The SAO audited purchases and reconstructions of buildings owned by the Ministry of Labour and Social Affairs
PRESS RELEASE on Audit No. 14/05 – December 8, 2014
The Supreme Audit Office (SAO) focused on how the Ministry of Labour and Social Affairs managed five programs that aimed at the construction, reconstruction, and purchase of buildings for the Labour Office, the Czech Social Security Administration (CSSA), and social services in the period 2009–2013. Auditors selected and scrutinized 22 specific operations worth CZK 2,300 million in total.
Programme funding should ensure the economic, effective, and efficient (3E) utilisation of funds from the State budget. The auditors found out that such a funding had not complied with 3E in many cases. For example, the Ministry of Labour and Social Affairs did not approve plans for finishing the construction of local CSSA premises in Pardubice because the landowner only wanted to sell the entire estate for CZK 15 million, which according to the Ministry was “too large”. Two years later, the Ministry approved other construction plans in a different locality but the new project was more expensive that the original plan by CZK 130 million.
The main problem was the fact that the Ministry of Labour and Social Affairs had changed the programmes conditions often and fundamentally. This unsystematic approach of the Ministry led to the situation, in which there were purchased buildings from the programmes for which the CSSA and the Labour Office did not have sufficient use or vice versa the buildings granted insufficient capacity for their needs. For example, the CSSA decided to stop the construction works on the office building in Rokytno (near Žďár nad Sázavou), which had cost CZK 60 million, but did not propose any suggestions about the future use of the unfinished building.
In another case, the CSSA regional department in Jihlava spent more than CZK 44 million for construction works on a modern training centre in 2006 but the centre was not much used. In mid-2012, the centre was not used at all so the regional department decided to give the useless property to the CSSA, which has begun its reconstruction with planned costs in the amount of CZK 17.5 million. Previously, preparation works related to the construction of another building in Jihlava cost nearly CZK 6 million. On the other hand, the office building in Karlovy Vary (built in 2012) is used more than sufficiently. The building’s capacity is 75 employees, but during the auditing operation, there were 107 employees working in the building and nine more employees had to work in the original unsatisfactory premises.
There is a risk of ineligible costs with other buildings as well – for example training centres procured by the Labour Office and a purchase of a building situated in Letná, Prague, which is being reconstructed and the planned costs are CZK 329 million in total. According to the plan, the General Directorate of the Labour Office and other departments will be situated in the reconstructed building. But before the General Directorate of the Labour Office was established in 2011, the Ministry of Labour and Social Affairs had originally claimed that no new building would be necessary. The Labour Office did not submit evidence that a proper selection process had been done before the purchase, which was an elementary condition for drawing from EU funds, namely from the Integrated Operation Programme. On top of that, the Labour Office did not produce verified data about the number of employees, who would be working in that building.
Supreme Audit Office