David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

On behalf of the Joint Committee of Public Accounts and Audit, I present Report No. 465:Commonwealth procurement, and I seek leave to have the tabling statement incorporated in Hansard.

Leave granted.

The tabling statement read as follows—

This report sets out the findings of the Committee's inquiry on Commonwealth procurement, based on three Australian National Audit Office reports concerning this matter.

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.

Achieving value for money is expected to be a central consideration of Commonwealth procurement activities. However, as the Auditor-General noted at the Committee's public hearing, 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 these 42 engagements was sole-sourced. Airservices had also 'routinely failed' to adhere to its procurement policies and procedures. In addition, the Auditor-General raised concerns about Airservices' management of probity risks for this procurement.

The Committee concluded that Airservices' procurement management was problematic on a number of fronts. While Airservices had made progress in implementing the audit recommendations, we recommended that Airservices provide the Committee with a post-implementation progress report for each of these recommendations. The Committee also recommended that Airservices report back on a number of matters to demonstrate its improved management of probity in procurement. The Department of Finance should also consolidate procurement guidance for corporate Commonwealth entities to ensure more strict application of the Commonwealth Procurement Rules.

A companion audit, Audit Report No. 46, Conduct of the OneSKY Tender, was tabled by the ANAO while the Committee was conducting its inquiry. Given the probity findings in Audit Report No. 1, the Committee noted the ANAO's conclusion that the OneSKY tender process was 'appropriate' and that the tender evaluation governance 'guarded against the conflict of interest issues identified in Audit Report No. 1 impacting on the tender evaluation process'.

However, given the ANAO's other findings from this audit—including that it was 'not clearly evident 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. Further, as criterion 3 of the ANAO's objective in this audit was not able to be examined, the Committee recommended that the ANAO consider conducting a third stage audit into Airservices' conduct of the OneSKY tender and any associated matters, once the contract for the entire acquisition has been executed, to complete its audit objective on this matter.

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 for onshore immigration detention.

The Committee noted the ANAO's conclusion that this contract 'was developed by the department based on a strategic analysis of shortcomings that had arisen under earlier contracts'. However, the ANAO identified areas for improvement in the department's contract management, particularly in relation to performance monitoring. We therefore recommended that the department provide the Committee with a progress report on: the implementation of appropriate performance monitoring of the contractor; implementing its risk-based remediation plan; progress with finalising key performance documents; and outcomes of any targeted audits it undertakes of the contractors' policies and procedures against relevant benchmarks.

Chapter 4 of the report 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 finding that there were significant deficiencies in all three phases of 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 the establishment of the contracts. However, the Committee 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. The Committee also noted the ANAO's finding concerning ongoing issues with the department's record keeping practices, including in relation to conflicts of interest, assessments and performance management of contracts.

The conduct and outcomes of the tender processes reviewed by the ANAO highlighted procurement skill and capability gaps amongst departmental officers. Procurement is core business for Commonwealth entities and the Committee welcomes the department's acceptance of the recommendations of the ANAO and its stated commitment to improve its procurement processes.

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.

In conclusion, by taking a thematic approach to some of our inquiries, as we have done in this report, the Committee seeks to encourage improvements and shared learning in key areas of public administration. Effective Commonwealth procurement will continue to be a strong focus of the Joint Committee for Public Accounts and Audit in its role in scrutinising the governance, performance and accountability of Commonwealth agencies. Procurement is core business for Commonwealth agencies, and achieving value for money is expected to be a central consideration.

I thank Committee members for their deliberation on these significant matters.

I commend the report to the Senate.

I move:

That the Senate take note of the report.

Question agreed to.