The objectives of the audit were to assess agency performance in relation to compiling their Internet contract listings as required by the Senate Order and the appropriateness of the use of confidentiality provisions in Commonwealth contracts. The audit involved a review in seven agencies of the processes used to compile their Internet contract listings and the use of confidentiality provisions in contracts.
This report outlines the results of the eighth audit of Financial Management and Accountability Act 1997 (FMA Act) agencies' compliance with the Senate Order for departmental and agency contracts (the Senate Order), to list contract details on the Internet.
The audit was conducted in accordance with the Senate Order request for the Auditor-General to undertake an annual examination of agency contracts listed on the Internet, and report whether there had been any inappropriate use of confidentiality provisions.
Audit scope and objectives
The objectives of the audit were to assess agency performance in relation to compiling their Internet contract listings as required by the Senate Order and the appropriateness of the use of confidentiality provisions in Government contracts.
The audit involved a detailed review in seven agencies of the processes used to compile their Internet contract listings and the use of confidentiality provisions in contracts for the 2005 calendar year.
The seven agencies selected for review were:
- Australian Agency for International Development;
- Australian Federal Police;
- Department of Agriculture, Fisheries and Forestry;
- Department of Education, Science and Training;
- Department of Foreign Affairs and Trade;
- Department of the Treasury; and
- Family Court of Australia.
The results of this audit, and the ANAO's audits over the last four years, have indicated a progressive reduction in the number of contracts reported as including specific confidential provisions. This situation is consistent with the Government's policy position that contracting information should not be treated as confidential, unless there is a sound reason for doing so.
However, the audit found that some agencies had given insufficient attention to ensuring the completeness and accuracy of the contract listing, which was provided on agencies' websites. The ANAO considered these agencies needed to strengthen the controls and quality assurance processes for compiling their contract listings.
While the proportion of contracts listed with specific confidential provisions was low, a significant number of the contracts reviewed were considered by the ANAO to be inappropriately listed. This situation could be attributed to inadequate guidance on the use of confidentiality provisions provided to staff responsible for contract negotiations. Errors were also identified in the preparation of the contract listing in some agencies. This indicated the need for staff responsible for the preparation of the contract listing to have a better understanding of the requirements of the Senate Order.
The audit found that each of the audited agencies had placed contract listings on their website that were, with the following exceptions, in accordance with the timing requirements set out in the Senate Order. In three audited agencies, two in the same portfolio, ministerial letters were not tabled in the Senate by the due date of 28 February 2006. The letters were tabled on 28 March 2006.
Although each of the agencies had controls and processes in place for compiling the Internet contract listing, the audit identified contracts that had been excluded from the contract listing. This result cast doubt on the effectiveness of audited agencies' various controls and processes for maintaining up to date contract registers and for compiling their contract listings.
Consistent with previous audits, the ANAO considered that these controls and processes could be strengthened in some agencies by the implementation of additional controls such as a reconciliation between the Senate Order contract listing and contract information contained in Financial Management Information Systems (FMIS) and reported in AusTender.1
The audit found that all of the selected agencies had included in their standard Request For Tender documentation and contract templates information on the Government's accountability requirements, including the policy in relation to confidential information and disclosure to the Parliament and its committees.
The ANAO found that less than 20 per cent of the contracts included in the Senate Order contract listings of the agencies audited were reported as containing specific confidential provisions. This is consistent with the trend over a number of years that indicates a progressive reduction in the number of contracts listed as containing specific confidential provisions. This reflects the Government's policy position that contracting information should not be treated as confidential, unless there is a sound reason for doing so. The ANAO also found that a number of the agencies audited had listed some contracts as containing general clauses of confidentiality, such as Privacy Act requirements. These are referred to in the Senate Order as ‘other requirements of confidentiality'. Such clauses exist in the majority of agencies' contracts.
The ANAO reviewed a sample of 87 contracts that were listed on the Internet as containing confidential information or confidential provisions to determine whether they had been appropriately listed. Of the 45 contracts that were listed as containing specific confidential provisions, the ANAO assessed that only one was appropriately listed. The ANAO considered that 12 of the 45 contracts (27 per cent) were inappropriately listed as the information identified as being confidential did not meet the required confidentiality criteria – this is the more substantial finding from the audit in terms of agency contracting arrangements. The remaining 32 of the 45 contracts (71 per cent) were considered by the ANAO to be inappropriately listed due to the incorrect recording of the use of confidentiality provisions in the agencies' listings; the contracts did not identify any specific information that was confidential. Of the contracts listed as containing ‘other requirements of confidentiality', the ANAO's testing identified that 41 out of the 45 contracts reviewed were appropriately listed.
The results of this audit testing indicated some confusion about the difference between the provisions in a contract that specifically identify confidential information and contracts containing ‘other requirements of confidentiality'. This suggests that, in addition to some agencies giving more attention to complying with the requirements of the Senate Order, there is likely to be benefit in the Department of Finance and Administration (Finance) enhancing its guidance about the use of confidentiality provisions in contracts. Finance shares this view.
The audit findings also indicated that guidance that outlined the requirements of the Senate Order, as well the extent and timing of training and awareness sessions on the Senate Order requirements were areas that needed improvement in some agencies.
These matters are particularly important in situations where agencies have a devolved procurement environment where line managers are responsible for the negotiation and management of contracts, including judgements about the use of confidentiality provisions in contracts.
The ANAO confirmed, where relevant, that individual instances of under-reporting identified in Audit Report No.27, 2005–06 Reporting Expenditure on Consultants, had been correctly reported in, or correctly excluded from, the 2005 Senate Order contract listings.
All agencies agreed with the recommendations. Where provided, agencies' additional responses to each recommendation are provided in the body of the report, and agency responses relating to the report in general are provided at Appendix 4.
1 All agencies subject to the Financial Management and Accountability Act 1997 are required by the Commonwealth Procurement Guidelines to publish on AusTender contracts and standing offers with a value of $10 000 or more.