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									 3.30 Government Purchasing Agency


Introduction                         The Government Purchasing Agency was originally created in 1973 by
                                     Section 49 of the Department of Public Works and Services Act. The Act
                                     provided that the Government Purchasing Agency’s primary duties were
                                     to acquire all services that were required by the departments and agencies
                                     of the Crown. The Act granted the Agency the authority to delegate
                                     purchasing authority to the various departments and agencies if the
                                     Director of Purchases is satisfied that it is in the interest of efficiency to do
                                     so. The Act also required that the Agency invite tenders for services
                                     except in certain specific circumstances.

                                     From 1973 to 1983, the Government Purchasing Agency was independent
                                     of Government departments and was attached to the Department of Public
                                     Works and Services for administrative purposes only. However, in 1983
                                     as a result of an amendment in the Act, the Government Purchasing
                                     Agency was made a part of the Department of Public Works and Services
                                     and later, as a result of Government re-organization, was made a part of the
                                     Department of Works, Services and Transportation. This 1983
                                     amendment resulted in a loss of independence for the Government
                                     Purchasing Agency.

                                     The role of the Government Purchasing Agency is to be responsible for all
                                     purchases on behalf of government departments and if deemed efficient on
                                     behalf of all agencies of the Crown. The Agency may delegate purchasing
                                     authority to departments and agencies if it deems it efficient to do so.
                                     However, the Agency is responsible to oversee and monitor the purchasing
                                     activities of these entities. As part of its responsibilities, the Agency must
                                     prepare a monthly Public Tender Exception Report for the Minister of
                                     Works, Services and Transportation for tabling in the House of Assembly.

                                     Expenditures of Government and its various entities

                                     The annual expenditures of the Province total approximately $4 billion.
                                     Of the $4 billion, $2.2 billion is paid to various entities which use a
                                     significant portion of this money to purchase supplies, goods and services
                                     which are supposed to be acquired in accordance with the Public Tender
                                     Act. In addition, approximately $400 million of the $4 billion is spent by
                                     government departments to purchase supplies, goods and services which
                                     are also supposed to be acquired in accordance with the Public Tender Act.




278 Auditor General of Newfoundland and Labrador
3.30 Government Purchasing Agency


                 Our review indicated the following:

                 h      Of the $402 million spent by Government departments for supplies
                        and services, $252 million (or 62.7% of all expenditures made by
                        Government departments) is spent by the Department of Works,
                        Services and Transportation most of which is supposed to be
                        acquired in accordance with the Public Tender Act.

                 h      For the period 1 April 2000 to 31 March 2001, $57.4 million was
                        reported to the House of Assembly as purchases for which no
                        public tenders were called. Of the $57.4 million, $34.9 million
                        related to entities and $22.5 million related to Government
                        departments. Of the $22.5 million, $14.6 million or 65% relates to
                        the Department of Works, Services and Transportation. This
                        Department tabled the highest number of exceptions of all
                        Government departments and entities required to comply with the
                        Public Tender Act.

                 Summary

                 Our work indicated that approximately 63% of expenditures made by the
                 various Government departments for supplies and services and 65% of
                 the public tender exceptions tabled in the House of Assembly were
                 purchases of the Department of Works, Services and Transportation. This
                 indicates that the great majority of the work of the Government Purchasing
                 Agency is centered around the Department of Works, Services and
                 Transportation, of which it is a part. The fact that the Agency is a part of
                 the Department of Works, Services and Transportation questions whether
                 the Agency can function in a manner which is independent of the
                 Department.

                 The Government Purchasing Agency is required to assess, critique and
                 report on purchases made by all departments and other entities required to
                 comply with the Public Tender Act, including the Department of Works,
                 Services and Transportation. To accomplish this, it must be in a position of
                 independence.

                 Recommendation

                 Government should draft legislation for consideration by the House of
                 Assembly which ensures that, to the extent possible, the Government
                 Purchasing Agency is independent of any department.




                                                           Auditor General of Newfoundland and Labrador 279
 3.30 Government Purchasing Agency


                                    Department’s Response

                                    The Government Purchasing Agency is bound by the Public Tender Act
                                    and Regulations and therefore enforces all the requirements of the
                                    legislation. Policies and procedures, which apply to all departments,
                                    along with the regulations and legislation guarantee objectivity in the
                                    procurement process. The Public Tender Act permits the acquisition of
                                    goods and services through the use of exceptions, which sometimes have to
                                    be exercised in emergency and other situations to effectively and
                                    efficiently provide services to the public.

                                    It is the Department’s position that the analysis in the Auditor General’s
                                    report indicates that the Department’s use of exceptions is directly
                                    proportional to its level of overall expenditures, as would be expected.
                                    Nevertheless, the Department is reviewing all rationale to support
                                    enacting legislation to make Government Purchasing Agency independent
                                    of all Departments and will recommend to Government to do so if it is in
                                    the interest of Government overall.




280 Auditor General of Newfoundland and Labrador

								
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