Defence, ServicesAus warned over contractor oversight issues

Joseph Brookes
Senior Reporter

Some of the Public Service’s biggest users of outside contractors are not ensuring the outsourced workers are properly qualified, inducted or discharged, the national audit office has found, putting Commonwealth assets at risk.

The Australian National Audit Office (ANAO) has released three reports on the management of contractors by the Department of Defence, Services Australia and the Department of Veteran’s Affairs.

The three federal agencies were found to have established at least largely fit for purpose policies for managing contractors, but each had problems demonstrating the effectiveness of their policies.

In the case of Defence – the Commonwealth’s biggest spender, much of it on technology contractors – it was unable to demonstrate to the ANAO whether its contractor policy was effective because Defence entities aren’t reporting policy implementation or use, despite a growing use of the outsourced workers.

“Defence has established fit-for-purpose policies and processes for the management of contractors. However, Defence cannot demonstrate the effectiveness of its arrangements, in the absence of entity-level assurance based on a systematic approach to monitoring and reporting on implementation,” the ANAO said.

There are now more than 8300 full-time equivalent contractors being used by Defence – about 7.4 per cent of the total Defence workforce, according to the department.

Contractors are mostly used in project management (27 per cent), information technology (18 per cent), other (16 per cent), platform or fleet sustainment and maintenance (12 per cent), and administration (9 per cent).

Government policy for engaging contractors means these workers need to meet eligibility and suitability requirements to access government resources.

But the audit office said Defence is “not well placed” to provide an assurance that this is happening consistently at an enterprise level for contractor engagement because of a lack of reporting on compliance and inconsistent implantation – suggesting gaps are possible if not likely.

The ANAO found mandatory induction completion rates of contractors are not being reviewed by Defence, no training is required for personnel managing contracts, and there is no specific guidance for managing contractors on contracts valued at less than $200,000.

Potential problems were also identified in the ongoing assessment and separation of contractors because of “inconsistent” implementation. Internal audits have found the implementation of Defence’s policy for the separation of contractors to be “not fully effective across the department” despite the requirement for government entities to mitigate risks when contractors leave employment.

The potential problems in separating Defence personnel led to the ANAO recommending it establish arrangements to better support compliance and monitor their effectiveness to ensure the requirement is being met by entities. Defence agreed to the recommendation.

Defence counts contractors separately from consultants and “outsourced service providers”. Together the groups now outnumber the department’s own non-uniform staff two-to-one.

Do you know more? Contact James Riley via Email.

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