AUDIT AND CONTROL UNIT

EUROPEAN REGIONAL DEVELOPMENT FUND (ERDF)

AND COHESION FUND (CF)

QUIRINO MEALHA

DIRECTOR

Compliance with Public Procurement Rules(Portuguese Action Plan)

(ERDF and Cohesion Fund)

•Background

•September/ October 2004 DG REGIO System Audit missions (ERDF and Cohesion Fund)

•February/ April 2005 Audit Reports received from DG REGIO

Main conclusions

•Inadequate application of Public Procurement Principles and Rules (National and EU)

•Lack of article 4 checks (management checks) – first level of control (Now article 13 of Regulation 1828/2006)

Possible systemic error

• April 2005 EC DG REGIO invites National Authorities (Audit and Managing) to a meeting in Brussels

Main Goal

• An Action Plan for Public Procurement in Portugal – ERDF and Cohesion Fund (2000-2006) to establish the scale of the problems detected

• April 2005 EC DG REGIO invites National Authorities (Audit and Managing) to a meeting in Brussels

Main Goal

• An Action Plan for Public Procurement in Portugal – ERDF and Cohesion Fund (2000-2006) to establish the scale of the problems detected

Background

Action Plan on Public Procurement

1st Phase

Action Plan on Public Procurement

1st Phase

Certifiedexpenditure until 31.12.2004

• July 2005 IFDR presents to DG REGIO a proposal for a specific methodology to be used on the Action Plan

It includes

• A project sample selection under MUS – ACL Software– with a level of confidence of 95% and error materiality of 2%, to be applied to the amount of expenditure certified by National Authorities till 31.12.2004

• check list on Public Procurement and fill in guidelines

• July/ August 2005 DG REGIO gives its approval to this methodology

• July 2005 IFDR presents to DG REGIO a proposal for a specific methodology to be used on the Action Plan

It includes

• A project sample selection under MUS – ACL Software– with a level of confidence of 95% and error materiality of 2%, to be applied to the amount of expenditure certified by National Authorities till 31.12.2004

• check list on Public Procurement and fill in guidelines

• July/ August 2005 DG REGIO gives its approval to this methodology

Methodology

• August 2005 Project sample presented to DG REGIO• August 2005 Project sample presented to DG REGIO

Methodology

ERDF 200 projects200 projects

Cohesion Fund 35 projects35 projects

• November 2005 Meeting with DG REGIO for the definition of the levels of correction (% of expenditure) to be applied to different types of errors found by auditors

• November 2005 Meeting with DG REGIO for the definition of the levels of correction (% of expenditure) to be applied to different types of errors found by auditors

Methodology

Making of a “corrections table” with

• Types of errors

• % of correction

(Before Guidelines for financial corrections on public procurement – COCOF Document 07/0037/03)

Making of a “corrections table” with

• Types of errors

• % of correction

(Before Guidelines for financial corrections on public procurement – COCOF Document 07/0037/03)

Main Findings

• Additional works/services (that didn’t result from unforeseen circumstances)

• Contract awarded by a significantly superior amount regarding the initial offer

• Splitting of contracts

• Procedure without prior call for competition/Direct award

• Incorrect Procedure (wrong choice)

• Key areas/Sectors of incidence: Transports / Health / IT Contracts

Main Findings

• Additional works/services (that didn’t result from unforeseen circumstances)

• Contract awarded by a significantly superior amount regarding the initial offer

• Splitting of contracts

• Procedure without prior call for competition/Direct award

• Incorrect Procedure (wrong choice)

• Key areas/Sectors of incidence: Transports / Health / IT Contracts

Conclusions

• Contracts not or not fully subject to the Public Procurement Directives:

Public Contracts below the thresholds for application of the Community Directives;

Public contracts for services listed in Annex I B to Directive 92/50/EEC and Annex XVI B to Directive 93/38/EEC (Annex II B to Directive 2004/18/EC and Annex XVII B to Directive 2004/17/EC).

Commission interpretative communication n.º 2006/C179/02 on the Community law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directives

• Contracts not or not fully subject to the Public Procurement Directives:

Public Contracts below the thresholds for application of the Community Directives;

Public contracts for services listed in Annex I B to Directive 92/50/EEC and Annex XVI B to Directive 93/38/EEC (Annex II B to Directive 2004/18/EC and Annex XVII B to Directive 2004/17/EC).

Commission interpretative communication n.º 2006/C179/02 on the Community law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directives

Conclusions

Action Plan on Public Procurement

2nd Phase

Action Plan on Public Procurement

2nd Phase

Certifiedexpenditure from 01.01.2005 until now

• IFDR issues guidelines to MA regarding the need for increased checks on public procurement procedures

For that purpose

• check list on Public Procurement and fill in guidelines (Now a key issue for checks under article 13 of Regulation 1828/2006)

• IFDR asks MA about actions already done and adopted measures

• IFDR issues guidelines to MA regarding the need for increased checks on public procurement procedures

For that purpose

• check list on Public Procurement and fill in guidelines (Now a key issue for checks under article 13 of Regulation 1828/2006)

• IFDR asks MA about actions already done and adopted measures

Introduction

• Assess the ability and level of understanding of human resources in charge of those checks = Key factor

• Identify the type of errors found and understand how MA deals with it

• Assess the ability and level of understanding of human resources in charge of those checks = Key factor

• Identify the type of errors found and understand how MA deals with it

Objectives

• Complete a questionnaire, to assess if MA checks are applied in accordance with rules for:

• Competition, advertising, transparency, equal treatment

• Choosing of award procedure

• Splitting

• Criteria for the award of the contract

• Procedure without prior call for competition/Direct award

• Additional works/ services not included in the original contract justifications

• Complete a questionnaire, to assess if MA checks are applied in accordance with rules for:

• Competition, advertising, transparency, equal treatment

• Choosing of award procedure

• Splitting

• Criteria for the award of the contract

• Procedure without prior call for competition/Direct award

• Additional works/ services not included in the original contract justifications

Methodology

• On the spot

• Meetings with MA

• Checks on the project files

• Interview with the person(s) in charge of checks

• On the spot

• Meetings with MA

• Checks on the project files

• Interview with the person(s) in charge of checks

Methodology

Main conclusions

• In a general way, we can attest that checks are carried out at the level of the MA and that they assure the compliance with the proposed methodology

However, some adjustments should be made

• Not all adopted methodologies are in line with IFDR’s guidelines; they lack on the verification of some issues (e.g. splitting of contracts)

• On going process

Main conclusions

• In a general way, we can attest that checks are carried out at the level of the MA and that they assure the compliance with the proposed methodology

However, some adjustments should be made

• Not all adopted methodologies are in line with IFDR’s guidelines; they lack on the verification of some issues (e.g. splitting of contracts)

• On going process

Conclusions

• Permanent monitoring of the MA checks on Public Procurement

• Update methodologies in view of the new Directives (2004/18/CE and 2004/17/CE) – New manual for audit of operations and specific checklists for MA – Article 13 checks always includes checklist on Public Procurement

• Attest that all Public Procurement Procedures are checked before expenditure is certified to the Commission (MA + CA)

• Relevant evidence of checks and tender documents in project files

• Permanent monitoring of the MA checks on Public Procurement

• Update methodologies in view of the new Directives (2004/18/CE and 2004/17/CE) – New manual for audit of operations and specific checklists for MA – Article 13 checks always includes checklist on Public Procurement

• Attest that all Public Procurement Procedures are checked before expenditure is certified to the Commission (MA + CA)

• Relevant evidence of checks and tender documents in project files

Today

Thank you for your attention

Questions?