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The government strives to create an open, fair and transparent federal procurement system that is accessible and attains best value for tax dollars spent. The current direction in government includes strengthening Public Sector Management; part of the strengthening involves tightening measures to control costs to ensure the government has the flexibility to meet the priorities of Canadians and ensure that there is adequate disclosure so that the Canadians are better able to hold their Government to account.
Treasury Board Secretariat's (TBS) contracting processes are key management processes supporting its role and mandate. During the fiscal year ended 2003/2004, TBS had 2,900 active contracts with an approximate value of $61 million.
This audit was identified in the risk based audit plan that was approved by the TBS Internal Audit and Evaluation Committee.
The objective of the internal audit of the TBS Contracting Processes was to provide Secretariat management an independent audit of the TBS contracting processes vis-à-vis policy requirements and to identify areas for improvement.
The scope of this audit focused on assessing the TBS contracting processes from initiation of contract request through to contract closure including financial controls, monitoring, contract management and reporting. The audit assessed procurement approaches available to TBS fund centre managers ranging from non-competitive contacting for less than $25,000 to large competitive contracts.
During the course of the audit, we found that there was no effective senior management planning and oversight function providing a corporate and longer term view of contracting. We also found that there was not a standard approach to contracting practices across the Secretariat. The higher-level observations and recommendations are summarized below. Detailed findings and recommendations are included in section 3 of this report. The management response to the detailed recommendations can also be found in this section.
The report's observations and recommendations are layered; supporting a change in culture and management responsibility for contracting, flowing down to specific operational adjustments that should be made.
Roles and Responsibilities
We recommend TBS adopt a strengthened centralized model for procurement and contract management. Roles and responsibilities of all key players need to be refined to strengthen controls, monitoring and oversight activities.
We recommend that there be controls in place to ensure that there is a senior level review for contracts greater than $10,000.
We further recommend that TBS management oversight of contracts processed through PWGSC be strengthened to include mandatory approval of contract and contract amendments by the TBS Contract Review Committee.
Policies and Procedures
We recommend that TBS adopt their own contracting directives to be used in conjunction with the government-wide TB Contracting Policy.
We recommend that contract oversight and review be strengthened and clarified. The compliance role, primarily the responsibility of Material Management Section needs to be strengthened by improved contract approval and amendment processes, and reporting and monitoring of contracts.
We recommend that contract documentation and closing processes be standardized and tools and checklists adopted to assist TBS fund centre managers to ensure contracts have been completed and value delivered.
We recommend that the controls in place to support the verification of financial signing authorities for Section 32 and 34 of the Financial Administration Act (FAA) be strengthened.
Planning
We recommend that contract planning should be included as part of the annual business planning process and done with enough lead time to meet business needs.
We recommend services required on a frequent and ongoing basis across TBS should be identified and considered for consolidation or supply arrangements that may result in better value and less administrative burden.
Reporting and Monitoring
We recommend a systematic approach to monitoring vendor performance be implemented to improve control and management of suppliers.
Contracting Practices
We recommend that TBS establish key performance indicators to be used to assess contracting and procurement performance (e.g. number of contracts by vendor, by procurement method, number of contracts amended). Organizational-wide oversight of the TBS contracting processes needs to be measured and monitored.