Confidentiality claims overstated in half of secret government contracts

By David Donaldson

September 28, 2016

Public servants are getting better at allowing transparency in government procurement, says federal auditor-general Grant Hehir — but there’s still a big non-compliance rate on confidentiality rules.

Only 3% of government contracts were prevented from being released by confidentiality provisions in 2015, the lowest ever, according to a report by the Australian National Audit Office.

When ANAO started its annual examinations — in 2002 more than 25% of government contracts were reported as being subject to confidentiality provisions.

The annual audit, of which this is the nineteenth, “is based on the principle that parliamentary and public access to government contract information should not be prevented, or restricted, through the use of confidentiality provisions, unless there is sound reason to do so”, explains ANAO.

It appears the report is having the intended effect of reducing the number of contracts unnecessarily being hidden from the public by overzealous public servants.

ANAO Number of government contracts containing confidentiality provisions by year.
The number of contracts containing confidentiality provisions has been falling since the annual audit was introduced.

Despite this improvement, almost half of those marked confidential did not comply with guidelines — either confidentiality provisions were used inappropriately (15%) or the contract was misreported as containing confidentiality provisions despite having none (33%), says ANAO.

Official guidance states that the entity’s assessment of the supplier’s claims and the reasons for agreeing to the inclusion of confidentiality provisions should be documented. But for the majority (62%) of contracts tested, the audited entities were not able to provide documentation supporting their assessment of suppliers’ claims against the Confidentiality Test and reasons for agreeing for the information to remain confidential.

But again, while compliance in half of all cases is a poor result by most standards, it’s still a significant step up from when ANAO started its investigations. Whereas 52% of cases used confidentiality provisions correctly in 2015, this number sat at a paltry 6% back in 2002. On this measure too, last year’s effort is the best recorded by the auditor so far.

The number of contracts misreported as being sensitive has fallen.
The number of contracts misreported as being sensitive has fallen.

Processes to capture information about basic contract details and confidentiality provisions on AusTender were also inadequate. Only 19% of contracts sampled were accurately reported on the online database. Entities were also failing to link to AusTender from the home page of their websites as required.

The auditor, as ever, thinks public servants need to do better.

“Despite the low proportion of contracts reported as containing confidentiality provisions, specific confidentiality provisions in contracts have continued to be incorrectly used and reported,” says ANAO.

“The result of this audit and previous audits indicate that entities need to do more to improve performance with respect to assessing and reporting on the use of confidentiality provisions.”

Given the “persistent poor compliance”, ANAO thinks the Department of Finance “could consider its regulatory stance to ensure that individual entities provide quality information to the parliament.”

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