The Australian National Audit Office (ANAO) conducted the performance audit of COVID-19 planning and procurement management to increase the National Medical Stockpile (NMS) as part of the first phase of ANAO's multi-year strategy to ensure the effective, efficient, economical and ethical delivery of the Australian Government’s response to the COVID-19 pandemic.

Audit Criteria:

• Was pre-pandemic procurement planning for the NMS effective?
• As part of the Australian Government’s COVID-19 response, was the planning and governance of the NMS procurements effective?
• Was the COVID-19 NMS procurement requirement for personal protective equipment (PPE) and medical equipment met?

1. The NMS procurement requirement for PPE and medical equipment related to COVID-19 was met or exceeded. Elements of the Department of Health’s procurement planning for the NMS could be improved.
2. Department of Health’s pre-pandemic procurement planning for the NMS was partially effective and partially risk-based. Agreement with states and territories about stockpiling responsibilities was not documented and stockpile information was not adequately shared. There were no protocols for emergency procurements.
3. Department of Health’s and Department of Industry, Science and Resources’ NMS procurement planning and governance arrangements in response to the COVID-19 pandemic were effective. Both entities had elements of a plan for meeting the requirement, established fit for purpose governance arrangements and considered risks.
4. The COVID-19 NMS procurement requirement was not clearly specified for PPE, swabs and COVID-19 tests. Procured quantities for the NMS were approximately aligned with overall national health system demand estimates for all items where demand modelling was undertaken, suggesting the procurement requirement was met or exceeded.

Fit for purpose governance and planning arrangements can mitigate risks to the proper use of public resources created by a challenging procurement environment.

1. Department of Health’s business as usual procurement planning for the NMS should be based on an analysis of strategic risks and threats.
2. Department of Health should establish a mechanism for regular sharing of information between jurisdictions about stockpile inventories, etc., that will function in both business as usual and emergency conditions.
3. Department of Health should put in place a strategic procurement, management and distribution plan for the NMS that includes protocols for emergency procurements.

Procurement is the core business of the National Capital Authority (NCA). The Australian National Audit Office (ANAO) conducted this audit to provide assurance to the Parliament over the effectiveness of the NCA’s procurement activities.

Audit Criteria:

• Have open and competitive procurement processes been employed?
• Has decision-making been accountable and transparent?

1. The NCA’s insufficient use of open and competitive procurement processes, non-compliance with the Commonwealth Procurement Rules (CPRs) and poor transparency and record keeping means it cannot demonstrate value for money across its procurement activities.
2. The NCA makes insufficient use of open and competitive procurement processes. Where open tenders were conducted, it was common for request documentation to limit the extent of effective competition. Where suppliers were directly approached, the pool of potential tenderers was often limited to those previously engaged by the NCA, or described by the NCA as being known to the NCA or its advisers. With respect to the assessment processes undertaken, just over half of the contracts were awarded to the candidate where documentation demonstrated that it offered the best value for money. The conduct of procurements was also not to a consistent ethical standard.
3. Procurement decision-making has not been sufficiently accountable and transparent. Approval had been obtained by an appropriate delegate in most of the contracts examined. It was common for there to be gaps in the records of the planning and conduct of procurements. The NCA’s reporting of contracts and amendments on AusTender was largely non-compliant with the requirements under the Commonwealth Procurement Rules (CPRs).

Generally, the more competitive the procurement process, the better placed an entity is to demonstrate that it has achieved value for money. Competition encourages respondents to submit more efficient, effective and economical proposals. It also ensures that the purchasing entity can compare the price and quality of goods, works and services from different suppliers. Openness in procurement involves giving suppliers fair and equitable access to opportunities to compete for work while maintaining transparency and integrity of process.

1.         The Department of Finance should develop and issue guidance on applying the definition of “construction services” when relevant entities are considering which procurement threshold to use for the purposes of the Commonwealth Procurement Rules (CPRs).

2.         The National Capital Authority (NCA) should:

• increase the extent to which it employs open competitive procurement processes;
• improve the accuracy of its AusTender reporting on how contracts were authorized.

3.         The National Capital Authority (NCA) should improve its controls over the making of appropriate records of the justification for using limited tender procurement approaches and outlining how value for money was achieved.

4.         The National Capital Authority’s (NCA) Audit Committee should monitor and provide assurance that the NCA employs open, fair and non-discriminatory approaches when undertaking procurements.

5.         The National Capital Authority (NCA) should strengthen its procurement controls to ensure that procurement request documentation includes a complete description of the evaluation criteria that will be applied.

6.         Where a probity adviser has been appointed, the National Capital Authority should actively engage and manage the adviser to ensure services are delivered as agreed and that probity has been maintained during the procurement process.

7.         The National Capital Authority (NCA) should implement a monitoring and assurance framework over its compliance with the Commonwealth Procurement Rules (CPRs), including AusTender reporting.

8.         The National Capital Authority (NCA) should place greater emphasis on timely and accurate reporting of its procurement activities, and making and retaining appropriate records of those activities.