CHAPTER 3
COMMITTEE VIEW
3.1
The committee strongly supports the continuation of the Senate order for
the production of lists of departmental and agency contracts (Senate order).
Since the introduction of the Senate order there has been a significant
decrease in the proportion of government contracts containing confidentiality
provisions – from 24 per cent in the 2001-02 financial year to four per cent in
the 2012 calendar year.
3.2
The committee's third report into the operation of the Senate order has
been narrowly focussed on two matters: the use of AusTender to comply with the
order; and an assessment of the ongoing role of the Auditor-General in auditing
compliance with the Senate order.
3.3
In forming its recommendations the committee has sought to ensure that
the culture of transparency and openness in relation to government contracts,
which has developed during the period of operation of the Senate order, is
maintained.
AusTender
3.4
The Minister for Finance is seeking the committee's support to update
the whole-of-government guidance developed by the Department of Finance
(Finance) to enable agencies to reference AusTender when complying with the
Senate order. Currently this guidance is contained in Financial Management
Guidance No. 8 Guidance on the Listing of Contract Details on the Internet
(Meeting the Senate order on Departmental and Agency Contracts) (FMG 8).
3.5
The committee encourages initiatives which remove the duplication of agencies'
reporting functions. However, in the context of this inquiry, the primary
consideration for the committee is ensuring that the proposed AusTender reports
are capable of complying with the Senate order.
3.6
Specifically, the Senate order requires that Ministers table a letter
advising a list of contracts has been placed on the Internet, with access to
the list through the department's or agency's homepage. The committee
understands the reference to a 'list of contracts' to mean a compiled list of
the agencies contracts in accordance with paragraph (2) of the Senate
order.
3.7
The demonstration of AusTender during the public hearing failed to show
that AusTender is capable of producing reports that comply with the Senate
order. AusTender requires a user to manually input the requirements in
paragraph (2) of the Senate order – with respect to dates, agency and contract
value – and subsequently generates a list of contracts which meets those
parameters. Essentially, a user must perform their own search to extract a list
of contracts which meets the requirements of the Senate order from all the
other data in AusTender.
3.8
In the committee's view requiring Senators to perform their own searches
in AusTender in order to generate the list of contracts undermines the intent
of the Senate order to improve transparency. For AusTender reports to comply
with the Senate order, the committee's expectation is that there is access to a
pre-generated list of contracts for agencies. Ideally, there would be
individual reports for agencies and not a single report of a compilation of all
reportable contracts from all reporting agencies. Until this occurs the
committee cannot support agencies using AusTender as it currently operates as a
means to comply with the Senate order.
3.9
The committee notes the subsequent assurance by the Minister for Finance
that AusTender will be modified so Senate order reports will be pre-generated,
that is compiled for individual agencies without users needing to set search
parameters. However, the committee has not had the opportunity to view this
capability. Therefore, the committee requires that Finance provide the
committee with a link to a prototype AusTender webpage with agencies' compiled
Senate order reports for the 2013-14 financial year. This link should be
provided to the committee by 1 September 2014. The committee will
then consider whether this modification to AusTender complies with the Senate
order.
3.10
Subject to the caveat that the committee is satisfied that AusTender is
able to produce reports which comply with the Senate order, the committee
provides the following discussion and recommendations with a view to supporting
agencies being able to use AusTender for a trial period of 18 months from
1 January 2015 to meet Senate order reporting obligations.
Finance guidelines
3.11
In order to facilitate the 18-month trial of AusTender as a mechanism
for agencies to comply with the Senate order, the committee supports updating
FMG 8. However, given the committee's reservations about the use of AusTender
set out above, the committee recommends Finance provide the revised version of
FMG 8 to the committee in draft form by 1 September 2014 for
consideration and approval by the committee.
Recommendation 1
3.12
The committee recommends the Department of Finance provide to the
committee by 1 September 2014:
-
a link to a prototype of the AusTender website with agencies'
compiled Senate order reports for the 2013-14 financial year; and
-
a copy of the revised version of Financial Management Guidance
No. 8 Guidance on the Listing of Contract Details on the Internet (Meeting
the Senate order on Departmental and Agency Contracts) in draft form.
3.13
Paragraph (1) of the Senate order requires that a Minister's letter of
advice state that a list of contracts has been placed on the Internet with
access to the list through the department's or agency's homepage. The committee
does not propose amending this wording in the Senate order prior to the trial.
The committee envisages that for the purposes of the trial, agencies will
provide a link to AusTender via the homepages, in addition to the link where
non-procurement contracts are listed.
3.14
It is the committee's intention to review the operation of AusTender and
its use by agencies to comply with the Senate order at the end of the 18-month
trial period. At that time, should the committee take the view that a permanent
move be made for agencies to use AusTender to report contracts pursuant to the
Senate order, the committee will also consider whether the Senate order should
be amended to:
-
refer to AusTender as a means for agencies to comply with the
Senate order;
-
provide that any future amendments to FMG 8 (or other Finance
guidance to agencies which is relevant to the Senate order) should be
considered and approved by the committee; and
-
accommodate the Minister's proposal for the Senate order to
capture contracts 'published' in the six month reporting period, rather than
contracts 'active' during the past 12 months.
Data integrity
3.15
The committee notes with concern the findings in the Auditor-General's
annual reports on compliance with the Senate order on problems with data
integrity in respect of agencies reporting pursuant to the Senate order and on AusTender.
The committee is also mindful of Finance's position – while assuring the
committee of the robustness of data in AusTender – that the integrity of data
in AusTender is the responsibility of individual agencies.
3.16
However, the Clerk of the Senate makes an important point that the Public Governance,
Performance and Accountability Act 2013 (PGPA Act) will strengthen the
legislative obligations on the agency's head with respect to the accuracy of
reporting of data. Further, the committee agrees with the conclusion of the
Clerk that the reputational damage that comes as a result of inadequate
administrative practices should provide a sufficient incentive for heads of
agencies to ensure contract data is accurately reported.
3.17
The committee also believes that there is some validity to Finance's
position that a reduced reporting burden will assist improving data quality,
that is, allowing agencies to report Senate order contracts using AusTender
will increase the accuracy of reporting.
3.18
Following the completion of the 18-month trial, the committee intends to
examine closely the performance of agencies using AusTender.
Non-procurement contracts
3.19
The committee notes that AusTender can only be used to comply with the
Senate order in respect of procurement contracts. All other non-procurement
contracts required to be reported pursuant to the Senate order will need to be
reported using the current mechanism, that is, a list which is accessed via a
link on individual agencies' homepage.
3.20
The committee also notes that Finance is currently developing the
'AusGrant' site which, in future, may have some role in fulfilling the
reporting requirement for the Senate order in respect of some non-procurement
contracts.
New reporting threshold for
AusTender
3.21
The committee would like to put on the record its reservations about implications
for the transparency in lifting the reporting threshold AusTender has on
contracts valued between $10 000-$20 000.
3.22
The committee notes the evidence of Mr John Sheridan, First
Assistant Secretary, Technology and Procurement Division, Department of
Finance, that contracts that fall in the range of $10 000-$20 000 represent 0.7
per cent by value of total contracts.[1]
However, the committee acknowledges that lifting the reporting threshold for
AusTender to $20 000 will not impact on compliance with the Senate order due to
its reporting threshold of $100 000.
Title for AusTender reports
3.23
AusTender contains a vast amount of information which is able to be
viewed using a number of categories. It is important that information pursuant
to the Senate order is user-friendly and visible on the AusTender website. In
the committee's view, while the current title of the Senate order report on
AusTender – 'Senate Order on Confidentiality in Procurement Contracts' – is
reasonably clear, the committee agrees with the Clerk of the Senate that the
report title, could be more explicit.
Recommendation 2
3.24
The committee recommends the Department of Finance amend the title of
the report in AusTender to 'Agency reports complying with the Senate order on
procurement contracts and use of confidentiality provisions'.
Amendment of the Senate order
3.25
During the course of the inquiry the committee reached the conclusion
that there are some aspects of the Senate order which should be amended. These
matters are discussed below. The committee accepts with gratitude the offer of
the Clerk to assist with the drafting of amendments to the Senate order.
Role of the Auditor-General
3.26
The committee agrees with the Auditor-General that, in terms of the inappropriate
use and reporting of confidential clauses in contracts by agencies 'we are over
the worst'.[2]
The committee is therefore sympathetic to the Auditor-General's view that the
need for ongoing annual audits of compliance with the Senate order has diminished.
3.27
However, given the trial of changes to compliance with the Senate order
in respect of AusTender, the committee is reluctant to move directly to a model
whereby the Auditor-General will monitor compliance with the Senate order
through the ANAO's audit of programs more generally. In the committee's view, the
oversight by the Auditor-General will be critical in the committee's assessment
of the success (or otherwise) of agencies' reporting pursuant to the
Senate order during the 18-month trial of AusTender.
3.28
The committee therefore prefers a phased approach to changing the role
of the Auditor-General. This phased transition would see the Auditor General
perform biennial audits for the next four years. That is, the committee expects
that the
Auditor-General will table a report no later than 30 September 2014
pursuant to the current Senate order. The committee then recommends that the
Senate order be amended to reflect that the Auditor-General will table two
subsequent reports no later than 30 September 2016 and
30 September 2018.
Certification by Ministers
3.29
While the committee is recommending the annual audit of compliance by
the Auditor-General be phased out, the committee believes that there should be
some form of quality assurance mechanism contained within the Senate order as
an incentive for agencies to use confidentiality provisions appropriately.
3.30
To this end, the committee believes that the proposal by the Clerk, that
Ministers be required to certify in the letters tabled pursuant to paragraph
(1) of the Senate order, that none of the contracts in the list include
inappropriate confidentiality provisions as measured against the guidance
issued by Finance, is appropriate.
Public Governance, Performance and
Accountability Act 2013
3.31
The committee accepts the advice of the Clerk of the Senate that the
Senate order will need to be amended to reflect recent legislative changes as a
result of the PGPA Act, specifically the reference to an 'agency' being an Financial
Management and Accountability Act 1997 (FMA Act) agency.
3.32
In the previous two reports on the operation of the Senate order the
committee has recommended that the order be expanded to cover Commonwealth
Authorities and Companies Act 1997 (CAC Act) bodies. That recommendation
was rejected by the government on both occasions on the basis that CAC Act
bodies operate under a different legislative scheme to FMA Act agencies. The
PGPA Act will bring CAC Act bodies and FMA Act agencies under the
same legislative scheme, therefore removing the reason for not extending the
operation of the order to CAC Act bodies. The committee therefore supports
the order being extended to cover all Commonwealth entities under the PGPA Act.
Technical matter
3.33
Finally, the committee believes that other technical aspects of the
Senate order, for example the committee's name in paragraph (7) of the order,
would benefit from review and updating.
Recommendation 3
3.34
The committee recommends that the Senate order be amended:
-
to provide that, following the tabling of the Auditor-General's
report pursuant to paragraph (5) of the Senate order in 2014, the
Auditor-General conduct an audit of compliance with the Senate order biennially
for the next four years with reports due no later than 30 September 2016 and 30
September 2018;
-
to provide that in the letter of advice tabled pursuant to
paragraph (1) of the Senate order, that Ministers must certify that none of the
contracts included in the list contain inappropriate confidentiality provisions
as measured against the Department of Finance's guidance;
-
to reflect legislative changes as a result of the Public
Governance Performance and Accountability Act 2013, so the Senate order
applies to Commonwealth entities; and
-
with respect to any further technical aspects of the Senate order
which are found, in consultation between the Clerk of the Senate and the
committee, to require amendment.
Senator Kate Lundy
Chair
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