12 December 2003
The economic development agency Scottish Enterprise (SE) has been criticised by auditor general Bob Black for the way it used outside consultants and contractors. These cost the agency £108m last year – more than a fifth of the total management and operational expenditure of the enterprise network.
In a report published this week by Audit Scotland, Black also pointed to a possible failure to apply for European Union funding to which SE was entitled and said there were problems and delays concerning some of its major projects.
However, he noted that the enterprise network as a whole achieved 21 out of 22 performance targets. The agency claimed it had been vindicated, despite media allegations of mismanagement.
Black, reporting to the Scottish Parliament, said he was concerned that, for a period of almost four years until April 2003, no management information on the use of consultants and contractors was provided to the board and senior management.
SE took the view that this type of spending should be monitored and controlled at the level of individual projects and programmes.
Auditors concluded that SE should improve its procedures for appointing consultants and monitoring contracts. Black said: 'They found that the requirement to expose work to competition was not always met and there were some failures to comply fully with EC procurement rules.'
Black's report suggested there might be scope for the agency to set more stretching performance targets.
It appeared the agency did not apply for all the funding to which it might have been entitled, he said. 'EU funding can be an important source and public bodies should ensure that the potential availability is considered at all stages of the development of new projects.'
In response, SE said media allegations that projects were close to collapse or mismanaged had been shown to be untrue and that a claim it had failed to apply for £32m of European funding was similarly false.
It said an action plan had been put in place to deal with the recommendations.
Chief executive Robert Crawford denied the mismanagement allegations earlier this year, but announced his intention to step down from his post in 2004, saying he wanted to escape from the 'goldfish bowl' of the job.
PFdec2003
