Fijileaks: We are reliably informed that Maintenance work will be contracted out to crony companies and USP maintenance staff will be made redundant in the next three months; meanwhile, read USP abuses:
"Three quotes from the open market are submitted with the PO. The line SMT signs off on the PO for the lowest amount, and then Procurement will actually go and award it to whoever they please. If the line SMT or the originator of the purchase request catches this, then the response from Procurement is that they went with the “Preferred Vendor”. It has been brought to the attention of the VCP and the EDF that Procurement does this, sometimes going with the “Preferred Vendor” at multiple times the amount even from the highest quote from the market. When questioned, the answer Procurement often provides is that the “Preferred Vendors” provide better quality service or goods. Nothing quantifiable that could have been written in the bid for quotes, just better!" - Dr Grewal
Procurement contracts
The University obviously has policies and limits around purchasing authorities and requirements for competitive bidding. For some purchases of goods and services three quotes have to be secured, for others the tender process has to be followed. In both cases there is a lot of creativity being employed by Purchasing. For example:
Three quotes from the open market are submitted with the PO. The line SMT signs off on the PO for the lowest amount, and then Procurement will actually go and award it to whoever they please. If the line SMT or the originator of the purchase request catches this, then the response from Procurement is that they went with the “Preferred Vendor”. It has been brought to the attention of the VCP and the EDF that Procurement does this, sometimes going with the “Preferred Vendor” at multiple times the amount even from the highest quote from the market. When questioned, the answer Procurement often provides is that the “Preferred Vendors” provide better quality service or goods. Nothing quantifiable that could have been written in the bid for quotes, just better!
The point of tenders is that every vendor is given the exact same information and then the award is based mostly on price and viability. This is not how tendering process is executed at USP. The process around advertising, acceptance of tenders and opening of tenders is solid and how it should be. The difference comes in when the tenders are opened and the decision made. Often times the decision is not based on price, but based on who the university wants to do the job or provide the goods or services. At this point arbitrary new conditions are introduce[d], again, such as “quality” and awards made on the basis of claims made by people based on personal knowledge or preference. If “quality” is such a significant factor, then why is it not an essential part of the EOI advertisement? How is it fair to all vendors when personal knowledge or preference is a criterion used to benefit the awardee? Isn’t this exactly what the tender process is put in place to avoid?
Vendors will tell you that two things are going on with quite a few EOIs at USP. One, they won’t even bother to apply because everyone already knows who it is going to be awarded to or, two, there will be cyclic bidding. Cyclic bidding is when a group of vendors are collaborating for repetitive orders by taking turns winning it. In this case say a group of the same five vendors will apply with one bidding low and the others bidding very high. All bids being higher than prevailing market rates. Next time around the same pattern will be followed, except the low bidder will be another one from the group.
If there is any doubt that there is a lot of creativity being employed in regards to purchasing at USP, ask the VCP himself what are his experiences around “USP Pricing”. He, himself, has been complaining about the “USP Pricing.” Question is what has been done about this?
Specific Examples: 1) Air conditioners for ITS – 3 quotes received, yet procurement wanted to give it to a specific preferred vendor at nearly twice the highest quote - USP pricing. The Procurement manager argues with the VPA about why he supports the price being nearly 2 times because of its all about quality. The VPA dials the phone on speakerphone, calls the same preferred vendor and asks for a price quote for the exact same model as on the PO and get a price nearly half of what’s being argued by Procurement as the price USP should be paying.
Another example: Three open market bids for some building repair come in the $9200-9800 range. Procurement decides to award it to a preferred vendor for about $24,000. Again, “quality” of work is stated as the reason. Repeatedly POs have been denied in writing by at least one line SMT, and procurement still goes ahead and awards/pays them. So, why require the line SMTs to sign off on the POs? Procurement Contracts Recommendations:
External Audit. Have an external audit, directly responsible to and reporting to Council, conduct a forensic audit of procurement practices, past contracts (especially construction contracts) and the tendering process. If it is established that records and paper copies aren’t somehow available anymore, take action. Preferred Vendor status stipulations. Make it a stipulation that the “preferred vendor” status cannot supersede price considerations when three open market quotes or a tendering process has been followed. “Preferred Vendor” only applies if their price is competitive with open market and there is something extra that is gained by going with them, example time.
Follow standard tendering processes. Make it a stipulation that standard tendering practices are to be followed. The criteria for submission and evaluation should be the same for all participants in the EOI process. If quality or timeliness or any other such undefined criteria is to be used, then it should be defined in the EOI and not applied after the fact for the benefit of specific vendors.
Whistleblower protections. Have a whistleblower policy with effective safeguards and direct channels of communications with Governance.
Rewards for fraud identification. Have a reward and protection system for people who identify fraud
Financial responsibility and oversight
Financial oversight at USP is weak, to put it kindly. This is not about audits; this is about fiduciary stewardship of the finances of the University. The financial audits could be strengthened even more, however, that will not address the issue of where and how the money is being spent and whether or not it is a prudent decision. There are some fundamental issues that need to be looked at from a different angle other than the one presented by Administration. Ask yourselves, why is it that the FIC Chairs have been faced with so much frustration and have had to question the EDF on why certain numbers don’t match in the budget, and then next year the same question has to be asked, only for a different segment of the budget.
Consider the financial health of the university in context of the surplus as a percentage of the overall budget and the additional debt numbers. Contrary to the surplus picture being painted, the actual numbers tell a very different story. By policy, 50% of all earned income from trading accounts should be returned to the trading account for their use. Please check and see when was the last time 50% of the millions of dollars of earned income from Commercial were actually returned to Commercial for reinvestment? Just that simple number will show that the University is heavily in the red from an operational budget perspective and not in the black. The future of the University infrastructure is being pawned off for the current budgets to be presented in a favorable light.
Faculties have line item budgets for positions. If a position in a faculty/department is vacant, then that money should belong in the faculty for the Dean to decide how best to use it. This is not what happens. The money is reclaimed into the VCP chest for him to use it however he pleases. Nothing wrong with it, since he needs the flexibility to run the University and address priorities; the problem arises in that positions are deliberately stalled or not filled because the University does not have money to fill all positions. Just to verify this, conduct a simple exercise: Have someone fill the numbers for every approved and budgeted position at the University and see what that does to the budget picture currently being presented by Administration. Money is being “saved” at the cost of quality. The Strategic Plan 2013-2018 says that by 2018 USP should have 60 professors. Just estimate the salary expenses for these 60 positions, and see if the current budget can even support these positions. This money should be present and available for the University to expend without further going into the red. If not, then the SP target is superfluous.
Academic and support staff positions have been dramatically reduced in the last few years, in spite of the University going through fabulous increases in the number of students enrolling at USP. USP owes vendors, ex-employees, and consultants significant amounts of money that do not show up as encumbrances on the budgets. If all these invoices were to be showed as encumbrances on the budget sheets, it would truly show the picture around USP finances. Meanwhile, the reputation of the University as a non-payer or defaulter is gaining steam on almost a weekly basis.
The University infrastructure has had limited to no infusion of cash in the last so many years. As a result, it is crumbling. In order to show favorable numbers in the overall budget, monies that were supposed to have addressed the infrastructure issues are instead spent elsewhere. All this is doing is painting a false picture of prosperity. When assets are not maintained, they become liabilities. The future of the University is being sold. Take IT for example: the infrastructure is falling apart, putting at risk the functioning of the University, and no money at appropriate levels has been set aside or infused over the years to replace this infrastructure. This is exactly what is happening to the buildings and other resources.
There are, or at least have been, student residential building floors with no firefighting equipment because when brought to the attention of the Administration, the EDF would require Commercial to pay for it without allowing Commercial to retain the earned income from which to pay from. The future VCPs will not have the massive amounts of monies required to take care of a crumbling infrastructure. The millions of dollars in maintenance monies that have been diverted today, conveniently labeled as deferred maintenance, will require massive capital tomorrow. Where is this going to come from? The University is creating a risk for the future.
The University painted a very bleak picture when asking the member countries for an increase in their financial contributions. It is time to ask where that money is going. PTAFE? Unnecessary travel? Lawsuits? Wine at every occasion? Bonuses and benefits to favorites? Exorbitant amounts of supplemental pay to favorites?
Outsourcing can be useful. It can also be a killer. Thus far the outsourcing of services has not been established as something that will save money. It will in fact cost more money. Further, it diminishes the capabilities of the University and puts its services at risk into the future. As an example: Outsourcing Properties and Facilities (P&F) is not saving any money, and it is going to put the University at risk during times of natural emergencies and disasters. It is hard enough to find carpenters, electricians and plumbers now in Fiji as a result of work generated in the aftermath of tropical cyclone Winston, it is going to be impossible to have any one respond in an emergency if another such natural disaster were to occur in the near future.
This is creating a risk in terms of functionality and finances. USP is also a large employer and provider for people of the Pacific. Eliminating jobs without significant gains ultimately hurts USP’s obligation to the peoples of the Pacific as an employer. Nearly 70 households will be affected without substantial benefits to the University in the outsourcing of P&F. Where is the humanity? If it is about quality of work, then that is an effective performance management issue, not a financial issue.
Financial policies should be applied evenly to everybody. The policy around Trading Accounts states that the university takes 20% of all expenses, not revenue, and then keeps 50% of the net earned income, returning the other half to the trading account for the department to reinvest and use as appropriate. This is the policy. How is it then that Commercial does not get a penny back from the 50% earned income monies, and PTAFE gets all of it? Practices such as these have the practical effect of adversely affecting performance and performance related awards, inhibiting reinvestment, thus creating risks, developing an environment of favoritism, and generating a culture of micromanagement where every decision is made by the EDF or the VCP because they control all money.
To be continued
The University obviously has policies and limits around purchasing authorities and requirements for competitive bidding. For some purchases of goods and services three quotes have to be secured, for others the tender process has to be followed. In both cases there is a lot of creativity being employed by Purchasing. For example:
Three quotes from the open market are submitted with the PO. The line SMT signs off on the PO for the lowest amount, and then Procurement will actually go and award it to whoever they please. If the line SMT or the originator of the purchase request catches this, then the response from Procurement is that they went with the “Preferred Vendor”. It has been brought to the attention of the VCP and the EDF that Procurement does this, sometimes going with the “Preferred Vendor” at multiple times the amount even from the highest quote from the market. When questioned, the answer Procurement often provides is that the “Preferred Vendors” provide better quality service or goods. Nothing quantifiable that could have been written in the bid for quotes, just better!
The point of tenders is that every vendor is given the exact same information and then the award is based mostly on price and viability. This is not how tendering process is executed at USP. The process around advertising, acceptance of tenders and opening of tenders is solid and how it should be. The difference comes in when the tenders are opened and the decision made. Often times the decision is not based on price, but based on who the university wants to do the job or provide the goods or services. At this point arbitrary new conditions are introduce[d], again, such as “quality” and awards made on the basis of claims made by people based on personal knowledge or preference. If “quality” is such a significant factor, then why is it not an essential part of the EOI advertisement? How is it fair to all vendors when personal knowledge or preference is a criterion used to benefit the awardee? Isn’t this exactly what the tender process is put in place to avoid?
Vendors will tell you that two things are going on with quite a few EOIs at USP. One, they won’t even bother to apply because everyone already knows who it is going to be awarded to or, two, there will be cyclic bidding. Cyclic bidding is when a group of vendors are collaborating for repetitive orders by taking turns winning it. In this case say a group of the same five vendors will apply with one bidding low and the others bidding very high. All bids being higher than prevailing market rates. Next time around the same pattern will be followed, except the low bidder will be another one from the group.
If there is any doubt that there is a lot of creativity being employed in regards to purchasing at USP, ask the VCP himself what are his experiences around “USP Pricing”. He, himself, has been complaining about the “USP Pricing.” Question is what has been done about this?
Specific Examples: 1) Air conditioners for ITS – 3 quotes received, yet procurement wanted to give it to a specific preferred vendor at nearly twice the highest quote - USP pricing. The Procurement manager argues with the VPA about why he supports the price being nearly 2 times because of its all about quality. The VPA dials the phone on speakerphone, calls the same preferred vendor and asks for a price quote for the exact same model as on the PO and get a price nearly half of what’s being argued by Procurement as the price USP should be paying.
Another example: Three open market bids for some building repair come in the $9200-9800 range. Procurement decides to award it to a preferred vendor for about $24,000. Again, “quality” of work is stated as the reason. Repeatedly POs have been denied in writing by at least one line SMT, and procurement still goes ahead and awards/pays them. So, why require the line SMTs to sign off on the POs? Procurement Contracts Recommendations:
External Audit. Have an external audit, directly responsible to and reporting to Council, conduct a forensic audit of procurement practices, past contracts (especially construction contracts) and the tendering process. If it is established that records and paper copies aren’t somehow available anymore, take action. Preferred Vendor status stipulations. Make it a stipulation that the “preferred vendor” status cannot supersede price considerations when three open market quotes or a tendering process has been followed. “Preferred Vendor” only applies if their price is competitive with open market and there is something extra that is gained by going with them, example time.
Follow standard tendering processes. Make it a stipulation that standard tendering practices are to be followed. The criteria for submission and evaluation should be the same for all participants in the EOI process. If quality or timeliness or any other such undefined criteria is to be used, then it should be defined in the EOI and not applied after the fact for the benefit of specific vendors.
Whistleblower protections. Have a whistleblower policy with effective safeguards and direct channels of communications with Governance.
Rewards for fraud identification. Have a reward and protection system for people who identify fraud
Financial responsibility and oversight
Financial oversight at USP is weak, to put it kindly. This is not about audits; this is about fiduciary stewardship of the finances of the University. The financial audits could be strengthened even more, however, that will not address the issue of where and how the money is being spent and whether or not it is a prudent decision. There are some fundamental issues that need to be looked at from a different angle other than the one presented by Administration. Ask yourselves, why is it that the FIC Chairs have been faced with so much frustration and have had to question the EDF on why certain numbers don’t match in the budget, and then next year the same question has to be asked, only for a different segment of the budget.
Consider the financial health of the university in context of the surplus as a percentage of the overall budget and the additional debt numbers. Contrary to the surplus picture being painted, the actual numbers tell a very different story. By policy, 50% of all earned income from trading accounts should be returned to the trading account for their use. Please check and see when was the last time 50% of the millions of dollars of earned income from Commercial were actually returned to Commercial for reinvestment? Just that simple number will show that the University is heavily in the red from an operational budget perspective and not in the black. The future of the University infrastructure is being pawned off for the current budgets to be presented in a favorable light.
Faculties have line item budgets for positions. If a position in a faculty/department is vacant, then that money should belong in the faculty for the Dean to decide how best to use it. This is not what happens. The money is reclaimed into the VCP chest for him to use it however he pleases. Nothing wrong with it, since he needs the flexibility to run the University and address priorities; the problem arises in that positions are deliberately stalled or not filled because the University does not have money to fill all positions. Just to verify this, conduct a simple exercise: Have someone fill the numbers for every approved and budgeted position at the University and see what that does to the budget picture currently being presented by Administration. Money is being “saved” at the cost of quality. The Strategic Plan 2013-2018 says that by 2018 USP should have 60 professors. Just estimate the salary expenses for these 60 positions, and see if the current budget can even support these positions. This money should be present and available for the University to expend without further going into the red. If not, then the SP target is superfluous.
Academic and support staff positions have been dramatically reduced in the last few years, in spite of the University going through fabulous increases in the number of students enrolling at USP. USP owes vendors, ex-employees, and consultants significant amounts of money that do not show up as encumbrances on the budgets. If all these invoices were to be showed as encumbrances on the budget sheets, it would truly show the picture around USP finances. Meanwhile, the reputation of the University as a non-payer or defaulter is gaining steam on almost a weekly basis.
The University infrastructure has had limited to no infusion of cash in the last so many years. As a result, it is crumbling. In order to show favorable numbers in the overall budget, monies that were supposed to have addressed the infrastructure issues are instead spent elsewhere. All this is doing is painting a false picture of prosperity. When assets are not maintained, they become liabilities. The future of the University is being sold. Take IT for example: the infrastructure is falling apart, putting at risk the functioning of the University, and no money at appropriate levels has been set aside or infused over the years to replace this infrastructure. This is exactly what is happening to the buildings and other resources.
There are, or at least have been, student residential building floors with no firefighting equipment because when brought to the attention of the Administration, the EDF would require Commercial to pay for it without allowing Commercial to retain the earned income from which to pay from. The future VCPs will not have the massive amounts of monies required to take care of a crumbling infrastructure. The millions of dollars in maintenance monies that have been diverted today, conveniently labeled as deferred maintenance, will require massive capital tomorrow. Where is this going to come from? The University is creating a risk for the future.
The University painted a very bleak picture when asking the member countries for an increase in their financial contributions. It is time to ask where that money is going. PTAFE? Unnecessary travel? Lawsuits? Wine at every occasion? Bonuses and benefits to favorites? Exorbitant amounts of supplemental pay to favorites?
Outsourcing can be useful. It can also be a killer. Thus far the outsourcing of services has not been established as something that will save money. It will in fact cost more money. Further, it diminishes the capabilities of the University and puts its services at risk into the future. As an example: Outsourcing Properties and Facilities (P&F) is not saving any money, and it is going to put the University at risk during times of natural emergencies and disasters. It is hard enough to find carpenters, electricians and plumbers now in Fiji as a result of work generated in the aftermath of tropical cyclone Winston, it is going to be impossible to have any one respond in an emergency if another such natural disaster were to occur in the near future.
This is creating a risk in terms of functionality and finances. USP is also a large employer and provider for people of the Pacific. Eliminating jobs without significant gains ultimately hurts USP’s obligation to the peoples of the Pacific as an employer. Nearly 70 households will be affected without substantial benefits to the University in the outsourcing of P&F. Where is the humanity? If it is about quality of work, then that is an effective performance management issue, not a financial issue.
Financial policies should be applied evenly to everybody. The policy around Trading Accounts states that the university takes 20% of all expenses, not revenue, and then keeps 50% of the net earned income, returning the other half to the trading account for the department to reinvest and use as appropriate. This is the policy. How is it then that Commercial does not get a penny back from the 50% earned income monies, and PTAFE gets all of it? Practices such as these have the practical effect of adversely affecting performance and performance related awards, inhibiting reinvestment, thus creating risks, developing an environment of favoritism, and generating a culture of micromanagement where every decision is made by the EDF or the VCP because they control all money.
To be continued
