Services Facilitated for the Ministry of the Interior: contracts awarded without tendering, procurements subdivided, recreational facilities vacant
PRESS RELEASE on Audit No. 15/30 – July 18, 2016
The Supreme Audit Office (SAO) performed an audit of the allowance organization Services Facilitated for the Ministry of the Interior (SFMI) and its management from 2013 to 2015. The SFMI manages and leases the Ministry’s facilities, secures the maintenance of the Ministry’s cars, and manages the Ministry’s health and recreational resorts. Auditors scrutinized assets worth CZK 1,200 million and expenses and revenues exceeding CZK 76 million. The biggest errors were found with public contracts. For example, the allowance organization awarded contracts for CZK 51 million for demolition of garages without tendering and subdivided contracts for washing of laundry and legal services in order that they could be ordered as below-the-threshold and “small scale” procurements. The SFMI also failed to sufficiently recover its claims and reach full capacity of their recreational facilities.
The SFMI was managing garages situated in Prague-Veleslavin, which were not properly maintained. As a result, the garages were in serious disrepair and the SFMI decided to demolish them. A contract for demolition works for CZK 51 million was awarded to one bidder in negotiated procedure without prior publication and explained that the situation was urgent, which the SFMI had not caused or could have predicted. Auditors argued that the SFMI had long known about the bad condition of the garages and the expert’s opinion, which based the SFMI’s decision to demolish the premises, stated that the reason of the bad condition was long-term inadequate maintenance. A call for tenders would surely secure a better price.
One of the main activities of the SFMI is washing the laundry for the needs of the Ministry of the Interior. During the audited period, the SFMI spent over CZK 11.5 million for contracts, which were subdivided so that they could be awarded as below-the threshold procurements. The SFMI did not take into the count the total annual costs of these services in the whole Czech Republic. Auditors also revealed purposeful subdivision of contracts at the SFMI with the supply of legal services, which cost nearly CZK 3.5 million during the audited period.
Auditors also criticized that the SFMI failed to sufficiently recover its claims. With eight out of twelve audited overdue claims, the SFMI did not require interest payments. The SFMI took excessively long to take any action. For example, a proposal for an execution warrant concerning a debt of CZK 90,000 was issued 1,241 days after the order for payment had become effective. When negotiating with the execution bailiff, the SFMI agreed on unfavourable terms, according to which the claimed amount would only be transferred to the SFMI when the entire amount was collected. As a result, the SFMI did not have access to the sum until the entire claim was recovered.
Auditors also scrutinized whether the recreational facilities reached their full capacity. On average, only one third of the capacity at the recreational facilities was busy in the audited period 2013–2015. In 2015, some half of the accommodation capacity was used, while only one fourth of beds were occupied during previous years. The increase of the facility utilisation rate was caused by one facility’s closure and by the fact that one facility was used to house expatriates who had relocated from abroad.
Supreme Audit Office