Incompatibility blamed for poor Queensland contract management

A whole-of-government approach to managing contracts in the Queensland government has failed to reap the expected benefits because the government didn't ensure the new system was compatible with the SAP finance system.
Written by Josh Taylor, Contributor

The Queensland Auditor-General Andrew Greaves has blamed contract system incompatibility as one factor for why the Queensland Government has not been able to demonstrate value for money in some of the AU$10.9 billion the government spends each year on procurement.

In the report (PDF) tabled in Queensland Parliament today, Greaves assessed over 60 contracts in the Department of Community Safety, the Department of Public Works and Housing, and the Department of Transport and Main Roads. He said that the departments "could not consistently demonstrate that they had achieved value for money" from their contracts, or whether they got the best solution for the best price.

"Their ability to achieve value for money from their contracts was weakened by poor performance management of their suppliers and ineffective planning for contract expiry," Greaves said.

"They did not have in place sufficient contract management skills and systems to manage all their contracts consistently to the same high standards."

The Procurement Transformation Division (PTD) within the Department of Public Works and Housing is supposed to have whole-of-government oversight over procurement spending but the departments were found to lack systems to keep a record of the contracts, to allow the department to collect the data as a whole.

Individual agencies did have their own methods of recording contracts, either via spreadsheet or through a register, but it was often incomplete and contained limited information, the report found.

In 2007, it was recommended that budget sector agencies have contract management systems in place, and it was recommended that this system be integrated into the SAP finance systems, although at the time the systems didn't have that capability.

In 2011, PTD implemented a new contract lifecycle system known as Q-Contracts for use by all budget sector agencies at a cost of AU$1.1 million. According to the report, the government had planned for all such agencies to be on the system by June 2012, with an expected AU$7.25 million in benefits each year. Greaves found that as of June 2013, only PTD was using the system, and it was only using it in five out of 30 of its business units.

Greaves explained that during the user acceptance testing phase, PTD did not check whether the Q-Contracts system would integrate with the SAP finance systems, and as a result it is currently incompatible with the existing SAP finance system. He said that this makes it less effective and appealing to departments.

"These capability gaps, combined with inadequate contract management systems, will make it more challenging for PTD to achieve its objective of obtaining maximum value from government spending," Greaves said.

He has recommended that all departments develop and implement contract management capability, and a lifecycle system to monitor supplier performance, provide spend analysis and warn when contracts are due to expire.

Neil Castles, the director-general for the Department of Public Works and Housing said in response that his department was working to bring in a new contract management system by the end of June 2014.

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