The Auditor-General has told the Tauranga City Council to sharpen up its project procurement process, following the failure of a $19 million car park building.
The Harington Street transport hub under construction in Tauranga. Photo: Supplied
The council pulled the plug on the defective and partly built Harington St carpark in June last year, due to seismic concerns.
Office of the Auditor-General inquiries manager Dave Lemmon wrote to the council's chief executive Marty Grenfell today.
He outlined his concerns about the council's process during the project - these included going for the cheapest option, a lack of a business case or overall plan for procurement, unclear responsibilities and unclear purpose of the project.
The council had spent $19m on the project when it decided to halt construction.
It was estimated it would cost $9.8m to demolish the building and restore the site.
Instead of pulling the building down, the council decided to sell the site to the lead contractor for $1.
The council got $200,000 back by selling the unused material and structural steel, along with the negotiated settlement of the construction contract.
Crown-appointed commissioners were appointed to Tauranga City Council earlier this year following dysfunction at the local body.
Lemmon criticised the council's procurement processes and governance.
"In the end, the council will have nothing to show for the money it has spent."
Lemmon said elected members had not settled on the project's final design and intended outcome before the procurement had begun.
"Furthermore, no written procurement plan was created for the whole project."
He said different approaches were taken depending on the contract, with minimal documentation for many aspects of the project and very short time frames for procurement.
In one case, there was only 17 days between a tender for a structural engineer being advertised and a contract being awarded.
Furthermore, Lemmon said the council seemed to opt for the cheapest deal.
"Some tenders appeared to have been evaluated based only on price and without assessing the tenderer's ability to meet the tender requirements. That is not to say the suppliers involved were not capable of meeting the requirements, but price was prioritised over ability when selecting the successful tender."
The council's chief executive, Marty Grenfell, said in a written statement the procedural failings in the procurement and management of this project were acknowledged.
"Prior to the Auditor-General's interest in this matter, we had commissioned two independent reviews and the recommendations from these, and the Auditor-General's letter, are in the process of being implemented."
Grenfell said a range of measures had been put in place to improve project delivery, governance and procurement processes.
"This has included the disestablishment of a standalone Project Management Office and the transfer of direct accountability for delivering capital projects to the business units which will ultimately be responsible for the asset. Central to this reform is the new Capital Programme Assurance Division (CPAD) and new Procurement Policy.
"The draft Long Term-Plan has an extensive programme of capital projects and the creation of CPAD will support our project delivery with increased capability, expertise and confidence," Grenfell said.
The council was taking legal action to recover as much money from the failed project as possible - this was $20.5m at the end of September 2020.
