Australian government must take ‘great care’ over public procurement rules

Gurjit Degun
18 July 2014

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19 July 2014 | Gurjit Degun

The Australian government needs to take “great care” in the policy, practice and operation of public sector procurement rules to work in the interest of the country’s citizens.

That’s the view of senator Kate Lundy, chairman of the Finance and Public Administration References Committee, which has published its conclusions following an inquiry into the operation and effectiveness of the country's procurement rules.

Lundy said there is an “urgent need for a stronger methodology to assess whole-of-life costs within the value for money assessment part of the decision-making process”. This followed evidence put to the committee explaining value for money is not only about comparing price but also looking at the broader benefit of the options available.

“[In addition], the effective application of the range of procurement-related policies, combined with scrutiny and accountability measures, procurement outcomes for Australian companies would be considerably improved without impacting on our international obligations,” the Labour senator for the Australian Capital Territory added.

In terms of non-discrimination, Lundy explained the committee “strongly” agrees Australian firms have at least an equal opportunity to compete, tender and win contracts.

She also said the committee supported “the intent of bilateral free-trade agreements” but the government “could do more” to ensure local industries and locally manufactured content can “participate fully, is not discriminated against (inadvertently or otherwise) by fully capitalising on exemptions provided for in those agreements”.

Lundy added: “Government procurement decisions may well be a significant determinant of the social and economic health of many Australian communities and regions. As a result, great care needs to be taken in the policy, practice and operation of the Commonwealth Government procurement rules if they are to operate in the interests of the Australian people.”

Other recommendations included calling on the Department of Finance to establish an “independent and effective complaints mechanism” for procurement processes. But the department said that it does not support this because there are a “number of opportunities” for people with complaints and there have been a “very low” number of complaints received.

The department said senators support the Australian National Audit Office (ANAO) assessing whether any further improvements in guidance for agencies is required in relation to ensuring financial and non-financial factors are taken into consideration. They also support the ANAO or another competent authority assessing the competencies of agencies' procurement officers.

However, it added: “Government senators consider that the application of the non-discrimination principle is not harmful to Australian interests, but recognise that there may have been failure in some areas to fully capitalise on the exemptions provided for within Australia's free trade agreements.

“The committee majority report appears to ignore the evidence that Australian suppliers, including our SMEs, are competitive in winning government contracts. Nearly 90 per cent of the suppliers contracted in 2012-13 were SMEs and over 80 per cent of those goods and services procured were (likely to have been) sourced from, or delivered by Australian suppliers. This is not evidence indicating a systemic problem that Australian suppliers are not winning government contracts.”

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