This performance audit report examines the Australian Passport Office's (APO) compliance with the Commonwealth Procurement Rules. The report finds that APO's procurement processes were not open and competitive and decision-making was not sufficiently open, accountable or transparent. The report makes seven recommendations to improve processes and strengthen oversight by the Department of Foreign Affairs and Trade (DFAT). The department agreed to all seven recommendations.

The audit focused on APO procurement activities relating to contracts and contract variations with a start date between 1 July 2019 and 31 December 2023. The report also includes the department’s responses to the audit findings, the ANAO’s recommendations for improvement, and a summary of responses from entities contracted by the APO.

Findings

• Between 1 July 2019 and 31 December 2023, the APO managed 331 contracts totalling $1.58 billion.
• Zero contracts entered into let via an approach to the open market.
• 29% were let via a genuinely competitive approach to market. 
• 53% referred to value for money, although did not always demonstrate it had been achieved.
• Procurement practices fell short of ethical standards, with DFAT initiating inquiries into the conduct of at least 18 individuals, both employees and contractors.
• In many cases, the department failed to identify and manage conflicts of interest, and procurement records were often incomplete or inaccurate.

Recommendations

1. Improve the planning of procurement activity for the APO.
2. Strengthen its procurement processes to ensure an emphasis on genuinely open competition.
3. Include evaluation criteria in request documentation for all APO procurements.
4. DFAT’s procurement policy framework should directly address the risk of officials being cultivated or influenced by existing or potential suppliers.
5. Strengthen its controls to ensure contract variations are consistent with the original approach to market.
6. Examine whether procurements not included in the audit sample also included ethical and integrity failures.
7. Strengthen oversight by its central procurement area of the APO’s procurement activities.