By: Paul Emanuelli

This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.

In its March 2020 report entitled Australian Government Procurement Contract Reporting Update, Australia’s National Audit Office found that a disproportionate allocation of work under supplier roster panel arrangements went to a small percentage of contractors, while also finding that over 40 percent of scope changes under publicly tendered contracts resulted in change orders that doubled the value of the originally awarded contracts.

The report found that “contracting through procurement panels has been growing significantly both in terms of the number of contract notices and their value” but that “it remains common for a relatively small proportion of suppliers on a panel to be awarded the majority of contract value when the panel is accessed.” In fact, the audit found that over a ten-year period, over 80 percent of the value of awarded work under these framework arrangements went to only one third of the suppliers on the government’s supplier panels:

The first information report identified that the large majority of panels examined had a relatively small proportion of suppliers that were awarded the majority of contract value. This situation was similarly evident from the ANAO’s expanded and updated analysis as part of this second information report. For example, for eight of the top ten panels by total value over the ten years analysed, less than one third of the suppliers represented on the panel were awarded at or over 80 per cent of the panel’s total value.

Furthermore, the audit noted serious concerns with contract change order practices, finding that “41.8 per cent of amended parent contracts had their value increase by more than 100 per cent, including 19.9 per cent of amended contracts where the value increased by 200 per cent or more.” As this report illustrates, even when government procurement practices superficially comply with transparent procurement practices through the creation of multi-supplier framework arrangements and publicly tendered contract awards, weak post-award administration of these panel arrangements and contracts reflects systemic weaknesses in the transparency of government contract administration practices.