Audit Report No.29 2011–12
Chapter 2 Administration of the Australia Network Tender Process
The Australia Network is an overseas television broadcasting service designed
to ‘promote Australia's image in the Asia–Pacific region’ and ‘provide consular
information to Australians living abroad, particularly in times of crisis’.
The service broadcasts in more than 44 countries across Asia, the Pacific and
the Indian subcontinent, and includes a range of programs including regional
news, English language programs, international documentaries, lifestyle
programs, drama, sports and children's programs.
Since 2001, the Australian Broadcasting Corporation (ABC) has delivered
the Australia Network service under two sequential contracts with the
Government, administered by the Department of Foreign Affairs and Trade (DFAT).
The most recent of these contracts was won by the ABC through a 2005–06 competitive
Initiation of the tender process
In November 2010, the Government decided that a competitive tender
process would be used to award a new 10 year contract for the continued
delivery of the Australia Network. This decision followed an industry
consultation process, a review of the ABC’s past performance, and a range of
departmental advice. The decision was also in
the context of a Government submission sponsored by the Communications Minister
(Senator the Hon. Stephen Conroy) proposing that the ABC provide the service on
a permanent basis.
Initial advice from DFAT to the then Foreign Minister (the Hon. Kevin
Rudd MP) was that the existing ABC contract should be extended by another five
years, during which time options for either a longer-term contractual
arrangement or further development of the Communications Minister’s submission
would be explored. However, through the
budget process the Department of Finance and Deregulation (Finance) and the
Treasury had indicated that if the service were to continue, a tender process
would be the preferred option in order to ensure value for money. Additional
advice from DFAT indicated that a new tender would enable the development of
more quantifiable KPIs, establish a longer contract period, increase
programming flexibility and give the Government greater scope to use the
service as a public diplomacy tool.
In early 2011, a Tender Evaluation Board (TEB) was formed consisting
of senior officials from DFAT, the Department of the Prime Minister and Cabinet
(PM&C), the Department of Broadband, Communications and the Digital Economy
(DBCDE), Treasury, and Finance. A Request For Tender
(RFT) was released by DFAT on 4 February 2011, attracting tenders from the ABC
and the Australian News Channel Pty Ltd (ANC)—a joint venture of Nine Digital, Seven
Media Group and British Sky Broadcasting. ANC is also the owner and
operator of Sky News Australia.
Amendment and termination of the tender process
While DFAT had originally planned a six month tender process, in June
2011 significant changes were made to the tender process including: adding a
new evaluation criterion to the RFT; replacing the Secretary of DFAT with the
Communications Minister as the approver for the tender; and allowing the
Communications Minister to make a decision that did not reflect the recommendations
of the TEB. The ABC’s contract was extended by six months to 8 February 2012 to
enable the service to continue while the amended process was completed.
The Australia Network tender process attracted a high degree of media
interest over the course of 2011. Most significantly, a newspaper article on 17
October 2011 contained specific references to the TEB’s August 2011
supplementary tender evaluation, and a further newspaper
article on 24 October 2011 referred to the ABC’s 2010 Performance Review,
which had not been publicly released.
On 7 November 2011, the Communications Minister announced that the
Government had decided to terminate the tender process on public interest
grounds ‘due to significant leaks of confidential information to the media’. The Government also announced that it had
asked the Australian Federal Police (AFP) to investigate the leaks, and the
ABC’s contract was extended by another six months (to August 2012) while a
decision was made on the long term arrangements for the service.
On 5 December 2011, the Government announced that the Australia Network
service would be removed from further contestability and be provided by the ABC
on a permanent basis.
Table 2.1 below summarises the key sequence of events in the
Table 2.1 Key events in the 2011 Australia Network tender
4 February 2011
Request for Tender announced on AusTender
25 March 2011
4 May 2011
Tender Evaluation Board submitted its recommendation to
the Secretary of DFAT as the decision-maker for the tender.
6 July 2011
The Government requested tender participants to submit
amended tender documentation relating to an additional evaluation criterion,
and changed the approver from the Secretary of DFAT to the Communications
27 July 2011
Closing date for amended tenders.
27 October 2011
The Australian Federal Police requested to investigate
the leaking of tender information (not announced until 7 November 2011).
7 November 2011
The Government announced that the tender process had
been terminated and that the Australian Federal Police was conducting an
investigation into alleged leaks.
5 December 2011
The Government announced that the ABC would provide the
Australia Network service on a permanent basis.
National Audit Office
Expenditure of public money by Australian Government departments is
subject to provisions of the Financial
Management and Accountability Act 1997 (FMA Act).
Under the associated FMA Regulations, proposals to spend public money must be
considered and approved by an appropriately authorised party before contracts
can be entered into. An approver must be satisfied that a spending proposal is
‘an efficient, effective, economical and ethical’ use of Commonwealth resources
that is ‘not inconsistent with the policies of the Commonwealth’.
The Commonwealth Procurement Guidelines (CPGs)—which were recently
revised and renamed as the Commonwealth Procurement Rules—provide the core
procurement policy framework for departments operating under the FMA Act. The
CPGs are issued under the authority of the FMA Regulations, and must be taken
into account by Ministers and their agency officials when performing duties
related to procurement. However, the ANAO notes
that ‘the CPGs are not exhaustive and it is the responsibility of agencies to
manage procurement processes in a way that is proportional to the risk and
sensitivity of the various procurements in which they are involved’.
Developments taking place since the tender’s termination
The Australia Network tender process attracted considerable parliamentary
interest. The Auditor-General received two requests to examine the tender
process from the Deputy Leader of the Opposition; and one request from the
Communications Minister. The Communications
Minister indicated in his request that the ANAO’s comments on aspects of the
tender process may help future tender processes to be as robust as possible.
These requests, and the broader parliamentary and public interest, resulted in
the Auditor-General’s performance audit being announced on 24 November 2011.
On 2 April 2012, the AFP finalised its investigation into the leaks to
the media. The AFP informed a Senate committee in May 2012 that the
investigation ‘did not identify the person or persons responsible for
disclosing the material’.
The ANAO Audit
Audit objective and scope
The objective of the audit was to report on the administration of the
Australia Network tender process and to identify lessons learned from the
conduct of the process to inform future procurement activities.
The audit examined the administration of the tender process, and also
considered the advice provided to government and the manner in which government
decisions were implemented, including compliance with procurement requirements.
As the Government played a key role in tender decision-making, and took into
account advice from several departments and advisors engaged by them, the audit
report included references to the advice received in several areas.
The Auditor-General also took the ‘extraordinary step’ of including in
the report references to briefings and submissions provided to Cabinet; Cabinet
decisions; the deliberations and recommendations of the TEB; and complaints
about the tender process. These references were
considered to be ‘central to understanding the issues involved in the tender
process and to provide context for the audit findings, conclusions and lessons
learned’, and their inclusion was considered to be not contrary to the public
At the time of the audit, the AFP’s investigation into the possible
unauthorised disclosure of confidential tender information was underway. The ANAO
considered these matters to be outside the scope of its audit, although DFAT’s
arrangements for the handling of tender information were examined.
Overall audit conclusion
Although the audit found that the administrative arrangements for the
tender were ‘in the main, effective’ and in line with the CPGs,
the ANAO concluded that the ‘manner and circumstances’ in which the tender
process was conducted ‘brought into question the Government’s ability to
deliver such a sensitive process fairly and effectively’.
The following factors contributed to this conclusion:
n The differing views
within government, including at the ministerial and departmental levels, about
the decision-making process for the tender. The report noted that ‘there was no
formal documented decision of government in relation to the approval process in
the early stages of the tender. Rather, there were clear indicators of
different views being held’.
n Issues raised as a
result of the Government’s changes to the tender process while it was in
progress, including changing the nominated approver and including an additional
n Handling of information
in briefings prepared for Ministers, which ‘should have had greater regard to
the confidentiality and sensitivity of the information being provided for what
was still a “live” tender process’. Information was therefore ‘not as tightly
controlled as it should have been’. Compliance with the
tender’s probity arrangements and restriction of confidential tender
information to only those who ‘have a demonstrable need for such specific
information’ would have achieved better control of confidential information.
The ANAO further noted that the Australia Network tender process ‘presented
the Australian Government in a poor light and cost the two tenderers—the ANC and
the ABC—time and money’.
‘Lessons learned’ for future procurements
In light of the tender process’s termination, the audit report did not
make any specific recommendations. However, in fulfilling
its objective to identify ‘lessons learned’ from the conduct of the tender
process, the report raised the following three issues:
n Firstly, it is
important that, where it is intended that Ministers or Cabinet have a formal
role in a tender process, that this be made clear; departments have a role in
assisting government to be explicit about this.
n Secondly, information
security is critically important to effective tender arrangements and there are
accepted ways within government of managing this, namely, by not circulating
confidential tender information to any departmental officers, Ministers or
their staff, unless they are part of the tender decision‐making process or have a demonstrable
need for such specific information.
n Finally, all parties
involved in the management of a tender process should have regard to the
importance of adhering to conventional procurement arrangements and effectively
managing the range of risks involved, given they can change significantly over
In addition, the report suggested that mitigation of perceptions of
conflict of interest should be considered when Ministers are performing the
role of tender approvers. Several other
suggestions for improvements in the tender process were also noted in various
sections throughout the report.
The Committee’s review
The Committee held a public hearing on Wednesday 27 June 2012 with the
n Australian National
n Department of
Broadband, Communications and the Digital Economy
n Department of Foreign
Affairs and Trade
n Department of the
Prime Minister and Cabinet
The Committee took evidence on the following issues:
n The decision to go to
n The clarity of the
n The transparency of
the evaluation criteria
n The handling of
n Conflict of interest
n Complaint handling processes
arrangements for the service
The decision to go to tender
In November 2010, Cabinet decided that the Australia Network service
would be put to a competitive open tender process ‘to ensure the best possible
service in return for its investment’. As part of the audit
report’s background and context, the ANAO included a record of events leading
up to this decision.
The audit report noted that the majority of submissions received during
a June–July 2010 industry consultation process did not support an open tender
for the service, and considered that ‘if the purpose of the Australia Network
was to act as a tool for public diplomacy, the service should remain with the
ABC as the national broadcaster’. As noted above, in a
briefing to the then incoming Foreign Minister on 1 October 2010 on the
outcomes of the consultation process, DFAT recommended that the ABC’s existing
contract to deliver the Australia Network service be extended for a further
five years, rather than being put out to tender. The intention would be to then
explore options to either move to a longer-term contractual arrangement, or to further
develop the submission sponsored by the Communications Minister to permanently
transition the service to the ABC.
In December 2011, after the Australia Network tender had been terminated
and the future of the service was under consideration, the audit report notes
that DFAT (and several other departments) did not support a submission from the
Communications Minister that the service should become an ongoing function of
the ABC, and instead favoured a competitive open tender process.
The Committee sought to clarify the reasons for this apparent shift in DFAT’s
advice towards support for a tender process. DFAT informed the Committee that,
in 2010, it had favoured a rollover of the ABC’s contract by a further five
years in order to ‘save time and money’. This position was supported
by a performance evaluation which had found that the ABC had met or exceeded
most of the contract’s Key Performance Indicators over the previous five years.
DFAT explained that it had never recommended a permanent transition of the
Australia Network to the ABC, but had only supported a five-year contract rollover.
DFAT argued that a tender process would be ‘the best way of getting value for
money’ from the service, rather than the proposed permanent transition to the
Clarity of the tender approval process
The ANAO found that, over the first five months of the Australia Network
tender process, there were unresolved issues concerning the approval
arrangements. The report noted that
‘key Government Ministers did not hold a common view of the approval processes including
any role for government in being consulted on, agreeing to, or making the
decision in relation to the preferred tenderer’. This situation eventually led
to an amended RFT being issued, which extended the tender process a further
five months—adding to costs—before it was finally terminated due to leaks of
confidential information to the media.
In its response to the draft audit report, PM&C disputed the Auditor-General’s
finding that there was a ‘climate of uncertainty’ around the tender approval
The Department of the Prime Minister and Cabinet considers
that the report inaccurately describes the tender as being conducted in a
climate of uncertainty as to the decision‐making
process. The Prime Minister had advised on 25 January 2011, before the tender
was released, that the tender be brought back to Cabinet for decision. Any
delays to the tender in order to implement that decision did not arise from
uncertainty or lack of clarity.
At the public hearing, PM&C stood by these comments, reiterating the
department's view that there was no uncertainty about the tender approval
process because ‘the Prime Minister had made clear—and as the report indicates
ministers had agreed in October—that it was to come back to Cabinet’.
DFAT, on the other hand, indicated that it agreed with the Auditor-General’s
findings rather than PM&C’s assessment of the situation.
Later in the hearing, PM&C acknowledged that there was ‘a divergence
between what had been in correspondence between the Prime Minister and the
Foreign Minister and what was occurring in the tender process’.
To assist the Committee’s inquiry, the ANAO provided a table summarising
the report’s findings concerning the decision-making arrangements for the
tender process. A copy of this table can
be found in Appendix C.
One of the three key lessons that the audit report identified in
relation to the Australia Network tender process was that ‘it is important
that, where it is intended that Ministers or Cabinet have a formal role in a
tender process, that this be made clear’ and that ‘departments have a role in
assisting government to be explicit about this’.
At the hearing, the Auditor-General expanded on this point, explaining
that in this instance it would have been ‘very helpful’ and may have avoided
some of the subsequent difficulties if the departments involved had insisted on
the Government making a clear decision about the tender approval process.
The Auditor-General noted that it is now ‘not that common for a complex policy
challenge to be handled by one agency’, and that better documentation of
approval processes is one way in which management of such challenges ‘across
borders’ could be improved:
I am just trying to make the point that if, as part of our
submissions to government, we can be quite clear that we would wish them to
take a decision about the approval process and document that, minute that, so
there is clarity amongst ministers and clarity amongst departments, that would
be a good thing.
When asked whether DFAT had made changes to any guidelines or processes
in response to the audit findings, DFAT indicated that it had done everything
possible to clarify the tender approval process. DFAT’s Secretary stated:
There is nothing more humanly possible that I or anyone in
the department could have done to assist the government in clarifying what was
not clarified. And there is nothing that I have learnt from this exercise that
I did not know before, in terms of that particular issue.
PM&C indicated that it shared the Auditor-General’s view of it being
desirable and important that government decisions are well documented, and that
one of the department’s core ongoing functions was to assist ministers and the
cabinet secretary to ensure that cabinet minutes are comprehensive and well
Transparency of evaluation criteria weightings
The audit report noted that the throughout both the initial and amended Australia
Network tender process, tenderers were not given any guidance about the
relative importance given to the evaluation criteria that were used to assess
the tenders. The order of importance
given to the evaluation criteria for the initial tender was agreed as part of
the Tender Evaluation Plan, approved after the RFT had been released.
The ANAO suggested that ‘clearly articulating the order of importance of the
evaluation criteria would have assisted tenderers in preparing their tenders’.
At the hearing, the Auditor-General advised the Committee that there was
no current guidance for departments about notifying potential tenderers of the
relative importance of tender evaluation criteria. He indicated that while it
was up to agencies to determine whether or not more weighting would be given to
certain criteria than others, in instances where this does occur, its
disclosure would enable tenderers to shape their submissions accordingly and
‘improve the clarity of communication between departments and tenderers’.
The Auditor-General noted that this issue has been raised previously in
other audits, in which tenderers have been sometimes surprised by the amount of
weight given to particular evaluation criteria without any public documentation.
He agreed with the Committee’s suggestion that it could be useful for procurement
guidelines to address this issue, and expressed a willingness to discuss the
point further with the relevant departments.
Handling of confidential tender information
As noted earlier, the Australia Network tender was terminated in
November 2011 on the basis of leaks of confidential tender information to the
media, which were judged to have compromised the tender process.
An investigation by the AFP into the leaks, which was finalised on 2 April
2012, ‘did not identify the person or persons responsible for disclosing the
The audit report makes clear that the audit did not directly examine the
possible unauthorised disclosure of information that was being investigated by
the AFP. However, the audit did
consider the arrangements for handling information by departments, and the
report noted several breaches of protocols which had resulted in ‘unwise’
distributions of confidential tender information to a wide range of ministerial
and departmental officers.
One particular breach of information security protocols documented by
the ANAO concerned the distribution of a draft cabinet submission prepared by
DFAT, which included the recommendations and deliberations of the Tender
Evaluation Board (TEB). At the time, DFAT officers had understood that it would
be Cabinet that would be selecting the preferred tenderer, meaning the
provision of this information in the draft submission to Cabinet was necessary.
The draft submission was circulated to at least two DFAT officials and two
advisors in the Foreign Minister’s office. The draft submission was also
transmitted (over the secure CABNET network) to 30 PM&C officers on a group
email inbox. The audit report notes that although the PM&C officers who
received the email were appropriately cleared to handle Cabinet material,
‘there was not a demonstrable need for them to be informed about the
deliberations and recommendations of a “live” tender process’, and DFAT should
instead have used PM&C’s established protocol of uploading documents onto
the dedicated CABNET database.
At the public hearing, the Auditor-General repeated his view that given
the sensitivity of the information, ‘standard practice’ was that there should
always be a demonstrable ‘need to know’ before material is shared,
and in that the case of the 30 PM&C officers who received the draft
submission from DFAT this need was not apparent.
Early in the hearing, PM&C firmly pointed out to the Committee that,
although it was outside the usual protocols, there was no established link
between this circulation of confidential tender material to departmental
officers—who are regularly trusted to handle cabinet-in-confidence material—and
the unauthorised leaking of information to the media.
PM&C informed the Committee that its protocols for the protection
and circulation of Cabinet materials were ‘long standing’, and that it conducted
regular training and information sharing activities with other departments in
relation to the protocols. PM&C further
explained that DFAT’s method of distributing the draft submission was only a
‘slight departure from standard practice’ and the only significant difference
was that by emailing the document, rather than adding it to the secure database,
there was no audit trail as to which of the 30 officers had actually viewed the
document. It was emphasised that distributing confidential material via the
CABNET email system, while not compliant with PM&C processes, did not
amount to treating it with a lack of security, and it was ‘still quite a secure
way to transmit information in the sense that it is via the secure Cabinet
network and it is only going to people who have the clearances to see material
over that network’.
DFAT acknowledged to the Committee that in retrospect, distribution of
the material could have been ‘tighter’, and in light of the audit’s findings, the
department had reinforced the need to follow the PM&C guidelines.
However, DFAT also pointed out that ‘the most highly and sensitive material’,
including tender material, is put on the CABNET network ‘all the time’, and
that given DFAT’s understanding at that time the distribution of the material
was ‘not unreasonable’.
The Auditor-General’s report suggests that it is the responsibility of
agencies to manage procurement processes in a way that is ‘proportional to the
risk and sensitivity’ of each procurement. This point was
reiterated by the Auditor-General at the hearing, adding that ‘anything in
Australia tending to deal with the media tends to increase the risk quite
significantly and reinforces the importance of having fairly sound and tight
processes around any tender of that kind’. In his closing remarks,
the Auditor-General added that in the case of the Australia–Network, the risk
of confidential information being leaked became higher as the length of the
tender process was extended well beyond the time that was originally
Conflict of interest perceptions
As noted earlier, on 24 June 2011 the Government announced several amendments
to the Australia Network tender process, which included, amongst
other changes, that the Communications Minister would become the nominated approver
for the tender outcome.
The audit report documents a range of advice that was provided by PM&C
and DBCDE in the lead up to this decision, including advice concerning the
possibility of a perceived conflict of interest arising from the Communications
Minister being the tender approver at the same time as holding portfolio
responsibility for the ABC. The Committee took the
opportunity to further question the two departments about this issue at its
DBCDE told the Committee that its advice to the Communications Minister was
that there would be a perception of a conflict of interest in his
appointment as the approver of the tender. DBCDE further clarified that the
purpose of this advice was not to suggest that DBCDE itself perceived a
conflict of interest, but rather to inform the Minister that it was likely that
other third parties, such as the media, might perceive a conflict.
The department explained:
In the circumstances, our advice to the Minister was as is
characterised in the Auditor's report, that regardless of the legal position
that there may be no conflict—which is what I call the reality of conflict—the
perception would still be an issue.
PM&C told the Committee that it had advised government that the
Minister did not have a personal conflict of interest in being appointed as the
tender approver, but that it did not provide advice about possible perceptions.
The audit report noted some lack of clarity at the time of the decision about
whether or not PM&C’s advice that there would be no apprehended bias in the
Communications Minister being appointed as the tender approver had been cleared
by the Australian Government Solicitor (AGS). After initially telling
the Committee this advice had come from the AGS, PM&C clarified that the
additional text concerning the possibility of a conflict of interest had actually
been added after the document had been cleared by the AGS. However, it
was pointed out to the Committee that although the AGS did not provide the
advice, it had been made aware of the proposal under consideration and had not
raised any concerns or objections about it with PM&C.
The Auditor-General agreed with PM&C’s view that it was not
necessary for agencies to obtain a legal opinion on every piece of advice
provided to government. The Auditor-General also
took the opportunity to reiterate the audit report’s suggestion that, in
relation to ministers being appointed as approvers for tender processes in
which their own portfolio agencies may be submitting tenders, ‘any perception
of a conflict of interest could be mitigated by the Government agreeing to
another Minister, or more than one Minister, approving the tender outcome’.
Complaint handling processes
DFAT received a range of complaints during the later stages of the
Australia Network tender process, primarily from the ANC. The ANAO report
identified deficiencies in DFAT’s handling of these complaints, and noted that
the complaints process consequently became a ‘source of frustration’ for the
While DFAT responded to the formal complaints in accordance
with the procedures outlined in the RFT and Tender Evaluation Plan, the
department did not, in all cases, fully appreciate the underlying issues or
nature of concerns raised by the ANC … A greater emphasis on understanding and
clarifying with the tenderer, the nature of their concerns or formal
complaints, would have better positioned DFAT to investigate and address the
The report also suggested that DFAT could have provided additional
information in the RFT that would have assisted tenderers at the beginning of
the tender process to better understand the complaints procedure.
At the hearing, the Committee asked DFAT whether it agreed with the
audit report’s findings, and whether its complaint handling processes had been
reviewed in light of the issues the report had highlighted. DFAT’s response was
We believe that we handled complaints properly. The people
who complained may be unhappy with the response they got, but we are satisfied
that the way those complaints were handled was in fact proper.
Permanent arrangements for the service
As noted above, the Government announced on 5 December 2011 that the
Australia Network service would be provided on a permanent basis by the ABC, as
Australia’s national broadcaster. The Government had previously
announced that the ABC’s existing contract would be extended by another six
months—until August 2012—while the long term contractual arrangements were
The ANAO report indicated that the implementation model for the new
operating arrangements was expected to be determined in ‘early 2012’.
At the time of the hearing in June 2012, there had still been no announcement
of this model. The Committee asked PM&C to provide an update on the
progress that had been made in determining the ongoing administrative
PM&C informed the Committee that it was coordinating
whole-of-government advice on the options for implementing the ABC’s permanent
delivery of the service, and that this was being done in consultation with the
ABC and with other departments, including DFAT and DBCDE. PM&C further
advised that the matter is ‘still under consideration by government’, and no
precise timeframe for its conclusion had yet been established.
The ANAO’s report suggested that in order for the Commonwealth to preserve
or incorporate powers previously contained in the Australia Network contract, changes
to the Australian Broadcasting Corporation Act may necessary, or desirable.
However, when asked about this suggestion, DBCDE advised the Committee that no
changes to the legislation were anticipated.
The Committee acknowledges that, in terms of administrative
arrangements, the Australia Network tender process was, for the most part,
handled in accordance with the relevant guidelines (the CPGs). It is clear that
efforts were made by the departments involved to run a robust tender process
and to clarify issues wherever possible, in the context of a difficult tender environment.
However, the costs of the eventual termination of the Australia Network
tender process were substantial, both in dollar terms and in reputational
terms. The ANAO report notes that over $1 million of taxpayers’ money was spent
by DFAT in administering the tender process and by the ABC taking part in it.
Given these costs and impacts it is important that the lessons from this
tender, as identified by the audit report and Committee’s investigation, are
taken on board to improve future outcomes. These lessons include:
n clarity of tender
processes—including decision making;
n handling of
n conflict of interest
n risk management in
It was unfortunate that it took nearly five months from the release of
the RFT for final agreement to be reached between ministers and departments
about who would be approving the outcome of the tender process. As documented
in the audit report, the issue was only resolved after a media article in April
2011 indicated publicly, for the first time, that the tender would be approved
by the Secretary of DFAT. Disagreement about the approver, and the amendments
to the tender that resulted from it, contributed to lengthy delays in the
process, which, as the Auditor-General noted in his evidence, increased the
risk of the process being compromised. The Committee considers that these
delays could have been avoided if the original decision for the tender to be
approved by Cabinet had been documented and well communicated. Public
disclosure of the approval process at the outset of a tender process would
reduce the risk of uncertainty even further.
The Committee considers that clarity of the tender process would have
also been improved if the order of importance of the tender evaluation criteria
was disclosed. This would have improved the transparency of the tender
evaluation process and allowed tenderers to supply appropriately targeted
information. Despite this not being common practice, the Committee considers it
to be good practice.
The Committee agrees with the ANAO’s finding that it was ‘unwise’ for confidential
tender information to be distributed as broadly as it was Although there is no
suggestion that the media leaks which led to the tender’s termination were
caused by this, it is clear not only that the risk of leakage increases the more
information is distributed, but also that the investigation by the AFP into the
possible source of the leaks would have been hampered by the relatively wide
distribution of confidential information. At a minimum, the standard procedures
for distribution of draft cabinet information should have been followed.
The Committee also considered when, if ever, it is appropriate to share
confidential tender information with departmental and ministerial staff who do
not have a direct role in a tender process. The Probity Plan for the Australia
Network tender forbade any such disclosure without consent from the Chair of
the TEB. The audit report notes
the importance of live tender information being ‘closely held’ and any
provision to others being made only on a ‘demonstrable need to know’ basis with
appropriate authorisation from a senior departmental officer.
However, key departments put to the Committee that, in this case, the disclosure
of tender details to a small number of departmental and ministerial staff was considered
necessary, as it was in the process of briefing Cabinet Ministers who were at
the time thought to be considering the tender outcome.
The problems with handling of sensitive information highlighted above
may have been hard to avoid given the rapidly changing and indeed confusing
environment. However, the Committee considers that there may still be benefits
from further clarity and guidance about when and how tender information may be
disclosed to ministers, ministerial staff, and departmental staff.
The perception of a conflict of interest in the Communications Minister
being responsible for the final approval of a tender process involving the ABC
was another issue considered in the audit report. The Committee agrees with the
Auditor-General that when possible conflicts of interest—whether perceived or
real—have been identified, it is important to manage the risks and consider
ways to mitigate them.
In any procurement process, it is important that risks are managed in
proportion to the sensitivity of their environment. It is important that departments
monitor the environment in which they operate and amend, potentially
strengthening, their management strategies as the level of risks increase. Additional
effort by the relevant departments to go beyond the basic guidelines to, for
example, require departmental officials to sign confidentiality undertakings,
could have also been warranted in some circumstances.
Finally, it is concerning that some of the audit’s key findings have not
been well received by the departments. The audit report provides an important
resource for identifying lessons to prevent similar problems from occurring in
the future, and the Committee fully supports the Auditor-General’s findings.
Responsibility for the problems found in the audit report squarely rests
with the parties involved. However, the Committee considers that lessons from
this tender process could also be disseminated more broadly.
The Committee suggests that the Government, through the Department of
Finance and Deregulation, consider how the identified lessons from the Australia
Network tender process might be disseminated more broadly and potentially
included in future enhancements to whole-of-government guidelines. Particular
issues to consider include:
n Publicly disclosing
the approval process at the start of a tender;
n Disclosing in
Requests For Tender any rankings of evaluation criteria;
n Improving the clarity
of when and how tender information may be disclosed to ministers, ministerial
staff, and departmental staff;
handling perceived conflicts of interest; and
n Improving the
transparency of complaint handling processes.