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Intro

The Auditor General identified all eight local governments assessed needed to address significant matters in how they manage contract extensions and variations.
 
They are also required to report to the Minister for Local Government on what actions they have taken or intend to take to address those significant matters.
 

Though the report only assessed eight local governments, the extent of the matters identified suggests all local governments need to review their processes, policies and guidelines around management of contract extensions and variations as a matter of priority.

The five key areas raised in the report are: 

  • Entities need to enhance their policies and procedures for managing contract extensions and variations with comprehensive guidance.
  • Entities lacked key information essential to monitor contractual obligations.
  • Entities did not have evidence of performance reviews for some variations.
  • Entities did not have sufficient documentation to demonstrate extensions or variations were given due consideration.
In some entities, variations were not approved by an officer with the appropriate level of delegated authority.
With procurement, one size does not fit all. All local governments need to ensure they have policies and guidelines that address ‘all focus areas’ of the better practice principles the Auditor General provided in Appendix 1 of the report.
 
Contract management processes - centred around the principles of probity, accountability and transparency - help to ensure that contracting is effective, meets the standards expected by the community and Parliament and provides good value for money for the ratepayer.
 

Local governments should be prepared for their auditor to check any of the five key areas identified above, and any significant deficiency identified is likely to result in a significant matter being reported in the auditor’s report.

COVID-19 –Purchasing Policy and guidelines amendments

Local governments also need to amend their Purchasing Policy and guidelines, including contract extension and variation, for changes that were gazetted on 9 April 2020 to the Local Government (Functions and General) Regulations 1996. Please refer to the LG Alert Practical assistance for local governments to respond during a State of Emergency (COVID-19).
 
These amendments increased the tender threshold to $250,000 and provided relief during a state of emergency to publicly advertise tenders in prescribed circumstances.
 

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Page reviewed 30 July 2019