Background

Work for the Dole

1. The Department of Employment and Workplace Relations (DEWR) contributes to the Australian Government's employment outcomes by developing policies and implementing and managing programmes with the objective of providing efficient and effective labour market assistance, higher productivity, higher pay workplaces and increased workforce participation.

2. Work for the Dole (WfD), since its implementation in 1997, is one of the programmes designed to contribute to these outcomes. Like other employment programmes, WfD is administered by DEWR under the Active Participation Model (APM), a key component of DEWR's policy platform since July 2003.

Active Participation Model

3. Under APM, job seekers remain continuously engaged in employment assistance until they find suitable employment. After three months most persons who remain unemployed receive specialised one-on-one assistance from a Job Network Member. This assistance, referred to as Intensive Support, starts with Job Search Training. Persons who are then still in a position of being unable to find work after six months of unemployment move into a period of Mutual Obligation, involving participation in WfD or other programme and then on to Customised Assistance involving a more intensive form of personalised assistance to disadvantaged job seekers.

The Government's Mutual Obligation Policy

4. WfD is also a component of the Government's policy on Mutual Obligation, operating on the principle that participants supported financially by the community should actively improve their work skills and give something back to the community that supports them. While compelling some job seeker to participate, WfD provides work experience placements for unemployed persons in approved activities which provide facilities and services to local communities. The implicit aim of WfD is to improve job seeker employability through meeting WfD programme objectives. Participation requirements range from between twelve to fifty hours each fortnight for six to ten months and will generally depend on a person's age and the amount of benefit they are receiving. Appendix 1 sets out WfD participation requirements. Participants are categorised as either having a Mutual Obligation, being a Very Long-Term Unemployed person or a voluntary participant.

Community Work Coordinators

5. In line with the Government's intent to outsource service delivery, the WfD programme involves the delivery of programme services and activities through organisations known as Community Work Coordinators (CWCs). DEWR contracts CWCs to make WfD places available for persons seeking employment. CWCs are required to manage and develop work experience opportunities for eligible unemployed persons. CWCs are responsible for developing and making available quality and diverse programme activities that provide valuable work experience opportunities.

Sponsors and hosts

6. CWCs often sub-contract the provision of services to sponsors or hosts within the various labour market regions to broaden the opportunities for job seekers to participate in WfD activities. Outsourced service provision assists to deliver services across capital city, rural and remote towns and communities. In this devolved service delivery model, it is important that contractual performance is assessed by a robust, risk-based, monitoring regime that offers DEWR comfort that programme administration and service delivery is consistent and up to the standards expected by the department.

Expenditure

7. The WfD programme currently provides employment services to around 87 000 job seekers per annum, up from 53 000 in 2000–01. Overall funding appropriations for WfD programme administration has risen from $113 million in 2000–01 to an expected $193 million in 2006–07. Of the $193 million, approximately $110 million will be spent on the outsourced contractual services of CWCs including sponsors and hosts.

DEWR's National Contract Management Framework

8. DEWR's National Contract Management Framework (NCMF) provides the corporate framework for managing CWC contracts including DEWR's risk-based approach to contract management.

9. The NCMF interacts with the department's Risk Management Module (RMM) to support contract managers and account managers, and the RMM assists contract monitoring to focus on any areas of concern. DEWR also has an Assurance and Compliance Framework which complements the NCMF and supports the integrity of employment services programmes including WfD. As the employment and related services market operates in a dynamic and changing environment, this approach allows targeted assurance and compliance actively to focus on emerging and changing risks.

10. DEWR's controls for managing WfD risks include contractual arrangements with CWCs that act to protect the interests of the Commonwealth against potential liabilities that may arise from the actions of the CWC, or any sponsors or hosts. Under these arrangements, CWCs are contractually responsible to the department for the performance of the services, including the performance of any subcontractors. Accordingly, it is important that DEWR's risk-based approach to contract management is supported by a robust monitoring regime and clear escalation processes for DEWR's contract managers.

Audit Approach

11. The objective of the audit was to assess the efficiency and the effectiveness of DEWR's administrative oversight for the WfD programme. The components of administration examined included whether:

• the operation of the WfD programme was guided by sound business planning including risk assessment;
• DEWR effectively and efficiently managed, monitored and reported the performance of CWCs in meeting contractual obligations;
• adequate support was provided to DEWR contract managers and account managers to assist in the delivery of WfD outcomes;
• there was evaluation of the performance of CWCs in delivering WfD objectives on behalf of the department;
• DEWR measures the effectiveness of WfD against programme objectives; and
• DEWR had implemented agreed recommendations from the previous WfD audit, where current and relevant.

12. The scope of the audit included contracts administered by DEWR between 1 July 2004 and 30 June 2006, extending to on-going contracts up and until the time the Australian National Audit Office (ANAO) conducted fieldwork, in September and October 2006.

13. The ANAO selected a random-stratified sample of 25 contracts from a broad-based population of 115 CWC contracts operating through 321 sites across the country. The sample included contracts administered by 5 State and Regional Offices. The sample included a mix of contracts by value (large, medium and small) delivered by different types of organisation, including for-profit and not-for-profit CWCs, covering both on-going contracts and one-off contracts. Fieldwork involved interviewing DEWR contract managers and/or account managers, and analysing reports, documentation and IT systems.

14. To gather feedback from contracted providers, a census of CWCs participating in the programme between July 2004 and September 2006 was conducted on a range of administration and performance topics in September-October 2006.

Overall audit conclusion

15. WfD is a work experience programme that has been operating since 1997 and is now well established within the wider community. Overall, DEWR was effectively administering the WfD programme.

16. DEWR's administration of the WfD programme was supported by:

• sound business planning including risk assessment;
• appropriate contracts with CWCs; and
• desktop monitoring, site visits and quality audits.

17. In addition, DEWR's processing of CWC invoices for contract payments was found to be consistent with the terms and conditions of the contracts. Systematic analysis of computer records using auditing software to interrogate payments data demonstrated a high level of adherence to both conditions of the contract and to the department's business rules.

18. In its risk assessments, and also reflected in its operational guidance, DEWR has identified a number of key risks that concern the operation of the WfD programme including: occupational health and safety (OH&S) issues that may affect WfD participants; whether CWCs have appropriate insurance coverage to protect DEWR, CWCs and third parties; and whether CWCs have suitable financial management arrangements that support fraud control practices.

19. DEWR's Community Work Coordinator Services Contract (CWCSC) 2002 and Employment Services Contract (ESC) 2006–2009 contain clauses relating to insurance, sub-contracting arrangements and compliance with all relevant statutes, regulations, by-laws and requirements of any Commonwealth, State or Territory or local authority (this would include OH&S requirements). Fraud prevention responsibilities are also explicitly identified in the ESC 2006–2009. DEWR determines CWC compliance against these conditions through its monitoring arrangements.

20. In April 2005, an internal audit within DEWR reported on ‘Community Work Coordinators Management – Impact and Devolution of Duties'. The objective of the audit was to review the impact of the devolution of responsibility for approving activities to CWCs and whether ‘CWCs' are complying with programme rules in relation to the types of activities that they approve'. The report findings focussed on OH&S risks. The report concluded:

Controls could be strengthened by requiring CWCs to provide certification when approving activities that in their opinion the approved activity would meet the requirements of contract with DEWR and the CWC programme rules.

21. In line with the internal audit conclusion, DEWR's oversight of CWC activities could be consolidated if DEWR contract managers in their monitoring of CWCs, obtained assurance from CWCs that CWCs have up-to-date OH&S plans, current and paid-up insurances, and fraud control plans as required under contract. ESC 2006–2009 also requires CWCs to make all subcontractors (sponsors and hosts) aware of, and comply with, certain provisions in the CWCs contract with DEWR including subcontractors obtaining relevant insurances. DEWR's assessment of CWCs fulfilment of this function could be improved. By taking these steps, DEWR's risk-based approach to monitoring could be further strengthened to provide assurance that the contract clauses in ESC 2006–2009 were operating as intended.

22. DEWR is already skilling its contract managers in fraud awareness and fraud control. The department also makes available other training through its intranet and internet for its contract managers and CWCs. To complement this, DEWR would benefit from clearly articulating in its programme guidelines, the escalation process in DEWR for technical issues, such as insurance matters, for which higher level technical assistance may be required.

23. WfD is a mature programme that been operating for approximately a decade. Overall, DEWR has adopted an appropriate approach to the ongoing administration of WfD and during the course of the audit implemented a number of refinements to its contractual arrangements with CWCs – the WfD service providers. Consequently, the ANAO has not made any recommendations in this audit. The report nevertheless mentions some area where enhancements might be considered.

Key Findings

DEWR's Risk Assessment of CWCs (Chapter 2)

24. The ANAO sampled 25 CWCs randomly selected from 115 CWC contracts to examine DEWR's approach to contract risk management, in order to gauge whether risk assessments were completed and up-to-date.

25. The ANAO's examination of the sample of contracts indicated that risk assessments were completed by DEWR. Risk assessments were populated with risk descriptions, the approved status of the risk, likelihood of risk occurrence, risk consequence, risk rating and annotation where of concern. The ANAO also found evidence on file of completed Activity Risk Assessment forms underpinning the risk assessment process.

26. Overall, risk assessments for all CWCs drawn from the ANAO's sample were prepared by DEWR officers and appropriately signed-off by approving officers.

CWC Contracts (Chapter 3)

27. The ANAO found that appropriate contracts were in place for all CWCs included in the ANAO sample. These contracts outline the responsibilities of service providers while establishing a framework for DEWR to administer the programme. Contract management responsibility for contracts between CWCs and sponsors and hosts under programme arrangements rests with the CWC.

28. By adding and improving clauses involving fraud, insurances and sub-contracting, DEWR has strengthened the general conditions in ESC 2006–2009 from those in the now finalised CWCSC 2002 that prevailed during the audit period.

29. WfD programme guidelines, which complemented the contract between the department and a CWC, are the principal means for providing administrative guidance to managers and to CWCs about their rights, obligations, roles and responsibilities. The ANAO found these guidelines provided direction for DEWR contract managers managing provider service delivery.

Desktop Monitoring and CWC Site Visits (Chapter 4)

30. DEWR contract managers and account managers are primarily responsible for the risk management process in the various State or Regional offices. Monitoring of CWCs generally involves regular risk assessments, desktop monitoring and site visits, and if deemed necessary, quality audits.

31. The ANAO found that risk assessments, desktop monitoring, site visits and a quality audit had been conducted in accordance with DEWR's programme guidelines.

Monitoring of Key Risks: OH&S, Insurance and Fraud (Chapter 5)

32. As part of the Government's Mutual Obligation policy, WfD participants are required to participate in work experience activities provided by CWCs and their sponsors and hosts. In this service delivery environment, DEWR has identified a number of key risks including:

• there is an obligation placed on work experience activity providers, that is CWCs and sponsors and hosts, to do all that is reasonably practicable to minimise the risk of injury to job seekers. State and Territory legislation imposes a duty of care on CWCs, in relation to their own employees, third parties (including WfD participants, and members of the public) and sub-contractors;
• for CWCs to have appropriate insurance coverage as appropriate to protect DEWR, the CWC and third parties to the agreement such as the sponsors and hosts, against possible breach, loss or damage arising during the course of the contract; and
• the importance of CWCs being financially viable with financial management frameworks that supports fraud control practices.

DEWR has considered these risks and put in place a variety of mechanisms to address them.

33. The ANAO found that sixty-five per cent of the 83 CWCs who responded to the ANAO's census had been asked by DEWR to provide an up-to-date OH&S Plan. DEWR's advised that an OH&S plan would be requested by a contract manager during a site visit. Where a contract manager was yet to visit a site, no OH&S plan would be requested.

34. The ANAO examined the files of the 25 CWCs drawn from its sample for detail of paid-up and current insurance for premises and equipment, public liability, workers' compensation and motor vehicles. The ANAO noted that while there was detail of insurances on file, there was little detail on file of annotations by contract managers supporting that CWCs held current and appropriate insurances.

35. CWCSC 2002 did not contain clauses requiring that a fraud control plan exist as part of the administrative requirements. Under the new contract arrangements from 1 July 2006, DEWR require all CWCs to have fraud prevention plans and copies must be made available to DEWR on request. DEWR's new ESC 2006–2009 now contains a clause that sets out general conditions involving fraud prevention control requirements for CWCs.

Training and Skilling (Chapter 6)

36. The ANAO examined the training strategies that DEWR had in place to support the WfD programme, with a particular focus on the department's contract managers, account managers and fraud awareness training.

37. DEWR contract managers had generally completed relevant training. However, specialist training and skilling for technical matters such as insurances and financial assessments was not readily available to its managers. In managing service delivery, DEWR managers have access to specialist assistance within the department. DEWR could more clearly articulate in its programme guidelines and advice to relevant personnel, the escalation process in DEWR for technical issues, especially insurance matters, for which higher level technical assistance may be required.

38. The ANAO noted that all fraud referrals had originated from persons associated with contracted service delivery - there were no internally generated fraud referrals. While fraud control practices and procedures were mandatory for all officers administering contracts under the department's fraud control guidelines, contract managers and account managers administering contracts had not undertaken appropriate fraud awareness training. DEWR's Investigations Branch informed the ANAO that from April 2006, DEWR had launched a fraud awareness training campaign for account managers and contract managers across the State and Regional offices. The Branch also advised training in evidence procedures was being developed for future roll-out.

Contract Payments (Chapter 7)

39. Effective contract management requires payments to contracted service providers to align with the terms and conditions of the contract. This will generally involve the CWC acquitting expense invoices or attaining predetermined programme targets to trigger the right to payment. Payments made under CWCSC 2002 and ESC 2006–2009 are incentive-based and therefore, may exceed the contracted value for services if the service provider delivers in excess of the contracted target amount. This however, makes it difficult to align actual contracted payments with amounts specified in the contract.

40. DEWR's processing of CWC invoices for contract payments was found to be robust. Systematic analysis of computer records using auditing software used to interrogate payments data shows a very high level of adherence to both conditions of the contract and business rules.

Reporting Performance (Chapter 8)

41. Monitoring the performance of contracted service providers is an important component of administrating outsourced programmes, providing an incentive for service providers to comply with contract requirements and better achieve the objectives of the programme.

42. An effective performance information framework, complemented by a risk based and timely programme evaluation strategy, allows the programme administrator to effectively target gauge the success of the programmes, resources and contribute to public accountability. The ANAO determined that DEWR's performance monitoring processes for WfD, delivered on their behalf by CWCs, was consistent across its State and Regional offices.

43. The ANAO recognises that DEWR's programmes involving the outsourcing of contracted services can make a positive contribution to the achievement of programme outcomes. Having an effective performance information framework and programme evaluation strategy provides a sound basis for DEWR to effectively target its resources.

DEWR's response to the audit

44. DEWR's summary response to the proposed audit report was:

The Department of Employment and Workplace Relations (DEWR) values the Australian National Audit Office's (ANAO's) opinion that an appropriate approach to the administration of the Work for the Dole programme is in place. Accordingly the ANAO has not made any recommendations following the audit of the programme.

Work for the Dole is a highly successful Australian Government programme that enables job seekers to gain quality work experience and contribute to their communities. Work for the Dole is a key element of the Government's Mutual Obligation Policy. The premise of Work for the Dole is that those who receive income support have the opportunity and obligation to contribute to the community and to improve their own skills.

From the introduction of Work for the Dole in November 1997, over 560,000 job seekers have commenced on a Work for the Dole activity. Over 33,000 activities throughout Australia have provided assistance and facilities that may not otherwise have been possible.

Survey results indicate participants are also very satisfied with their experience in Work for the Dole. During the year ending 30 September 2006, 85 per cent of people who had participated in Work for the Dole were satisfied or very satisfied with their Work for the Dole project in terms of overall quality of assistance and service. Furthermore, 39 per cent of respondents were either employed or in education or training three months after leaving the programme.

The ANAO has acknowledged that DEWR has recently made a number of refinements to contractual arrangements with Community Work Coordinators to further strengthen the Work for the Dole programme. The ANAO reported that DEWR's administration of the Work for the Dole programme is supported by sound business planning including risk assessment, appropriate contracts with Community Work Coordinators, desk top monitoring, site visits and quality audits.
It is noted that the ANAO found no significant weaknesses with the programme and, therefore, the report does not contain recommendations.