Oi, Mate, watcha hidin'?

Transparency is essential for accountability and accountability is essential to good governance; good procurement is the cornerstone of good governance.

But it seems the lads Down Under continually fail to fully take this on board. Can't you hear, can't you hear the plunder?

Confidentiality in government contracts still too common: audit

Federal agencies are still falling short of full compliance with a Senate Standing Order introduced in 2001 to improve the public transparency of government contracting, according to the auditor general Grant Hehir.

The order requires ministers to table lists of all significant contracts and agreements in their respective portfolio areas, highlighting those that contain confidentiality clauses of any sort and outlining the justifications for them.

The Australian National Audit Office’s report explains the reporting practices it observed are “not always adequate or reliable enough to meet the requirements of the Order” despite it being in place for well over a decade and audited every year. “Transparency of contract information can be affected as a result,” the report warns.

Confidentiality in Government Contracts: Senate Order for Departmental and Entity Contracts (Calendar Year 2014 Compliance), Australian National Audit Office (excerpts cut and pasted and rearranged; read the audit report at the link for context, fullness and accuracy)

Confidentiality provisions in government contracts can impede accountability and transparency in government purchasing. A request for specific information to be kept confidential must be assessed against the Confidentiality Test criteria and entities should make sure decisions to include confidentiality provisions are documented.

The [relevant Senate Order] was introduced in 2001 to improve public access to information about government contracting. At the time, the level of information available to the Parliament and to the public about government contracting had not kept pace with the increased rate of contracting out.

In this respect, the audited entities were not able to provide documentation supporting their assessment of suppliers’ claims against the Confidentiality Test, and reasons for agreeing for the information to remain confidential. The results of this audit indicate that processes to capture information about basic contract details and the reporting of existence of confidentiality provisions needs to improve.

Successive governments have agreed to comply with the Senate Order and its subsequent amendments. Under the Order, Ministers must table letters of advice that all entities which they administer have placed on the Internet lists of contracts valued at $100 000 or more, by no later than two calendar months after the end of each financial and calendar years. These lists are to:

>include the details of each contract which has not been fully performed or which has been entered into during the previous 12 months; and
>indicate whether the contracts contain confidentiality provisions or other requirements of confidentiality, and a statement of the reasons for the confidentiality.

The Department of Finance is responsible for providing entities with policy guidance on procurement, including confidentiality in procurement and compliance with the Order. Opportunities exist for Finance to improve advice through direct reference to the Confidentiality Test in the Commonwealth Procurement Rules, and disseminating better practice examples of entity assurance mechanisms.

The results of this audit show that there continues to be scope for entities to improve their assessment of suppliers’ claims for confidentiality of contractual information and implement more rigorous quality assurance processes for reporting confidentiality provisions in contracts. In the ANAO’s sample only 17 per cent of contracts were found to be accurately reported, taking into account the basic contract information and the correct type and reason for confidentiality provisions.

Despite the low proportion of contracts reported as containing confidentiality provisions, specific confidentiality provisions in contracts continue to be incorrectly used and reported in 2014. The ANAO’s examination of a sample of 101 contracts reported to contain confidentiality provisions, found that for 80 per cent of the contracts the use of confidentiality provisions did not comply with the Guidance or was misreported. The level of inappropriate use has increased by 17 per cent compared to the 2013 Senate Order compliance audit.

It should be noted that this report dealt only with the Department of Finance (Finance); Department of the Prime Minister and Cabinet (PM&C); Department of Social Services (DSS); and Department of Veterans’ Affairs (DVA). The 2013 Audit looked at the Australian Federal Police (AFP); Australian Securities and Investment Commission (ASIC); Department of Communications (Communications/DoC); and, Department of Immigration and Border Protection (DIBP).  I wonder if there is any study undertaken of which departments are dragging the chains, relative to others.

The 2013 audit reported

the Finance and Public Administration References Committee noted some concern with the integrity of contract data reported on AusTender. [Nevertheless,] the Committee recommended that the annual audit of Senate Order compliance be phased out.

It also reported

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 contract information reported by agencies on AusTender is used to compile a number of government reports and provides statistics on the actual goods and services purchased by government. It is also used by suppliers and other stakeholders to monitor government business opportunities. This audit highlights that agencies need to improve the quality of data they report to make sure that it is accurate and reliable. The need for agencies to comply with multiple procurement reporting requirements is a factor which influences the integrity of the information reported.

The Senate Order is underpinned by the principle that the Parliament and the public should not be prevented from being able to obtain access to contract information unless there is a sound reason to do so. Once a contract has been awarded, the terms of the contract including parts of the contract drawn from the supplier’s submission are not confidential unless the agency has determined and identified in the contract that specific information is to be kept confidential. An examination of the Senate Order contract listings indicates that 1369 contracts were identified as containing confidentiality provisions. ANAO’s examination of a sample of 95 contracts in four audited agencies found that confidentiality provisions in three of the agencies were often misreported or not applied correctly. Fewer than 40 per cent of the contracts contained specific confidentiality provisions that had been correctly reported. When misreporting occurred, it was generally due to a lack of understanding of how to distinguish between and apply the various types of provisions.

Some agencies still included reasons for the inclusion of confidentiality provisions (such as ‘commercial-in-confidence’ or ‘protection of Commonwealth material’) which did not clearly categorise the information to be protected as set out in Finance’s guidance. There remains a need for agencies to check Senate Order contract listings for completeness, accuracy and timeliness prior to the publication of the listings and the tabling of Ministers’ letters.

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.