dates of grant reveal a time gap of about 4 months between the first and the last contract; • Al the works appear in Multiannual Investment Plan of the year of 2009, approved at town meeting; • As to its geographical location, it should be noted that the 5 contracts were limited to municipal perimeter (either in avenues within the city, or in its adjacent roads). • Given the nature of the works (repair and paving of roads), its location, the fact that they are all included in a Multiannual Investment Plan, approved by the competent municipal qualified authority, and as a result, in the prior knowledge of the beneficiary, to which must be added a non-relevant time gap in a way that put the concomitance of these endeavors, one cannot fail to considered that there was a splitting of the whole set of expenses, embodied in the work breakdown into 5 partial procedures. • All facts considered, given the nature of the work, it was mandatory the adoption of a public tender procedure for the whole set of the expenditure regarding the 5 contracts, in respect of contracts under applicable law and by the principles of transparency, equality and competition. • Subsequently, it was not given fulfilment to the provided in article 22 of the CCP (Article 9(3) of the Directive 2004/18/EC), so the situation in question is considered an irregularity for the purposes of co-financing . • Thus, considering the guidelines for determining Financial corrections to be applied to the Co-financed Expenditure by the structural funds and the Cohesion Fund (COCOF table 07/003703-EN), it is considered to be applying a correction of 25% the expenditure in reference (Nr. 21 Type of irregularity – failure of an appropriate degree of publicity and transparency) – previous guidelines - 10 -

  11. Main Results / Findings on NSRF 2 – European Social Fund : TOTAL ERRORS on ESF, related to Public Procurement - 11 -

  12. Main Results / Findings on NSRF 2 – European Social Fund :  Annex II B – Directive 2004/18/CE (31/03/2004) altered by Annex VII – Reg. (EC) n. 2013/2008 (28/11/2007) Partially excluded from the application of public procurement procedures  National Law – DL 18/2008 (29/01/2008) § f), n. 4, Article 5 - DL 18/2008 - Education and vocational training services - 12 -

  13. Main Results / Findings on NSRF Contracts which have as their object services listed in Annex II B shall be subject solely to Article 23-Technical specifications and Article 35(4) – Notice after the award of the contract. 2 – European Social Fund : Partially excluded from the application of public procurement procedures The contracts having for object “Education and vocational education services” : Listed as Category 24,  in  the ANNEX VII  to  the COMMISSION REGULATION (EC) Nº 213/2008 of 28 November 2007 amending Regulation (EC) Nº 2195/2002 of the European Parliament and of the Council on the Common Procurement Vocabulary (CPV) and Directives 2004/17/EC and 2004/18/EC of the European Parliament and of the Council on public procurement procedures, as regards the revision of the CPV referingto services from CPV reference n.º  80100000-5  to  CPV reference n.º 80660000-8 (except 80533000-9, 80533100-0, 80533200-1), listed in the  ANNEX I to the mentioned Regulation - 13 -

  14. Main Results / Findings on NSRF 2 – European Social Fund : • MAIN ERRORS on ESF, related to Public Procurement: • Lack of publication of contract notice (N. 1 of Commission Decision 9257, of 19/12/2013) • Artificial splitting of works / services / supplies contracts (N. 2 of Commission Decision 9257, of 19/12/2013) - 14 -

  15. Practical examples - NSRF (Corrections based on EU guidelines) • 2 - European Social Fund • Example 1 - Lack of publication • Contracting Authority and Open tender Procedure (Year: 2012) • Contract Amount = 250.000€ (> Community threshold amount for public contracts, applied on 2012 = 200.000€) • Notice: Portuguese Official Journal + Portuguese newspaper of wide circulation • Notice after the award of the contract: Portuguese Official Journal • MANDATORY: • Notice: Official Journal of the European Union + Portuguese Official Journal • Notice after the award of the contract: Official Journal of the European Union FINANCIAL CORRECTION = 25% of Contract Amount (according to N.1 of Commission Decision 9257, of 19/12/2013 ) - 15 -

  16. Practical examples - NSRF (Corrections based on EU guidelines) • 2 - European Social Fund • Example 2 - Incorrect procedure in relation to the amount involved • Contracting Authority and DIRECT AWARD(Year: 2009) • Purchase of a multifunctional device: copying, printing and scanning (for 3 years) • Contract Amount = 72.000€ (Portuguese threshold amount for Direct Award = 75.000€) • Contract Price: Fixed Amount – 72.000€ • Variable amount depending on number of copies (0,03€/copy) • AA understanding: • “… the maximum value of the contract to be awarded is the maximum value of the economic benefit that can be obtained by the tenderer in the execution of all services which constitute its object …” • AA estimated the total value of the contract in 145.000€ OPEN TENDER FINANCIAL CORRECTION = 10% of Contract Amount (according to Portuguese Audit Authority Decision) < Community Threshold but > Portuguese Threshold - 16 -

  17. Thank you very much

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