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Mahuta wants assurances over Westland council procurement

Friday 5th April 2019

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Local Government Minister Nanaia Mahuta wants assurances that Westland District Council's procurement is up to scratch after an Auditor-General found the local authority pushed the boundaries of its powers. 

Mahuta has given council until the end of May to provide her with enough documentation to ease concerns that the local authority has strong enough procurement policies and processes to avoid a repeat of the $1.2 million project at Franz Josef that attracted a harsh critique from the Office of the Auditor-General. 

"In light of the OAG report's findings and the Westland District Council's history of procurement issues, I consider a problem may exist with the council's procurement policies and processes," she wrote in a letter to the council on March 20 and which was made public last night. 

In its March 5 report, the Auditor-General found a number of unacceptable practices when it investigated the construction of a new stopbank to protect Franz Josef's wastewater treatment plant from flooding, including whether the work had been approved at all. It concluded that the council couldn't show whether the decision was well made or the money well spent. 

Council had allocated $1.3 million for urgent maintenance work on the wastewater plant to address compliance issues, but instead built a new stopbank. 

The Auditor-General was concerned the council went beyond its remit in building the stopbank, potentially opening itself up to legal proceedings and invalidating insurance cover. It also found the council decision-making process was inadequate, with no advice sought and an absence of records kept.

The report also found that Mayor Bruce Smith and councillor Durham Havill blurred the lines between governance and management in negotiating the work arrangements. 

The Department of Internal Affairs recommended the minister wade into the matter, saying while issues of governance and management at the council were largely circumstantial, the Auditor-General's report showed a specific and serious problem around procurement. 

What's more, since the report, DIA officials told the minister that the Westland mayor has indicated a desire to undertake more work on the Waiho River. 

Council agenda papers show its bid for Provincial Growth Fund money to enhance the stopbank protections was rejected and that efforts to find investors in the region had failed because of the flooding risk. 

The DIA said in a briefing to the minister that a letter requiring information was the most proportionate response to the immediate problem. 

"It retains the integrity of local government by giving the council the ability to produce information proving its new policies and processes will adequately prevent further issues arising. It also enables you to escalate the response, should you not be satisfied with the council's response." 

A Westland council spokeswoman said the council is complying with the request and has already hired a consultant to start the procurement review process. 

The DIA officials recommended against Mahuta doing nothing, saying the mayor's comments and uncertainty around the new processes meant there was a high risk of the council making the same mistakes again. They didn't favour installing a Crown review team or Crown observer, which could be seen as an over-reaction. 

Mahuta has sought a copy of the council's procurement policies and processes and any supporting policies, any independent review commissioned into its procurement or advice on when it plans to do so, any monitoring reports, and any other documents that would soothe her concerns. 

The council held an extraordinary meeting yesterday to discuss the freedom camping review working group. The meeting agenda also noted that the public would be barred from the discussion on a confidential report relating to the Auditor-General investigation. 

In the February financial performance update to the council's finance, audit and risk committee, the Franz Josef wastewater treatment plant upgrade was its biggest capital project with a budget of $2.25 million. Of that, $552,000 was spent in the year to date, less than the $1 million, because the project is running behind schedule. 


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