By Ray Athwal
The federal agency in charge of drafting Australia's laws flouted basic government spending rules, overseeing a project where budgets tripled, conflicts of interest were not declared and contracts ballooned up to 1900 per cent
A blistering audit of the Office of Parliamentary Counsel (OPC) by the Australian National Audit Office (ANAO) found the development of the new Federal Register of Legislation was marred by systemic non-compliance and procurement failures.
The project, launched in January 2024, suffered a four-year delay with a budget blowout in which the final price tag reached $11.8 million, nearly triple the original $4.2 million estimate.
The audit identified a pattern where the agency relied on contract variations to expand the scope of work, a practice that can bypass requirements for open market competition. Nine of the 13 procurements were amended leading to an increase of 125 per cent, from $6 million to $13.5 million. One contract alone was varied 20 times.
The ANAO warned that agencies should not use contract variations to "significantly change" the scope of deals or to "avoid obligations under the Commonwealth Procurement Rules", noting the OPC's use of variations risked doing that.
A spokesperson from the OPC said that, while the project was complex and staff tried to follow the rules, the agency acknowledged the mistakes and had already started incorporating the recommendations.
In one instance, a labour-hire contract with HiTech Group for an experienced "scrum master" was originally valued at $65,250 for just two months of work. A scrum master helps lead teams to tackle complex projects by dividing them into small chunks of work, improving processes as the project advances.
However, despite the absence of extension options, this contract was varied six times. It ended up running for 18 months with a final price tag of $479,694 - an increase of 635 per cent.
The agency justified the six variations by claiming that retaining the supplier would "reduce administration costs", suggesting that the decision was driven by a desire to avoid the administrative workload of a new competitive tender.
Audit into the Office of Parliamentary Counsel
Key findings
- The project budget tripled to $11.8 million largely due to a systemic use of contract variations.
- An evaluation panel member failed to declare they were related a supplier candidate.
- Of the requests, 92 per cent lacked evaluation criteria, meaning suppliers were not told how they would be judged.
- Work was awarded to a candidate that ranked lowest against the evaluation criteria.
In another instance, a contract with 101 Web Technology, established through a panel arrangement for $101,640, was varied 20 times. The variations increased the contract's value by more than 1900 per cent to $2.1 million without the agency testing the market for the expanded scope.
The audit also heavily criticised the agency for failing to estimate the value of contracts before going to market, a vital step in deciding if a contract should be open to competition.
This oversight meant the OPC could not justify bypassing the open market, creating a risk that contracts exceeding the $80,000 threshold were awarded without proper scrutiny. When the agency did choose its suppliers via limited tender, it frequently failed to provide a justification.
When the agency attempted to justify a sole-source contract through a small business exemption, it did not meet the mandatory rules. It was required to check if an Indigenous business could do the job, but it skipped that step entirely, failing to produce evidence that it tested the market as required under current procurement rules.
A Canberra Times analysis of Austender data revealed that the agency's use of limited tender extended beyond this project. The analysis identified 51 other instances of contracts and amendments categorised as limited tender exceeding the $80,000 threshold again without a clear justification recorded for bypassing the open tender process.
ACT independent senator David Pocock said the findings regarding value for money were alarming.
"Cost blowouts, contracts without clear performance requirements, and serious shortcomings in managing conflicts of interest point to failures in the procurement process," Senator Pocock said.
"The community expects high integrity and proper management of public funds. This audit makes clear that the OPC has fallen short and the government should consider what reforms are needed to avoid repeating these issues."
The review also highlighted gaps in documentation, integrity and transparency processes. In 12 out 13 procurements examined, request documentation did not include evaluation criteria, meaning suppliers were not informed of the assessment criteria. In one example, the OPC awarded a contract to the candidate that was ranked lowest against the evaluation criteria.
Integrity management practices were deemed insufficient. None of the 13 procurements examined contained a single conflict of interest declaration. The audit identified one instance where an evaluation panel member failed to declare a conflict of interest despite being "related to or socially engaged with" a candidate.
It was also common for details and roles of panel evaluation members and advisers who were part of the procurement process to be excluded.
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