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Confidentiality in Government contracts: senate order for departmental and agency contracts (calendar year 2013 compliance)

18 Sep 2014

This audit assessed the appropriateness of the use and reporting of confidentiality provisions in a sample of Australian Government contracts.

Audit objective, criteria and scope

This audit is the seventeenth in a series of audits and fulfils the Senate’s request for the Auditor‐General to provide an annual report on agencies’ compliance with the Senate Procedural Order of Continuing Effect: Departmental and Agency Contracts (the Senate Order/the Order).

The objective of the audit was to assess the appropriateness of the use and reporting of confidentiality provisions in a sample of Australian Government contracts. To conclude on this objective the ANAO’s broad criteria included an assessment of whether relevant agencies adhered to the requirements of the Senate Order and whether the reported use of confidentiality provisions in a sample of contracts was appropriate.

The scope of the audit included an examination of the timeliness and content of all published contract listings relating to the 2013 calendar year as at 14 March 2014. In addition, the ANAO examined whether selected agencies accurately reported contract information, including the use of confidentiality provisions, in the contract listings and on AusTender. The four agencies included in this part of the audit were the:

  • Australian Federal Police (AFP);
  • Australian Securities and Investment Commission (ASIC);
  • Department of Communications (Communications/DoC); and
  • Department of Immigration and Border Protection (DIBP).

Overall conclusion

The unwarranted inclusion of confidentiality provisions in government contracts has the potential to impede scrutiny and accountability of government expenditure. The Senate Order aims to address these concerns by making details of significant contracts accessible and requiring that any use of confidentiality provisions is soundly based. Since the Senate Order’s introduction, the proportion of contracts reported as containing confidentiality provisions across all Government agencies (subject to the Order) has declined significantly from 24 per cent for the 2001–02 financial year to 4.5 per cent for the 2013 calendar year.

Although the proportion of contracts reported as containing confidentially provisions in 2013 was low (in keeping with 2012 levels), specific confidentiality provisions in contracts continued to be incorrectly applied and reported. To assess the appropriateness of the use of confidentiality provisions, the ANAO examined a sample of 95 contracts across four agencies. Consistent with the results of previous audits, fewer than 40 per cent of the contracts examined contained confidentiality provisions that had been correctly reported—with most of the issues primarily relating to misreporting of contract information rather than with the contracts themselves. Where there was inappropriate use of confidentiality provisions, it was generally due to a lack of understanding of how to distinguish between the various types of confidentiality provisions.

The ANAO also examined the consistency and accuracy of the audited agencies’ procurement contract reporting in their 2013 calendar year Senate Order contract listings and on AusTender. There were some inconsistencies in the contract details reported between the two listings, partly reflecting the differences in Senate Order and AusTender reporting requirements. However, the ANAO’s examination of the sample of 95 contracts identified that fewer than 35 per cent had been accurately reported in either the Senate Order contract listings or on AusTender.

The main focus of the ANAO audits of the Senate Order is the appropriateness of the use of confidentiality provisions. Overall, the results of this audit, consistent with previous audit findings, indicate that the intent of the Senate Order—to provide transparency in government contracting—is being addressed. However, as explained above, the application and reporting of specific confidentiality provisions remains problematic and agencies should take steps to improve staff understanding around when and how the provisions apply. The quality of data reported in the Senate Order listings and AusTender also requires attention. The recommendations from the Finance and Public Administration References Committee's recent inquiry into the Senate Order, if implemented, can be expected to assist in streamlining the reporting requirements for agencies. Nonetheless, agencies should take steps to implement stronger quality assurance processes to support accurate data capture and reporting of contract information. This should also include providing staff with practical support, such as decision flow charts and examples relevant to their agency’s work, and encouraging staff to apply them.

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