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17 August 2011 | Angeline Albert

The Australian government’s spending watchdog has been criticised for not following its own purchasing compliance rules over a nine-month period.

An internal audit, made public this month following a freedom of information request, has revealed the government’s Departmentof Finance and Deregulation failed to meet its own compliance rules in 19 procurements out of a sample of 27 that occurred between 1 July 2009 and 31 March 2010.

The report by PricewaterhouseCoopers, which focused on purchasing operations at the government department, found procurement processes did not encourage competition in accordance with Commonwealth Procurement Guidelines (CPGs and Operational Government Rule 4.3 (OG 4.3)) issued by the department.

Issues discovered included poor value for money, poor risk assessments and discrimination based on location.

The report said finance officers were unclear about direct procurements, uncertain about the requirements for completing self assessments for procurements valued below AUD $80,000 (£51,283), and there was the potential that finance “may not be able to successfully defend a challenge to a procurement process, due to insufficient documentation”. Auditors said buyers needed to “read up and follow the department’s guidance for procurement”.  

The report said: “A supplier’s location cannot be a factor in a procurement decision and therefore should not be referred to in procurement documentation.”

Auditors said approval documentation for the 24^th procurement was non-compliant because it included the statement: “UNIFY Solutions Pty Ltd are therefore the only organisation in the Canberra region that can effectively and efficiently provide support services…”.

In addition, 17 of the 27 procurements tested were inaccurately reported on AusTender, the government procurement portal. Auditors recommended compliance education for finance staff for future procurements, including clarity on the importance of encouraging competition and reporting accurate information on AusTender.

A spokesman for the Department of Finance and Deregulation said: “The vast majority of findings related to non compliance with internal guidance, and are not breaches of the Financial Management and Accountability Act 1997 or the CPGs.

“We have initiated a procurement process improvement project to update guidance and templates, and are reviewing training and communication of this material to help staff follow internal guidance. The department has also recently introduced a Basic Contract Documentation Suite to assist all agencies procure low-risk, low-value contracts up to $80,000. This will help improve compliance.”