Procurement is big business and commits the Australian Government and taxpayers to tens of billions of dollars every year. Procurement accounted for more than $80 billion in committed value in 2021-22, with the Government awarding more than 90,000 contracts to more than 12,000 businesses for a hugely diverse range of goods and services.
The five biggest consulting firms (Accenture, KPMG, Deloitte, PWC and Ernst & Young) secured nearly $2 billion in government contracts in the 2021-22 financial year, comprising more than $1.6 billion in new contracts as well as more than $300 million in contract variations or extensions.
In four of the five reports by the Australian National Audit Office (ANAO) considered in this inquiry, there was noncompliance with the Commonwealth Procurement Rules (CPRs). Especially significant were consistent failures to demonstrate value for money, conduct procurements in line with ethical requirements or keep adequate records, and substandard contract management.
Put plainly, the Commonwealth has serious commitment issues. AusTender is no AusTinder and it needs reform. Public servants need to get far more comfortable and skilled with playing the field and sharpening their pencils on suppliers, even if this leads to difficult conversations and rejection.
This report draws on evidence from the audit reports, and also from procurement practitioners, as well as the context of similar findings over recent years to make 19 recommendations both to the audited entities and to Finance as the 'steward' of the procurement framework.
The rules are not onerous. Simply put, the guiding principle is that agencies should be able to demonstrate that they have achieved value for money for the taxpayer, by following the CPRs which are set by the Department of Finance (Finance). There is a lot of flexibility for agencies to determine how they will conduct their procurements and determine what 'value for money' is in light of their circumstances. But this flexibility brings added complexity and an increased risk of non-compliance.
Systemic problems were identified hence the Committee has recommended major changes are needed to get better value for money for taxpayers.
The Committee recommendations include that:
- Panels have become an uncompetitive rort and it needs to stop! A growing share of procurement is occurring from suppliers listed on ‘Standing Offers’ or Panels. Yet too often this is one quote or limiting or stifling competition and value for money. Limiting competition via panels has been particularly used to advantage the Big 4 consulting firms. The rules should be changed to make clear that: sole-sourcing is not cool and multiple quotes should be obtained; a separate value for money assessment must still be undertaken; and panels should be refreshed more often.
- Better Match-making by Tarting up AusTender! It should be clear how many quotes were sought, even when procuring from a Panel, and why a contract was amended of varied. Finance need to exercise greater curatorial oversight on AusTender, making sure data is properly structured and accessible.
- Take a broader view of what you do! Procurement is more than a conveyor belt trucking Commonwealth money out, and goods and services in. The current definition should be updated to reflect modern, professionalised practices including more active management of supply chains and markets to maximise value for money.
- Value for money, always, no exceptions! Sometimes things are urgent – but value for money still applies. Clause 2.6 is not a magic spell – agencies still need to keep records and ensure value for money.
- Take a good hard look at yourself! Internal Audit Committees should increase their scrutiny of procurement controls, and provide more assurance over major, complex or risky procurements.
- One in, all in! All Commonwealth Corporate entities should be subject to the CPRs, reversing the current onus where entities like the NDIA are excluded which makes no sense.
- It’s time to re-professionalise! Finance must address the lack of procurement expertise and capability within the Australian Public Service (APS) by prioritising the development of a procurement professional stream in the APS, and by updating the procurement framework to match the development the procurement profession has undergone outside the public sector in recent years.
- Finance needs to lead! Finance is the system steward and regulator – so own it! To be effective, Finance needs to have more clue what’s actually happening in the system. That doesn’t mean being accountable for every procurement, but it does mean collecting more and better information about agencies' compliance with the CPRs to give it an accurate picture of how the procurement framework is operating. Requirements need to be skilfully crafted so they’re not ‘red-tape’ but force self-reflection and permit external analysis.
Various recommendations are also directed specifically at individual agencies.
This report is the latest in a conga line of reports addressing aspects of procurement but this time recommendations for systemic change are made. In a time of rising prices and tightening budgets, the Australian public deserves no less.
I would like to thank all inquiry participants and witnesses for assisting the work of the Committee and Committee members for their participation in and engagement with this important inquiry. I would also like to thank the superb Committee secretariat for their diligence and professionalism.
Julian Hill MPChair