Morocco Audits Public Firms Over Hasty Contract Cancellations Leading to Losses

Morocco's General Inspectorate of Finance is accelerating surprise audits of 17 public institutions and companies. These investigations stem from reports by spending authorities concerning alarming indicators related to the management of public contracts, particularly a growing trend of "hasty" decisions to terminate them by project owners.

These premature cancellations have reportedly imposed heavy financial losses on the involved entities. Inspectors are concentrating on examining the reasons behind ending contracts with companies and suppliers, assessing whether legal procedures were followed. This scrutiny comes after public institutions incurred escalating additional financial costs due to judicial disputes with companies executing contracts and purchase orders.

Sources indicate that large contract files are under review. This follows instances where public institutions and companies were compelled to retract termination decisions after receiving legal warnings from contracting firms. These firms presented evidence, compiled by judicial officers, demonstrating their adherence to contractual terms. Project owners belatedly reviewed their legal positions and reversed their decisions to avoid certain financial and legal repercussions.

The financial inspectors are also scrutinizing the mechanisms for monitoring contract execution. They are assessing whether the relevant public administrations possess qualified personnel to ensure better evaluation of goods, services, and works before rushing into termination decisions, only to retract them later. Procurement officials in three public institutions, based in Rabat and Casablanca, have been asked to provide documents related to contracts dating back four years.

Inspectors' requests also extend to minutes of inspection, provisional acceptance, and final acceptance. The audit includes legal notification files for specific contracts, some of which involved rescinded termination decisions. Current oversight operations have identified irregularities in adhering to legal procedures during the management of public contract execution. The audit has highlighted cases where orders were not issued to contractors who had breached their commitments before sudden termination decisions were made. Additionally, some administrations failed to issue timely legal compliance notices, despite these procedures allowing for unconditional contract termination and the seizure of final guarantees.