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Auditor criticises handling of offshore processing contracts

This week, the Australian National Audit Office (ANAO) exposed failures in the way the Australian Government handled the contracts for its offshore processing centres on Nauru and Manus Island.

The centres were established in 2012 and the Australian Government contracted a number of companies and organisations to help in the operation and management of the centres.

What did the audit do?

The ANAO’s audit looked at whether the procurement process undertaken by the Department of Immigration and Border Protection (the Department) from 2012 to 2015 was consistent with the Commonwealth Procurement Rules (CPRs).

What did they find?

The audit revealed a number of key failures. The findings stated that the tender processes did not meet the requirements outlined in the CPR due to the Department’s failure to initiate an open tender process. This meant costs were higher than they should have been because of the lack of competition.

In 2013-14 a ‘contract consolidation process’ was undertaken and the Government directed the Department to reduce spending on the offshore processing centres. This was expected to occur through an open tender process. However, the Department only conducted a limited tender and spending increased. The audit also found there was inadequate record keeping, which contributed to a lack of transparency of the procurement process.

The report outlined a number of concerns regarding the DIBP’s management of contracts. These included:

  • the extended length of time taken for contracts to be signed
  • contracts being signed after provision of services had already commenced
  • service provision costs not being settled until after contracts were signed, and
  • insufficient agreement for cost adjustments in response to fluctuating capacity levels in the centres.

The ANAO made a number of recommendations. These involve:

  • more extensive staff training and specialist staff selection
  • more detailed and transparent record keeping
  • practical adjustments to ensure frameworks are adhered to
  • greater emphasis on ethical conduct
  • better management of conflict of interest
  • engagement with an open tender process for future procurement, and
  • implementing assessments of cost value in-line with service provision.

The DIBP, Government ministers and entities, former departmental officials, non-government organisations and service providers responded to the audit findings and recommendations.

Read the ANAO report

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