The Independent Commission Against Corruption (ICAC) wants to see the NSW Government overhaul its procurement processes, after a survey of 1,500 suppliers to government found that one-third have refused to bid on contracts due to a perception that the process is too corrupt.
Another 55 percent of respondents said that they thought favouritism influenced NSW public sector procurement decisions and many suppliers expressed a concern that confidential information submitted in tenders would be leaked to competitors. Overall, 41 percent rated corruption as a moderate to major problem when doing business with government.
These results haven’t come as a surprise to the corruption watchdog.
"Each year, approximately 12 percent of complaints received by the ICAC include allegations of corruption in NSW government procurement and approximately 30 percent of our public inquiries make findings of corrupt conduct related to NSW government procurement activities," ICAC said in its report on the findings.
In response, the Commission has made seven recommendations for the reform of NSW Government procurement regulation and policy, including a dramatic rationalisation of procurement leadership.
The report has criticised the way that the responsibility for procurement is spread thinly across the government.
“Public sector procurement in NSW operates within a structure that is characterised by complexity and a great deal of uncertainty,” it said.
Elements of procurement responsibility lie with the NSW Treasury, NSW Procurement within the Department of Finance and Services (DFS), the State Contracts Control Board (SCCB), the Construction Consultative Committee, and some functions are retained at the individual agency level.
The ICAC has recommended that NSW follow the lead of state governments in Queensland and Western Australia in the creation of a single centralised body responsible for the regulatory framework for procurement, and the monitoring of compliance.
It said that while the procurement bodies have advised that reforms to the procurement processes in the NSW are currently underway, these “essentially confirm the existing, broad procurement structure and processes”.
It also recommended that a single regulatory framework for procurement be established, which would offer clarity on which rules and processes represent mandatory obligations for procuring agencies, and which are simply offered as guidance.
Other recommendations include:
- A review of public sector procurement in NSW;
- The alignment of state and local government procurement policy;
- A review of the information and advice functions supporting procurement regulation;
- Mandatory education and training for procurement staff; and
- The establishment of central body to investigate complaints and breaches of procurement regulations.
The Commission described procurement corruption in the NSW public sector as “systemic” and said that it was threatening the ability of the government to spend public funds efficiently and effectively.
“What became clear to the ICAC is that there is a general feeling from the perspective of the end users (that is, public sector procurement practitioners and suppliers) that NSW public sector procurement does not work well,” it said in the report.
The NSW Government has recently announced changes to the structure of ICT governance within the state.
Under the changed structure, high level ICT policy and major projects will fall within the oversight of an ICT Board made up of the Directors-General of seven NSW Departments. The implementation of policy objectives will be the responsibility of an ICT Leadership Group consisting of a Chief Information Officer and Deputy Director-General from each of the nine agency clusters.
Oversight of ICT procurement will most likely sit with the latter group.