Auditor-General, John Ryan, says Horowhenua District Council failed to follow its own procurement policy when considering the future of Levin landfill.
Mr Ryan said concerns were raised with his Office around the engagement of external consultants to provide services in relation to the landfill site.
The Office found that while the Council had a procurement policy, it was not followed in this case, and elements of good procurement practice were “missing”.
“The Council has recently made some improvements to its policies and practices for procurement, and we encourage the Council to consider our comments as part of further improvements,” said Mr Ryan.
“The matters raised here could serve as a useful reminder for other public organisations when carrying out procurement.”
The landfill, located close to the coast on the southwestern side of the Levin township, has operated for nearly 50 years.
In May 2020, Council’s then Chief Executive decided that it should engage external experts to review options available to the Council for the future use of the site.
Morrison Solutions Limited (Morrison Solutions) was engaged and between May 2020 and May 2022, the Council paid Morrison Solutions around $895,000 for services related to the landfill.
The specific concerns raised with us were that:
- the Council engaged consultants using a direct procurement approach, which was inconsistent with the Council’s procurement policy and/or related guidelines;
- the costs of consultants were significant and incurred without appropriate delegated authority; and
- a potential conflict of interest had not been appropriately managed.
Mr Ryan said it was found that “many of the disciplines of good procurement practice” were missing, including consideration of the overall potential costs of the work, a procurement plan or business case to demonstrate the need for the procurement, documentation supporting the selection and engagement process that was followed, and written contracts for the work that was carried out.
“We would expect to see all of these in a procurement process where ratepayer money is being spent. Many were also requirements of the Council’s own policies,” he said.
The Auditor-General said that the almost $900,000 spent on contractor services was within delegated authority.
“We have not identified a conflict of interest. However, the absence of a written and clear rationale for the work and selection of the provider, and absence of a contract, raises questions about whether that spending represents good value for money,” said Mr Ryan.
“Having appropriate policies and processes for procurement activities, and following them, supports trust and confidence that public organisations are making good decisions when spending public money. That confidence can be lost if established policies and processes are not followed or documented.
“It is also important that senior leaders in an organisation lead by example in following those processes. The tone set by leaders is crucial to demonstrating what is seen as acceptable behaviour in an organisation.”
Mr Ryan said the Council had recently made some improvements to its policies and practices for procurement.
