Background

The use of contractors to perform general business support services in Australian Government agencies is now an integral part of public administration as agencies focus on the delivery of core services. Business support services are administrative type services, such as finance and human resource functions, cleaning, accommodation, maintenance, courier and security services that support the core business of an agency.

Audit objectives

The objectives of this audit were to examine the management of business support service contracts in selected agencies to:

• assess the effectiveness of business support service contract management in the transition, ongoing management and monitoring and succession planning stages of the contract management lifecycle; and
•  identify examples of better practice and opportunities for improvement for individual agencies and Australian Government agencies more broadly.

Audit scope and focus

The audit examined the management of contracts for business support services in four Commonwealth organisations operating under the Financial Management and Accountability Act 1997 (FMA Act). That is, contracts for provision of internal services that supported the organisations' delivery of outputs. The contracted business support services examined included:

• property management;
• cleaning services;
•  security and guarding services;
•  travel management;
•  printing;
•  human resource and payroll information services;
•  records management and retrieval services; and
•  supply of stationery.

This audit is a follow up to the ANAO's previous Management of Contracted Business Support Processes audit that included consideration of contract management issues.

The audit did not include consideration of procurement decisions themselves. The audit was based primarily on the better practice guidance outlined in Contract Management – Better Practice Guide.¹ The audit was undertaken in the following agencies:

• Australian Industrial Registry;
• ComSuper;
•  Family Court of Australia; and
•  IP Australia.

Audit conclusion

The ANAO concluded that, generally, audited agencies' CEIs and procedures did not provide adequate guidance for all the stages of contract management. Contract management practices for business support service contracts tended to be informal and undocumented. In particular, there were a large number of contracts that had either expired, or were operating on a month-by-month basis.

In addition, the ANAO found that there was a significant lack of training for contract managers.

As a consequence, a risk exists that contract objectives may not be achieved efficiently or effectively by such agencies.

As such, the ANAO considers that there is scope for improvement in the conduct, management and documentation of contract management practices for business support services in the agencies audited. The ANAO further considers that all Commonwealth agencies would benefit from reviewing contract management practices, including contracts of both a core business and process support nature, against better practice contract management guidance.

Recommendations

The ANAO has made seven recommendations based on the findings from the agencies reviewed. These recommendations are likely to have relevance to contract management practices in all Commonwealth organisations.

Responses provided by agencies

Each of the audited agencies, together with the Department of Finance and Administration² , responded positively to the opportunity to comment on the proposed audit report.

Each of the audited agencies indicated that they agree with the recommendations. Agencies' responses to the recommendations are shown following each recommendation within the report. Other general comments provided by these agencies and the Department of Finance and Administration are contained in Appendix 1 of the report.

Footnotes

1 Australian National Audit Office, Contract Management—Better Practice Guide, February 2001.

2 The Department of Finance and Administration was asked to comment on the draft report given its central policy role in relation to procurement.