'Jerusalem budget has major flaws’

Report states that municipality mismanaged funds by not offering competitive bidding practices on tenders.

By DANIEL K. EISENBUD
Updated: NOVEMBER 26, 2015 06:21
Jews gather to pray at the Western Wall during Succot (photo credit: AFP PHOTO)
Jews gather to pray at the Western Wall during Succot
(photo credit: AFP PHOTO)
Jerusalem, Israel’s largest city, scored a four out of 10 for fiscal management in the last fiscal year due to its poor socioeconomic standing and the municipality’s purported non-competitive bidding practices for high-paying tenders, the annual State Comptroller Office’s report stated.
The 43-page analysis of Jerusalem’s notoriously anemic economy provides an expansive overview delineating the underlying factors contributing to the city of roughly 830,000 inhabitants’ foundering economic status.
According to the report, published on Wednesday, the main failure of the Jerusalem Municipality was its lack of “centralized information on municipal contracts” for suppliers of goods and services.
“Although the municipality is conducting transactions of billions of shekels, it does not collect consolidated and integrated quantitative and qualitative data relating to its agreements in order to maintain effective oversight,” the report stated.
“The lack of such information may impair the ability of the municipality to take advantage of its size. The city is not even using its knowledge and experience with the coordination of its divisions and various other commitments to improve conditions with those suppliers.”
Specifically, the report cited the municipality’s apparent refusal to offer open bidding for major tenders, including the renovation of sporting facilities, resulting in “a severe blow to the principles of equality, efficiency and economy of the underlying tender laws.”
Consequently, the report claimed that the municipality’s purported preferential treatment of contractors resulted in inflated prices. As a case in point, the report cited a cleaning contract for Teddy Stadium to a contractor “resulting in a waste of public funds.”
To rectify the problem, the report suggested closer coordination with the Comptroller’s Tenders Committee, which would independently review all prospective tenders and choose a bidder based on an “equitable and objective examination of the proposals presented.”
The report added that “serious deficiencies” were uncovered with respect to awarding non-competitive, inflated contracts by the municipality in numerous other areas, including the city’s lighting infrastructure.
In the report’s “main recommendations” section, the Comptroller’s Office suggested that the municipality establish a central database “that will allow it to exploit the advantages inherent in the size and scope of its agreements.”
“The municipality will be responsible for appointing an official to buffer data, carry out comprehensive and effective controls on the contracts system, and ensure its proper management,” the report said.
It added: “The municipality has taken a narrow interpretation of the provisions of the tender exemption law.”
Municipal officials – especially in the Sport’s Department responsible for Teddy Stadium’s cleaning services tenders – must “critically reexamine the terms of the tender in question” by creating a “tender exit,” the report suggested.
The report’s “conclusion” section reiterated that an audit of the municipal budget found numerous shortcomings, “some of them severe,” with respect to adequately addressing its contracts with suppliers and contractors.
Based on the findings, the municipality must “act to increase control over its engagements system,” the report concluded.
Jerusalem Mayor Nir Barkat, a highly successful software entrepreneur, has repeatedly stated that a new business district to be constructed at the Western entrance of the city will result in a reversal of fortune for the capital.
The municipality had issued no response to the report by press time.