The Department of Finance has sought to play down an internal audit that found it failed to meet its own compliance rules in 19 procurements over a nine-month period.
The audit [pdf] of Finance's procurement processes by PriceWaterhouseCoopers showed a "deterioration in compliance with the procurement CEI [chief executive instructions] and OG [operation guidelines] over the past four years.”
The CEIs and OGs imposed specific requirements for Finance staff buying goods and services.
They were separate from Commonwealth Procurement Guidelines - also issued by Finance - which all agencies had to follow when making purchases.
The internal audit was released as part of a Freedom of Information request. It tested compliance across a sample of 27 procurements made between 1 July 2009 and 31 March 2010.
The audit found "potential non-compliance" with Finance's own CEI and OG rules in 70 percent of the sample.
Issues included potential breaches of probity self-assessments, no value for money or risk assessments and discrimination on the basis of location.
A $220,000 contract awarded to UNIFY Solutions breached both Commonwealth Procurement Guidelines (CPG) and Operational Government Rule 4.3, according to the audit.
Auditors declared it non-compliant because documentation included the statement: “UNIFY Solutions Pty Ltd are therefore the only organisation in the Canberra region that can effectively and efficiently provide support services…”
Section 1 of OG 4.3 stated that non-discrimination must be ensured and cannot be a factor in a procurement decision and CPG 5.2 prohibits supplier location as the basis for approval of a purchase.
PwC also found the procurement file lacked a separate probity self-assessment and breached AusTender’s requirement to reveal the correct start date for the contract.
Other problem buys included:
- A $1.7 million contract to upgrade the Department’s CLARIION storage infrastructure awarded to Infront Systems. The audit found it lacked evidence of probity self-assessment or a copy of the evaluation plan.
- A $1.5 million contract to ITNewton for ICT benchmarking and advisory services, that auditors said lacked endorsement of the evaluation plan from all the evaluation panel members. This breached OG 4.3 section 2.2, according to the report.
- A $185,308 contract to lead a review on future directions for Australian Government Service delivery awarded to Acumen Contracting and Recruitment, which the audit said did not encourage competition and breached CPGs and OG 4.3. All procurements over $80,000 required at least three quotes to be obtained from a number of panel members. Instead, only one panel member was approached for all three quotes in this procurement.
In many instances AusTender – the Government procurement shopfront to proclaim transparency and integrity of dealings - saw incorrect start and end dates.
Total commitment of a contract was also incorrect in a few cases, the auditors found.
The report saw Department executives commit to seven action items - with deadlines - to ensure the number of potential procurement breaches were reduced.
A Finance spokesman declined to comment on whether the action items had been implemented.
He also sought to play down the extent of the alleged breaches.
"The vast majority of the findings related to non compliance with internal guidance, and are not breaches of the Financial Management and Accountability Act 1997 or the Commonwealth Procurement Guidelines," the spokesman said.
"We have initiated a Procurement Process Improvement Project to update guidance and templates, and review training and communication of this material, to help staff more easily follow its internal guidance."
Finance had also recently introduced a Basic Contract Documentation Suite to assist all agencies, including Finance, procure low-risk, low-value contracts up to $80,000.
"This will both improve compliance across government agencies and reduce the costs associated with low-risk, low-value contracts," he said.