25/01/2007Auditor General for Wales warns 'lessons must be learned'
An independent review by the Auditor General for Wales found that a series of process and procedural weaknesses and a number of unplanned and unconnected events and actions led to the withdrawal of the preferred, lowest price tender to build Guernsey's PEH Clinical Block. The withdrawal of the tender has resulted in the States incurring unnecessary expenditure of £2.4 million and damaged the reputation of the States of Guernsey government.
In October 2006, the States' Public Accounts Committee asked the Auditor General for Wales to examine the circumstances surrounding the tender withdrawal as well as the nature and extent of the problem. He found that the States' actions in relation to the contract were deficient in many respects and it is unclear which factors directly influenced the decision of RG Falla Ltd to withdraw its tender.
RG Falla Ltd was selected as the preferred contractor to build the hospital's clinical block in July 2006. Its contract price was some £2.4m lower than the rival bid and was recognised as representing good value for money by both the States' Health and Social Services Department (HSSD) and the Treasury and Resources (T&R) Department. However, a month later, RG Falla withdrew its tender.
The report found that States' processes and procedures for managing capital contracts were not always followed and guidance was inadequate, incomplete and unclear. Also, there was no methodology for the prioritisation and allocation of capital budgets, leading to confusion and uncertainty in the tendering process.
Furthermore, the actions of a number of key individuals and groups were on occasion confused, inadequate and inappropriate. These all contributed to the circumstances which led to the withdrawal of the tender.
The report makes a number of recommendations for improving the States' business processes and procedures in the future.
Jeremy Colman, Auditor General for Wales said today,
"My review has uncovered a series of weaknesses with the way the States manages capital contracts - all of which played a part in RG Falla withdrawing its tender. Urgent action must now be taken to tighten up procedures, particularly through introducing clear guidance and better defining roles and responsibilities."
Notes to Editors:
• This report examines the circumstances leading to the withdrawal of the preferred tender to build the Princess Elizabeth Hospital Clinical Block. It follows a decision in October 2006, by the States of Guernsey, to order an independent review.
• The States of Guernsey Public Accounts Committee (PAC) was established in 2004 to ensure the proper scrutiny of the financial affairs of the States of Guernsey. The PAC carries out investigations into States' departments, whether directly or via third parties, in this case the Wales Audit Office.
• The Wales Audit Office is independent of government and is responsible for the annual audit of some £19 billion of annual public expenditure.
• Its mission is to promote improvement, so that people in Wales benefit from accountable, well-managed public services that offer the best possible value for money. It is also committed to identify and spreading good practice across the Welsh public sector.
• The Wales Audit Office was created in April 2005 through the Public Audit (Wales) Act, 2004, which expanded the functions of the Auditor General for Wales and enabled the transfer of staffs from the Audit Commission in Wales and National Audit Office in Wales to his employment.
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