Commonwealth procurement panels are stifling competition and affecting value for money, a parliamentary inquiry has found.
The Joint Committee of Public Accounts and Audit (JCPPA) said an increasing share of procurement is coming from suppliers listed on panels, which continue to advantage the biggest consulting firms.
The top five raked in nearly $2 billion from government contracts in 2021-22.
“Panels have become an uncompetitive rort and it needs to stop,” the committee says in its report tabled on Wednesday.
“A growing share of procurement is occurring from suppliers listed on ‘Standing Offers’ or Panels. Yet too often this is one quote or limiting or stifling competition and value for money.
“Limiting competition via panels has been particularly used to advantage the Big 4 consulting firms.”
The report recommends refreshing panels at least every two years and making it clear that multiple quotes and separate value for money assessments should be undertaken.
Sole-sourcing from a panel should be generally considered inadequate to demonstrate value for money, the committee says.
Failure to comply with rules and ethics
The JCPAA also said agencies are systematically failing to comply with rules or demonstrate value for money, and it found a lack of compliance with ethical requirements, as well as poor record keeping and contract management.
“Put plainly, the Commonwealth has serious commitment issues with respect to procurement,” JCPA Chair Julian Hill said.
Put plainly, the Commonwealth has serious commitment issues with respect to procurement.
JCPAA
“Action is needed to ensure that taxpayer dollars are not being wasted as a consequence of poor public sector procurement practices.”
The report calls for reform of AusTender and the development of a procurement professional stream within the APS to fix what it says is a lack of expertise and capability in the public service.
$80b in procurement
Commonwealth agencies awarded some 12,000 companies more than 90,000 contracts worth a total of $80 billion in 2021-22.
The report notes that a significant proportion of the annual procurement spend comes from contract amendments, with more the 200,000 amendments between 2012-2022 valued at more than $180 billion.
Where the value of a contract was changed, the increase was more than 100 per cent in almost half the cases reported on Austender.
Disgraced consultants PwC, along with Deloitte, KPMG, EY and Accenture, accounted for more than $1.6 billion worth of new contracts and $300 million in variations and extensions.
The top category by value of contract was ‘Commercial and Military and Private Vehicles and their Accessories and Components’ at $122.8 billion over the last 10 years, followed by ‘Management and Business Professionals and Administrative Services’ at $106.7 billion. Following that was Engineering and Research and Technology Based Services’ at $57.4 billion.
The committee considered evidence from five reports by the National Audit Office, including reports in procurement of digital and ICT services by the DTA; National Capital Authority Procurement; the management of the maritime surveillance contract by Home Affairs; patrol boat procurement by Defence, and the Department of Industry, Science and Resource’s procurement of delivery partners for the Entrepreneur’s Program.
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