Division of Legislative Audit
Audit Digest #08-30048-08
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|A Special Report on the Department of Commerce, Community, and Economic Development, Alaska Energy Authority, Rural Power System Upgrade Program, Procurement Issues, August 15, 2008.
PURPOSE OF THE REPORT
In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted an audit of procurement issues under the Rural Power System Upgrade (RPSU) program administered by the Alaska Energy Authority (AEA).
The objectives of the audit were to review and assess the procurement process for RPSU projects and the related Switchgear Evaluation Report, dated November 21, 2007. In addition, we conducted a survey of communities with a completed RPSU project to obtain their perspective on certain aspects of the program.
FINDINGS AND RECOMMENDATIONS
- Procurement policies and procedures for AEA’s Rural Energy Group (REG) projects need to be rewritten.
- Procurements for RPSU projects were not consistently made in compliance with the Rural Energy Group, Bulk Fuel Upgrade Program/Rural Power System Upgrade Program Project Reference Manual guidelines or the underlying federal regulations.
- The Switchgear Evaluation Report does not clearly meet the original intended purpose.
- The majority of communities with completed RPSU projects are generally satisfied with their upgraded power system; however, the program provides little community involvement in the design of the system or the procurement process.
Recommendation No. 1
The executive director of AEA should undertake revision to the REG procurement policies and procedures to more closely align with the state developed policies and procedures.
The federal assistance agreements governing funding require AEA and its subgrantees to comply with federal procurement regulations. The following are areas of weakness in AEA’s procurement system related to informal and formal procurement methods.
We believe there is no need to develop a written set of policies and procedures that are different from the state procurement policies and procedures. Rather, like DOTPF, AEA should use the state procedures as the base and only make changes where federal regulations differ.
- Approval authority listing is not maintained. The listing of AEA staff with purchasing authority along with the dollar limits placed on that authority is not updated regularly.
- Signatory records are not maintained. No signatory records are maintained to ensure only authorized personnel approve procurements and the payment for the purchases.
- A formal vendor listing is not maintained for various types of procurement. A vendor listing is not maintained for procurements that require AEA staff to only obtain price quotes from vendors rather than issuing invitations for formal bids.
- A formal record of the date and time bids or proposals are received is not consistently kept.
- Use of specific brand name equipment is not consistently justified.
Recommendation No. 2
AEA Rural Energy Group procurements should be made in accordance with the required policies and procedures.
There were three exceptions to established procurement standards related to the award of term contracts. These contracts, last awarded in 2002, put a group of firms on retainer to AEA. This allows AEA to make work assignments on an as needed basis, through what are termed Notices to Proceed (NTP). The exceptions included:
- The cost of services was not a part of the evaluation criteria for the term contract award.
- Business licenses were not confirmed.
- NTPs were awarded to term contractors in a non-competitive manner.
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