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Are procurement rules too hard to follow?

A volley of audits were released last week as auditor-general Ian McPhee handed over the role to Grant Hehir. Among those audits was one that looked at limited tender procurement, which puts agencies at risk of spending too much and has the potential to unfairly exclude some of their potential suppliers.

The report repeats several previous recommendations from ANAO that federal entities generally need to use competitive procurement processes more often than they do.

The auditors ran the ruler over three different federal agencies: the Australian Customs and Border Protection Service (ACBPS), which now exists in name only ahead of the emergence of Australian Border Force next month, along with the Department of Foreign Affairs and Trade and the Department of Human Services.

The report found all three were “reasonably familiar” with the procurement rules, as one would expect, and this was reflected in their own in-house guidance.

The audited procurements showed public servants did not always follow that guidance, and the reason for going to a limited tender was not always recorded. According to the report summary:

“The ANAO observed gaps in the planning of procurements in each of the audited entities. In addition there were instances in ACBPS and DFAT, where either no justification was provided, or the recorded justification for limited tender procurements did not meet the conditions for limited tender specified in the CPRs.”

Only two-thirds of 51 high-value procurements that were examined included “appropriate justification” for going with a limited tender.

Earlier planning is encouraged to get better outcomes in terms of the key principles underlying government procurement: a level playing field for prospective suppliers and the best value for tax dollars. The audit suggests the act of estimating costs as early as possible will inform better decisions on what kind of procurement process to use.

Evidence like quotes, correspondence with potential suppliers and evaluation reports to support claims of value for money was lacking in some cases. Proof that expenditure was approved before deals were struck with suppliers was available for only 74% of procurements.

The audit also reveals contract information is still reported inaccurately on AusTender even after this was, again, highlighted in previous ANAO reports. Of 155 AusTender contract notices reviewed, 45 were misreported and just 41 correctly listed all the basic details of the contract and were published within the mandatory 42-day timeframe. This led the audit office to recommend:

“… that entities review their reporting arrangements, including quality checks, in order to improve the accuracy and timeliness of contract information reported on AusTender.”

The three entities subject to the most recent audit all agreed with that and the second recommendation:

“To assist delegates to make more informed decisions that support the achievement of value for money and increase compliance with the CPRs when conducting limited tender procurements, the ANAO recommends that entities review, and where necessary strengthen:

a) pre-approval compliance assurance mechanisms; and

b) supporting documentation including the estimated procurement value, the justification for using limited tender and how the procurement represented value for money in the circumstances.”

Given the CPRs have not changed much in ten years, ANAO’s view is that “it is reasonable to expect that entities would have developed sound practices to support a consistently high level of conformance” with them. But doing procurement by the book remains an “ongoing challenge” for many public servants, and according to the report:

“This is due, in part, to the extent to which entity officers are involved in procurement (which varies significantly depending on the frequency they undertake procurement) and follow available advice. Entities also face the prospect that officials may try to save time and effort by avoiding open tender processes which can be perceived as onerous — without appropriate regard for the impact on suppliers and potential savings which may arise had more competitive processes been applied.”

Customs said nothing in response to the audit beyond agreeing with the recommendations.

DFAT said it had commenced “significant procurement reforms” on July 1, 2014 that centralised responsibility for compliance with procurement rules including reporting in its newly established Contracting Services Branch, and established a new procurement policy framework. As is common with such responses, it respectfully suggests that while the auditor-general’s report is welcome, it is perhaps no longer relevant and it’s all under control:

“DFAT considers that the reforms introduced to date have addressed many of the issues identified in this audit but as a matter of good practice will continue to review and refine its procurement policies and practices to ensure compliance with the CPRs.”

Similarly, the Department of Human Services said a “a range of … enhancements” to the ‘ESSentials’ e-procurement system that address some of the issues found by ANAO are on the way or already complete. It will also put more emphasis on limited tendering in training and guidance material, and introduce something called ” an inflight verification action” that will allow for “a centralised, manual review of all contract notices against key criteria prior to batch upload”.

Read more at The Mandarin: Tom Burton: Abbott’s new procurement game changer

Author Bio

Stephen Easton

Stephen Easton is a journalist at The Mandarin based in Canberra. He's previously reported for Canberra CityNews and worked on industry titles for The Intermedia Group.