Many B.C. liquor branch contracts don't comply with government standards: audit
The Crown corporation that wholesales liquor in B.C. is being hammered by the province’s auditor general, who says dozens of contracts weren’t signed according to government rules, with the public possibly picking up a higher tab..
Carole Bellringer says her audit shows the Liquor Distribution Branch could have used more sober second thought when inking 74 directly awarded contracts, valued at about $25 million.
"The government is set up for a fair process for any supplier who is interested in participating in work for the government. In these cases the suppliers were selected directly, without a fair advantage for everybody," Bellringer said.
"Research shows that a competitive process is going to get you the best price."
Bellringer’s office audited the contracts to do with corporate services at the LDB, such as product tracking software, interior design, and cooling services. There was no audit of the purchase of liquor or cannabis itself.
She says 55 per cent of the contracts that were directly awarded do not show the exceptional circumstances required to avoid the bidding process.
The report says 20 of the contracts indicated the liquor branch did not grant special favours to contractors, but the remaining 54 don't have enough documentation to show fairness.
The LDB denied it was under the influence of any supplier, saying most of the contracts were top-ups of existing arrangements. Only a handful of the companies were listed as donors to the political party in government at the time.
A public agency can avoid putting bids to tender if there is some urgency, if there is only one provider, or if putting a service up to bid would infringe on the agency’s competitive, said Viviana Zanocco, the Liquor Distribution Branch’s communications manager.
"We didn’t document that information very well, and that’s something we’re going to improve. We are accountable to British Columbians and have to be seen to be accountable," she said.
The largest contracts were $14.2 million for JDA Software, which is described as an "upgrade to JDA proprietary software system over an eight-year timeframe," which started on Jan. 1, 2018.
Zoftec, LLC supplied "ongoing professional services to JDA Store proprietary POS software system" for $700,000 starting Aug. 11, 2016. GF Bunzl Canada supplied "pallet wrappers" at the distribution centre in Delta for $585,261, a contract that began on Dec. 11, 2017.
The fourth largest is to Staples Advantage for $450,000, which is described as a "six-month extension to the current cleaning and office supplies agreement for the LDB head office and retail stories," which began on April 8, 2018.
Bellringer makes five recommendations including ensuring all liquor branch staff dealing with procurement take contract management training.
In its response in the audit, the branch says it expects staff to complete part of the training that was recommended by the end of the year and it has made other changes to provide greater oversight of how contracts are awarded.
It also says some of the findings of the audit 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.