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VIC audit stresses importance of “strategic procurement”

by Staff Writers •
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Victorian Auditor-General, Des Pearson, has found weaknesses in local management controls and oversight arrangements in his audit of tendering and contracting in local government. 

His report, Tendering and Contracting in Local Government, which was released on 24 February, examines whether policies, guidelines and procedures for tendering and contracting are adequate, have been complied with and have resulted in value for money.

Even though the report is focused on Victorian Local Government, there are many observations that could apply in other jurisdictions.

Pearson found  while procurement policies were adequate, staff had limited guidance on how to adhere to probity standards or avoid conflicts of interest.

There is “significant scope” to better achieve value for money through procurement practices, according to the report, which also noted a “lack of attention to the benefits of strategic procurement”. 

The report made three key recommendations:

1.  Councils should strengthen the application of probity standards in procurement by:

  • Training all staff involved in procurement to identify and manage conflicts of interest and probity;
  • Requiring all tender evaluation panel (TEP) members to document declarations of conflicts of interest;
  • Assuring TEP reports provide sufficient detail and analysis to support decisions to award tenders;
  • Maintaining sufficiently detailed and secure records of all procurement activities and decisions to reliably acquit transparency and accountability obligations.

2.  Councils should strengthen  oversight and monitoring of procurement by:

  • Regularly monitoring cumulative payments to suppliers to identify opportunities to use competitive and/or collaborative procurement arrangements for improved value
  • Establishing procedures for assuring compliance with and adherence to statutory requirements and public sector probity standards 
  • Systematically reviewing the effectiveness of procurement activities and associated controls.

3.  Local Government Victoria (LGV) should review and enhance guidance to councils on strategic procurement in consultation with stakeholders. This should include amending the Local Government Regulations to:

  • Better prescribe the range of circumstances under which a council’s statutory obligations to tender apply, and specifically address situations involving cumulative spend with suppliers 
  • Require councils to set the scope, timeframe and value of works to be covered by a contract entered into because of an emergency and to report this publicly.

View the full audit report here.

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Jurisdiction
  • VIC
Tags
  • auditor general
  • Contracting
  • Local Government
  • Tendering