Canadian Manufacturing

Many B.C. liquor branch contracts don’t comply with government standards: audit

The audit shows several contracts awarded did not comply with procurement policies. More than half were awarded without an open bidding process

July 11, 2019  The Canadian Press

VICTORIA – Staff at British Columbia’s liquor distribution branch should receive contract management training, says an audit that revealed contracts totalling millions of dollars were awarded without competition.

Auditor general Carol Bellringer said Wednesday several contracts awarded by the province’s liquor branch did not comply with procurement policies, including some that were awarded without an open bidding process.

The audit examined 74 directly awarded contracts valued at about $25 million and found more than half were directly awarded without the exceptional circumstances required to avoid the bidding process, she said.

“In 41, or 55 per cent, of the contract files we looked at, the reason for the direct award could not clearly demonstrate the existence of exceptional conditions,” Bellringer said at a telephone news conference.


There are five exceptions listed in the government’s Core Policy and Procedures Manual for contract procurement: a contract with other government organizations, proof only one contractor is qualified, an unforeseeable emergency that restricts time for an open bid process, a likelihood that competition would interfere with ministry security and a threat that public competition could compromise government confidentiality.

Bellringer said the audit included an award without competition of an eight-year software and support services agreement originally listed as worth $8.5 million and increased to $14.2 million without competition.

“The change to the contract wasn’t competed, meaning the LDB didn’t consult the market to see who else could meet their needs,” she said. “As a result the LDB couldn’t demonstrate that the higher cost represented good value for money or that the supplier was the only source for the product.”

The audit also cited a $57,000 contract to deliver and provide promotion products for annual Public Service Week events, including employee appreciation, she said.

The contract was awarded without competition on the grounds supplies for the annual celebration could not be procured on time if the contract was put out to tender, Bellringer said.

“By the time the event organizers decided to do this, they didn’t have enough time to procure the items competitively,” Bellringer said. “The LDB justified the event award as an emergency to meet its deadline.”

Bellringer’s audit made five recommendations, including improved documentation for its direct award contracts and better staff contract management training.

In response, the liquor branch said it expects staff to complete part of the training recommended by the end of the year and other changes have also been made to provide greater oversight of how contracts are awarded.

It also said some of the audit’s findings were based on a lack of evidence in the files that were reviewed, but in many cases the branch did comply with the correct processes, such as conducting legal reviews.

Bellringer’s report says most of the contracts that were reviewed were for information technology services.

The audit would have reported evidence of illegal activities if it had found any, she said.

The report covered a time period from April 2016 to July 2018.


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