TAO finds DPW failed to comply with ASG sealed bidding process, ARRA rules
A Territorial Audit Office’s limited scope performance audit found the government didn’t follow local regulations on the “competitive sealed bid process” in contracting the installation of the new Tafuna Fueling Station, which is overseen by the Department of Public Works.
This is one of three findings and recommendations by the TAO in its audit of internal controls of the ASG fuel station. The audit review was initiated durning 2011 and it was carried out to determine if DPW has sufficient internal controls in place at the fueling station to reasonably ensure fuel is properly accounted for and used only for authorized purposes.
ADMINISTRATIVE CODE VIOLATIONS IN BIDDING PROCESS
TAO found that DPW and Procurement Office did not follow the American Samoa Administrative Code in contracting for the installation of the gasoline storage tanks and pumps at the fueling stations.
TAO’s audit report cited specific provisions of the American Samoa Administrative Code which states in part that the government’s policy is to conduct all purchases and procurement actions in a manner that provides maximum open and free competition.
Additionally, the Administrative Code specifies a competitive sealed bidding process including elements and prescribes how these elements are to be accomplished. For example, invitation for bids, public notice, bidding time, recording of bids and awarding of contract.
Moreover, a provision of the Administrative Code specifically states that, “Unless authorized by law, all government contracts shall be executed by competitive sealed bidding...”, the report says.
TAO said its review found that DPW and Procurement Office “did not use the competitive sealed process to select a contractor to equip and install gasoline storage tanks and pumps for the fueling station.”
Instead of using Procurement Office to initiate a competitive sealed bid process, DPW “unilaterally solicited three quotes for the project,” the audit report says and noted this did not comply with the Administrative Code.
Although DPW solicited three quotes, other ASG oversight offices and departments approved the ultimate contract. In the end, the Procurement Office approved the award “without complying with the competitive sealed bidding requirements” cited in the Administrative Code, said TAO.
Additionally, Treasury Department and the ASG Stimulus Office authorized contract payments based on prior written approvals by DPW and Procurement Office indicating that all procurement rules and purchasing requirements had been complied with.
The new fueling station was completed last October at a cost of nearly $350,000, all paid with American Recovery and Reinvestment Act (ARRA) funds that were allocated by the ASG stimulus office, according to TAO, who didn’t identify the winning bidder.
Total costs included contract costs of $191,327, while the original contract was for $171,593 and DPW authorized an additional $19,644 for a change order for a computer module. In addition to the contract cost, the total project cost included $158,000 to pay for additional equipment, and demolition and installation expenses.
NON COMPLIANCE WITH ARRA REQUIREMENTS
Besides not following the Administrative Code, TAO report says ASG did not comply with the ARRA requirement of posting this procurement opportunity on the local ARRA website, as required by the federal government.
“One of the primary requirements of ARRA is to provide transparency for all ARRA activities,” said TAO. “Accordingly, ARRA requires that procurement opportunities for ARRA projects be identified on the local ARRA website.”
And since this procurement was not advertised in the local newspapers, ASG also did not meet the requirement to advertise the project as an ARRA funded project.
TAO recommends that all ASG departments including DPW always involve the Procurement Office in planning, advertisement, soliciting, evaluating and ultimately awarding contracts when competitive sealed bids are required.
In its response to this finding, DPW director Taeaotui Punaofo Tilei says the department recognizes the importance of this finding and it was not DPW’s intention to deviate from the regular procurement process.
“DPW provided the information needed to complete the project and all the control points of this process approved. The control points were not limited to Procurement [Office],” he said.
As stated by TAO, the other failed control points were the Treasury Department and the ASG stimulus office, and had DPW been made aware of the issues concerning what is on this audit report, “we would have processed it as suggested,” according to the director.
However, DPW was not approached or denied at any of these control points in which case DPW proceeded as planned, he said and noted that DPW “has always and will always adhere to any and all processes regarding the procurement of any product or service.”
The third and final finding and recommendation in this report will be published later in the week.