Julian Hill (Bruce, Australian Labor Party) Share this | Hansard source

On behalf of the Joint Committee of Public Accounts and Audit, I present the committee's report entitled Report 465: Commonwealth procurement.

Report made a parliamentary paper in accordance with standing order 39(e).

by leave—It is a lovely way to start a parliamentary week: to present a tabling statement on a public accounts report, and you'll be pleased to know I crossed a lot of it out! But I think a few statements are in order. The report sets out the findings of the committee's inquiry on Commonwealth procurement based on three Australian National Audit Office reports concerning this matter. The context for this is the committee's decision to undertake thematic inquiries into important matters of public administration, and of course procurement is core business for all Commonwealth departments and agencies. So, by clustering a number of reports, we're able to identify similar themes and problems and share those learnings more broadly across the Public Service. I will turn briefly to, and make a couple of comments on, each of the three reports we considered.

Chapter 2 of the report discusses the committee's findings on audit report No. 1, concerning Airservices' procurement of the International Centre for Complex Project Management, ICCPM, for the OneSKY program. The Auditor-General noted at the committee's public hearing that Airservices' approach to contracting the centre was 'ineffective in providing value-for-money outcomes'. Airservices made extensive use of ICCPM to assist with the delivery of OneSKY, with 42 engagements of employees and subcontractors through 18 procurement processes. But each of those 42 engagements was sole-sourced. Airservices had also routinely failed to adhere to its own procurement policies and procedures, and concerns were raised about Airservices' management of probity risks for this procurement. The committee concluded that Airservices procurement management was problematic on a number of fronts, and made a series of recommendations to maintain scrutiny of the issue. The committee also recommended that the Department of Finance should consolidate procurement guidance for corporate Commonwealth entities to ensure more strict application of the Commonwealth Procurement Rules.

It is important to note that a companion audit report, No. 46, Conduct of the OneSKY tender, was tabled by the Australian National Audit Office while the committee was conducting its inquiry and which was, to be fair, much less awful and showed effort to respond to the first audit. However, given the ANAO's findings from this audit, including that it was not clearly evident that the successful tender offered the best value for money, we recommended that Airservices report back to the committee on its progress in implementing the findings of audit report No. 46. The committee recommended also that ANAO consider conducting a third-stage audit into Airservices' conduct of the OneSKY tender.

Briefly, chapter 3 of the report discusses the committee's findings on audit report No. 13, concerning the Department of Immigration and Border Protection's management of the contract to provide health services in onshore immigration detention. The committee noted the ANAO's conclusion that this contract was developed by the department based on the strategic analysis of the shortcomings that had occurred under earlier contracts. However, the ANAO identified areas for improvement in the department's contract management, and the committee made a comprehensive recommendation—which I will spare everyone by not reading it, but it's in the report.

Chapter 4 of the report—I think this is the most substantive area in relation to the immigration department—discusses the committee's findings on audit report No. 16 concerning the procurement of garrison support and welfare services in offshore processing centres in Nauru and Papua New Guinea. The committee noted the ANAO's findings that there were significant deficiencies in all three phases of the audit activity by the Department of Immigration and Border Protection. The committee acknowledged that the department was operating in a complex and rapidly evolving environment under exceptional time pressure during establishment of the contracts. However, the committee—and this is important to note—considered that the department ought to have taken steps to improve its procurement activity within a reasonable time, particularly in relation to the subsequent phases of consolidation of the contracts and retendering. To put it in plain English, the time the contract was first entered into, the then government under Prime Minister Gillard had set a very short time frame of only a number of weeks for the contracts to be put in place, and, clearly, with those time pressures there were some deficiencies, but the audit office did not find that the same time pressures were evident under the current government when the contracts were consolidated and retendered.

The committee also noted the ANAO's finding concerning ongoing issues with the department's 'porous' record-keeping practices, including in relation to conflicts of interest, assessments and performance management of contracts—that is, there was often no paperwork to backup decisions which were made to tender billions of dollars of public money. The conduct and outcomes of the tender processes reviewed by the ANAO highlight a procurement skill and capability gaps amongst departmental officers. The committee recommended that the department provide a post-implementation progress report on its implementation of the audit recommendations and that the ANAO consider conducting a performance audit of the department’s next procurement process in this area. It is worth a read for members interested in this, given the billions of dollars of public money involved—a read if only to understand what not to do.

In closing, as I said at the start, procurement is core business for Commonwealth agencies. Achieving value for money is expected to be a central consideration, and members could expect that the committee will continue to maintain a focus on procurement in our future work program.

See this speech in context