Audit: Queensland procurement lacks transparency, echoing ANAO concerns

By Stephen Easton

Thursday February 22, 2018

The Queensland Audit Office has made very similar criticisms to its federal counterpart: agencies are failing to clearly and consistently report on the details of where they spend money with the private sector.

The government’s commitment to being open and transparent about its  spending is clearly stated, but the public service is not delivering on it, according to the report.

Queensland public service contracts for essential goods and services are worth over $14 billion per year in total.

The state auditors planned to look at “the extent and appropriateness” of the use of commercial confidentiality provisions in government contracts.

“However, we were unable to do this because the five audited departments’ contract registers lacked sufficient information,” the report states.

This echoes concerns raised by the federal auditor-general about how agencies record and classify their contracts in the Commonwealth’s AusTender system.

The federal auditor-general looks at the prevalence of confidentiality provisions in Commonwealth contracts on a yearly basis and in 2016 found their use had been decreasing, although they are still often included when they shouldn’t be.

The Queensland audit team examined five departments and found “only a few examples of contracts containing specific confidentiality provisions” — but the reason is not particularly impressive.

“This was because the departments did not record whether contracts used specific provisions,” the audit report states.

“And for those we did identify, the departments did not document the reasons for including them — meaning there is a lack of evidence that staff have conducted an assessment to justify the need.

The audited departments were Premier and Cabinet; Housing and Public Works; Environment and Science; Natural Resources, Mines and Energy; and State Development, Manufacturing, Infrastructure and Planning.

Not one had a complete record of all their contracts, according to the report.

“The departments’ deficiencies in contract record keeping means that no one can determine the extent of the use of confidentiality provisions in Queensland Government contracts,” the auditors note.

The guidance of the state’s chief procurement adviser about what information about contracts agencies should disclose is pretty clear. But “where and how these disclosures should occur” is not so clear.

“This leads to confusion among agencies on how to discharge their responsibilities,” the auditors contend.

“As a result, a number of the departments we examined are falling short in disclosing awarded contracts in accordance with the Queensland Government’s reporting requirements.”

Out of 90 contracts, the majority had been “partially disclosed” but only 25% were “appropriately” disclosed and 21% were not disclosed at all.

“This is mainly due to incomplete records, multiple systems and, in some cases, a lack of awareness or misinterpretation of disclosure requirements. This, and a lack of data validation, has led to both duplicate and missing disclosures, resulting in unreliable publicly reported data.

“This is exacerbated by confusion in the disclosure guidelines about how and where agencies must disclose contract information. Also, the departments’ ambiguous processes and systems are not fully effective, and prevent them from fully meeting disclosure requirements.

“They are not delivering on the government’s commitment to be open and transparent about awarded contracts.”

The report states the departments “either missed basic details, or reported only transactional value instead of the full contract value” and were in some cases “misinterpreting how confidentiality provisions prevent disclosure” in the view of the auditors.

“Mostly though, we found partial or non-disclosure was more due to incomplete contract records, multiple contract systems and, in some cases, a lack of awareness of disclosure requirements,” the report adds.

The audit office recommends the Department of Housing and Public Works, where the chief adviser sits, improve its guidance and training. Together with the Department of Premier and Cabinet and any other relevant body, DHPW is also asked to work out the best place to report contracts, and the best process, to improve transparency.

The two systems used are QTenders and the Queensland Contracts Directory, data from which is published twice a year on the government’s open data portal.

The third recommendation is to all agencies, and essentially asks them to redouble efforts to follow the guidelines and maintain complete records of all contracts.

Dave Stewart, director-general of the DPC, told auditor-general Brendan Worrall he had “concerns” about the conclusion that there had been “systemic failures of record keeping in the department” in his official response.

He agrees with all recommendations, but says confidentiality provisions that prevent full disclosure are only used sparingly and in line with legal advice.

“Notably, the contract information relating to the Department of Premier and Cabinet sample of contracts reviewed as part of this audit was all disclosed on the Queensland Contracts Directory,” he writes.

All four other departments also agreed to implement the audit’s recommendations.

Last week, the Queensland Audit Office also produced a series of recommendations for how all agencies could tighten up their fraud controls after an audit found weaknesses in the police, fire and emergency, and public safety agencies, as well as Queensland Rail and the Queensland Building and Construction Commission.

“None of the agencies we audited is effectively managing fraud risk, leaving themselves potentially exposed to fraud,” said that report, published last week.

“Agencies have not applied the findings from our previous two reports on fraud risk management.

“We are still observing gaps in governance, fraud identification, detection, and prevention. It is particularly concerning that agencies are not taking the opportunity to proactively manage fraud risk as the incidents and attempts of fraud become more prevalent and sophisticated.”

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