In the Municipality of Barceloneta, payments of $1.4 million without a written contract and purchases without bidding
The Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of Barceloneta. A qualified opinion is issued when the noncompliances, individually or as a whole, are significant but not pervasive.
The Report reveals that the Municipality did not claim the performance bond of a contractor who did not comply with the construction of 26 gazebos and 21 rest areas. The Municipality had to invest additional resources of $290,446, to finish the works not built by the original contractor.
In addition, the Municipality paid $26,764 for galvanized steel railings not installed in the construction of the gazebos, and $9,130 for work not performed at the Children's Pavilion. In this project, the payment certifications were approved by an inspecting engineer, the executive director, and a special aide to the mayor; however, the auditors identified constructions, installations, and gates, with dimensions smaller than those established in the contract (see table in the Report).
The four-finding audit notes that construction work on gazebos and rest areas was begun at 28 Head Start centers without obtaining the permits from the Permit Management Office, until two and a half years later. Also, at four Head Starts they began the construction of four gazebos without requesting a permit and, for the construction of one gazebo, they did not deliver the required construction permit.
This situation did not allow the Permit Management Office to exercise its regulatory function and also does not offer the Municipality assurance that the projects were carried out in accordance with the corresponding laws and regulations.
The Municipality of Barceloneta paid $1,434,374 without a written contract, to two awarded bidders of four biddings for the acquisition of goods and services held from 2020 to 2022. In accordance with the requirements of governmental contracting and the jurisprudence of the Supreme Court, the Municipality should have complied with the formality of a contract. The absence of a legal document establishing the rights and obligations of the parties may cause unnecessary litigation.
In violation of current law, the Municipality ordered the purchase of 221 laptop computers for $282,233, and seven desktop computers for $7,693, without holding a bidding process. This situation prevented, among others, free competition among the largest number of suppliers.
The Report publishes that as of June 30, 2022, the Internal Audit Unit had not conducted audits on the areas of materiality and risk of the Municipality. This situation deprived management of the necessary information on the internal controls and the functioning of the accounting system, among others.
The audit notes the irregularities detected by the Office of the Inspector General of the United States on the handling of the disaster recovery funds of the programs. From 2019 to 2020, the National Head Start Office of the Administration for Children and Families granted $56 million for the programs, including some $14.3 million in disaster assistance to the Municipality of Barceloneta.
The Inspector General determined that the Municipality did not administer the disaster assistance grants of the programs in accordance with federal and state requirements.
On the other hand, the Report notes that the inspector of one of the improvement projects at the Carrizales Head Start Center was also the owner-president of the concrete company from which the contractor purchased concrete to carry out the work. The contractor was unaware that the inspector had commercial interests with the concrete company. This type of situation may cause a conflict of interest that affects the image and the federal allocations to the programs.
As of December 31, 2022, three civil lawsuits for improper payments and damages totaling $942,938 were pending resolution by the courts.
Barceloneta's budget from 2020 to 2023 was $27,537,631, $26,065,515, $26,470,440, and $30,943,312, respectively. The Municipality had its financial statements prepared, audited by certified public accountants, for fiscal years 2019 to 2021. These reflected a surplus in the General Fund of $3,003,184, $6,910,123, and $7,489,279, respectively.
The Report recommends that the director of the Office of Management and Budget ensure that the Municipality of Barceloneta complies with the Corrective Action Plan established by the Office of the Comptroller of Puerto Rico.
This first report of Barceloneta covers the period from July 1, 2019, to December 31, 2022.
The Audit Report OC-24-62 can be obtained on our website: www.ocpr.gov.pr.
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