Posted on February 5, 2021 by Stuart Simington 29

Procurement management in Local Government – NSW Audit Office Report

Effective procurement procedures are important to ensure that local government procurement delivers the best value for money for the community and avoids or minimises the potential for  fraud and conflicts of interest.

The current regulatory environment is set out in the Local Government Act 1993, the Local Government (General) Regulation 2005 , the Tendering Guidelines for NSW Local Government 2009, the Government Information (Public Access) Act 2009 and the State Records Act 1998.

Following its  Report on Local Government 2018, which provided a sector-wide summary of aspects of procurement management in local government, the Audit Office has now released a further report detailing it assessment of the effectiveness of procurement management in a number of particular councils and its recommendations for reform.

The Audit Office conducted an audit of six (6) procurement transactions conducted by each of six (6) councils being: Cumberland City, Georges River, Lockhart Shire, Tweed Shire, Waverley and Wollongong City.

The key conclusions arising from the audit are summarised by the Office as follows:

“All six councils had procurement management policies and procedures that were consistent with the legislative requirements for sourcing and assessing tender offers.

Their policies and procedures also extended beyond the legislative requirements to cover key aspects of procurement, from planning to completion.

In terms of how these policies were applied in practice, the six councils were mostly compliant with legislative requirements and their own policies and procedures, but we found some gaps in compliance in some councils and made specific recommendations on closing these gaps.

There were also opportunities for councils to improve procurement management to mitigate risks to transparency, accountability and value for money.

Common gaps in the councils’ procurement management approaches included not requiring procurement needs to be documented at the planning stage, not providing adequate staff training on procurement, not requiring procurement outcomes to be evaluated, and having discrepancies in contract values between contract registers and annual reports.

These gaps expose risks to councils’ ability to demonstrate their procurements are justified, well managed, delivering to expectations, and achieving value for money.”

While making specific recommendations to each council about the particular shortcomings identified by the particular audits, the report contains specific recommendations for Statewide legislative and policy reform.

By June 2022, the office has recommended that the DPIE should:

1. publish comprehensive and updated guidance on effective procurement practices – including electronic tender submissions and procurements below the tender threshold
2. review and update the Local Government (General) Regulation 2005 to reflect the increasing use of electronic tender submissions rather than paper copies

We will be keeping an eye on action arising from the above recommendations.

You can read the full report here.