An agency set up to digitally transform Australia’s public sector procurement has consistently failed to carry out effective procurement itself, an audit has found.
The audit of the Digital Transformation Agency (DTA) by the Australian National Audit Office (ANAO) looked at nine different ICT services contracts procured by the agency and found all nine came up short.
The ANAO said while the DTA had established a procurement framework, its oversight and implementation was consistently weak.
“For the procurements examined by the ANAO, the DTA did not conduct the procurements effectively, and its approach fell short of ethical requirements,” the auditor said in a report.
The audit described one of the agency’s main roles as simplifying digital procurement to reduce costs and increase reuse and advising on IT procurement.
But it said the DTA consistently failed to “provide sound advice to decision-makers”. “Advice generally did not include whether selected tenderers would achieve value for money or how risks were considered,” the report said.
Auditors examined contracts worth A$54.5m that were finalised between 2019 and 2021 – a mixture of open tender, panel procurements, and limited tender arrangements. In four of the seven panel procurements the DTA approached one supplier from the panel.
The report said the DTA failed to estimate the value of the contract prior to determining the procurement approach, assess risks, or maintain appropriate records of the approach to market.
This broke the spirit and letter of the DTA’s own procurement rules, the report said.
“Further, the DTA’s frequent direct sourcing of suppliers using panel arrangements such as the digital marketplace does not support the intent of the CPRs [Commonwealth Procurement Rules],” it added.
“The DTA has not been following its internal policies and procedures and there are weaknesses in its governance, oversight and probity arrangements for procurements,” the report said.
DTA chief executive Chris Fechner said he welcomed the audit but said it was “not a review of the DTA’s whole-of-government digital sourcing responsibilities”.
“As such, the ANAO’s findings have no bearing whatsoever on our whole-of-government agreements, panels, marketplaces and BuyICT platform,” Fechner said..
“While the audit report identifies shortfalls in relation to internal procurement processes, controls and education, each of the sampled procurements still achieved their intended outcomes and supported critical delivery requirements in an unprecedented pandemic environment,” the DTA said.
According to the DTA remediation measures either now underway or planned include:
- A review of the risk-management framework, including update of strategic risks and risk register.
- Updating guidelines strengthening processes around potential fraud and probity breaches.
- Reviewing approach-to-market, tender-evaluation and contract-management processes.
- Improving management of internal payment controls, with an internal audit to verify the effectiveness of these controls by March 2023.
- Implementing a register of declared interests for senior executive service staff.
- Updating the gifts and benefits policy, and online publication of gifts and benefits register.
Other recommended changes included annual fraud awareness training for all staff and training in procurement processes, including approach to market, tender evaluation, declarations of interest, and contract management.
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