There is a significant level of non-compliance with procurement rules in Ireland’s Health Services Executive (HSE), according to the state’s financial watchdog.
A report by the Comptroller and Auditor General (C&AG) said that one third of purchases examined in an audit were found to be non-compliant with procurement rules.
The buying of goods and services by the HSE is governed by national and European Union rules, as well as internal HSE policy.
To test compliance, the C&AG tested a sample of 100 payments valued at €2.21m to suppliers in six locations—three hospitals and three local health offices.
It said 36% of the transactions audited were found to be non-compliant with procurement rules.
In the non-compliant cases, it was found that most of the procurement arrangements had been in place for a considerable period of time, with one dating back to 1991.
It said that while some of the initial contracts may have been awarded after a procurement process, the subsequent contracts had long since expired and the arrangements were simply rolled over from one year to another.
Since 2009, the HSE is required to issue an annual report—known as a circular 40/2002 report—on all contracts above €25,000 that have not been subject to competitive tendering.
The report found that of the 36 cases of non-competitive procurement identified in the audit, 31 should have been included in the HSE’s 40/2002 report but only three were.
The HSE said it requires its managers to attest to compliance with procurement procedures by way of a signed compliance statement and in 2013, 92% of managers completed a controls assurance statement.
“In light of the findings of non-compliance with procurement procedures in the locations visited, the HSE’s control assurance statement process does not appear to be highlighting the underlying level of non compliant procurement occurring in the HSE,” it said.
The report added that the HSE does not have an automated system to maintain a register of all contracts awarded without a competitive process, rather it relies on individual areas to identify and report such non-compliance.
The C&AG also found the HSE was increasingly using framework agreements to procure goods and services. However, in the six locations subject to audit only 6% of examined contracts had used the framework agreement.
It said there was an apparent general lack of awareness of the existence of framework agreements.
The procurement findings were part of a wider C&AG report into the HSE, which found it paid nearly 4bn—around 28% of its total budget—to 2,270 outside agencies, including hospitals, disability organisations and other services—but had failed to track how the money was spent in all cases.
The report said not only had some agencies not provided up-to-date audited accounts, there was a lack of feedback to the HSE on how well the organisations receiving payment were being governed and run.
Sean Fleming, Dáil Public Accounts Committee chairman, said the comptroller’s report raised an alarming number of governance issues.
“It remains apparent that the HSE’s monitoring and oversight of monies given to these agencies is seriously deficient,” he said.
Last year, the HSE commissioned an external review of the governance at board and executive level in all health organisations, known as section 38 bodies, but declined to release the findings.
“The report of the external review of governance at board and executive level in section 38 providers will go through an internal HSE process and when that process is complete the matter of releasing these reports will be considered,” it said.