Item - 2012.AU7.13

The Audit Committee recommends that:

1.         City Council request the Director, Purchasing and Materials Management Division, to review and enhance the existing Purchasing and Materials Management review process such that inaccurate or questionable information on purchase request documents is identified and addressed prior to approval of the purchase request documents.

2.         City Council request the Director, Purchasing and Materials Management Division, to define in all pertinent purchasing policies and procedures that the purchase amount for contract increases and sole-source approvals refers to the gross cost to the City (excluding taxes), not net costs after deductions, refunds, or credits.

3.         City Council request the City Manager, in consultation with the Director, Purchasing and Material Management Division, to take necessary steps to ensure that, where a contract service is not acquired under a fixed price agreement, the unit pricing, labour rates, and estimated labour hours are established prior to commencing the contract services, and the hours of contract services are tracked and documented.

4.         City Council request the Director, Purchasing and Materials Management Division, to take the necessary steps to ensure that divisions comply with the City purchasing policies regarding the timely submission of sole-source purchase requests for approval by the Purchasing and Materials Management Division.

5.         City Council request the City Manager to forward the recommendations contained in the audit report entitled “Procurement of 311 Toronto’s Information Technology System – Lessons for Future Procurement Processes” to the City’s major Agencies and Corporations, for consideration in future procurement processes.

6.         City Council adopt the recommendations contained in Attachment 1 – Confidential Information to this report.

7.         City Council authorize the public release of audit recommendations and management responses contained in confidential Attachment 1 at the discretion of the City Solicitor in consultation with the City Manager.

The Audit Committee recessed its public session and met in closed session to consider confidential information on this Item related to litigation or potential litigation that affects the municipality or local board.

The Auditor General’s 2011 Audit Work Plan included a review of 311 Toronto operations.  An audit report entitled “311 Toronto – Full Potential for Improving Customer Service Has Yet To Be Realized” was presented at the November 23, 2011 Audit Committee meeting.

When the 2011 audit was initiated there was no intention of conducting a review of the 311 procurement process.  However, during the course of the 2011 audit, a number of issues pertaining to the initial procurement of an information technology (IT) solution for the 311 Contact Centre were identified.  Rather than including these concerns in the 2011 report which focused on customer service and operational issues, it was determined that a separate report pertaining exclusively to the procurement process would be appropriate.  The issues pertaining to the procurement process are the subject of this report.

Certain of our audit findings and recommendations are presented in a confidential attachment to this report.  The report sections pertaining to the award of the initial IT contract contain confidential information.  As a result, the relevant report sections and recommendations are presented in confidential Attachment 1 appended to this report.  Our other audit findings and recommendations are detailed in Appendix 1 to this report. 

Our audit findings and recommendations are presented as follows:

Appendix 1 – Audit findings and recommendations excluding those related to the award of the initial IT contract

Appendix 2 – Management responses to audit recommendations contained in Appendix 1

Attachment 1 – Confidential audit findings and recommendations pertaining to the award of the initial IT contract, and management responses to the audit recommendations contained in Attachment 1.