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Wrong Way Go Back: NSW Auditor-General says RTA's IT contract management needs review

by Paris Cowan •
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The former Roads and Traffic Authority (RTA) has become the latest NSW agency to attract the ire of the State’s Auditor-General for failing to properly monitor its IT services contracts, and squandering tax-payer dollars in the process.

In his latest submission to Parliament, Auditor-General Peter Achterstraat has warned that flaws in the management of two long-term contracts, worth $22 million and $6.5 million each, could point to systemic failings in IT contract management across the agency, which is now called Roads and Maritime Services (RMS) following a recent restructure.

 “My findings on two significant contracts made me doubt whether RTA was effectively managing its other IT services contracts and getting value for money,” he said.

Achterstraat repeated a concern voiced earlier this month that agencies which repeatedly extend existing IT contracts, rather than taking procurements to the open market, cannot be assured that they are still achieving value for money.

He said that under one of the contracts, the RTA had “essentially set up a monopoly arrangement” by agreeing to a clause in the contract that obliged them to procure the specified type of service from the contractor only.

The report also found evidence that rebates that should have been paid by the contractor in compensation for underperformance were never chased-up. It said that performance evaluation was essentially left to the contractor itself.

In perhaps the most striking indictment against the agency’s contract oversight, the report found evidence that one contract employee had continued to invoice the RTA for two years after the expiry of their contract, and that the agency paid out as much as $122,000 for the non-existent labour.

“State government agencies are becoming increasingly reliant on private sector IT contractors to provide core operational services,” said the Auditor-General.

“It is therefore very important to have strong contract management in place for agencies to extract value for money from these often complex and long term arrangements”.

Following a restructure of the Transport cluster, however, responsibility for IT services contracts at the now Roads and Maritime Services and RailCorp will be transferred to the lead agency, Transport for NSW, as they expire.

Under the new arrangements, Transport for NSW will be responsible for all major procurements, and according to the Audit Report, it is seeking to establish whole-of-Transport contracts for IT services. The restructure came into effect on 1 November 2011.

The Auditor-General has asked the lead agency to review these contracts and report back to him before IT services procurement falls under its authority.

He has also advised the RMS and Transport for NSW to review their contract management frameworks, and the RMS make a submission to its internal auditors regarding value for money achieved under these contracts.

Elsewhere in the report, the Auditor-General reiterated his criticisms of financial reporting systems across the NSW Government, saying he found 1,256 financial misstatements, 25 of which were over $20 million, in agency submissions for 2011.

He repeated his request that that the Treasury and the Department and Premier and Cabinet lead the implementation of common financial reporting systems within each of the new Departmental clusters.

His complaints echo those of last week’s interim Schott Report, which has called on the Treasury to commence scoping for a new whole-of-government financial management system “as a matter of urgency”.


 Related Articles:

NSW Agencies told to step up policing of IT Services contracts

Schott Report: NSW needs a new Budget Management System

NSW Transport portfolio to be restructured once again

New Transport Authority to assume responsibility for major procurement in NSW

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