Recommendations

2.143The Committee recommends that the Department of Finance work to advance public sector procurement capability and professionalisation by:

prioritising the development and rollout of a procurement professional stream within the Australian Public Service, to facilitate the creation of procurement and contracting specialists, and

expanding the current definition of procurement in the Commonwealth Procurement Rules, to empower and better reflect modern, professionalised procurement practices, including more active management of supply markets and supply chains to maximise value for money.

Finance should report back to the Committee within 12 months on its progress to develop and deliver these outcomes.

2.149The Committee recommends that the Department of Finance amend the Commonwealth Procurement Rules to reverse the onus such that they apply to corporate Commonwealth entities by default, with any exceptions to be made by the Finance Minister via legislative instrument.

2.153The Committee recommends that the Department of Finance amend paragraph 2.6 of the Commonwealth Procurement Rules to emphasise that the core principles of achieving value for money and conducting procurements in a fair, transparent and accountable manner continue to apply to the procurement even when an exemption to the rules was obtained under the paragraph. Finance should develop and issue guidance on paragraph 2.6 to reflect this amendment.

2.160Noting that reporting on compliance with the Commonwealth Procurement Rules (CPRs) is currently limited to the inclusion of significant non-compliance in annual reports, the Committee recommends that the Department of Finance:

introduce requirements for entities subject to the CPRs to report, at least annually and certified by the accountable authority, on their compliance with the CPRs

publish a report annually, commencing in the 2023-24 year, aggregating this information across the sector to help assess the effectiveness of the procurement framework, identify areas of risk, and inform changes to the procurement framework to ensure it remains fit-for-purpose, and

require Commonwealth entities subject to the CPRs or the Public Governance, Performance and Accountability Act 2013, by 31 December 2023, to provide Finance with a report on their internal procurement and delegation policies that outlines how value for money will be ensured when procuring from panels.

2.162The Committee recommends that the Department of Finance amend its guidance to Commonwealth entities to recommend that, where an entity engages in significant or complex procurement activity:

the entity’s audit committee should increase its scrutiny of procurement risks and internal procurement controls commensurate with the scale and risk of the procurements, and

the entity’s internal audit program should provide assurance over the conduct of those procurements.

2.167The Committee recommends that the Department of Finance write to the accountable authorities of Commonwealth entities with guidance on how to use probity advisers, and reminding them of their obligation to manage probity in a thorough and consistent manner when conducting procurements.

2.171The Committee recommends that the Department of Finance amend its guidance on the use of panels to make it explicit that:

a separate value for money assessment must still be undertaken when conducting a procurement from a panel, even though value for money has been considered when forming the panel, and

panel procurement should involve multiple competing tenders from panel members, with sole-sourcing from a panel generally considered inadequate to demonstrate value for money.

2.174The Committee recommends that the Department of Finance require panel procurements to facilitate ongoing competition and foster new entries to markets, by requiring:

panels to be refreshed at regular intervals, for example, at least once every two years and at least before a panel is extended, and

an ability for new entrants to seek to be listed on the panel, at any time where possible or at least periodically during the life of the panel.

2.177The Committee recommends that the Department of Finance amend the reporting requirements on AusTender to ensure it is clear for every procurement:

how many suppliers were invited to submit quotes for a procurement, including when procuring from panels and standing offers as recommended by the Australian National Audit Office in its audit of the Digital Transformation Agency, and

reasons for any amendments or variations to a contract, by standardising the relevant field to produce more structured data.

2.179To facilitate a greater level of transparency in procurement, the Committee recommends that the Department of Finance exercise greater curatorial oversight over the information on AusTender, by, among other things, ensuring data is consistent, properly structured, and easily accessible, and by making standard format reports available to prospective tenderers.

3.99The Committee recommends that the Digital Technology Agency provide an update to the Committee five months from the tabling of this report on the progress of its improvements to its procurement processes, including:

its procurement governance and oversight, especially the management of procurement risk

its management of probity, particularly its fraud and conflict of interest controls

changes to its approach to market processes to meet its obligations under the Commonwealth Procurement Rules, including its use of procurement plans, risk assessments, and the appropriate use of panels

improvements to its tender evaluation processes

improvements to its contract management processes, particularly with respect to contract variations, and

the keeping of appropriate records of all stages of a procurement, from planning to contract management.

3.101The Committee recommends that the Australian National Audit Office consider conducting a follow up audit within three years of the tabling of this report to determine the success or otherwise of the Digital Technology Agency’s procurement reforms.

3.103The Committee recommends that the Digital Transformation Agency’s audit committee review the agency’s procurement risk and its internal procurement controls, and ensure that procurement is a subject of the agency’s internal audit program.

4.72The Committee recommends that the National Capital Authority provide an update on the implementation of the reforms undertaken in response to the audit, including:

statistics on and analysis of its use of competitive procurement methods, especially when procuring through standing offers and panels

statistics on and analysis of how its procurement methods have changed to encourage competition, particularly its request documentation and its tender evaluation processes

changes to its management of probity and promotion of ethical and fair procurement, and

changes to its record keeping practices and procedures.

5.85The Committee recommends that the Department of Home Affairs report back to the Committee, commencing in September 2023 and then six monthly until the current contract expires, on its progress in tendering and procuring a new surveillance services contract, given that it will have been 21 years since the contract was competitively procured if it runs to its current expiry date.

5.86The Committee recommends that the Australian National Audit Office undertake a performance audit of the Department of Home Affairs’ transition to the new surveillance services contract when the current contract expires.

6.45The Committee recommends that the Department of Finance report back to the Committee within six months of the tabling of this report with the outcomes of its review of its Commonwealth procurement guidance, including a list of changes made to the guidance as a result of the review.

7.81The Committee recommends that the Department of Industry Science and Resources report back on:

the progress and outcomes of its assurance review of its other procurements including advice as to any other breaches of the Commonwealth Procurement Rules identified

the outcomes of all claims under the Scheme for Compensation for Detriment caused by Defective Administration, and

what additional activities the department’s Audit and Risk Committee has undertaken and is undertaking in relation to procurement reforms

7.82The Committee recommends that the Australian National Audit Office conduct a follow-up performance audit of the Department of Industry, Science and Resources to assess the effectiveness of its recent procurement reforms.