Government to hire legal auditors to test 750+ ERDF procurements

The Government is to hire legal auditors to test all higher value procurements being used by applicants under the European Regional Development Fund (ERDF) in England, an exercise that will see more than 750 contracts reviewed.

The Department for Communities and Local Government is the managing authority for the ERDF in England. Under Article 60 of the European Structural Funds regulations all expenditure claimed from the European Commission must be checked for existence, defrayal and regulatory compliance.

A key aspect of regulatory compliance is adherence to Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts and the Public Contracts Regulations 2006. In addition private sector applicants are required to demonstrate value for money in their contract selections.

The DCLG said: “In the programme to date, 42% of irregularities by incidence and 75% of irregularities by value have involved failure to follow procurement procedures correctly, or inability to demonstrate via full audit trails compliance with public procurement requirements, where these apply.

“This has resulted in significant clawback from applicant organisations, flat rate penalties and fines for the department. In the light of this, DCLG has decided to test all higher value procurements being used by our applicants.”

The DCLG said it would appoint appropriately qualified contractors to conduct a compliance review of the contracts relating to expenditure claimed (or to be claimed) from the Commission.

The chosen contractor will examine the documentation, and potentially travel to the offices of grant recipients “to investigate the full audit trails of procurement processes to ensure that all procurements are procedurally compliant”.

The Department said its requirement encompassed approximately 476 contracts where the value exceeded the financial thresholds that trigger the application of the procedures set out in the Public Contracts Regulations 2006, and up to 300 contracts below those thresholds which nonetheless must be awarded in accordance with relevant Community law.

“The contractor is expected to provide written reports advising of any relevant breaches of Community law in any procurement exercise which would amount to an irregularity under Community law and advise on the appropriate level of financial correction having regard to the relevant COCOF Guidance.”

The project is expected to last between February and August 2014. Six lots are available with the DCLG seeking one person for each.