A hard hitting report issued last month by Ireland’s Comptroller and Auditor General (“C&AG”) Seamus McCarthy paints a bleak picture of compliance in relation to public procurement and purchasing in the Republic’s Health Services Executive (“HSE”) highlighting significant non-compliance with EU and National procurement rules and regulations, non-compliance with public sector pay policy and an absence of internal audit functions
The report says that more than €3.8 billion (~£3.4 billion) was provided in funding by the HSE to over 2,700 health organisations and agencies, so called section 38 bodies, for the delivery of a range of health and social care services last year. Given the level of expenditure and the number of agencies funded, the Comptroller’s report stated “it is important that the HSE has adequate oversight and monitoring arrangements in place”.
To test compliance, the C&AG tested a sample of 100 payments valued at €2.21m to suppliers in six locations—three hospitals and three local health offices. It said 36% of the transactions audited were found to be non-compliant with procurement rules. In the non-compliant cases, it was found that most of the procurement arrangements had been in place for a considerable period of time, with one dating back to 1991.
It said that while some of the initial contracts may have been awarded after a procurement process, the subsequent contracts had long since expired and the arrangements were simply rolled over from one year to another.
Since 2009, the HSE is required to issue an annual report—known as a circular 40/2002 report—on all contracts above €25,000 that have not been subject to competitive tendering. The C&AG’s report found that of the 36 cases of non-competitive procurement identified in the audit, 31 should have been included in the HSE’s 40/2002 report but only three were.
The HSE said it requires its managers to attest to compliance with procurement procedures by way of a signed compliance statement and in 2013, 92% of managers completed a controls assurance statement.
“In light of the findings of non-compliance with procurement procedures in the locations visited, the HSE’s control assurance statement process does not appear to be highlighting the underlying level of non compliant procurement occurring in the HSE,” it said.
The report added that the HSE does not have an automated system to maintain a register of all contracts awarded without a competitive process, rather it relies on individual areas to identify and report such non-compliance.
The C&AG also found the HSE was increasingly using framework agreements to procure goods and services. However, in the six locations subject to audit only 6% of examined contracts had used the framework agreement.
It said there was an apparent general lack of awareness of the existence of framework agreements.
Supply Management, 3rd October 2017 “Third of Irish health purchases non-compliant”
The Irish Times, 29th September 2017 “Health bodies found non-compliant with pay, procurement rules”