The Western Australian Department of Mines and Petroleum has come under scrutiny from the state auditor over a potential conflict of interest associated with an IT contractor.
The department was one of three to be singled out by Auditor-General Colin Murphy for having potential conflicts concerning ICT contractors go unrecognised.
The other two agencies named were the Department of Education and electricity retailer Synergy.
Murphy's report [pdf] noted that Mines and Petroleum employed a contractor to perform "business process review and reform services" over a five year period.
"The contractor's work has included developing specifications for business solutions that [the Department] then puts to open quotation," Murphy noted in his report.
"However, the contractor has a close relationship with the company that has successfully bid for and provides software and support services for approximately 12 of [the Department's] business systems applications.
"The contractor also delivers training programs to [Department] staff for those business applications."
An internal audit by the Department uncovered the potential conflict in March 2010. Some steps were taken to mitigate it, but risks remained, according to the auditor.
"There is a risk that the contractors are positioned to create demand for each other’s services and in our opinion, this continues to represent a potential conflict of interest," the report said.
"We have recommended that [the Department] should wherever possible, avoid sourcing strategic ICT consultancy and associated service delivery from the same contractor.
"Where contracting arrangements present potential conflicts, these should be recognised and mitigation strategies should be documented through the strategic ICT plan or agency conflict of interest/risk register."
Murphy said that maintaining conflict of interest and gift registers were the best ways to proactively manage risk.
“Where contracting arrangements present potential conflicts, these should be recognised and mitigation strategies established and documented," he said.
Murphy's report also found that Mining and Petroleum, Lotterywest, Synergy and Tourism WA lacked either comprehensive or up-to-date strategic ICT plans which left them open to the a risk of making poor use of contractors and not getting best value for taxpayers’ dollar,
DMP, Lotterywest and Synergy did not fully comply with procurement policy for some of their contracting arrangements.
This included failures to develop business cases, establish contract management plans, seek appropriate approvals and ensure competitive tendering for some contracting arrangements.
Landgate was the only agency of six examined by the Auditor-General that was found to manage all aspects of ICT contracting and purchasing well.