A damning report following an Australian National Audit Office probe into the Digital Transformation Agency has all but sealed the fate of the agency.
The boutique technology shop founded by Malcolm Turnbull that was meant to transform the public sector instead became an unwanted orphan.
Released on the Wednesday prior to the National Day of Mourning, the ANAO report fails the DTA on all of the nine ICT services procurements it examined, finding that “the DTA’s procurement of ICT-related services has been ineffective for the nine procurements examined.”
“The DTA has established a procurement framework, but its implementation and oversight has been weak, The ANAO found.
“For the procurements examined by the ANAO, the DTA did not conduct the procurements effectively and its approach fell short of ethical requirements,” the Auditor continued.
“For the procurements examined by the ANAO, the DTA has not managed contracts effectively.”
While the audit is a sample of contracts and does not cover whole-of-government IT purchasing arrangements that preceded the DTA’s creation but now live there, the failure on all counts will provide the Albanese government the ammunition it needs to end the ambitious project.
The ANAO probe covered selected procurements with published start dates in 2019-2020 and 2020–2021, with a combined reported value of $54.5 million.
One was an open tender, seven were panel procurements and one was a limited tender. Of the seven panel procurements, the ANAO said there were four “where the DTA approached one supplier off the panel.”
The ANAO also concluded that the DTA, despite itself being a procurement tsar for ICT, hasn’t been following its own rules.
“The DTA has Accountable Authority Instructions and procurement policies and guidance that align with relevant aspects of the finance law. However, the DTA has not been following its internal policies and procedures, and there are weaknesses in its governance, oversight and probity arrangements for procurements,” the audit report said.
The findings are particularly damning on the procurement front, with the ANAO citing a laundry list of non-compliance with Commonwealth Procurement Rules.
“The DTA did not conduct approach to market processes effectively for procurements examined by the ANAO,” the report states.
Specifically, it found that the procurements examined did not comply with CPR requirements to:
- estimate the value of the procurement prior to determining the procurement approach;
- assess risks to the procurement;
- maintain appropriate records of the approach to market.
The spirit of the procurement rules, as well as their letter was broken by the DTA, the ANAO said.
“Further, the DTA’s frequent direct sourcing of suppliers using panel arrangements such as the Digital Marketplace does not support the intent of the CPRs.”
The only recently appointed chief executive of the DTA, Chris Fechner, took the excoriating review and bleak findings into the clearly malfunctioning agency he has been hired to fix with professionalism and grace, owning the results and promising improvements. Assuming it survives.
However Fechner immediately sought to ring fence the ANAO’s findings on its hand-picked procurements from Whole of Government arrangements or DTA functions not probed.
“The Australian National Audit Office (ANAO) has tabled the performance audit of the Digital Transformation Agency’s (DTA) procurement of ICT-related services in 2019–20 to 2020–21. The audit was not a review of the DTA’s whole-of-government digital sourcing responsibilities and, as such, the ANAO’s findings have no bearing whatsoever on our whole-of-government agreements, panels, marketplaces and BuyICT platform,” Fechner said in a statement.
“The DTA welcomes this review and takes seriously the ANAO’s focus on providing increased transparency over our internal procurement framework and practices with a view to ensuring contracts are managed effectively and value for money continues to be achieved.
“The DTA accepts all identified opportunities for improvement and agrees with each of the eight relevant recommendations proposed in the review.”
Fechner said the combination of “opportunities and work already underway in remediating the recommendations” would ensure “continuous improvement of the DTA’s procurement framework and supporting processes” and would feature strengthened internal controls.
According to the DTA, remediation work either now underway or planned includes:
- review of risk-management framework, including update of strategic risks and risk register
- update guidelines strengthening processes around potential fraud and probity breaches
- review of approach-to-market, tender-evaluation and contract-management processes
- improved management of internal payment controls, with an internal audit to verify the effectiveness of these controls by March 2023
- implementation of register of declared interests for Senior Executive Service staff
- update of gifts and benefits policy, and online publication of gifts and benefits register.
There are also very notable “education and training” measures being put in place that appear to amount to immediate intensive governance rehab. How some were not already in place, in a government agency that oversees the governments vast tech spend, is now a massive question.
Lessons now scheduled include:
- mandate and scheduling of annual fraud awareness training for all staff
- training and education campaigns around finance and procurement processes, including approach to market, tender evaluation, declarations of interest and contract management
- review of e-learning modules to determine if updates and/or new content are required
- bi-annual training for SES staff on internal controls around declarations of interest
- training of relevant staff on internal payments system.
“Where possible and appropriate, the DTA will work with the Department of Finance to leverage existing policies and processes to expedite remediation action, Fechner said.
Fechner added three of the nine procurements probed by the ANAO “relate to the Australian Government’s urgent response to the COVID-19 pandemic (myGov upgrade, COVIDSafe app development and COVIDSafe app enhancements).”
The results of those procurement speak for themselves.
“The pace of the Government’s response to the pandemic increased the risks involved in these procurements, particularly where they were undertaken on shortened timeframes or transferred from one entity to another,” Fechner said.
“The DTA has already set to work on addressing all areas identified for improvement in the review. It is my commitment that all relevant recommendations will be addressed in full.”
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