The Auditor-General has zeroed in on the performance of the Digital Transformation Agency and two other Commonwealth Departments in a report on the use of procurement panels and arrangements for expenditure on ICT related goods and services, which totalled over $A3.9 billion for the Australian government in the 2018-2019 financial year.

The DTA was criticised for failing to ensure that suppliers were treated equitably and its staff handling the process did not “have sufficient understanding of the procurement requirements, the nature of the arrangement being established and procurement related risks.”

It also found examples where Department of Home Affairs and the Department of Industry, Science, Energy and Resources had not given sufficient consideration to competition between suppliers to drive value for money.

Of the $A3.9 billion worth of contracts published on AusTender in FY 2018-2019, more than 36 per cent of reported contracts, involving over 17 per cent of reported contract values, were identified as having been drawn from a panel.

The audit assessed selected components of the establishment and use of two ICT related cooperative procurement panels:

- the IT Services panel established by the Department of Infrastructure, Transport, Regional Development and Communications (Infrastructure); and

- the Digital Marketplace panel established by the Digital Transformation Agency (DTA).

The audit also examined whether Infrastructure and DTA established effective monitoring arrangements to enable them to assess whether the panels or arrangements met their objectives

The ANAO examined a sample of 15 procurements - five from each of the two panels examined and five procurements made under the IBM Whole of Australian Government Arrangement.

Out of these 15, it found three did not comply with Commonwealth Procurement Rules (CPRs).

“When using such arrangements, entities need to adopt processes that are not just technically compliant with the CPRs but are also consistent with their intent, which is to drive value for money through competition,” the report notes.

“In relation to the use of the selected arrangements, entities largely complied with the CPRs to support the achievement of a value for money outcome. For one procurement, documentation did not fully demonstrate that the conditions for limited tender were met. In two other procurements, there was limited evidence supporting value for money considerations. In these three cases it was difficult for entities to demonstrate that the procurements achieved a value for money outcome. There were instances of entities not meeting requirements regarding the approval of variations to contracts, record keeping and AusTender reporting. There was also scope for some entities to strengthen their consideration and management of risk and probity.”

“DTA’s planning and approach to market for the establishment of its Digital Marketplace panel did not comply with all of the CPR requirements but did demonstrate the adoption of a number of key sound practices identified in Finance guidance. The planning and approach to market did not support the achievement of a value for money outcome. DTA documented clear objectives for establishing the panel and approached the market to conduct an open tender which encouraged competition. However, DTA’s request documentation did not require suppliers to provide price information and DTA was therefore unable to conduct a value for money assessment in accordance with CPR requirements. Additionally, suppliers were able to join the panel based on different requirements — this resulted in not all suppliers being treated equitably, which is inconsistent with the CPRs.”

During the course of the audit, the ANAO was advised by the Department of Finance of allegations of fraud related to the supply of information technology contractors. Investigations are ongoing it says.

The full report is available HERE.