The Joint Committee of Public Accounts and Audit, as
prescribed by its Act, examines all reports of the Auditor-General, and reports
the results of the Committee’s deliberations to the Parliament. This report
details the findings of the Committee’s examination of two performance audits
selected for further scrutiny from nine audit reports presented to Parliament
by the Auditor‑General between February and May 2012.
The Committee focused its inquiry on government procurement,
an area of public spending which has been of ongoing interest to the Committee.
In 2010–11, Australian Government agencies entered into over
79 000 contracts for property and services valued in excess of $32.6 billion.
Under the financial framework, agencies must ensure each procurement delivers
the best value for money, using public resources in a way that is efficient,
effective, economical and ethical.
Last year the Committee reviewed the Auditor-General’s
report on direct source procurement, making a range of recommendations how
value for money procurement could be better supported within government. The
Committee has now looked at two other areas of government procurement:
processes—specifically examining the tender used to procure the Australia
Network broadcasting service; and
2. The establishment and use of procurement panels.
reviewing the ANAO’s audit of the administration of the Australia Network
tender process, the high costs of this tender’s failure has important lessons across
all agencies that might be applied to future procurements.
A key lesson highlighted by the Auditor-General’s report is
that clarity around the decision-making processes for a tender is essential—particularly
for tenders involving multiple ministers or departments. In the case of the
Australia Network, it took almost five months for issues around the approval
process to be resolved. If the decision maker had been documented at the start
of the process, the lengthy delays and associated issues that affected the
tender might have been avoided. On this point, we suggest that public
documentation of tender approval processes could be a way of avoiding similar
problems in the future.
Other key issues discussed in the Auditor-General’s report on
the Australia Network tender process concerned the handling of confidential
tender information. The Committee heard that standard practices for handling
and distributing sensitive information were not followed, leading to a wider
distribution of information than was desirable. The Committee believes there
may be benefits from further guidance being provided to staff involved in
future tenders about when and how tender information should be disclosed to
ministers, ministerial staff, and other departmental staff.
While the responsibility for the problems found in the audit
report rests with the parties involved, the Committee considered that lessons
from the Australia Network tender process could be shared more broadly and has
therefore made a range of suggestions for improvement to future training
The Committee also examined the practice of government
agencies using panel arrangements to obtain efficiencies in procurement.
Procurement panels involve agencies conducting an initial procurement process
to establish a panel of suppliers, and then undertaking individual procurements
from the panel on an as-needed basis. The Auditor-General’s report found that
while agencies generally had sound practices for initially establishing panels,
the performance was less satisfactory when it came to selecting suppliers from
the panel to undertake work. In particular, the Auditor-General noted that
agencies needed to improve their documentation of value for money assessments.
The Committee was disappointed to learn that many of the issues
that came up in this audit report had previously been identified in internal
audits by agencies, suggesting these findings had not been adequately followed
We were, however, pleased to hear that the Finance Department
is taking a more active role in helping agencies to improve their compliance
with financial management obligations. The Committee also supports the role of
Central Procurement Units within agencies, which can serve as the link with
Finance and take a proactive role in assisting procurers.
Another point made in the Auditor-General’s report is that
agencies should be performing evaluations of the use and effectiveness of their
procurement panels at appropriate stages of their lifecycle. The Committee
supports this point, and has asked the audited agencies for an update on how
they are implementing the Auditor-General’s recommendation, including the
timelines in which evaluations will be undertaken.
Finally, the Committee examined the cooperative use of
single panels by multiple agencies, a practice known as ‘clustering’ or
‘piggybacking’. These arrangements are becoming increasingly popular as
agencies seek efficiencies in procurement. At one of our hearings we learned
that while clustered panels can lower costs, particularly for small agencies,
care is needed to make sure the services being supplied are actually
appropriate for the needs of each agency. Government also needs to be aware of
the perspective of suppliers, as there is a perception that large, multi-agency
panels may disadvantage small and medium enterprises (SMEs). The number of SMEs
on panels is not currently being monitored by departments, so this is an area
that warrants additional attention in future.
The Committee will continue to keep a close eye on
government procurement activities to ensure that public money is being spent in
a way that ensures value for money and compliance with the government’s
financial framework regulations.
Rob Oakeshott MP