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Type: Performance audit
Report number: 3 of 2024-25
Portfolios: Infrastructure, Transport, Regional Development, Communications and the Arts
Entities: Department of Infrastructure, Transport, Regional Development, Communications and the Arts; Infrastructure Australia
Date tabled:
Audit Summary : show
Summary and recommendations
Background
1. The Victorian Government announced the construction of the Suburban Rail Loop (SRL) in August 2018. When complete, the SRL will be a 90-kilometre rail line from Cheltenham to Werribee.
2. In May 2022, a $2.2 billion initial contribution towards the SRL East project was announced by the Australian Labor Party as part of its 2022 federal election campaign. SRL East is the first section of the SRL project and connects Cheltenham to Box Hill.
3. The Australian Government committed $2.2 billion to SRL East in the October 2022–23 Federal Budget.
4. Australian Government funding for land transport infrastructure projects is administered by the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (the department) and the Department of the Treasury (Treasury), with input from the states and territories and Infrastructure Australia. The funding is governed by an approval process. As at June 2024, the SRL East project has progressed only through the first stage of the project approval process (refer to Figure 1.3).
Rationale for undertaking the audit
5. The Australian Government provides significant investment in land transport infrastructure, in partnership with state and territory governments. This audit provides assurance to Parliament that Australian Government funding decisions for the SRL East project were supported by appropriate advice and consistent with the requirements for Australian Government infrastructure investment.1
Audit objective and criteria
6. The audit objective was to assess whether the department effectively managed the approval and administration of the Australian Government’s $2.2 billion funding commitment towards SRL East.
7. To form a conclusion against the objective, the ANAO examined the following criteria:
- Did the department provide appropriate advice to the Australian Government on allocation of funding to SRL East?
- Were established processes for allocating infrastructure funding to the states and territories followed to protect the Australian Government’s interests and achieve value for money?
Conclusion
8. The department was largely effective in managing the approval and administration of the Australian Government’s $2.2 billion commitment to SRL East, noting the current status of the SRL East project within the project approval process.
9. The department provided largely appropriate advice to the Australian Government on the SRL East project, relative to its current status in the project approval process. The advice focused on including the $2.2 billion election commitment in the October 2022–23 Federal Budget. Other advice provided on the SRL East commitment to the Minister for Infrastructure, Transport, Regional Development and Local Government (the minister) was primarily through email correspondence or verbal advice — for which limited records were kept.
10. There are established processes in place to support land transport infrastructure investment by the Australian Government, which align with legislative requirements and have review mechanisms in place. For SRL East, the department has followed the components of the process required to be undertaken as of June 2024. As at June 2024, the SRL East is yet to go through the formal project approval process, which must occur before funding can be expended.
Supporting findings
Advice to government on the SRL East project
11. The department provided advice to the Australian Government on the SRL commitment as part of the October 2022–23 Federal Budget process. The department used the $2.2 billion election commitment as the basis for the level of funding and provided high-level risks, relative to the current status of the project in the project approval process. Where information was provided verbally between the department and the minister’s office, there were limited records kept by the department. (See paragraphs 2.2 to 2.25)
Process approval process
12. The process for the Australian Government to approve and administer land transport infrastructure investment projects aligns with legislation and frameworks. There are changes underway to the frameworks based on findings and recommendations from three external reviews conducted since 2022. (See paragraphs 3.3 to 3.32)
13. The SRL East project was identified as a land transport investment project by the department following the announcement of SRL East as a 2022 election commitment. The Australian Government’s commitment of $2.2 billion to the SRL East project was made through the usual Federal Budget processes. The $2.2 billion has been added to the national partnership agreement schedule as required and updated to reflect the change to the funding profile agreed to by the Australian Government as part of the Mid-Year Economic and Fiscal Outlook (MYEFO) 2023–24. (See paragraphs 3.33 to 3.35)
14. A project proposal report from the Victorian Government is due to be submitted to the department by the end of 2024 to facilitate assessment of the project and consideration and approval by the minister. An updated SRL business case is also required to be submitted to Infrastructure Australia by the Victorian Government for a formal evaluation, which is required as part of project approval for any Australian Government contribution to infrastructure projects over $250 million. (See paragraphs 3.36 to 3.48)
Summary of entity responses
15. The proposed report was provided to the department. Extracts of the proposed report were provided to Infrastructure Australia and the Treasury. The summary response from the department and the Treasury are provided below and the full responses from the department and the Treasury are at Appendix 1. Infrastructure Australia chose not to provide a response letter.
Department of Infrastructure, Regional Development, Transport, Communications and the Arts
The department welcomes the proposed report and the report’s overall conclusion that the department was largely effective in managing the approval and administration of the Australian Government’s $2.2 billion commitment to Suburban Rail Loop East (SRL East), noting the current project status within the project approval process.
As noted in the report, SRL East is yet to go through the formal project approval process, which must occur before Australian Government funding can be approved. Following receipt and assessment of a project proposal report from the Victorian Government, and having regard to the formal assessment provided by Infrastructure Australia, the department will provide advice to the Minister for Infrastructure, Transport, Regional Development and Local Government, in regards to approval of the SRL East project, in accordance with the Public Governance, Performance and Accountability Act 2013 and the National Land Transport Act 2014.
Infrastructure Australia
No summary response provided.
The Department of the Treasury
Treasury welcomes the report. Although there are no recommendations or findings specifically directed to Treasury, Treasury notes and accepts the report’s key message for all Australian Government entities, regarding the importance of appropriate records management and providing advice through formal ministerial briefings.
Key messages from this audit for all Australian Government entities
16. Below is a summary of key messages, including instances of good practice, which have been identified in this audit and may be relevant for the operations of other Australian Government entities.
Group title
Records management
Key learning reference
Type: Performance audit
Report number: 46 of 2023-24
Portfolios: Infrastructure, Transport, Regional Development, Communications and the Arts
Entities: Australian Communications and Media Authority
Date tabled:
Audit Summary : show
Summary and recommendations
Background
1. The Public Service Act 1999 requires that Australian Public Service (APS) employees, agency heads and statutory office holders abide by the APS Code of Conduct. The APS Code of Conduct, consistent with duties under the Public Governance, Performance and Accountability Act 2013 (PGPA Act), requires officials to declare the receipt of gifts, benefits and hospitality. Collectively, these requirements establish obligations for officials and Commonwealth entities in relation to how they manage the provision and receipt of gifts, benefits and hospitality.
2. Section 27 of the PGPA Act states that an official must not improperly use their position to gain, or seek to gain, a benefit to themselves or another person, or to cause, or seek to cause, detriment to the entity, the Commonwealth, or any other person.1 The National Anti-Corruption Commission Act 2022 also contains provisions against conduct that adversely affects (or could adversely affect) the honest and impartial exercise of any public official’s powers, functions or duties.2
3. The Australian Public Service Commission (APSC) publishes Guidance for Agency Heads – Gifts and Benefits. The principles underpinning this guidance are that:
- agency heads are meeting public expectations of integrity, accountability, independence, transparency and professionalism in relation to gifts and benefits; and
- there is consistency in relation to agency heads’ management of gifts and benefits across APS agencies and Commonwealth entities and companies.
4. The Australian Communications and Media Authority (ACMA), established under the Australian Communications and Media Authority Act 20053 (ACMA Act), is a non-corporate Commonwealth entity covered by the Public Service Act 1999. ACMA is the Australian Government regulator for a range of legislation covering Australia’s telecommunications, broadcasting, radiocommunications, unsolicited communications and certain online content. The ACMA Act establishes ACMA as a Commonwealth statutory authority and the ACMA Chair as the accountable authority.4 The Online Safety Act 2021 establishes the eSafety Commissioner as a statutory office holder5, supported by ACMA, and sets out the eSafety Commissioner’s functions and powers. In accordance with section 184 of the Online Safety Act 2021, ACMA must make available members of the staff of ACMA to assist the eSafety Commissioner to perform their functions and exercise their powers and are subject to the directions of the eSafety Commissioner. As at 30 June 2023, ACMA had 525 staff working in Canberra, Melbourne and Sydney.6
Rationale for undertaking the audit
5. Section 27 of the PGPA Act states that an official must not improperly use their position to gain, or seek to gain, a benefit to themselves or another person, or to cause, or seek to cause, detriment to the entity, the Commonwealth, or any other person. Public service entities must meet public expectations of integrity, accountability, independence, transparency, and professionalism. Acceptance of a gift or benefit that relates to an official’s employment can create a real or apparent conflict of interest that should be avoided.7
6. Public confidence in Commonwealth entities and the APS can be damaged when gifts and benefits that create a conflict of interest are accepted or not properly declared. APSC states in its publication, APS Values and Code of Conduct in practice, that the risk of the appearance of a conflict can be damaging to public confidence:
The appearance of a conflict can be just as damaging to public confidence in public administration as a conflict which gives rise to a concern based on objective facts.8
7. This audit provides assurance to the Parliament that ACMA has complied with gifts, benefits and hospitality requirements.
Audit objective and criteria
8. The objective of the audit was to assess whether ACMA had complied with gifts, benefits and hospitality requirements.
9. To form a conclusion against the objective, the ANAO adopted the following two high-level audit criteria.
Did ACMA have effective arrangements in place to manage gifts, benefits and hospitality?
Were ACMA’s controls and processes for gifts, benefits and hospitality operating effectively in accordance with policies and procedures?
10. The audit examined the management of gifts, benefits and hospitality within ACMA over the period from 1 July 2021 to 30 September 2023.
Conclusion
11. ACMA is partly effective in managing and controlling the risks associated with giving and receiving gifts, benefits and hospitality. ACMA’s policies are largely in place to manage gifts, benefits and hospitality. The implementation of its policies is partly effective, with deficiencies in enforcing the requirements for: making declarations of gifts, benefits and hospitality; complying with declaration timeframes; and the completion of mandatory training and conflicts of interest declarations.
12. ACMA has established largely fit-for-purpose arrangements to manage the compliance requirements and risks associated with the management of gifts, benefits and hospitality. ACMA has implemented policies for gifts, benefits and hospitality that include an internal declaration process to support the public reporting requirements for all officials including the agency head. The policies also identify business functions where the acceptance or provision of gifts, benefits and hospitality may create increased risk of conflicts of interest, impacting on ACMA’s integrity and independence as the Australian Government regulator for communications and media services. ACMA’s policy does not include the requirement in the APSC Guidance to declare items based on their market value and items accepted by the agency head’s immediate families and dependants where it is related to the agency head’s official duties. ACMA’s suite of mandatory training covers obligations relating to gifts, benefits and hospitality. Risks associated with the acceptance or provision of gifts, benefits and hospitality, and the controls in place to manage them, have not been identified, assessed, and documented in ACMA’s Strategic Risk Register, fraud and corruption risk register, and divisional risk registers.
13. ACMA’s controls are partly effective in supporting its compliance with gifts, benefits and hospitality requirements. Analysis identified 19 instances of gifts, benefits and hospitality that were not declared in accordance with ACMA’s policy requirements. Of ACMA’s declarations of gifts, benefits and hospitality, 42 per cent did not meet ACMA’s declaration timeframe of 14 days. Mandatory training and conflicts of interest declarations were not completed as required in ACMA’s policies. For Senior Executive Service (SES) officers’ conflicts of interest declarations that were completed in 2022 and 2023, ACMA could not provide evidence that the ACMA Chair as the accountable authority had reviewed these as required by ACMA’s policy.
Supporting findings
Arrangements for managing gifts, benefits and hospitality
14. ACMA’s Strategic Risk Register contains an assessment of an integrity-related risk and controls such as declarations of conflicts of interests, training, enhanced identity authentication checks, and awareness of the National Anti-Corruption Commission. The risk assessment does not identify and assess controls to address potential impacts to integrity from gifts, benefits and hospitality. ACMA’s fraud and corruption risk register makes no reference to risks or controls arising from the provision or acceptance of gifts, benefits and hospitality. ACMA’s divisional risk registers, including for the Office of the eSafety Commissioner, do not identify controls to manage and reduce risks to its integrity, particularly where the provision and acceptance of gifts, benefits and hospitality may create conflicts of interest for specific functions and positions. (See paragraphs 2.6 to 2.14)
15. ACMA has established requirements for its staff pertaining to being offered, accepting and offering gifts, benefits and hospitality. ACMA’s policy framework aligns with the APSC Guidance except in the areas of reporting items at market value, and the declaration of items received by the agency head’s immediate families and dependants where it is associated with the agency head’s official duties. ACMA’s policy framework could be strengthened to cover the range of circumstances of gifts, benefits and hospitality impacting conflicts of interest, particularly given ACMA’s role as a regulator of communications and media services. (See paragraphs 2.18 to 2.51)
16. ACMA has established mandatory training arrangements that include learning relating to the Commonwealth Resource Management Framework, fraud awareness and the APS Values and Code of Conduct. These topics include the potential conflicts of interest impacts from gifts, benefits and hospitality. (See paragraphs 2.53 to 2.55)
17. ACMA has established policy and processes that centralise the reporting of receipt and provision of gifts, benefits and hospitality declarations. The process supports the collation of items that are reportable under the APSC Guidance and ACMA’s policy framework for reporting gifts, benefits and hospitality. ( See paragraphs 2.56 to 2.60)
Implementation and effectiveness of arrangements for managing gifts, benefits and hospitality
18. ACMA has implemented preventative controls through its policies and declarations for gifts, benefits and hospitality, mandatory staff training, conflicts of interest declarations and delegations. ACMA’s preventative controls do not enable ACMA to effectively manage its risks relating to gifts, benefits and hospitality. ACMA relies on staff knowing its policy requirements and declaring all gifts, benefits and hospitality in a timely manner. ACMA has relied on staff to have undertaken the training and declaring potential conflicts of interest as its key preventative controls. Measures for staff training, conflicts of interest declarations and the timeliness of declaring gifts, benefits and hospitality within 14 days have not been effectively enforced to ensure compliance. (See paragraphs 3.2 to 3.33)
19. ACMA has establish detective controls through its bi-annual PGPA Management Assurance Survey and quarterly reminders to relevant officials as the key mechanisms to detect non-compliance with its policy requirements. ACMA’s quarterly email reminders and conflicts of interest declaration process support detection for its management of gifts, benefits and hospitality requirements. (See paragraphs 3.38 to 3.40)
20. When non-compliance with gifts, benefits and hospitality policy requirements is identified, ACMA seeks the staff member involved to make the declaration for collation and publication, where applicable, onto the gifts, benefits and hospitality register on ACMA’s website. (See paragraphs 3.41 to 3.43)
21. The ACMA Chair reviews the quarterly gifts, benefits and hospitality register and approves its publication on ACMA’s website. These declarations are reliant on staff knowing the declaration requirements within ACMA’s Official Hospitality and Business Catering Guide or from having received the quarterly reminder emails, rather than assurance arrangements that validate control effectiveness for its gifts, benefits and hospitality requirements. (See paragraphs 3.44 to 3.48)
Recommendations
Recommendation no. 1
Paragraph 2.15
Australian Communications and Media Authority:
- update the Strategic Risk Register and fraud and corruption risk assessment to include consideration of risks and controls in relation to gifts, benefits, and hospitality; and
- ensure that divisional risk assessments, including for the Office of the eSafety Commissioner, are completed for all business divisions and reflect the risks associated with gifts, benefits and hospitality, particularly for those functions with heightened risk.
Australian Communications and Media Authority response: Agreed.
Recommendation no. 2
Paragraph 2.38
Australian Communications and Media Authority review its policy framework for gifts, benefits and hospitality and implement amendments to align with the APSC Guidance for the requirements to declare items at current market value and the declaration of any service or item received by the family of the agency head, where there is a clear link with the agency head’s official duties.
Australian Communications and Media Authority response: Agreed.
Recommendation no. 3
Paragraph 3.34
Australian Communications and Media Authority establish governance and reporting arrangements to monitor and enforce its policy requirements for compliance with gifts, benefits and hospitality that include the completion of:
- declarations of offers, acceptance and the provision of gifts, benefits and hospitality within the stipulated time according to ACMA’s policy framework and delegations;
- mandatory training; and
- conflicts of interest declarations and management of actual or potential conflicts.
Australian Communications and Media Authority response: Agreed.
Summary of entity response
22. The proposed audit report was provided to ACMA. ACMA’s summary response to the audit is provided below and its full response is at Appendix 1.
The ACMA, including the Office of the eSafety Commissioner (eSafety), acknowledges the ANAO’s findings and agrees with, and has already taken steps to implement, the three recommendations identified in the Report. The ACMA remains committed to strengthening our controls for managing the risks associated with the giving and receiving of gifts, benefits and hospitality, including managing real and perceived conflicts of interest.
The ACMA will also implement all the additional opportunities for improvement identified in the Report in line with government best practice. Actions arising from the ANAO’s audit will include improved processes to ensure compliance with updated internal policies, additional reviews and cross-checking to avoid omissions and errors and better documentation of the assessment of conflicts of interest and actions to be taken where conflicts are identified. The ACMA thanks the ANAO audit team, who were professional and collaborative during their engagement with our staff.
Key messages from this audit for all Australian Government entities
23. This audit is part of a series of performance audits reviewing compliance with gifts, benefits and hospitality in selected non-corporate Commonwealth entities:
- Australian Communications and Media Authority;
- Department of the Treasury; and
- Murray Darling Basin Authority.
24. Key messages from this audit series will be outlined in an ANAO Insights product available on the ANAO website.
Type: Financial statement audit
Report number: 42 of 2023-24
Portfolios: Across Entities
Entities: Across Entities
Date tabled:
Audit Summary : show
Type: Performance audit
Report number: 34 of 2023-24
Portfolios: Infrastructure, Transport, Regional Development, Communications and the Arts
Entities: Australian Maritime Safety Authority
Date tabled:
Audit Summary : show
Summary and recommendations
Background
1. The Australian Maritime Safety Authority (AMSA) is responsible for providing the Australian Government’s network of marine Aids to Navigation (AtoN) to the commercial shipping industry that meets international standards. Since 2001, AMSA’s AtoN maintenance program has been implemented continuously through one external contractor, with the current contract due to end on 30 June 2024.
2. Between August 2022 and July 2023 AMSA undertook an open procurement process for the provision of AtoN maintenance services. One tender was received, which was from the incumbent contractor. After completing a full evaluation of the tender that was received, including a value for money assessment, a contract for the maintenance of the AtoN was not awarded.
Rationale for undertaking the audit
3. This performance audit of the AtoN maintenance procurement was undertaken in response to a request from the Minister for Infrastructure, Transport, Regional Development and Local Government (the minister).1 The request from the minister referenced concerns about the conduct of the procurement from the unsuccessful tenderer. This performance audit provides assurance to Parliament on the effectiveness of AMSA’s management of the 2022–23 AtoN maintenance procurement.
Audit objective and criteria
4. The audit objective was to assess the effectiveness of AMSA’s management of the 2022–23 AtoN maintenance procurement.
5. To form a conclusion against the objective, the following high-level criteria were adopted.
- Did AMSA take appropriate steps to encourage open and effective competition?
- Was the tender evaluation planned and undertaken consistently with the Request for Tender?
- In its management of the procurement process and when dealing with complaints from the unsuccessful tenderer, did AMSA act ethically and has it been accountable and transparent?
Conclusion
6. AMSA’s management of the 2022–23 AtoN maintenance procurement was largely effective. Achieving value for money is the core rule of the Commonwealth Procurement Rules (CPRs) and the result of the open tender conducted by AMSA identified that the tender received for AtoN maintenance services did not demonstrably represent value for money. Accordingly, and consistent with the CPRs, it was not in the public interest for AMSA to award a contract for AtoN maintenance services. In its debriefing of the unsuccessful tenderer for the AtoN maintenance services contract, and its public statements about the tender outcome, AMSA did not clearly communicate the reasons for not awarding the AtoN contract.
7. AMSA took appropriate steps to design and conduct the procurement in a way that would deliver open and effective competition. This included taking on board information obtained through a market sounding exercise. The tender closing date was also extended twice, at the request of potential tenderers. Some additional steps could have been taken in pursuit of the goal of open and effective competition, in recognition that there was an incumbent contractor, as follows:
- disclosing the weighting of the evaluation criteria, as this would have communicated to potential tenderers that their capability and capacity was more important than whether they had experience in providing the services being tendered. Identifying the weightings would also have allowed AMSA to meet the requirement under the CPRs that request documentation disclose the relative importance of the criteria; and
- clearly communicating to potential tenderers that the draft AtoN contract included with the Request for Tender (RFT) involved changes from the existing contract. This would not detract from tenderer’s responsibility to inform themselves about the services they were tendering to provide.
8. In response to the RFT, AMSA received one tender (from the incumbent contractor) for the AtoN contract. An absence of competition makes it more difficult for the procuring entity to be satisfied that that it has obtained value for money.
9. AMSA’s evaluation of the tender received for AtoN maintenance was planned and undertaken consistent with the RFT. The tender that was received was assessed as compliant. It was scored at 65.3 per cent against the four evaluation criteria included in the RFT, with AMSA identifying the scores as ‘marginal’ in a number of areas. As required by the CPRs and the RFT, tender evaluation was completed by AMSA undertaking a value for money assessment. That assessment concluded that a value for money outcome had not been achieved. On the basis of the evaluation results, AMSA’s conclusion that it was not in the public interest to award a contract was appropriate and complied with the CPRs. AMSA has not provided clear and accurate reasons for why it did not award a contract in its debrief of the unsuccessful tenderer or publicly.2
10. Important elements of a framework for conducting the procurement ethically were in place including a probity plan and the engagement of a probity advisor. There was no probity plan in place for the industry engagement activities that informed the design of the RFT. There were also a number of shortcomings in the implementation of the probity framework for the RFT, including insufficient risk management and a lack of evidence that all procurement personnel received probity briefings and completion of conflict of interest declarations. AMSA’s investigation of the procurement complaint made by the unsuccessful tenderer under the Government Procurement (Judicial Review) Act 2018 was timely and scoped appropriately. There were errors in the investigation report although those errors did not affect the findings that the alleged breaches of the CPRs had not occurred.
Supporting findings
The approach to market
11. Prior to, and separate from the RFT, AMSA conducted a market sounding exercise. This was conducted by AMSA issuing an open Request for Information (RFI). The 14 submissions received by AMSA:
- provided information about the likely level of market interest in the AtoN maintenance and level 1 Emergency Towage Capability (ETC) services contracts. There was no market interest in the AtoN contract separate to the ETC contract, seven respondents indicated interest in both contracts and seven respondents were interested solely in the ETC contract; and
- provided information that AMSA used to confirm the design of the contracts included in the subsequent approach to the market. AMSA decided to offer separate contracts for AtoN maintenance and ETC, as well as the opportunity to lodge a tender for both, and lengthened the proposed duration of the contracts (to ten years, with extension options for up to a further five years). (See paragraphs 2.1 to 2.9)
12. With the objective of having competition for the contracts, the procurement was conducted by way of an open RFT with the tender closing date extended twice. In addition to designing the RFT in a way intended to encourage competition, AMSA extended the tender closing date twice at the request of potential tenderers. To encourage competition, there would have been benefits in AMSA informing potential tenderers of the criteria weightings and also highlighting that some changes were proposed to the contract for AtoN maintenance compared with the existing contract.
13. The RFT did not result in competing tenders being received for the AtoN maintenance contract. Most of the respondents to the RFI did not proceed to lodge a tender. Seven RFI respondents indicated they were likely to tender for both contracts with six of those not proceeding to tender for both contracts (although one of those six did tender for the ETC contract). No RFI respondents indicated they were likely to tender for the AtoN contract alone. One tender for the AtoN contract was received, from the incumbent contractor. The incumbent contractor also tendered for the ETC contract. This was the only respondent that tendered to provide both services. (See paragraphs 2.10 to 2.22)
Tender evaluation
14. AMSA implemented appropriate arrangements to govern the evaluation of tenders. (See paragraphs 3.1 to 3.10)
15. An evaluation plan was documented and approved prior to tenders closing. The evaluation plan was consistent with the RFT, with the exception of including criteria weightings that had not been disclosed in the RFT. (See paragraphs 3.11 to 3.13)
16. The tender received for AtoN maintenance services was evaluated in the manner required by the RFT. At the conclusion of tender evaluation, AMSA was unable to conclude that the tender offered value for money. This conclusion drew upon evaluation results against the four weighted criteria, as well as analysis of the price tendered. AMSA also took into account the nature and extent of contractual non-compliance identified, and the related risks, in identifying that tender clarification would, in effect, amount to bid repair. (See paragraphs 3.14 to 3.32)
17. AMSA has not clearly communicated the reasons for not awarding the AtoN contract. The result of the tender evaluation was that the tender received for the AtoN maintenance services had been assessed to not represent value for money. Statements by AMSA that a value for money assessment was not completed, or that the tendered price for AtoN maintenance services was not evaluated, are inconsistent with AMSA’s tender evaluation records:
- A Value for Money Assessment Report was prepared, and signed in June 2023 by each member of the two Procurement Evaluation Committees. It applied the methodology set out in the RFT to assess the value for money offered by the tenders received for the two contracts. This included comparing tendered prices to the pre-tender estimate, other ETC tenders (where there was competition) and to the cost of the existing AtoN maintenance contract (where there was no competition).
- The final Tender Evaluation Report, signed in June 2023 by each member of the Consolidation Evaluation Panel, recorded the Panel’s assessment of whether the tender received for AtoN maintenance services, as well as the tenders received for ETC services, represented value for money.
18. The value for money assessment, documented in these two evaluation reports, was relied upon by AMSA to support it awarding a contract for ETC services to the tender assessed as offering the best value for money. The same documents set out the evaluation conclusion that the one tender received for the AtoN maintenance services did not represent a value for money outcome and a contract should not be awarded.
19. If AMSA had not completed a value for money assessment, as AMSA has stated was the case, it would have been inconsistent with the RFT, as well as a breach of the CPRs. (See paragraphs 3.33 to 3.38)
Ethics, accountability and transparency
20. A probity plan was not in place to govern the industry engagement activities that informed the design of the procurement process. A probity plan was in place for the RFT process, and an external probity advisor was engaged. AMSA did not specifically assess probity risk and did not fully adhere to the probity plan requirements for procurement personnel to receive probity briefings and make conflict of interest declarations. The probity advisor provided an interim report at the completion of tender evaluation, and a final report following completion of the procurement process. (See paragraphs 4.1 to 4.26)
21. AMSA engaged a probity advisor for the RFT process and an internal audit of the procurement was undertaken. The commissioning of the internal audit did not follow AMSA’s internal processes and AMSA’s Board Audit and Risk Committee was not informed of the limitations regarding the assurance level of the work that was undertaken. The format of the report, a brief email, was not fit for its purpose. (See paragraphs 4.27 to 4.37)
22. There have been three complaints by the unsuccessful tenderer in relation to the AtoN tender.
- An August 2023 complaint under the Government Procurement (Judicial Review) Act 2018 alleging breaches of the CPRs was handled appropriately by AMSA. The investigation was appropriately scoped and completed in a timely fashion. There were two errors of fact3 in the investigation report. Those errors did not affect the investigation’s conclusion that the alleged contraventions of the CPRs had not occurred.
- In November 2023 the unsuccessful tenderer alleged that the Chair of the AMSA Board had a conflict of interest. AMSA advised the Department of Infrastructure, Transport, Regional Development, Communications and the Arts that the results of the evaluation process, and the decision that a contract should not be awarded, was not influenced by the Chair or any other member of the Board.
- Also in November 2023, the unsuccessful tenderer made allegations about the conduct of the chair of the Consolidation Evaluation Panel. Once it became aware of those allegations in January 2024, AMSA took timely and appropriate action to investigate, finding that there was no evidence to support the allegations. (See paragraphs 4.38 to 4.69)
Recommendations
Recommendation no. 1
Paragraph 2.19
The Australian Maritime Safety Authority strengthen its procurement controls and better inform the market by setting out in its request documentation the relative importance of the evaluation criteria that will be applied.
Australian Maritime Safety Authority response: Agreed.
Recommendation no. 2
Paragraph 2.22
When re-tendering contracts, the Australian Maritime Safety Authority consider the benefits to encouraging competition by identifying any major changes proposed to the contractual arrangements in the request documentation.
Australian Maritime Safety Authority response: Agreed.
Recommendation no. 3
Paragraph 3.37
When debriefing tenderers and in any public statements on the results of procurement processes, the Australian Maritime Safety Authority promote transparency by ensuring the reasons it provides are consistent with the tender evaluation reports.
Australian Maritime Safety Authority response: Agreed.
Recommendation no. 4
Paragraph 4.16
To effectively manage probity risks in procurement activities, the Australian Maritime Safety Authority:
- include an assessment of probity risks and identify how they should be managed within the risk register for large and/or complex procurements; and
- have in place a probity plan that governs any pre-procurement activities including industry engagement and addresses the way it will engage with any incumbent contractor(s) during the planning for, and conduct of, the procurement process.
Australian Maritime Safety Authority response: Agreed.
Summary of entity response
23. The proposed final report was provided to the Australian Maritime Safety Authority and extracts were provided to the Department of Infrastructure, Transport, Regional Development, Communications and the Arts. The summary response from AMSA to the report is provided below (the department did not provide a summary response). The full response from each entity is at Appendix 1.
Australian Maritime Safety Authority
AMSA takes seriously its obligations to comply with the Public Governance, Performance and Accountability Act 2013, the Commonwealth Procurement Rules and conducting procurements ethically under its own internal procurement requirements. AMSA appreciates the ANAO’s conclusion that AMSA’s management of the AtoN maintenance procurement was largely effective and that consistent with the Commonwealth Procurement Rules it was not in the public interest for AMSA to award a contract for AtoN maintenance services. AMSA also accepts the identified recommendations and the suggested opportunity for improvement and will amend its practices accordingly.
Key messages from this audit for all Australian Government entities
24. Below is a summary of key messages, including instances of good practice, which have been identified in this audit and may be relevant for the operations of other Australian Government entities.
Group title
Procurement
Key learning reference
Type: Performance audit
Report number: 31 of 2023-24
Portfolios: Infrastructure, Transport, Regional Development, Communications and the Arts
Entities: Department of Infrastructure, Transport, Regional Development, Communication and the Arts; Department of Industry, Science and Resources
Date tabled:
Audit Summary : show
Summary and recommendations
Background
1. The Growing Regions Program is an open, competitive grants program that provides grants to local government entities and eligible not-for-profit incorporated organisations for capital works projects that deliver community and economic benefits across regional and rural Australia. To be eligible, a project’s location must be outside the Greater Capital City Statistical Areas (GCCSA) as defined by the Australian Bureau of Statistics.1
2. The Australian Government has committed $600 million over three years from 2023–24 for the Growing Regions Program. The program will be conducted across two rounds with $300 million available in each round. Within each round, grants between $500,000 and $15 million will be awarded to eligible applicants to deliver priority community and economic infrastructure projects.
3. On 24 October 2022, the Minister for Infrastructure, Transport, Regional Development and Local Government (the minister) announced that following consultation and review of the funding process, the Australian Government would adopt a ‘new approach to restore accountability, transparency and fairness to regional infrastructure grant programs’. It was also announced that round six of the Building Better Regions Fund and the Community Development Grants program were being discontinued. Allocated funds from these programs were redistributed to the new programs in the October 2022–23 Federal Budget.
4. Round one of the Growing Regions Program opened on 5 July 2023 and received 650 applications with a total requested funding of $2.7 billion. The announcement of funding for round one was expected to be made in March 2024 with contract negotiations expected to be finalised by May 2024. The minister announced the funding for successful projects on 16 May 2024. The implementation of the Growing Regions Program has experienced delays impacting the opening of the full application process and the announcement of funding.
5. The Department of Infrastructure, Transport, Regional Development, Communications and the Arts (Infrastructure) is the Australian Government entity responsible for the Growing Regions Program. Infrastructure has engaged the Department of Industry, Science and Resources (DISR), through the Business Grants Hub, to administer the program.
Rationale for undertaking the audit
6. The Growing Regions Program is a new grants program and is one of the largest competitive grant programs administered by Infrastructure. The program also contains a new design feature — a two-stage assessment process with an expression of interest (EOI) stage assessed by a multi-party parliamentary panel.
7. Previous ANAO audits found deficiencies in Infrastructure’s implementation of regional grants programs including program design, providing information to the delegate, and transparency of decision-making. This audit provides assurance to the Parliament on the design of the Growing Regions Program and whether Infrastructure has implemented lessons learned from previous grants programs.
Audit objective and criteria
8. The objective of the audit was to assess the effectiveness of the design and planning of the Growing Regions Program.
9. To form a conclusion against the objective, the following high-level audit criterion was applied.
- Was the program effectively designed and planned?
10. The scope of this audit focused on the design and planning of the Growing Regions Program up until the opening of applications in July 2023. A second audit report is planned to table during 2024 focusing on the assessment of applications and the decision-making for the funding of projects.
Conclusion
11. The design of the Growing Regions Program was largely effective.
12. Infrastructure developed program objectives and outcomes that align with the overall government policy objective after capturing and documenting lessons learned from previous grants programs. Infrastructure consulted with stakeholders during the planning of the Growing Regions Program and met the mandatory requirements against the Commonwealth Grants Rules and Guidelines 2017 (CGRGs) for the grant opportunity guidelines.
13. Infrastructure’s design and planning work fell short in the following areas:
- Infrastructure developed targets for measuring the establishment and implementation of the program, however targets against the program objectives have not been developed. Infrastructure has not developed corporate performance measures for the program.
- The minister expressed a clear intention to have a two-stage assessment process with a panel assessing EOI applications, however planning work for this option was not undertaken. Not all identified risks were provided to the minister on the design of the program application process, particularly around introducing an EOI step assessed by a panel.
- Infrastructure has not met best practice principles of the CGRGs in terms of having clear assessment criteria, appropriate weighting for criteria and providing grant opportunity guidelines to stakeholders for consultation as planned.
Supporting findings
14. Infrastructure developed objectives and outcomes for the Growing Regions Program that align with the overall program objective agreed to by government. Infrastructure developed internal measures of success for the program but has not set measurable targets to determine if the objectives of the program are being met. There are also no corporate performance measures in place for the program. Infrastructure is working with the Business Grants Hub to collect data to report on program progress and outcomes.(See paragraphs 2.4 to 2.15).
15. During the planning of the Growing Regions Program, Infrastructure captured and documented lessons learned from previous grant programs. Infrastructure used the lessons learned to inform design features of the program, for example, the assessment criteria and the final decision-making processes. (See paragraphs 2.20 to 2.24).
16. Infrastructure planned and undertook consultation on the design principles and draft grant opportunity guidelines. Infrastructure engaged with and sought submissions from program stakeholders including Regional Development Australia, peak bodies and Local Government Associations. The outcomes of the consultations demonstrated that stakeholders supported Infrastructure’s proposed design principles. (See paragraphs 2.25 to 2.34).
17. Infrastructure provided advice to the minister on program design including: identifying the types of projects and applicants who would be eligible; options for the assessment process and merit criteria; and the role a panel could play in assessing applications. After the minister expressed a preference for a panel to assess the EOI, Infrastructure presented alternative delivery models for the program, including different options for panel arrangements. While Infrastructure’s planning processes had identified concerns over introducing an EOI assessed by a panel, all risks associated with this approach were not provided to the minister. Infrastructure’s design work relating to how a panel would assess an EOI stage and the engagement of a grants hub to administer the program was not thorough or timely. (See paragraphs 2.35 to 2.76).
18. The grant opportunity guidelines developed by Infrastructure addressed the two mandatory requirements of the CGRGs. The guidelines met the best practice principles except for not providing clear guidance and appropriately weighted criteria for the EOI process, and not providing the grant opportunity guidelines to stakeholders prior to or during consultations. The grant opportunity guidelines were approved on 5 May 2023 and published on GrantConnect on 8 May 2023. (See paragraphs 2.77 to 2.107).
Recommendations
Recommendation no. 1
Paragraph 2.16
The Department of Infrastructure, Transport, Regional Development, Communications and the Arts develops performance measures and targets to determine whether the program objectives of the Growing Regions Program are being met, and reported in its annual performance statements.
Department of Infrastructure, Transport, Regional Development, Communications and the Arts response: Agreed in principle.
Recommendation no. 2
Paragraph 2.53
The Department of Infrastructure, Transport, Regional Development, Communications and the Arts ensures future regional grants programs are informed by:
- appropriate information to decision-makers on all program risks; and
- timely planning to be able to provide clear advice to government.
Department of Infrastructure, Transport, Regional Development, Communications and the Arts response: Agreed in principle.
Summary of entity response
19. The proposed audit report was provided to Infrastructure and DISR. Infrastructure and DISR’s summary responses are reproduced below. The full responses from both entities are at Appendix 1. Improvements observed by the ANAO during the course of this audit are listed in Appendix 2.
Department of Infrastructure, Transport, Regional Development, Communications and the Arts
The department welcomes the proposed report and the report’s overall conclusion that the design of the Growing Regions Program was largely effective.
The Growing Regions Program is a new regional infrastructure grant program which introduced new design features including place-based priority criteria and a multi-party parliamentary panel assessing the first stage expression of interest process. Some learning occurred with aspects of these new processes, which the department will incorporate into any future rounds of the Growing Regions Program and other relevant grant programs.
The department acknowledges the areas for improvement identified in the proposed report and agrees in principle with both recommendations.
Department of Industry, Science and Resources
The Department of Industry, Science and Resources acknowledges the Australian National Audit Office’s report on the Design of the Growing Regions Program.
The department notes the ANAO’s conclusion that the design of the Growing Regions Program was largely effective and met the mandatory requirements against the Commonwealth Grants Rules and Guidelines (CGRGs). The department notes the other areas identified for improvement.
As a shared service provider for Australian Government grants through the Business Grants Hub we will consider these key messages in the design and administration of future granting programs.
Key messages from this audit for all Australian Government entities
20. Below is a summary of key messages, including instances of good practice, which have been identified in this audit and may be relevant for the operations of other Australian Government entities.
Group title
Program design
Key learning reference