On 20 June 2024 the Victorian Auditor-General’s Office (VAGO) tabled an independent assurance report to Parliament titled “Assuring the Integrity of the Victorian Government’s Procurement Activities”.

This report examined whether Victorian Government departments:

• Have policies, procedures, and controls in place to prevent, detect and investigate fraud and corruption during their procurement processes.
• Follow these procurement policies, procedures and controls to mitigate fraud and corruption.

The report presents an examination of procurement practices within Victorian government departments, highlights key areas for improvement, and provides recommendations to ensure integrity and probity in public sector procurement.

In the first of this three-part series, we explore the report’s key findings, recommendations, and lessons learned.

Overview of the Investigation

VAGO's investigation focused on the procurement activities of all 10 Victorian government departments, with three departments selected for in-depth analysis (“the deep-dive departments”): the Department of Education (DE), the Department of Justice and Community Safety (DJCS), and the Department of Jobs, Skills, Industry and Regions (DJSIR).

VAGO evaluated their adherence to established policies and procedures, particularly in relation to fraud and corruption controls in procurement. The audit aimed to identify vulnerabilities that could lead to conflicts of interest, corruption, inefficiencies, and poor value for money. The report provides an analysis of how procurement processes are managed, the challenges faced by departments, and the effectiveness of current oversight mechanisms.

Key Findings

VAGO reported that “…departments have further work to do to effectively manage the risk of fraud and corruption when procuring goods and services.” Key findings include:

• Inadequate Conflict of Interest Management: A significant finding was the lack of robust mechanisms to manage conflicts of interest. VAGO found insufficient processes for identifying, disclosing, and managing conflicts of interest,  posing a significant risk to the integrity of procurement activities. For example, VAGO noted that where there are no management plans for declared conflicts of interest, there is no audit trail to show that the risks of staff continuing to be involved in a procurement process have been properly considered. Part two of this blog series will explore this theme and specific VAGO recommendations.
• Insufficient Training and Awareness: The report highlighted a notable gap in staff training and awareness regarding procurement policies and ethical standards.
• Weak Implementation of Procurement Policies: Despite having fraud and corruption policies in place, departments struggle with effectively implementing these policies.
• Procurement Documentation and Evaluation Criteria: The investigation revealed that the documentation supporting procurement decisions can be inadequate. Part-three of this blog series will cover this aspect in detail.

Recommendations

To address these issues, VAGO made five recommendations aimed at strengthening procurement practices and ensuring integrity:

1. All 10 departments: Review their fraud and corruption control policies and plans to make sure they are accurate and up to date. At a minimum, this involves setting timeframes to review and update policies and plans.

2. All 10 Departments: Review and update their policies and procedures for procurement, conflicts of interest and maintaining vendor master files. This should involve reviewing and updating:

– policies and procedures when there has been a significant change to the department or how it operates

– conflict of interest policies to include timeframes for approving conflict of interest declarations

– conflict of interest forms to include a field to record the role of the declarer and approver.

3. All 10 Departments: Set up a regular monitoring program to review fraud and corruption incidents and integrity investigations to identify how they can improve their controls.

4. DJCS: Introduce a regular training refresher program for all staff that covers fraud and corruption.

5. Eight departments (excluding the Department of Jobs, Skills, Industry and Regions and the Department of Transport and Planning): Set up regular data analytics reviews to assess their procurement activities for fraud and corruption risks. At a minimum, this involves collating and centralising data so they can export and review it.

Conclusion

The VAGO report provides recommendations for Victorian government departments to improve procurement practices. By implementing these recommendations, departments and agencies can enhance the integrity and transparency of their procurement activities, safeguarding public trust and ensuring value for money.

***

A participant in the UN Global Compact, CourtHeath seeks to raise awareness about the sustainable development goals and the principles of the Global Compact with business and government organisations in Victoria. The elimination of all forms of discrimination in respect to employment and occupation is Principle 6 of the Global Compact. The Global Compact repudiates labour discrimination internationally.

***

IMAGE: Used under licence from shutterstock.com

***

[category courtheath's blog]

[#ProcurementIntegrity, #VAGOreport, #PublicSector]