Procurement concerns over 'abandoned' car park

28 May 2021

New Zealand’s auditor-general has rapped procurement practices at Tauranga City Council after it pulled the plug on a car park project having spent $19m.

The council decided to “abandon” construction at the partly built Harington St car park in June 2020 due to concerns about the building’s ability to withstand earthquakes.

In a letter to the council the auditor-general recommended the council reviews its procurement policies after an external review raised several concerns.

The review by McHale Group found gaps in procurement documentation and information and lack of good practice in managing conflicts of interest, the auditor-general said.

Several procurement process timelines appearing to be compressed and there was no evidence that due diligence activities were conducted, the review found.

The review recommended the council ensure robust, evidence-based processes were used to guide decision-making, especially where there are differences of opinion.

And it also urged the council to ensure accountability and governance measures were set out before a contract started and to review its use of supplier panels.

The council’s chief executive had taken steps to implement the recommendations, the letter added.

The letter said: “In the end, the council will have nothing to show for the money it has spent.

“This raises significant questions about the procurement process used by the council for the building.”

Concerns about the council’s processes during the project included selecting the cheapest option without a business case or overall plan for procurement.

The letter criticised unclear responsibilities and a lack of clarity around the purpose of the project.

When the council halted construction after already spending $19m on the project, it estimated it would cost $9.8m to demolish the building and restore the site.

Rather than demolition the council sold the site to the lead contractor for $1 and received $200,000 back when the contractor sold unused material and structural steel.

• Separately, in Australia an independent review has criticised New South Wales public insurer Icare for using for its procurement of an $260m claims and billing platform.

An independent review by retired Supreme Court judge Robert McDougall said the process had an “unreasonably short tender” that appeared to have had a “predetermined outcome”.

The report said the tender process that resulted in a contract being awarded to Capgemini and its partner Guidewire “was not competitive”.

A hurried tender process meant that only Capgemini submitted a bid.

Icare approved this bid two months later at a cost of $31.4m for Capgemini and $17.4m for Guidewire.

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