Audit reports

Guide no. 02/02: Sale of disposed assets

Guidelines

(1) We consider the internet platform “Customs Auction” as the standard tool for the sale of disposed federal assets. This platform provides the administration with a uniform procedure to reach as many prospective purchasers as possible.

(2) Where, in isolated cases, the Customs Auction platform cannot be used due to the lack of necessary special knowledge or to the need to use other distribution channels, the preferable alternative option is to use the services of VEBEG GmbH.

(3) The authorities should not proceed to any separate sales to staff.

(4) A transparent and objective decision-making procedure is needed where assets are given to charities free or at little cost.

Background

Where authorities discard assets no longer needed for the performance of Federal Government tasks, Art. 63 Federal Budget Code requires that they may only be sold at their full value. Any sales must comply with the principles of efficiency and economy.

In the years 2008 and 2009, we conducted audits at several federal authorities to ascertain whether their sales of federal assets were made in accordance with the efficiency requirement. Our study also comprised earlier findings on the disposal of IT equipment and the sale of official motor vehicles.

(1) We found that selling practices were insufficiently structured and not always in line with professional procedures. The offers of assets for sale were little structured and different sales channels were relied on. Obtaining an overview was difficult for prospective purchasers. Therefore, the authorities were unable to fully open up the market potential.

We consider the internet platform “Customs Auction” (www.zoll-auktion.de) as the standard tool for the sale of disposed federal assets. The Customs Administration auctions most of the assets it has seized through this platform. Other federal entities may also achieve good value for money by using this platform to sell discarded objects (e.g. cars, computers, furniture). We pointed out that the Customs Auction platform provides a good market outreach, permitting to obtain the full value of the assets sold while this is not always the case when using other approaches.

We therefore advised against advertising the intention to sell chattels in local daily newspapers. We believe that such advertising will reach only part of actors in the market place. Apart from additional advertising costs, lower selling prices are likely.

(2) Where, in isolated cases, use of the Customs Auction platform is impossible due to the lack of the necessary special knowledge or the need to rely on distribution channels other than auctions, the services of VEBEG GmbH may be used. This company has special knowledge and experience with selling assets which are difficult to market, especially defence equipment. We therefore hold this is the preferable channel for selling such assets.

In our opinion, the use of private-sector agencies specialised in helping to sell assets is appropriate only in exceptional cases. The efficiency and need for using private-sector firms would have to be substantiated in each case. General arguments, e.g. to the effect that the use of individual private-sector contractors specialised in certain services is of particular merit are not sufficient to commission the private-sector contractor.

(3) We found that some authorities offered discarded assets for sale to their staff (e.g. via the intranet). We believe that higher selling prices may be obtained by offering the goods to a wider public. We therefore suggested refraining from any separate procedures for sales to staff but to conduct all sales through the Customs Auction platform. Sufficient regard can be taken to staff interests by advertising the intended sale and auction in-house e.g. via the intranet at the same time.

(4) We found that most authorities did not document the justifying reason for giving assets to charities free or at little cost. In our opinion, transparent and objective decision-making is required in such cases. The term “charity” shall not be interpreted in an arbitrarily way.

Notes

The Federal Finance Ministry has drawn attention of other supreme federal authorities to our audit findings. To the extent possible, uniform practices should be ensured by using the Federal Government’s sales channels Customs Auction and VEBEG. Any free gifts or sales at little cost to charities should be based on transparent and objective decision-making procedures.

 

 

 

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