Documenting Procurement and Contracts

Contracts are important for not only establishing expectations and obligations of the parties, but serve as the main tool in the event one of the parties does not fulfill its commitments.

Audit Findings:  Here's a quick list of some details to pay attention to that come to us based on the results of a recent audit finding by the Washington State Auditor's Office when they recently audited the Port of Ilwaco:

• Document Selection Process:  The port hired two contractors for a public works project off of its Small Works Roster.  While the port told the auditor that they had contacted all the contractors on the roster about the project, they had no documentation to demonstrate their process or that firms had been contacted.

• No Work Before Contract Execution:  There is no agreement or contract until both parties have signed a contract - and consultants and contractors should not be permitted to perform services prior to execution of the contract by both parties.  The auditor noted that an engineering firm hired by the port "provided services prior to the effective date of the contract."  In addition to the risk of an audit finding, it is not a good practice to permit work to begin without a signed contract.  Public employees who direct a company to begin work without a contract may pick up personal financial liability or be subject to disciplinary measures for their action.  Contractors and consultants who begin work without a contract do so at their own risk, understanding that they might not be paid for such work.

• Document Contract Execution:  The auditor noted that the port did not have a copy of the contract signed by both parties in their files.  They were thus unable to demonstrate that there was, in fact, an executed contract, or that payments made were appropriate.  On another contract, the port awarded a public works construction project for more than $200,000, but did not require the contractor to sign a contract.

• Extend Contract Time Before Expiration:  The auditor noted that the contract with an engineering firm was for a term of three months, but the contract was not amended to extend the term of the contract when the project was delayed.

Details are important:  It is important for public agencies to pay attention to a variety of details related to procurement and contracting.  These are not mere formalities, but serve as the basis for documenting how consultants are selected and what are the terms of the contract.

Copy of Audit:  Click here to read the audit report.

Mike Purdy's Public Contracting Blog 

© 2012 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com