A Parliamentary inquiry is taking place into Commonwealth procurement © Yury Prokopenko/Getty Images
A Parliamentary inquiry is taking place into Commonwealth procurement © Yury Prokopenko/Getty Images

Auditor questions whether procurement system is 'fit for purpose'

28 November 2022

Australia’s national auditor has told Parliament that deficiencies in government procurement performance are found so often that it suggests a “deficit in institutional capability and proficiency”.

The Australian National Audit Office (ANAO) made a submission to the Joint Committee of Public Accounts and Audit (JCPAA) enquiry into Commonwealth procurement, questioning whether the current system was “fit for purpose”.

This came after a series of scathing audits into government procurement of technology, defence assets, infrastructure, and grant programmes.

Recent audits into key departments such as industry, the Digital Transformation Agency, home affairs, the National Capital Authority, and defence have uncovered a series of concerns.

Departments have been accused of frequent bypassing of correct processes, bias in favour of certain suppliers, poor contract management and oversight, and failure to achieve competitive prices.

The auditor said in three of the five audits considered by the inquiry departments could not demonstrate value for money had been achieved.

“This is sometimes attributable to a failure to make or retain sufficient documentation in relation to the value-for-money assessment,” the report said.

“More commonly, an entity may attest that value for money has been achieved in documentation, but when scrutiny is applied it becomes apparent that the assessment of value is not meaningful or methodical, or does not account for flaws in the conduct of the procurement.”

The ANAO report said oversight to ensure suppliers are fulfilling contractual commitments was “not systematically monitored” across government.

The ANAO called on the JCPAA to look at whether it was appropriate to exempt 48 corporate Commonwealth entities from procurement regulations.

And it queried whether reporting regulations should look at compliance more broadly as current reporting has led to lack of transparency. At present, government organs are only obliged to report significant non-compliance with procurement requirements in annual reports.

“This impacts finance’s ability, as the policy owner, to measure and assess the effectiveness of the procurement framework, identify areas of risk to the sector and to implement timely intervention strategies,” said the ANAO.

The office suggested the JCPAA should examine the “true rate” of open tenders and appeared to cast doubt on government figures suggesting that the use of open tenders was increasing. 

Data indicates 54% of all contracts and amendments in in 2021-22 were subject to open tenders, up on 45% in 2017-18.

But the ANAO said three recent audits indicated that tenders reported to be open could actually be subject to limitations on competition, by including only one potential supplier or limiting the numbers of potential suppliers participating.

Obliging greater transparency over reporting would make it clear how many suppliers were participating in tenders.

And it said self-regulation by departments meant issues often went unnoticed until audits took place, despite these being relatively infrequent.

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