Annual contract administration - march 2017
Annual Contract Administration
Released March 2017 Download the Full Report here We undertook this audit to determine whether the Department of Procurement administers annual contracts for commodities in compliance with city code and industry best practices. While city code and the Department of Procurement’s standard operating procedures define steps for the city to enter into annual contracts for commodities and for user departments to make purchases against those contracts, user departments have been responsible for enforcing contract terms with little guidance for doing so. As a result, the city may have been over-billed. The city’s recent reorganization of the procurement function provides opportunities to strengthen contract management as former user department buyers, and their role of creating purchase orders, were centralized within the Department of Procurement. |
We found:
- Lack of accountability leaves city vulnerable to price discrepancies
- Differences in how departments recorded transactions make it impossible to distinguish reliably between purchases made from contracts and purchases made through departments’ small purchase authority
- More than 80% of the 164 invoices we sampled from the city’s top twelve supply vendors did not align with the contract price or the contract price list had expired and the city had no current list
- Failure to enforce contract terms reduces advantages of competitive pricing
- Procurement consolidation offers opportunities to improve contract management
- Price savings could improve with better annual forecasting and communication during invitations to bid
- Analysis of spending and strategic procurement could yield lower prices