Background

1. The Senate Procedural Order of Continuing Effect: Entity Contracts (the Senate Order/the Order) is based on the principle that parliamentary and public access to government contract information should not be prevented, or restricted, through the use of confidentiality provisions, unless there is sound reason to do so.¹ Successive governments have agreed to comply with the Senate Order and have required entities to put in place suitable procedures to support Ministers to comply with it.

2. The Order requires Ministers to table letters of advice that all entities which they administer have placed on the Internet lists of contracts² valued at $100 000 or more, by no later than two calendar months after the end of each financial and calendar year. These lists are to:

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

3. To support the Order, the Auditor-General has annually examined a number of the contracts reported to contain confidentiality provisions, and reported any inappropriate use. The Auditor-General has also examined and reported on contracts excluded from the listing.

4. This is the ANAO’s first audit of compliance since the Order was amended to allow the reporting of procurement contracts via AusTender for the purposes of the Order.³ In amending the Order the Senate also requested that two further compliance reports be provided by the Auditor-General, this report and a further report in 2018.

Conclusion

5. Confidentiality provisions in government contracts can impede accountability and transparency in government purchasing. The reported use of confidentiality provisions in contracts across all entities in 2015 was the lowest proportion of contracts (three per cent) since the commencement of the Order in 2001. Despite the low proportion of contracts reported as containing confidentiality provisions, specific confidentiality provisions in contracts have continued to be incorrectly used and reported. Errors in application and reporting relate to insufficient assessment of contracts including a lack of documentation of assessments of suppliers’ claims against the Confidentiality Test. The audit also found that processes to capture information about basic contract details and the reporting of confidentiality provisions were inadequate. Only 19 per cent of contracts sampled were accurately reported in AusTender.

Supporting findings

Use of Confidentiality Provisions (Chapter 2)

6. In the calendar year 2015 there were 42 947 contracts reported across all entities with a combined value of $243.3 billion. 1290 contracts with a value of $24.7 billion were listed as containing confidentiality provisions, three per cent of the total contracts reported and 10 per cent of total contract value. This is a reduction compared to the 2014 calendar year reporting period and consistent with the broader downward trend since the commencement of the Senate Order.

7. In the sample of contracts, the ANAO found that for 48 per cent of the contracts, the use of confidentiality provisions did not comply with the guidance or the contracts did not contain specific confidentiality provisions and were therefore misreported. The result of the analysis of the sample of contracts is shown in Figure S.1.

Figure S.1: Contract analysis result: appropriateness of the use and reporting of confidentiality provisions

Source: ANAO analysis.

8. The audited entities were not able to consistently provide appropriate documentation supporting their assessment of suppliers’ claims against the Confidentiality Test, and reasons for agreeing for the information to remain confidential.

9. In the 2015–16 Senate Order audit, the ANAO made a recommendation for Finance to amend the Commonwealth Procurement Rules (CPRs) to include the Confidentiality Test or refer more directly to the requirement for its use; to which Finance agreed. The recommendation has not been implemented. Finance has advised that updates to the CPRs are expected be published in mid-2017.

10. Of the 140 confidential and non-confidential contracts examined by the ANAO, 69 per cent contained parliamentary disclosure clauses, and 79 per cent included ANAO access clauses. This result represents a moderate decline on 2014 results which found 98 per cent of contracts sampled contained appropriately worded parliamentary disclosure clauses, and 97 per cent included ANAO access clauses in contracts.

Ministers’ Letters and Accuracy of Contract Information (Chapter 3)

11. In order for Ministers to comply with the Senate Order, entities are expected to support their Minister by publishing listings in accordance with the content and timing requirements. This audit found that entities did not always meet these requirements and Ministers could be better supported. In 2015 the ANAO observed:

• the timeliness of Ministers’ letters has decreased compared to previous years, with letters relating to only 60 entities (65 per cent) provided to the Senate for tabling by the due date. This is the lowest result since 2011;
• overall 11 entities reported excluded contracts in 2015. A sample of these contracts found all those reviewed had been excluded for appropriate reasons. One of the audited entities had excluded contracts without advising of the exclusion in their Ministers’ letter;
• 41 entities did not identify whether they did or did not have non-procurement contracts, and therefore did not meet the Senate Order requirements;
• although 89 per cent of entities provided a link to AusTender from their website, the majority did not do so directly from their home page, as instructed by the Senate Order; and
• from a sample of 140 confidential and non-confidential procurement contracts on AusTender only 19 per cent of the contracts sampled were correctly reported.

12. The 2015 changes to the Senate Order provided for entities to use a complying report on AusTender to report procurement contracts. Consequently the compliance cost estimate should not include any cost with respect to procurement contracts. This change has significantly reduced entities’ overall cost of complying with the Senate Order.

13. Each of the audited entities compiled their listings for procurement contracts using AusTender. AusTender listings for the Department of Agriculture and Water Resources, the Department of Foreign Affairs and Trade and Health reflect contracts on a whole of life basis (incorporating amendments into original contract notices). Defence reports each contract and contract amendment individually (as separate AusTender contract notices). Defence is part of a whole of government project which is underway to update SAP-based (enterprise resource planning software) financial systems and improve their reporting functionality.

Summary of entity responses

Department of Agriculture and Water Resources

The Department agrees with the overall findings in the ANAO report and will implement additional measures to improve compliance when assessing confidentiality provisions.

Department of Defence

Defence acknowledges the findings contained in the audit report on Confidentiality in Government Contracts: Senate Order for Entity Contracts (Calendar Year 2015 Compliance).

The Department of Defence places a high priority on strengthening its compliance with the requirements of the Senate Order. The ANAO audit process and the audit report have delivered additional information that will enable Defence to further build upon the progress it has made in recent years. This includes enhancing its systems, training and controls to promote compliance without the need for inefficient and high cost manual reporting.

Defence remains committed to compliance with the Senate Order to promote transparency of its contracts through AusTender reporting. As part of this commitment, Defence is taking the technical lead in a Department of Finance whole-of-government project to streamline and improve AusTender functionality. This includes system aspects to support improved contract confidentiality compliance reporting. Defence appreciates the information provided by this audit and will work with the Department of Finance and other agencies to strengthen AusTender functionality to support improved cost-effective contract reporting compliance in the future.

Department of Foreign Affairs and Trade

The Department of Foreign Affairs and Trade acknowledges and agrees with the findings in the audit report. The audit process was a valuable exercise and the feedback provided by the ANAO will assist DFAT to continue improving compliance with the Senate Order.

Department of Health

The Department agrees with the findings in the proposed report. The treatment and reporting of confidentiality provisions in contracts will be improved through a procurement transformation project that is scheduled to be completed by July 2017.

The Senate Order

1.1 The Senate Procedural Order of Continuing Effect: Entity Contracts (the Senate Order/the Order) was introduced in 2001 to improve public access to information about government contracting.⁴ The main principle on which the Senate Order was based is that parliamentary and public access to government contract information should not be prevented, or otherwise restricted, through the use of confidentiality provisions, unless there is sound reason to do so. Successive governments have agreed to comply with the Senate Order and have required entities to put in place suitable procedures to support Ministers to comply with it.⁵

1.2 Under the Senate Order, Ministers must table letters of advice for entities they administer in the Senate. The letters of advice are to confirm that these entities have published, on their websites, lists containing the following information⁶, as set out in paragraph (2)(a)–(d) of the Order:

1. each contract⁷ entered into by the entity which has not been fully performed or which has been entered into during the previous 12 months, and which provides for a consideration to the value of $100 000 or more;
2. the contractor, the amount of the consideration, the subject matter of each such contract, the commencement date of the contract, the duration of the contract, the relevant reporting period and the twelve-month period relating to the contract listings;
3. whether each such contract contains provisions requiring the parties to maintain confidentiality of any of its provisions, or whether there are any other requirements of confidentiality, and a statement of the reasons for the confidentiality; and
4. an estimate of the cost of complying with [the] order and a statement of the method used to make the estimate.

1.3 To support the Order, the Senate requested the Auditor‐General examine a number of the contracts reported to contain confidentiality provisions, and report any inappropriate use of these provisions annually. In addition, the Senate also requested the Auditor-General examine a number of contracts reported to have been excluded from entities’ Senate Order contract listings and report on whether those contracts were appropriately excluded.⁸

Senate Order Guidance

1.4 The Department of Finance (Finance) is responsible for providing entities with guidance on complying with the Senate Order as part of its broader responsibility for procurement policy, including the appropriate use of confidentiality provisions. The Finance publication Resource Management Guide No. 403—Meeting the Senate Order on Entity Contracts (RMG 403)⁹ provides guidance to support entities in developing and presenting their Senate Order contract listings. Further, Finance’s whole-of-government guidance Buying for the Australian Government, Confidentiality Throughout the Procurement Cycle (the Guidance)—contains the Confidentiality Test, which is designed to assist entities to determine the appropriate inclusion of confidentiality provisions in contracts. The Test consists of four criteria, all of which must be met for a supplier’s commercial information to be considered confidential. These are:

• the information to be protected must be specifically identified;
• the information must be commercially ‘sensitive’;
• disclosure would cause unreasonable detriment to the owner of the information or another party; and
• the information was provided under an understanding that it would remain confidential.¹⁰

1.5 The Senate Order is one of a number of mechanisms to promote transparency in Australian Government contracting. Other mechanisms include the reporting on AusTender¹¹ of procurement and consultancy contracts, the production of lists of grants—as well as the publication of grants on entities’ websites—and the presentation of summary contract information in entities’ annual reports.¹²

Previous audits of Senate Order compliance

1.6 This audit is the nineteenth in a series of audits and fulfils the Senate’s request for the Auditor‐General to provide a report on entities’ compliance with the Order by September 2016. Previous audits of Senate Order compliance and audit recommendations since 2002–03 are listed in Appendix 3. These recommendations have commonly encouraged entities to improve their use and reporting of confidentiality provisions in contracts by:

• strengthening approaches used to identify and record confidential contract information; and
• improving the accuracy and quality of publicly reported contract information.

1.7 The annual audit of Senate Order compliance is to be phased out following amendments made to the Senate Order in May 2015. The Auditor-General will conduct one further audit on entity compliance with the Senate Order, by 30 September 2018.

Audit Approach

1.8 The objective of the audit was to assess the appropriateness of the use and reporting of confidentiality provisions in a sample of Australian Government contracts. The ANAO’s assessment was based on the following criteria:

1. entities published contract listings on their websites and Ministers’ letters were tabled in accordance with the timing and content requirements of the Senate Order;
2. confidentiality provisions were used appropriately in a sample of contracts which were reported by the selected entities to contain confidentiality provisions¹³; and
3. the selected entities accurately reported contract information, including the use of confidentiality provisions, in the contract listings and on AusTender. ¹⁴

1.9 As at 1 February 2015, there were 92 entities to which the Senate Order applied.¹⁵ All of these entities were included for the purposes of the overall audit analysis (criteria (a)). The entities selected for detailed contract analysis (criteria (b) and (c)) were the:

• Department of Agriculture and Water Resources (Agriculture);
• Department of Defence (Defence);
• Department of Foreign Affairs (DFAT); and
• Department of Health (Health).

1.10 Table 1.1 shows the number and value of the contracts reported in the audited entities’ 2015 procurement contract listings and the percentage of those contracts reported as containing confidentiality provisions.

Table 1.1: Summary of procurement contract information reported by the audited entities in the 2015 calendar year Senate Order listings

Source: ANAO analysis.

1.11 The audit was conducted in accordance with the ANAO’s auditing standards at a cost to the ANAO of approximately $373 371.

2.1 To determine whether confidentiality provisions in contracts had been used appropriately and reported correctly, the ANAO examined:

• the reported use of confidentiality provisions in contracts over time based on each entity’s Senate Order listings; and
• the use of confidentiality provisions in a sample of the audited entities’ contracts.

2.2 The inclusion of parliamentary disclosure and ANAO access clauses in the sample of contracts was also examined.

How has the reported use of confidentiality provisions in Australian Government contracts changed over time?

2.3 The unjustified use or incorrect reporting of confidentiality provisions in government contracts can reduce transparency through: preventing the release of contract information; and potentially misinforming the Parliament and the public about government contract information that they can access. A summary of the number and value of contracts, and the reported use of confidentiality provisions in entities’ contract listings for the 2012–2015 calendar years is provided at Table 2.1.

Table 2.1: Number and value of contracts and the reported use of confidentiality provisions, in entity contract listings 2012–2015

Source: ANAO analysis.

Note: Entities are defined under the Public Governance, Performance and Accountability Act 2013 and were previously defined under the Financial Management and Accountability Act 1997.

2.4 Across all entities’ contract listings, the proportion of contracts reported to contain confidentiality provisions for the 2015 calendar year has remained low at 3.0 per cent. This is a reduction compared to the 2014 calendar year reporting period and consistent with the broader downward trend since the commencement of the Senate Order, as shown in Figure 2.1. The low level of reported use of confidentiality provisions indicates that scrutiny and accountability of government expenditure is less likely to be impeded by assertions of commercial sensitivity or confidentiality than when the Order was first introduced.

Figure 2.1: Proportion of contracts reported as containing confidentiality provisions: calendar years 2002–2015

Source: ANAO analysis.

Were confidentiality provisions used appropriately in the sample of contracts?

2.5 Entities are required to identify in their contract listings whether any of the listed contracts contain confidentiality provisions. The two types of provisions entities are to identify are described in Resource Management Guide No. 403—Meeting the Senate Order on Entity Contracts (RMG 403) as:

• those that make specific information contained in the contract confidential (referred to in the Order as ‘provisions requiring the parties to maintain confidentiality of any of its provisions’; and
• those that protect the confidential information of the parties that may be obtained or generated in carrying out the contract but cannot be specifically identified when the contract is entered into (referred to in the Order as ‘other requirements of confidentiality’).

2.6 Table 2.2 outlines the differences between the two types of specific confidentiality provisions and provides examples of how they may be applied.

Table 2.2: Description of the two specific confidentiality provision types

Source: ANAO representation of information contained in RMG 403.

2.7 Where possible, entities are to identify the reasons for the inclusion of confidentiality provisions under specific categories in the contract listings. Should a contract contain a confidentiality provision that does not fall within a specific category, entities are to identify the provision as ‘other’ and provide a reason for the inclusion of the provision. The standard reasons are provided in RMG 403 and include:

• trade secrets (includes intellectual property);
• internal costing/profit information;
• public interest;
• statutory secrecy provisions; and
• the Privacy Act 1988.

The appropriate use of confidentiality provisions in a sample of contracts

2.8 To assess the appropriateness of the use of confidentiality provisions for the purposes of this audit the ANAO reviewed a sample of contracts identified as containing confidentiality provisions. In order to undertake this assessment, the ANAO had regard to Finance’s current guidance, Buying for the Australian Government, Confidentiality throughout the Procurement Cycle (the Guidance). The Confidentiality Test outlined in the Guidance establishes four criteria (as shown in Table 2.3), all of which must be met for a supplier’s information to be considered confidential.

Table 2.3: The Confidentiality Test

Source: Finance, Buying for the Australian Government, Confidentiality throughout the Procurement Cycle, paragraph 9.

2.9 The ANAO selected a sample of 100 contracts that had been reported by the four audited entities in their procurement contract listings on AusTender, as containing provisions requiring the parties to maintain confidentiality of provisions. One entity, Defence, was unable to provide documentation for six contracts during the audit timeframe. Of the 94 contracts examined, only 45 per cent used and reported confidentiality provisions appropriately. The results of the ANAO’s analysis, based on the application of the Confidentiality Test to the reported confidentiality provisions, are shown in Figure 2.2.

Figure 2.2: Contract analysis result: appropriateness of the use and reporting of confidentiality provisions

Source: ANAO analysis.

Note: Areas of incorrect reporting and/or use of confidentiality provisions are shown with dark blue shading.

Confidential information in the contract is specifically identified (Criterion 1 and Criterion 4 of the Confidentiality Test)

2.10 For a contract to be assessed as meeting Criterion 1 of the Test, at least one contract provision must specifically identify the information that is to be protected.¹⁶ In the audit sample, 63 of the 94 contracts identified specific information to be kept confidential.

Information is commercially sensitive and would cause detriment if made public (Criterion 2 and Criterion 3 of the Confidentiality Test)

2.11 The Confidentiality Test states that for information to be considered confidential it must be commercially sensitive and the disclosure of the information would cause detriment to the owner of the information or another party. This type of information would not normally be in the public domain. Examples of information that may be included in contracts requiring protection through the use of confidentiality provisions include:

• pricing information that would reveal a supplier’s cost or profit margins;
• unique industrial processes, formulae, product mixes, customer lists, engineering and design drawings and diagrams, and accounting techniques;
• personal information requiring protection under the Privacy Act 1988; and
• information of a nature that should be protected on the basis of public interest or under statutory secrecy provisions.¹⁷

2.12 The ANAO assessed the 63 contracts (from the sample of 94) which had specifically identified the information to be protected through the use of confidentiality provisions against Criteria 2 and 3 of the Confidentiality Test. Of these 63 contracts, 49 were assessed as meeting Criteria 2 and 3 of the Confidentiality Test. Of the 14 contracts assessed as not meeting these criteria:

• eight claimed protection of supplier internal costing/profit information, but the contracts did not contain pricing information which revealed the suppliers’ internal costs or profit margins;
• one claimed confidentiality under the Privacy Act 1988, but did not contain information of a personal nature as described by the Act; and
• five claimed other reasons, including public interest.

Documenting reasons for contract confidentiality

2.13 The Guidance advises that the entity’s assessment of the supplier’s claims and the reasons for agreeing to the inclusion of confidentiality provisions should be documented. For the majority (62 per cent) of contracts tested, the audited entities were not able to provide documentation supporting their assessment of suppliers’ claims against the Confidentiality Test and reasons for agreeing for the information to remain confidential.

Trends in the use of confidentiality provisions

2.14 Each of the ANAO’s audits of the Senate Order since 2006 have identified that fewer than 40 per cent of contracts examined have contained specific confidentiality provisions that met the Confidentiality Test criteria. In 2015, that percentage was approximately 52 per cent. The results of this audit of the Senate Order indicate that there continues to be a high degree of inappropriate use and misreporting by entities of the types of confidentiality provisions and reasons for their use.

Figure 2.3: Trends in the appropriate use of confidentiality provisions in contracts over time

Source: ANAO analysis.

Note: To allow comparison with previous years, this Figure refers only to the 94 contracts tested with confidentiality provisions reported.

Did entities include parliamentary disclosure and ANAO access clauses?

Note a: The original sample was 150. Defence was unable to provide documentation for nine contracts (six confidential and three non­confidential) in the audit timeframe, and one contract notice was reported in error and could not be tested.

2.15 In entering into a contract, the Australian Government cannot provide an absolute guarantee of confidentiality. Legislation can require the Government to disclose information, regardless of any contractual obligations to maintain confidentiality. These may include disclosure of information consistent with the Freedom of Information Act 1982 or disclosure of discoverable information that is relevant to a case before a court. In addition, entities may be required to facilitate the disclosure of, or access to, contractual information by the Parliament, its committees, and the Auditor-General to comply with accountability obligations. Accordingly, and as recommended in the Commonwealth Procurement Rules (CPRs)¹⁸, Australian Government contracts should contain clauses that advise suppliers, regardless of contract confidentiality, that:

• the disclosure of contract‐related information may occur to the Parliament or parliamentary committees; and
• the ANAO can access a contractor’s records and premises.

2.16 Of the 140 contracts examined by the ANAO, 69 per cent contained parliamentary disclosure clauses, and 79 per cent included ANAO access clauses (see Table 2.4). This result represents a moderate decline on 2014 results which found 98 per cent of contracts sampled contained appropriately worded parliamentary disclosure clauses, and 97 per cent included ANAO access clauses in contracts.

Table 2.4: Parliamentary and ANAO access clauses

Source: ANAO analysis.

Were recommendations from previous Senate Order audits implemented by the entities?

2.17 This audit is the nineteenth in a series of Senate Order audits. To date there have been 26 recommendations aimed at entities to improve their use and reporting of confidentiality provisions in contracts by strengthening approaches used to identify and record confidential contract information, and improving the accuracy and quality of publicly reported contract information. While the level of confidentiality provisions in contracts has decreased, this audit indicates that overall compliance with the Senate Order is still not being achieved.

2.18 Finance issues the Guidance for the Senate Order, however, when undertaking procurement an entity’s first port of call is the CPRs. ANAO Report No.4 2015–16, included a recommendation for Finance to amend the CPRs to include the Confidentiality Test or refer more directly to the requirement for its use; to which Finance agreed.¹⁹ The recommendation has not been implemented. Finance has indicated to ANAO, as part of this audit, that updates to the CPRs are expected be published in mid-2017. As the entity responsible for AusTender and procurement policy, Finance has not necessarily taken a clear regulatory role with respect to the accuracy of contract reporting, with procurement data quality solely based on entity self-reporting. In the context of persistent poor compliance found in ANAO Senate Order audits, Finance could consider whether this is the appropriate regulatory stance to ensure that individual entities provide quality information to the parliament.

2.19 In ANAO Report No.4 2015–16, the ANAO recommended that entities implement procedures that require: a case-by-case assessment of supplier requests against the Confidentiality Test; and adequate documentation of the reasons for agreeing to keep specific information in contracts confidential. DFAT and Agriculture provided evidence to demonstrate that they had noted the recommendation and that a response had been implemented. Due to timing, improvements to entity guidance would not yet have been implemented in relation to contracts for the 2015 Senate Order.

Did Ministers table their letters of advice in the Senate by 29 February 2016?

3.1 The Senate Order requires letters from Ministers to be tabled twice a year advising that all non-corporate Commonwealth entities they administer have placed on the internet lists of contracts valued at $100,000 or more (GST inclusive). The letters must be tabled within two months following each reporting period (by 31 August for financial year reporting and by 28 February (29 February in leap years) for calendar year reporting). The letters are intended to provide an accountability mechanism—informing the Parliament that entities have complied with the requirements of the Senate Order.

3.2 For the 2015 calendar year reporting period, Ministers’ letters covering 60 entities (65 per cent) were received by the Senate for tabling on or before the due date 29 February 2016. Ministers’ letters covering an additional nine entities were received within one week of the deadline. Letters covering six more entities were tabled up to one month after the deadline, and letters covering a further 16 entities were tabled more than one month late.²⁰ The 65 per cent rate of compliance is the lowest since the 2011 calendar year which saw a 57 per cent rate of compliance, and continues the downward trend since 2013’s peak of 92 per cent compliance for the calendar year reporting period.

Did the content of the Ministers’ letters comply with the content requirements of the Senate Order including outlining excluded contracts?

3.3 Under the Senate Order where an entity has excluded contracts from its listing²¹, the Minister’s letter is to advise the basis for the exclusion.²² In 2015, 11 entities noted they had excluded contracts from their listings. Additionally, Health had excluded contracts from their listing which was not disclosed in their Minister’s letter.

3.4 As requested under the Order, the ANAO examined a number of contracts which had not been included in the list to assess whether the exclusion of these contracts complied with the Senate Order. A sample review of nine contracts, across two of the four audited entities (DFAT and Defence), found all had been excluded for appropriate reasons.

Did the content of the lists comply with the content requirements of the Senate Order?

3.5 The Senate Order was amended in May 2015 to allow for procurement contracts valued at or above $100 000 to be reported by reference to a complying report on AusTender, the Australian Government’s procurement information system.²³ To satisfy the requirement, a link to AusTender’s Senate Order report from an entities home page is considered acceptable practice for the purposes of reporting procurement contracts.

3.6 For the 2015 calendar year reporting period, 79 entities (89 per cent) placed links on their website to either the AusTender home page or the AusTender Senate Order report page. These AusTender links were placed either on a “contracts” or “Senate Order” reporting page within the website itself, or inside a separate downloadable document listing the entity’s non-procurement contracts. The remaining 10 entities did not reference AusTender as part of their internet listings. ANAO did not identify any entity that placed a relevant link on their website’s home page, as required by the Order (part 2A).

3.7 Reporting of non-procurement contracts requires entities to place lists on their website identifying the contract details presented in Table 3.1.

Table 3.1: Template for contract listings

Source: Department of Finance, Resource Management Guide No. 403—Meeting the Senate Order on Entity Contracts, p 15.

3.8 For the 2015 calendar year reporting period, 35 entities (39 per cent of those that published a list) identified and reported a list of non-procurement contracts. A further 13 entities reported that no non-procurement contracts had been entered into. Forty-one entities did not identify whether they did or did not have non-procurement contracts, and therefore did not meet the Senate Order requirements.

3.9 Entity website listings of non-procurement contracts matched the Department of Finance’s recommended template in 33 cases. This represented 94 per cent of the sample when excluding the entities that stated they did not have non-procurement contracts to report.

3.10 Of the audited entities, all had placed a list on the website with all required details.

Accuracy of procurement reporting within audited entities

3.11 Reliance on AusTender for accountability makes it incumbent upon entities to ensure that information is correct and up-to-date. To assess the reliability of information published on AusTender the ANAO compared the accuracy of contract information reported for a sample of 140 contracts to actual contracts and supporting documentation. The 140 sample comprised the 94 contracts described in paragraph 2.9, which were reported to contain confidentiality provisions, and another 46²⁴ randomly selected contracts that were reported as not containing confidentiality provisions.

3.12 The assessment involved review of the basic contract details (contractor, subject matter, amount and period) as well as the correct identification of the type and reasons for confidentiality provisions. Based on these criteria, as shown in Table 3.2, only 19 per cent of the 140 contracts were considered to be correctly reported on AusTender.

Table 3.2: Accuracy of reported information—procurement contracts

Source: ANAO analysis.

Did the relevant entities provide an estimated cost of compliance?

3.13 Under the Order, entities are required to provide an estimate of the cost of complying with the Senate Order for each listing along with an overview of the method used to reach the estimate. The estimate should be based upon the cost of the resources required to comply with the Senate Order. Given the 2015 changes to the Order and the use of AusTender reporting, the estimate should not include the cost of complying with the Senate Order with respect to procurement contracts. Despite this, 17 entities reported a cost of complying without reporting any non-procurement contracts. Each of the audited entities recorded a cost of compliance and justification in accordance with the Senate Order. Health had the highest reported cost of compliance and advised that they have reduced requirements for manual reviews and expect this cost to decline.

Table 3.3: Cost of complying with the Senate Order

Source: ANAO analysis.

Notes: (a) This is the highest reported cost of compliance.

How was Senate Order and AusTender information complied and quality assured?

3.14 The audited entities had established procedures for recording and reporting contract information, including the information required by the Senate Order.²⁵ Entities relied on information being recorded accurately in AusTender at the time initial data entry.

3.15 Each of the audited entities had both procurement and non-procurement contracts in the calendar year. The compilation of the procurement contract listings involved extraction from the entities’ Financial Information Management Systems (FMIS) and upload to AusTender. This process ranged from being highly automated to highly manual.

3.16 AusTender listings for Agriculture, DFAT and Health reflect contracts on a whole of life basis (incorporating amendments into original contract notices). Defence reports each contract and contract amendment individually (as separate AusTender contract notices). This is due to Defence’s system processes which result in contract amendments appearing on AusTender as unique entries. Defence is currently part of a whole of government project which is underway to update SAP based financial systems and improve their reporting functionality. Defence is the lead entity on the project. An overview of the project is at Box 1.

Appendix 1 Entity responses

Appendix 2 Senate Procedural Order of Continuing Effect 13: Entity Contracts

(1) There be laid on the table, by each minister in the Senate, in respect of each entity administered by that minister, or by a minister in the House of Representatives represented by that minister, by not later than 2 calendar months after the last day of the financial and calendar year, a letter of advice that:

(a) a list of contracts in accordance with paragraph (2) has been placed on the Internet, with access to the list through the entity’s home page; and

(b) includes an assurance by the entity head that the listed contracts do not contain any inappropriate confidentiality provisions.

(1A) Order 1(b) takes effect from 1 July 2017.

(2) The list of contracts referred to in paragraph (1) indicate:

(a) each contract entered into by the entity which has not been fully performed or which has been entered into during the previous 12 months, and which provides for a consideration to the value of $100 000 or more;

(b) the contractor, the amount of the consideration and the subject matter of each such contract, the commencement date of the contract, the duration of the contract, the relevant reporting period and the twelve-month period relating to the contract listings;

(c) whether each such contract contains provisions requiring the parties to maintain confidentiality of any of its provisions, or whether there are any other requirements of confidentiality, and a statement of the reasons for the confidentiality; and

(d) an estimate of the cost of complying with this order and a statement of the method used to make the estimate.

(2A) For the purposes of paragraph (1)(a) as it applies to procurement contracts only, access from an entity’s home page may include a link to a complying report on AusTender. If an entity has contracts to report other than procurement contracts, there must be a dedicated link to a list of such contracts from an entity’s home page in addition to any link to AusTender.

(3) If a list under paragraph (1) does not fully comply with the requirements of paragraph (2), the letter under paragraph (1) indicate the extent of, and reasons for, non-compliance, and when full compliance is expected to be achieved. Examples of non-compliance may include:

(a) the list is not up to date;

(b) not all relevant entities are included; and

(c) contracts all of which are confidential are not included.

(4) Where no contracts have been entered into by an entity, the letter under paragraph (1) is to advise accordingly.

(5) In respect of contracts identified as containing provisions of the kind referred to in paragraph (2)(c), the Auditor-General be requested to provide to the Senate, by not later than 30 September 2016 and 30 September 2018, a report indicating that the Auditor-General has examined a number of such contracts selected by the Auditor-General, and indicating whether any inappropriate use of such provisions was detected in that examination.

(6) In respect of letters including matter under paragraph (3), the Auditor-General be requested to indicate in a report under paragraph (5) that the Auditor-General has examined a number of contracts, selected by the Auditor-General, which have not been included in a list, and to indicate whether the contracts should be listed.

(7) The Finance and Public Administration References Committee consider the ongoing operation of the order and report on relevant developments from time to time.

(8) This order has effect on and after 1 July 2001.

(9) In this order:

“complying report on AusTender” means a report in respect of an individual entity that meets the requirements of this order in respect of procurement contracts;

“entity” means a Commonwealth entity within the meaning of the Public Governance, Performance and Accountability Act 2013, but does not include a trading Public Non-financial Corporation as classified by the Australian Bureau of Statistics;

“inappropriate confidentiality provision” means a confidentiality provision that is not in accordance with guidance issued by the Department of Finance on compliance with this order and approved by the Finance and Public Administration References Committee; and

“previous 12 months” means the period of 12 months ending on either 31 December or 30 June in any year, as the case may be.

(9A) Until 1 July 2017, entity is taken to mean a non-corporate Commonwealth entity within the meaning of the Public Governance, Performance and Accountability Act 2013.

(20 June 2001 J.4358, amended 27 September 2001 J.4994, 18 June 2003 J.1881, 26 June 2003 J.2011, 4 December 2003 J.2851, 1 March 2007 J.3527, 14 May 2015 J.2601)²⁶

Appendix 3 Previous ANAO audit reports on the Senate Order