Far North District Council has sound procurement policies, but work needed, review finds

A Far North District Council review of it's procurement systems, after a stoush with contractor Ken Rintoul, above, has found it has effective systems, but needs to embed them across the organisation.

The Far North District Council has effective procurement systems, but needs to embed them across the organisation to ensure consistently good practices, an independent review has found.

The council commissioned KPMG to conduct the review after a legal dispute with a Far North contractor prompted concerns about how it was procuring services.

In May in the High Court, Justice Mathew Downs ruled that the council should not have excluded Kaikohe firm Rintoul Group from bidding for the tender to build four sections of the Twin Coast Cycle Trail. Rintoul Group wants $500,000-plus in compensation from the council.

KPMG selected and assessed 12 procurement exercises over the past two financial years and assessed three more of interest to the council. They related to contracts for a range of services, including road maintenance, footpath and bridge construction, building housing for the elderly and water system upgrades.

KPMG's audit report identified several low-medium risk issues, but none of high risk that could compromise internal controls if not addressed.

The company assessed the council as between "Foundation" and "Established" levels on a procurement maturity curve, suggesting that it should aim for at least "Established" level.

"While this review has identified a number of areas for further improvement, we note that these findings are relatively consistent with a number of other district councils," the report said.

The council had introduced several initiatives over the past year to improve its procurement function, including setting up a procurement board and centre of excellence within the organisation, revising a procurement policy, and developing tools, guidelines and training for staff.

"We identified a number of key strengths that management should continue to build upon to develop a robust control environment over FNDC's procurement function. These will need time to be embedded across the organisation to produce consistent results," it added.

The council's previous procurement policy had not been well embedded across the organisation, or tailored to suit the council's needs, resulting in inconsistent procurement practices, non-compliance with policies and procedures, and a largely decentralised procurement model.

Mayor John Carter said the council commissioned the fully independent review because it wanted residents and ratepayers to be confident that its procurement procedures were fair, robust and transparent.

"While the audit did not constitute a deep-dive forensic investigation into the procurements, KPMG did not find any indication of fraudulent activity by council staff," he said.