An inquiry into public sector contract management has revealed deficiencies, including insufficient recordkeeping and poor documentation of value for money in contract variations.

The Joint Committee of Public Accounts and Audit released its inquiry into the contract management practices of Commonwealth entities, judging value for money and efficacy.

“Value for money cannot be achieved for the taxpayer if a well-managed procurement process is not followed up with effective contract management,” said Linda Burney, chair of the Joint Committee of Public Accounts and Audit.

The effectiveness of My Health Record (MHR) procurement by the Australian Digital Health Agency (ADHA) was diminished by poor procurement planning and failure to observe core elements of the Commonwealth Procurement Rules, the inquiry found.

MHR is a public system supporting coordination and clinical decision-making, providing health information for 23.7 million Australians. It was upgraded rapidly during the COVID-19 pandemic to provide convenient access to test results and vaccination certificates.

An audit by the Australian National Audit Office (ANAO) found that the National Infrastructure Operator contract with Accenture was amended eight times between January 2018 and February 2024, largely to fund MHR system enhancements. Six amendments valued at $54 million were executed during the term of the existing contract.

For the six amendments, ADHA failed to document value for money considerations. Furthermore, ADHA did not review the contractor’s performance when it chose to extend the contract.

ANAO found that officials managing the National Infrastructure Operator contract did not adhere to the ADHA’s records of management policies, including practices of benchmarking, annual performance reviews and audits.

The audit also found that ADHA’s leverage to manage contractors’ performance was weakened by the advance payment of services before delivery. When a formal dispute arose between Accenture and the ADHA in June 2019, this was not resolved until March 2023.

ANAO made 13 recommendations to ADHA. These included measures to ensure that performance and deliverables underwent review before contracts were extended, and that decisions to spend more money through contract variations were adequately documented.

In a separate audit, ANAO found that none of the 13 general service providers engaged by Adult Migrant English Program (AMEP) contracts were engaged with appropriate contractual arrangements.

The AMEP has provided free English tuition to eligible migrants and humanitarian entrants with low English proficiency. It has supported approximately 53,000 participants annually, and the contracts are valued at over $2 billion.

The inquiry found that AMEP contracts had been subject to significant variations, with insufficient documentation to prove that each variation represented value for money.

Key performance indicators (KPIs) put in place when the contracts were initially signed were amended over time such that they no longer addressed the educational outcomes being achieved by students, the accuracy of provider assessments of student outcomes, or the timeliness in which service providers gave data to the department.

Submissions from AMEP instructors argued that the KPIs were stressful and time consuming, including requirements to track student hourly attendance, adhere to Australian Core Skills Framework (ACSF) progressive assessments of student attainment, and navigate a cumbersome student data management system.

“Key performance indicators should be related to student satisfaction and excellence in English language delivery, not by achieving passes in random tests,” one instructor said.

“Students disliked over-assessment and stopped attending class,” they added.

“Quality assurance and compliance should be supportive and not punitive. Quality English language provision should be the focus, not ticking boxes and ‘busy work’ that requires senior leadership staff to spend time away from supporting and mentoring teaching staff.”

Attendance KPIs were also unpopular with instructors.

“KPIs often just punish the provider for student behaviour. It is common for many AMEP students to skip assessments or to leave classes halfway through semesters. This will have nothing to do with the provider,” one instructor said.

“Adult learners must be treated with respect and their priorities recognised in regard to attending AMEP classes and balancing these against other life demands, such as gaining employment and caring responsibilities, which impact on attendance,” another added.

Regardless, ANAO recommended that KPIs be reinstated such that student performance and program efficacy could be monitored by the Department of Home Affairs (DoHA).

It also urged DoHA to maintain records of contract variations and decision-making processes relating to the value for money of proposed contract changes.

Following its inquiry, the Joint Committee of Public Accounts and Audit delivered a series of recommendations regarding contract management practices.

Firstly, government agencies should undertake mandatory self-assessments on contract management performance, and corrective action should be taken when shortfalls are identified.

Furthermore, the Department of Finance should produce effective guidance addressing common weaknesses in contract management, consulting with ANAO and relevant agencies.

It also recommended that ADHA and DoHA report back to the committee after six and 12 months to ensure that the recommendations regarding the MHR and AMEP contracts were implemented.

“The Department of Finance has a pivotal role to play in addressing shortfalls in contract management across the Commonwealth. The department needs to be more than just a policy steward that provides advice and resources,” Burney said.