Background and rationale

1. Procurement is an important and substantial activity for the Australian Government. In 2018–19, there were 78,150 contract notice (parents and amendments) publications with a combined value of $64.5 billion reported by relevant entities on the AusTender website. Over the ten years up to and including 2018–19, contract values totalling $490.8 billion were reported.

2. The Auditor-General Act 1997 enables the Auditor-General at any time to cause a report to be tabled in either House of the Parliament on any matter. This is the second information report prepared by the ANAO on Australian Government procurement contract reporting. It incorporates more recent data than the December 2017 report (up to 30 June 2019 compared with 30 June 2017) and also includes analysis of historic trends over a longer period of time (10 years compared with five).

Key information

3. Nearly two thirds of Australian Government entities are required to centrally report data on AusTender on contracts they have awarded with a value above prescribed reporting thresholds. There is no centralised reporting on the value of procurement activity undertaken by 34 per cent of Australian Government entities as they are not covered by the CPRs. This includes some entities that are engaged in significant procurement activities.

4. For 2018–19, 78,150 parent contracts and amendments were reported, valued at $64.5 billion. The total contract value reported over the five years up to and including 2018–19 was $305.3 billion, an average of $61.1 billion per year. A feature of the reporting of contract notices has been considerable volatility in the value of amendments from year to year.

5. Delays with AusTender reporting are common, with 17 per cent of publications in 2018–19 taking longer than the prescribed 42 days. Delays are often significant, with it being common for reporting to take more than twice as long as it is supposed to.

6. Competition is a key element of the procurement framework. More than half of all contracts have been reported as resulting from a limited tender rather than an open tender. The Commonwealth Procurement Rules (CPRs) seek to limit the use of non-competitive approaches for higher value procurements. They do this by establishing thresholds above which procurements must be conducted through an open approach to the market, subject to listed exemptions. Analysis of AusTender data indicates that:

• 44 per cent of procurements for contract notices above the relevant thresholds specified in the CPRs is let through limited tender; and
• Non-Corporate Commonwealth Entities report greater use of limited tender approaches to non-construction services procurement than Corporate Commonwealth Entities non-construction services procurement, and for all entities construction services procurement.

7. Contracting through procurement panels has been growing significantly both in terms of the number of contract notices and their value. It remains common for a relatively small proportion of suppliers on a panel to be awarded the majority of contract value when the panel is accessed. There are also indications that some panels are being accessed after their reported end date.

8. Entities report that the majority of the contracts involve the procurement of services rather than goods. Procurement contract notices in a small number of areas represent the majority of total reported contract value, with it also being common for a small number of suppliers to dominate in most of those categories. Over the ten year period analysed, the total contract values reported for consultancies reached its lowest in 2013–14 and has grown each year over the last five years. Reporting also indicates a small number of suppliers are dominant providers.

Introduction

1.1 Procurement is an important and substantial activity for the Australian Government. Contract values totalling $490.8 billion were reported on the AusTender website over the ten years from 2009–10 to 2018–19. In 2018–19, there were 78,150 contract notice publications with a combined value of $64.5 billion. This comprised:

• 62,928 parent¹ contracts with an aggregate value of $47.2 billion; and
• 15,222 contract amendments with an aggregate value of $17.3 billion.

1.2 The contract values reported on AusTender are to represent the total maximum value of each contract over its life (including Goods and Services Tax). Payments under a contract may span more than the year in which the contract notice was published. While actual expenditure is not reported on AusTender, so long as entities accurately report values as contracts are entered into and any amendments subsequently made then AusTender data can provide a reliable indicator of the total expected expenditure over the life of each contract. All actual expenditure on contracts should be captured in each entity’s financial management information system and included within the expenditure figures reported by each entity in in its financial statements.

Roles and responsibilities

1.3 Under the Public Governance, Performance and Accountability Act 2013 (the PGPA Act), responsibility for the proper use of public resources, including procurement, rests with the Accountable Authority of each entity. This responsibility includes developing procurement policies, procedures and systems and the conduct of individual procurements.

1.4 The Department of Finance (Finance) is the central agency with responsibility for establishing and promulgating the resource management framework, which includes the procurement policy framework. The keystone of the procurement policy framework is the Commonwealth Procurement Rules (CPRs²) issued by the Finance Minister under Section 105B of the PGPA Act. In addition to addressing the way in which procurement processes are to be conducted, the CPRs include requirements for relevant entities³ to publish on AusTender information on: planned procurements; open tenders; and notices reporting key details of contracts that have been awarded.

1.5 The primary purpose of the contract notice section of AusTender is to provide information to the market at the conclusion of a procurement process to demonstrate that the contract that has been awarded is consistent with the representations that were made during the approach to the market. This reflects that Austender was introduced in 2007 as the contemporary implementation of a gazettal function that dates back to 1901.⁴

1.6 The procurement framework also includes: web-based guidance developed by Finance to assist entities to implement the framework; resource management guides promulgated by Finance to advise entities of significant elements of the framework and key changes and developments; and various templates, such as the Commonwealth Contracting Suite. Finance is also responsible for the AusTender platform.

1.7 In April 2019, Finance advised the Australian National Audit Office (ANAO) that:

• the first procurement information report tabled by the ANAO in December 2017⁵ had helped it to identify a number of areas where entities could improve their contract reporting; and
• in response, it has either completed, or is in the process of completing, a range of initiatives to assist entities to better meet their reporting obligations and improve the accuracy and consistency of their reporting. The initiatives identified to the ANAO by Finance included:
  • a cross agency project to improve data quality for entities that use SAP⁶;
  • introducing additional fields into AusTender that require entities to record the justification for undertaking a procurement that is above the relevant procurement threshold through a limited tender⁷;
  • working with the Australian Bureau of Statistics to refine the methodology that is used to estimate the level of small and medium enterprise (SME) participation⁸; and
  • consolidating all information and guidance on the reporting requirements into a Procurement Reporting Resource Management Guide (RMG).⁹

Rationale and approach

1.8 The purpose of the ANAO is to support accountability and transparency in the Australian Government sector through independent reporting to the Parliament, and thereby contribute to improved public sector performance. The Auditor-General Act 1997 (section 25) enables the Auditor-General at any time to cause a report to be tabled in either House of the Parliament on any matter.

1.9 This is the second information report prepared by the ANAO on Australian Government procurement contract reporting. It incorporates more recent data than the December 2017 report (up to 30 June 2019 compared with 30 June 2017) and also includes analysis of historic trends over a longer period of time (10 years compared with five).

1.10 This information report presents no conclusions or opinions. This is because it is neither an audit nor an assurance review. For example, the ANAO did not test the integrity of the underlying data used to prepare this report. The ANAO performed diagnostics over the AusTender data provided by Finance to prepare for the analysis in this report, and confirmed that the same data extract was used by Department of Finance to produce statistics on Australian Government Procurement Contract Notices.¹⁰

1.11 The report was prepared at a cost to the ANAO of $205,000.

Entities required to report on AusTender

2.1 As of September 2019, there were 190 Australian Government entities governed by the PGPA Act. This comprised:

• 101 non-corporate Commonwealth entities (NCCEs);
• 71 corporate Commonwealth entities (CCEs, that is, a body corporate); and
• 18 Commonwealth companies (that is, a Corporations Act 2001 company that the Commonwealth controls).

2.2 The CPRs outline the procurement policy framework that applies to nearly two thirds of PGPA Act entities. Their core objective is to ensure the 125 covered entities¹¹ achieve value for money in the conduct of procurement activity. The CPRs apply to all NCCEs. In addition, the Finance Minister is able to prescribe that corporate Commonwealth entities and/or wholly-owned Commonwealth companies comply with the CPRs. At the time this Information Report was prepared, 24 of the 71 CCEs are prescribed under section 30 of the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) to comply with the CPRs. In addition to those 24 CCEs, section 29AA of the PGPA Rule applies the CPRs to the Commonwealth Superannuation Corporation, but only in relation to its function of providing administrative services relating to the superannuation schemes it administers. None of the 18 Commonwealth companies were prescribed. Table 2.1 provides details.

Table 2.1: Corporate Commonwealth Entities as at September 2019

Source: ANAO analysis of the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule).

2.3 The value of Australian Government procurement activity reported in AusTender excludes that undertaken by 34 per cent of Australian Government entities not covered by the CPRs. Some of those entities are engaged in significant procurement activities.¹²

2.4 For the 125 covered entities, the CPRs require the publication through the AusTender procurement information system of certain procurement information, including some details of contracts that have been awarded above specified thresholds (see Table 2.2 below). AusTender reporting is not required for contracts with a value below those thresholds.

Reporting thresholds

2.5 Entities required to report on AusTender must publish parent contracts and amendments if they are valued¹³ at or above the relevant reporting threshold.

2.6 Table 2.2 illustrates the AusTender reporting thresholds for different categories of entities as well as the thresholds specified for the additional procurement rules in the CPRs (sometimes referred to as ‘covered’ procurements). When the expected value of a procurement is at or above the relevant ‘procurement threshold’ additional rules in the CPRs must also be followed unless an exemption applies. Primarily, those additional rules require that, except under specified circumstances, procurements valued above the threshold must be conducted by an open approach to the market.

Table 2.2: Reporting and procurement thresholds

Note: The CPRs (paragraph 3.8) state that the Commonwealth Superannuation Corporation must also report contracts with a value above $80,000 in regards to its administrative functions only, and it has reported 1,520 contracts valued at $338 million. The Corporation is not one of the CCEs prescribed as being required to comply with the CPRs.

Source: ANAO analysis of the Commonwealth Procurement Rules (CPRs).

Number and value of contracts being reported

2.7 Over the ten years up to and including 2018–19, 651,951 parent contracts were reported on AusTender. There were also 94,155 amendments reported over this period. The total value reported was $490.8 billion, comprising $378.4 billion worth of parent contracts and $112.4 billion in amendments.

2.8 More than 99 per cent of the number (98.7 per cent by value) reported on AusTender over the ten years analysed by the ANAO were reported by NCCEs.

2.9 Of the 25 CCEs prescribed to comply with the CPRs, 23 reported 6,348 contracts on AusTender over the ten year period of analysis, with an aggregate contract value reported of $6.60 billion. No contracts were reported in that period by the Australian Institute of Marine Science or the National Portrait Gallery of Australia.¹⁴ Among the 23 CCEs reported, five CCEs reported fewer than ten contracts over the period analysed by the ANAO.¹⁵

2.10 On an annual basis, as illustrated by Figure 2.1¹⁶:

• the number of parent contracts being reported has been stable for the last five years averaging 61,182 parent contracts reported annually. Over five financial years, there was a low of 58,337 parent contracts in 2016–17 and a high of 62,928 parent contracts reported in 2018–19;
• The number of amendments has not fallen below 11,600 in five years. The number of amendments reported was at the highest level yet in 2018–19; and
• the total contract value reported over the five years up to and including 2018–19 was $305.3 billion, an average of $61.1 billion per year. A feature of the reporting of contract notices has been considerable volatility in the value of amendments from year to year. The reported value of amendments was 20 per cent of the total value reported in 2014–15, increasing to nearly 27 per cent in 2018–19. The peak occurred in 2017–18, when the value of amendments reported was 39 per cent of the total contract value reported.

Figure 2.1: Number and value of contracts reported: 2014–15 to 2018–19

Note: Reliable data on amendments was not available for the first four years of the ten year period analysed by the ANAO.

Source: ANAO analysis of AusTender data.

2.11 As illustrated by Table 2.3, the average value of reported contracts and amendments has, in general, been increasing.

Table 2.3: Average contract value for parent contracts and amendments

Source: ANAO analysis of AusTender data.

2.12 As the value of contract amendments varies considerably from year to year, further analysis has been undertaken of amendments. Given AusTender did not have functionalities to report amendments before 2012–13, the ANAO’s analysis of amendments involved six years of data (from 2013–14 to 2018–19). Over this period:

• from a population of 365,301 parent contracts, there were a total of 37,611 (10 per cent) with at least one amendment, which will be referred to as ‘amended contracts’ for the remainder of this analysis; and
• in total, there were 72,411 amendments published. While the majority of contracts that were amended were amended once, almost one-third of contracts that have been amended were amended on more than on occasion (see Table 2.4).¹⁷

Table 2.4: Breakdown of amendment volume to amended contracts

Source: ANAO analysis of AusTender data.

Amendments to contracts within 12 months of the parent contract being reported

2.13 Over the six years analysed, less than nine per cent of amended contracts were reported as being amended within twelve months of being published. The proportion of parent contracts amended within 12 months in 2018–19 was the lowest of the six years analysed, at 6.2 per cent. ¹⁸

Extending contract end dates

2.14 As amendments to contract end dates overwrite the original end date in AusTender, it was not possible for the ANAO to use the dataset obtained for this information report to analyse the extent to which contract end dates have been amended.

Increasing contract values

2.15 AusTender data identifies both the value of the parent contract and the value of any subsequent amendments above the required threshold (refer to Table 2.1).

2.16 The use of limited tender is restricted by a set of conditions for contracts above certain thresholds (see Table 2.1). From 2013–2014 to 2018–2019, less than two per cent of amended contracts had their value amended from below the relevant threshold to above the threshold. Where such amendments occurred, they were significantly more common for non-construction services procurements undertaken by NCCEs (compared with construction services procurements and non-construction procurements undertaken by CCEs).

2.17 Where an amendment to increase the value of a contract has been reported on AusTender, the extent of the increase has often been significant. For example, and as illustrated by Figure 2.2, 41.8 per cent of amended parent contracts had their value increase by more than 100 per cent, including 19.9 per cent of amended contracts where the value increased by 200 per cent or more.

2.18 In determining whether the value of the procurement is above the relevant threshold, the CPRs require entities to estimate the maximum expected value including options, extensions, renewals or other mechanisms that may be executed over the life of the contract. This is different from the methodology used to determine the reported value for AusTender purposes where Finance guidance requires that an entity report the total value of the contract (including GST where applicable) and that the reported value not take into account any options, extensions, renewals, or other mechanisms that may be exercised at a future date to increase the value of the contract.

2.19 Where an amendment is reported onto AusTender, the possible reasons for the amendment include:

• exercise of options within the contracts;
• there was an increase in scope or an extended timeframe; and/or
• an increase in contract value.

2.20 The AusTender dataset does not capture specifically the reasons for amending a contract.

Figure 2.2: Range of value increase through amendments published

Source: ANAO analysis of AusTender data.

2.21 Table 2.5 outlines the top 10 procurement categories with parent contracts that increased in value by more than 200 per cent.

Table 2.5: Amended contracts with over 200 per cent increase in value by procurement category^a

Note a: Two amendments were without parent contracts. They were not included the analysis.

Note b: There are 37 categories. The top 5 by volume are Temporary personnel services (1077 contracts), Legal services (951 contracts), Project management (521 contracts), Management advisory services (240 contracts) and Personnel recruitment (200 contracts).

Source: ANAO analysis of AusTender data.

2.22 It is not possible from AusTender reporting to identify the reasons for increases to contract values. This includes, for example, whether the increase relates to the same scope as originally contracted, an increased scope, a longer timeframe for delivery, or exercising an existing extension option in the contract.

High value contracts

2.23 The ANAO analysis of the reported number and value of contracts suggests that the reporting entities may be awarding higher valued contracts. Consistent with this, a small number of high-value AusTender records represented the majority of total contract value reported as being awarded each year. Table 2.6 sets out the lowest number of high value records that makes up 80 per cent of total reported contract value.

Table 2.6: Lowest number of high value records that makes up 80 per cent of contract value

Source: ANAO analysis

2.24 Table 2.7 is a subset of Table 2.6 with the Department of Defence excluded. After excluding the contracts from the Department of Defence, there remains a small number of high value contracts contributing to the total procurement value.

Table 2.7: Lowest number of high value records that makes up 80 per cent of contract value (excluding Department of Defence)

Source: ANAO analysis.

Timeliness of reporting

2.25 The CPRs state that relevant entities must report contracts and amendments on AusTender within 42 days of entering into (or amending) a contract if they are valued at or above the reporting threshold.

2.26 Between 2009–10 and 2018–19 there were 140,336 instances (19 per cent) where a contract or amendment was published 42 days or more after the reported start date. For analysis, the ANAO considers these to be non-compliant contract notices. As illustrated by Figure 2.3, extended delays have not been uncommon.

Figure 2.3: Non-compliant contract notices by financial year (2009–2010 to 2018–2019)

Source: ANAO analysis of AusTender data.

2.27 Table 2.8 shows non-compliance with the 42 days publishing rule each year for the ten year period analysed by the ANAO. Compliance improved between 2009–10 and 2016–17, but deteriorated in 2017–18 and 2018–19.

Table 2.8: Volume and percentage of contract notices published 42 days or more after the reported start date

Source: ANAO analysis of AusTender data.

3.1 The categories of procurement methods set out in the CPRs have varied over time. For the majority of the ten year period examined by the ANAO, the choices were:

• ‘open tender’, defined as involving publishing an open approach to market and inviting submissions. This includes multi-stage procurements, provided the first stage is an open approach to market and where a panel is established through an open approach and then individual procurements involve using this panel to select a provider;
• ‘prequalified tender’¹⁹, which involves publishing an approach to market inviting submissions from all potential suppliers on:
  • a shortlist of potential suppliers that responded to an initial open approach to market on AusTender;
  • a list of potential suppliers selected from a multi-use list established through an open approach to market; or
  • a list of all potential suppliers that have been granted a specific licence or comply with a legal requirement, where the licence or compliance with the legal requirement is essential to the conduct of the procurement; and
• ‘limited tender’, where one or more potential providers are approached to make a submission. Limited tender includes the category previously referred to as ‘direct source procurement’.

3.2 The analysis in this chapter shows reported use of these three procurement methods. Readers should apply some caution to interpreting the results given ANAO audit reports have identified errors by entities when reporting on the procurement method.²⁰ In addition, performance audits have also identified that a procurement approach that commences with an open approach to the market does not necessarily mean that the procurement process promoted effective competition.²¹

Procurement method

3.3 Achieving value for money is the core rule of the CPRs. Generally, the more competitive the procurement process, the better placed an entity is to demonstrate that it has achieved value for money and so competition is a key element of the procurement framework.²² Competition encourages respondents to submit more efficient, effective and economical proposals. It also ensures that the purchasing entity has access to comparative services and rates, placing it in an informed position when evaluating the responses. Over a period of ten years, 44 per cent by value (37 per cent by count) of contract notices (parent contracts and amendments) with value above the relevant procurement threshold were reported as being let through limited tender.

3.4 Open tender and prequalified tender promote competition, whereas limited tender, as its name suggests, limits competition. While the CPRs emphasise the benefits of open and effective competition, limited tender is the most commonly used procurement approach. As illustrated by Figure 3.1:

• across the ten year period analysed, 55 per cent of parent contracts were reported as having resulted from a limited tender procurement method; and
• limited tender consistently represented the reported method for between 50 per cent and 55 per cent of parent contracts. This proportion was at its lowest in 2009–10 (at 49 per cent) and its highest in 2014–15 (at 59 per cent).

Figure 3.1: Reported procurement method: 2009–10 to 2018–19

Source: ANAO analysis of AusTender data.

Extent to which higher value contracts have resulted from a competitive approach

3.5 As illustrated by Table 2.1 on page 9, different procurement thresholds are in place for identifying when Division 2 of the CPRs applies (which restricts the use of limiter tender approaches) depending on whether the procurement is for construction services and whether the entity is a NCCE or prescribed CCE.

Construction services contracts for all reporting entities

3.6 Entities are not required to identify in AusTender whether a contract relates to construction services. For the purposes of analysis, the ANAO considered contracts in three categories as relating to construction services²³ and the remainder as being non-construction services.

3.7 Table 3.1 illustrates the procurement approaches reported as having been used for construction services contracts. There were 35,217 construction services contracts worth $43.5 billion reported across the ten years analysed by the ANAO. A significant proportion of those contracts (42.6 per cent by volume) were reported as having been let through a limited tender. By value, the limited tender construction services contracts were worth $5.94 billion or 13.6 per cent of the total.

Table 3.1: Procurement approach reported for construction services contracts

Source: ANAO analysis of AusTender data.

3.8 The significant majority (99.3 per cent by volume) of construction services contracts reported as having resulted from a limited tender procurement were valued below the $7.5 million threshold. A small number (98 or 0.7 per cent of the total number) of contracts above the $7.5 million threshold comprised the majority by value of all construction services contracts reported as having resulted from a limited tender procurement (54.5 per cent). This indicates the use of competitive approaches for construction services contracts increases as the value of the contract increases:

• by number, 42.6 per cent of construction services contracts with a reported value below $7.5 million were let through a limited tender compared with 17.4 per cent of contracts with a value above the $7.5 million threshold; and
• by value, 26.2 per cent of construction services contracts with a reported value below $7.5 million were let through a limited tender compared with 9.7 per cent of contracts with a value above the $7.5 million threshold.

Corporate Commonwealth entities non-construction services contracts

3.9 Table 3.2 illustrates the procurement approaches reported as having been used by prescribed CCEs. There were 4,926 non-construction services contracts worth $4.15 billion reported across the period analysed by the ANAO. A significant proportion of those contracts (49.8 per cent) were reported as having been let through a limited tender. By value, the majority (57.6 per cent) of these contracts were reported as having resulted from an open tender approach.

Table 3.2: Procurement approach reported by prescribed CCEs for non-construction services

Source: ANAO analysis of AusTender data.

3.10 Specific to non-construction services contract notices, of the 23 prescribed CCEs that had reported on AusTender²⁴, there were three that did not report any contracts having been let through a limited tender approach.

3.11 As illustrated by Table 2.1 on page 9, five of the 25 prescribed CCEs have a reporting threshold of $80,000, and the remaining 20 have a reporting threshold of $400,000 for non-construction services contracts. In this respect:

• 15 of the prescribed CCEs reported a total of 2,618 non-construction services contracts with a value below $80,000, which did not need to be reported; and
• the five entities identified in the CPRs as having a reporting threshold of $80,000 reported 674 non-construction services contracts with a value of $80,000 or higher. There were a further 15 prescribed CCEs that reported a total of 761 non-construction services contracts with a value between $80,000 and the reporting threshold of $400,000 specified for them in the CPRs. Those 761 contracts did not need to be reported.

3.12 As illustrated by Figure 3.2, the extent to which prescribed CCEs have reported using limited tenders for non-construction services contracts valued above the relevant threshold in the CPRs has varied considerably.

Figure 3.2: Extent to which prescribed CCEs have reported using limited tender for non-construction services contracts with a value at or above relevant threshold

Source: ANAO analysis of AusTender data.

Non-corporate Commonwealth entities non-construction services contracts

3.13 Over the ten years analysed by the ANAO, NCCEs reported 626,202 non-construction services contracts valued at $405.5 billion.

3.14 Limited tender was the most commonly reported procurement method for NCCEs non-construction services contracts with a reported value under the $80,000 procurement threshold. Specifically, 62 per cent of contracts representing 58 per cent of the NCCEs non-construction services contract values were reported as resulting from a limited tender.

3.15 It was less common for NCCEs non-construction services contracts above the procurement threshold to be reported as having resulted from a limited tender. The percentages nevertheless remained relatively high at 37 per cent and 47 per cent.

3.16 NCCEs report higher use of limited tender approaches to non-construction services procurement compared to the use of limited tender for prescribed CCEs to non-construction services procurement, and for all entities construction services procurement.

3.17 There has been significant variability across NCCEs as to the extent to which they have reported using limited tender procurement approaches. Figure 3.3 includes, by value, the ten NCCEs that reported the greatest use of limited tender for parent contracts and amendments above the $80,000 threshold and illustrates the extent to which a limited tender approach was reported as being used each year by those entities.

3.18 As illustrated by Figure 3.3, there has been a decline in what proportion of non-construction contracts reported by NCCE’s each year have resulted from limited tenders.

Figure 3.3: Proportion of the use of limited tender records at or above $80,000 by NCCE for non-construction contracts

Source: ANAO analysis of AusTender data.

3.19 As illustrated by Figure 3.4, there has been considerable variation in the extent to which NCCEs have reported using limited tenders over the ten year period analysed.

Figure 3.4: Proportional use of limited tender by value for non-construction contracts at or above $80,000 for NCCE control report entities

Source: ANAO analysis of AusTender data.

Recorded reasons for not employing competitive approaches for higher value contracts

3.20 From 1 July 2018, reporting entities are required to record in AusTender the justification for undertaking a procurement through limited tender that has an estimated value above the relevant procurement threshold. To date, there has been a high level of compliance with this requirement. Specifically, 99.1 per cent of contract notices with a value above $80,000 (99.9 per cent by value) have an exemption or condition recorded.²⁵

3.21 For Table 3.3 and Table 3.4, the ANAO analysis of exemption conditions and exemptions is based on parent contracts as this best reflects the initial procurement method of a contract.

3.22 Table 3.3 shows the total count of parent contracts and their total value against the limited tender conditions as stated in section 10 of the CPRs.

Table 3.3: Parent contract value and count of Limited Tender Conditions for financial year 2018–2019

Source: ANAO analysis of AusTender data.

3.23 If a limited tender condition is not provided for a limited tender contract at or above the relevant procurement threshold an exemption needs to be provided. Table 3.4 shows the total parent contracts value and their count against the Paragraph 2.6 and Appendix A exemptions. The significant majority (95 per cent) of the exemptions claimed under paragraph 2.6 of the CPRs were reported by the Department of Defence.

Table 3.4: Parent contract value and count of Paragraph 2.6 and Appendix A exemptions for financial year 2018–2019

Source: ANAO analysis.

4.1 Procurement panels are a tool for the procurement of goods or services regularly acquired by entities. Panels are established through procurement processes, where typically a number of suppliers are appointed through a contract or deed of standing offer. Panels are usually established at a point in time, and once established, a panel must be refreshable for other suppliers to join. Where panel arrangement was established by open tender, then purchases made from it are also reported as being made by open tender, even when not all suppliers represented on the panel are invited to respond to the particular procurement opportunity.

4.2 Entities in addition to the one that established a panel are able to use the panel where the initial request documentation and the contract permit this. Where the entity using the panel is not an AusTender reporting entity (see paragraphs 2.2 to 2.6), the contract entered into through the panel arrangement will not be reflected in AusTender data and so is not able to be reflected in the ANAO’s analysis. Analysis of the use of panels is also dependent on entities identifying in AusTender that the procurement came from accessing a panel and linking the reported contract notices to the panel that was accessed.²⁶

Use of panels

4.3 As illustrated by Figure 4.1, the number and value of panel contracts reported each year increased significantly over the last ten years. Finance advised the ANAO in February 2020 that:

The Panel Arrangement flag was introduced in 2014–15 and was applied to new and existing panels in anticipation of the release of Dynamic Sourcing for Panels. This is why there is significant growth in the number of contracts linked to the Panel flag over the ten year period.

Figure 4.1: Number and value of panel’s contracts reported: 2009–10 to 2018–19

Source: ANAO analysis of AusTender data.

4.4 Figure 4.2 illustrates that the use of panels has also grown in relative terms. In 2018–19, more than 36 per cent of reported contracts, involving over 17 per cent of reported contract values, were identified as having drawn from a panel.

Figure 4.2: Proportion of records with a panel arrangement identified

Source: ANAO analysis of AusTender data.

Concentration of suppliers

4.5 The first information report identified that the large majority of panels examined had a relatively small proportion of suppliers that were awarded the majority of contract value. This situation was similarly evident from the ANAO’s expanded and updated analysis as part of this second information report. For example, for eight of the top ten panels²⁷ by total value over the ten years analysed, less than one third of the suppliers represented on the panel were awarded at or over 80 per cent of the panel’s total value.

Table 4.1: Proportion of suppliers awarded at or over 80% of panel’s total value for top 10 panels by value (2009–2010 to 2018–2019)

Source: ANAO analysis of AusTender data.

Panel end dates

4.6 Panels have a set period of operation. For this reason, deeds of standing offer are to include a clear end date. This should be reflected in the specification in AusTender of a Standing Notice Offer (SON) end date.

4.7 Analysis of AusTender data (see Figure 4.4) identified the existence of parent contracts under panel arrangements that have been published with contract start dates after the published end date of the panel. There were more than 1,000 such instances out of 113,345 across the ten years analysed by the ANAO. As illustrated by Figure 4.4, there has been a significant increase in the incidence of this occurring in recent years, with 269 in 2018–19 alone.

Figure 4.3: Parent contracts under panel arrangements with start date after the panel’s end date

Source: ANAO analysis of AusTender data.

4.8 Reporting in AusTender has also included more than 17,000 contracts where the contract was reported as having an end date after the panel’s end date. Such instances have also increased significantly in recent years, as illustrated by Figure 4.5.

Figure 4.4: Parent contracts under panel arrangements with end date after the panel’s end date

Source: ANAO analysis of AusTender data.

4.9 Table 4.2 shows that it has been common for the contracted start date to be a significant period of time after the reported end date for the panel.

Table 4.2: Distribution of differences (days) for parent contracts started after its panel’s end date.

Note a: There was a parent contract with a start date in May 2018 registered to a panel that ended in Oct 2011. This is a difference of 2400 days.

Source: ANAO analysis of AusTender data.

5.1 Finance advised the ANAO that the AusTender system was designed and built to perform a gazettal function which means that it has a simple data structure, with a limited number of fields. Finance further advised the ANAO that there are no linkages to agency financial management information systems, beyond providing the capacity to upload data into the simple data structure. These circumstances affect the extent to which AusTender data can be used to analyse the types of goods and/or services being contracted, and the suppliers being contracted with.

5.2 Entities reporting contracts on AusTender use a subset of the United Nations Standard Products and Services Code (UNSPSC) to categorise the entry so as to identify the primary purpose of the contract. The ANAO used nine years of data (from 2010–2011 to 2018–2019) for analysis. This was because Finance’s code set of UNSPSCs could only be sufficiently mapped to AusTender data going back to 2010–2011.

Extent to which purchases are of ‘goods’ or ‘services’

5.3 Based on the procurement contract category, the majority of contracts (58 per cent by number and 64 per cent by value) have been for services rather than goods. Figure 5.1 shows the breakdown over the nine years of analysis. The total contract value for services was higher than that of goods in each year except for 2017–18.

Figure 5.1: Total contract notices value and record count by ‘goods’ and ‘services’ and financial publish year

Source: ANAO analysis of AusTender data.

5.4 On average over nine years, the value of services contracts ($29.1 billion per financial year) was significantly greater (36.7 per cent) than that of goods contracts ($21.3 billion per financial year).

Major procurement categories

5.5 A small number of procurement categories represent a significant proportion of total reported contract values. Of the 54 categories, one (Commercial and Military and Private Vehicles and their Accessories and Components) represents nearly one quarter of all reported contract values. As illustrated by Table 5.1, five categories represent more than two thirds of the total reported contract value.

Table 5.1: Top five procurement categories by contract value (2010–2011 to 2018–2019)

Source: ANAO analysis of AusTender data.

5.6 Within those five categories, it has been common for a small number of suppliers to dominate. Table 5.2 presents the top five suppliers against each category.

Table 5.2: Top 5 procurement categories and the largest suppliers: 2009–10 to 2018–19

Source: ANAO analysis of AusTender data.

5.7 Contract value for a number of procurement categories has been concentrated with a small number of suppliers. From 2010–2011 to 2018–2019, there were ten categories where one supplier was awarded more than 40 per cent of the total contract value (see Figure 5.2).

Figure 5.2: Procurement categories where one supplier represented more than 40% of contract value

Source: ANAO analysis of AusTender data.

5.8 Table 5.3 shows the categories and their top associated supplier by total contract value from 2009–2010 to 2018–2019. The total number of suppliers with at least one AusTender contract are also included. There are instances where one supplier has the majority of the total contract value in a procurement category with multiple suppliers.²⁸

Table 5.3: Procurement categories where one supplier occupied more than 40% of contract value and their associated count of suppliers

Note a: Proportion of contract value procured with the largest supplier as a proportion of all contract value in a procurement category from 2010–2011 to 2018–2019.

Source: ANAO analysis.

Consultancies

5.9 Contracts and amendments relating to consultancies are required to be identified on AusTender via the use of a ‘Consultancy Flag’ field, together with the supporting reason for the consultancy.

5.10 As illustrated by Figure 5.3, the nominal contract value under the ‘consultancy’ code reported on AusTender in 2018–19 is broadly at the same level as 2009–10. It initially declined to reach its lowest in 2013–14 when $365.9 million in consultancy contracts were reported. It has grown each year over the last five years. Consultancy contracts reported in 2018–19 totalled $647.0 million.

Figure 5.3: Total contract value by ‘consultancy code’ and financial publish year

Source: ANAO analysis of AusTender data.

5.11 Among all contracts awarded under consultancy category, the ‘need for specialised or professional skills’ has consistently been the reason reported as relating to the majority of the total contract value each year over the last ten years (see Figure 5.4).

Figure 5.4: Total contract value by consultancy reasons and financial publish year

Source: ANAO analysis of AusTender data.

5.12 The ANAO identified²⁹ eight non-Australian Government entities³⁰ that have been reported as significant providers of consultancy services. This analysis includes all contracts with those suppliers, irrespective of whether they have been flagged as a consultancy contract. Figure 5.5 illustrates the total reported value of contracts with these providers over the last ten years, as well as the proportion of the total that was reported for each provider.

Figure 5.5: Contracts value by significant consultancy services providers: 2009–2010 to 2018–2019 irrespective of consultancies classification

Source: ANAO analysis of AusTender data.

5.13 Figure 5.6 illustrates, for control report entities on AusTender, the extent to which they have reported awarding contracts to each of those eight providers.

Figure 5.6: Proportion of contract value by entity: 2009–2010 to 2018–2019^a

Note a: Analysis is a proportion based on total contract value reported against eight selected suppliers.

Source: ANAO analysis of AusTender data.