Part 1: Summary
1.1 Audit findings and opinions
1.1.1 The comprehension of the calculation on the approval limit of expense
Without direct negotiation with three entities for price inquiries and written quotations, the administrative committee of Panda Fund approved three projects costing from 325,000.00 patacas to 470,000.00 patacas in 2011 and 2012 respectively. According to the Nr. 2 and 3 of the article 56 of “System of Public Finance Management”, the approval limit of expense of the administrative committee of Panda Fund in 2011 and 2012 was 32,500.00 patacas and 69,600.00 patacas separately, equaling to one percent of the total income set out in the initial year budget; without the competitive tendering or negotiation in the procurement of asset and service, the limit would be halved to 16,250.00 patacas and 34,800.00 patacas, therefore, the expense of three projects was over the limit, and as a result the administrative committee exceeded the approving authority when approved the expense. The main reason for approving beyond authority was that the Panda Fund failed to properly understand the regulations which granted and influenced its approving authority of expense.
1.1.2 The justification for applying exemption provisions
1.1.2.1 The exemption from public tendering and direct negotiation with three entities for price inquiries and written quotations
The Land, Public Works and Transport Bureau (DSSOPT), the Transport Bureau (DSAT) and the Environmental Protection Bureau (DSPA) should respectively conduct public tendering for 7, 9 and 14 outsourced projects of more than 750,000.00 patacas, however, they only requested single service provider for quotation instead of conducting public tendering and direct negotiation with three entities for price inquiries and written quotations. The three departments mainly explained by reasons of “being professionalism”, “having rich experience in the related field”, “participated in the relevant research before”, “being familiar with the district” and so on, failing to report why direct awarding to one company was more advantageous to Macau SAR than public tendering. Therefore, the exemption from public tendering was not totally in conformity to the conditions specified in the law. Provider with related competence, experience and professional knowledge was qualified to be invited for quotation, but could not be the reason to deviate from the procedure of public tendering and direct negotiation with three entities for price inquiries and written quotations, and to award projects directly.
1.1.2.2 Contract
The Macau Foundation signed private agreements rather than written contracts with providers for 18 outsourced projects, of which 7 projects were less than 500,000.00 patacas but more than six months in service period, and Macau Foundation was supposed to sign written contracts for the 7 projects, however, it only signed contract for the project costing over 500,000.00 patacas because of incorrect comprehension of provisions about signing contract. For the other 11 projects which were more than 500,000.00 patacas, Macau Foundation cancelled the signing of written contract due to urgent reasons. However, those urgent reasons were not relevant to the emergencies specified in the Decree no.122/84/M, article 12, Nr. 2 (a), such as the emergencies about public safety and public disaster; the expense of the 11 outsourced services exceeded the limit of 750,000.00 patacas according to the article 12, Nr.2 (d). Therefore, there was no room to bypass the signing of written contract under the law.
1.1.3 The continuous extension of the same outsourced service contract
DSAL had rehired a voluntary-retiring civil servant through service procurement for providing consultancy service and for executing the daily work since 2003. The service contract was renewed every six months while the interval between contracts was two to five days, and the service had lasted for ten years until 2013. Since 2010, DSPA had hired a consultant who previously worked in other public department as a non-employee consultant by means of service procurement, and it had continuously extended the consultancy service for about 5 years until finishing the audit in 2014. During the extension, each service period was no more than 6 months. Two departments failed to execute the work by adopting the relative law according to the nature of administrative action, and this practice might circumvent the system of employment of retired civil servant or retired staff that provided service in government, and the system of personnel recruitment.
1.1.4 Cases that deserve public attention
1.1.4.1 Air quality monitoring – DSPA
At the end of November 2010, since the flying ash in Ko Ho flying ash landfill of coloane influenced surrounding environment and caused potential damage to resident’s health, DSPA directly engaged company D that had professional qualification and rich experience to test the samples drawn in the landfill for monitoring air quality from 14 to 21 December 2010, eliminating the procedures, including public tendering, direct negotiation with three entities for price inquiries and written quotations, and signing a contract, under the exemption provisions by reason of professionalism in work and urgent situation. Thereafter, between December 2010 and June 2013 DSPA had directly awarded company D the service to monitor the air quality of Ko Ho area and temporary flying ash deposit area 23 times without conducting public tendering, direct negotiation with three entities for price inquiries and written quotations, involving a total of 37,175,100.00 patacas, and also the awarding has still proceeded at the end of audit. For a succession of follow-up outsourced work, DSPA was not in a tight time since it could previously acknowledge that the related work had to continue regularly, however, it has still continuously obtained the related service from company D by explanations such as professionalism in work and understanding of situation of Ko Ho area, and has not judged whether the service offered by company D was reasonable through comparing the service price, quality and experience, failing to ensure the effectiveness and economy of public funds.
1.1.4.2 Land traffic policy – DSAT
DSAT intended to outsource “The study on general policy of Macau land traffic and transport” to company E without the use of public tendering and direct negotiation with three entities for price inquiries and written quotations; however, after negotiation with company E, DSAT found it was unsuitable. Therefore, DSAT established “Working group on the study of Macau traffic and transport” for collecting and consulting public opinion. Getting two quotations from company F and company G and evaluating the related study proposals, the working group conducted a comparison between the two companies, and it finally contracted out the study to company F based on company F proposal which satisfied the group’s requirement, and quotation without going through the process of public tendering and direct negotiation with three entities for price inquiries and written quotations. DSAT submitted an only meeting minutes summary that was not signed by the meeting participants, and failed to record that the working group made the selection and comparison between the two companies according to the quality of proposal, service cost, related experience, etc. The procurement of services under this process failed to definitely show the power authority and participating provider that it was fair and impartial.
1.1.4.3 The survey on the supply of parking space - DSAT
Two divisions of DSAT ─ Public Relations Division (PRD) and Transport Planning Division (TPD), separately outsourced two surveys on the number of Macau parking space in June and November 2011, but audit discovered that there were two principal problems existing in the TPD outsourced service: (1) the core part and the greatest workload in the whole survey is to investigate the parking space number in the car parks such as residential building, commercial building and public department, PRD had already sent the copy of report to TPD after receiving from contractor, but TPD still outsourced the similar survey to other contractor; (2) the company, which currently manages roadside metered parking spaces under concession contract, has the information on the area and number of metered parking space and is supervised by DSAT, however, DSAT outsourced the survey on the number of metered parking space to other company. Therefore, the two surveys in (1) and (2) were actually unnecessary and caused public funds waste by incurring additional expense, as well as showed that DSAT approved the expense without giving a full consideration to the effectiveness of expense.
1.2 Audit suggestions:
Departments, institutions and leaders should have a clear awareness and understanding of the amount of expense that can be approved by their authorities entitled by the relevant organic law and authorizing order; every year, public departments and institutions vested with financial autonomy have to calculate how much amount of expense administrative committees can approve by their authority in accordance with the regulation and take the amount as an upper limit. Before approving the expense upon their authorities, they should also notice that whether the above amount of expense need to be halved due to the elimination from the procedure of public tendering, negotiation or signing a written contract in the award process.
During the procurement of constructions or services, the procedures such as public tendering, direct negotiation with three entities for price inquiries and written quotations, and signing a written contract should be executed in compliance with regulation; and public departments and institutions should have an accurate and comprehensive understanding of the current procurement law and related guideline, and observe them strictly as well as perform them thoroughly. Only under the exceptional circumstances prescribed by law can exemption provisions be exercised, and also sufficient justifications are requested in the relevant document.
Departments have to apply the appropriate regulations to award process according to the nature of outsourced project. The solution to the problem in the area of human resource should be in line with the manner and procedure of the current public administrative personnel system; for hiring the retired civil servants or retired staff that provided service in government, who are prohibited from assuming public duties under article 268 of “General Regulation on Workers of Macau Public Administration”, departments should severely obey the manner and procedure required by relevant provisions; taking the retirement and resignation of staff into consideration, departments should timely arrange the succession to work so as to avoid influencing the daily operation of departments;
The procurement of constructions, goods and services should be proceeded upon current regulation and strike a balance between profession and public administrative norms; awarding without using public tendering, direct negotiation with three entities for price inquiries and written quotations is permitted when it is justified and is subject to the exceptional condition stipulated in regulation; in order to select the most qualified supplier based on a reasonable price and government’s need, departments should reconsider each objective condition when extend the service contract, and execute the procedure of public tendering and direct negotiation required by Decree no. 122/84/M with the aim to make good use of public funds and to strive for the best interests of Macau SAR;
In awarding document, departments should fully and accurately keep a record of the public tendering being applied to procurement process or the invitation to provide quote in direct negotiation, and specify the rationale for awarding so that the power authority can make a judgment and approve the awarding; departments also should ensure that the assessment criteria of selecting provider are clearly documented in the process for highlighting a fair and impartial award;
To fulfill existing legal requirement and gain the greatest benefit from expense, departments should review the necessity of expense before approving expense, as well as coordinate and complement the work plans of its different divisions to prevent from performing the same or similar work repeatedly so that expense is consistent with the principle of safeguarding the overall interests of Macau SAR and the prudent use of public funds.
