Services Australia slammed for ignoring procurement rules in $180 million furniture splurge

The Australian National Audit Office has given Services Australia a definite fail over the agency’s office furniture purchases, which totalled $180 million over five years and was often from one supplier without comparing prices.

While Services Australia was illegally hunting down welfare recipients with bogus Robodebt bills, it was also snubbing Commonwealth Procurement Rules (CPR) and its own guidelines in a furniture spending spree that has been officially declared to have not provided value for Australian taxpayer money.

Between July 2017 and June 2022, Services Australia recorded 990 contracts on AusTender under the categories of ‘office furniture’, ‘office and desk accessories’ and ‘workstations and office packages’.

The total value was $180 million, which accounted for more than half (51 per cent) of the overall government spend ($355 million) on furniture for the same period.

During this five-year span, Home Affairs recorded only 28 contracts on AusTender related to the procurement of office furniture with a total value of $1.7 million.

The ANAO audited the furniture-buying processes of Services Australia and Home Affairs and found the central welfare agency seriously flawed in its approach.

The audit found that despite tender evaluation committees being established and panel arrangements in place – and an external ergonomist contracted for advice – procurement rules were not followed when it came to good practice for considering value for money.

“Services Australia’s planning for the workstations panel did not follow good practice for considering value for money under the CPRs and its poor management of procurement timeframes contributed to difficulties in evaluating whether suppliers on the panel offered value for money,” the ANAO report states.

The agency “often approached one supplier, despite internal guidance to approach multiple suppliers”, and prices were not compared.

“There were examples where Services Australia’s use of panel arrangements fell short of supporting the intent of the CPRs to encourage competition and achieve value for money,” the report states.

Between 1 June 2013 and 30 June 2018, Services Australia had a standing offer with Schiavello International to provide workstations, loose furniture and marketing products. There was only one supplier on this standing offer.

“Thirty-seven of the 40 sampled procurements from Services Australia were purchased from a panel or standing offer notice. Of the 37 procurements, 21 (57 per cent) approached only one supplier,” the report states.

The audit also found some purchases were inaccurately reported, and in one case, a contract was signed with one supplier at an agreed price before any decisions were made on what was to be bought.

“The use of an exclusive process to order from a supplier on a panel by first signing a contract before deciding upon purchased items is not compliant with the CPRs,” the report states.

“Services Australia advised that this process ‘was not a procurement for new furniture’ and was for the retrofit of non-electric Schiavello workstations and repair of Schiavello products that were out of warranty.

“There was limited evidence to support this advice and no evidence of the agency considering a process that would be in line with the CPRs.”

The Auditor-General has made three recommendations for Services Australia to strengthen its procurement practices, stick to government guidelines and provide value for money.

Services Australia has accepted all the recommendations and says it has updated and strengthened its guidelines and practices at various times.

“The agency notes that many of the procurements examined by the ANAO were undertaken on or before 30 June 2022,” Services Australia says in its response to the report.

“Since then, the agency has strengthened its processes and controls for supporting the achievement of value-for-money in procurement consistent with updates to the commonwealth procurement rules and best practice.”