The following table shows control principles on which our audit focused. They are not intended to be an exhaustive list.
Management of contract extensions and variations |
Focus area |
What we expected to see |
Policy |
Policies and procedures |
- Contract management policies and procedures are regularly reviewed to ensure compliance with current legislation and relevance to current operations.
- Policies or procedures include a requirement to maintain a comprehensive register or database of all contracts, including:
- the dollar value above which contracts are to be included in the register, and
- the custodian of the register with responsibility for regular review and update of the contract register or database.
- Policies include clear guidance on what constitutes a contract variation and when a separate procurement process is required.
- The policies or procedures provide guidance on the key processes for contract extensions, including timely and documented assessments of contractor performance prior to exercising an extension option.
|
Delegations |
- There are appropriate delegations and authorisations in place for procurement as well as for contract extensions and variations.
|
Records |
Comprehensive register of contracts |
- A comprehensive register of all contracts is maintained, with all key contract information.
|
Contract extensions |
Contract terms |
- Contracts are extended only if the original contract includes extension options.
|
Approval |
- Contract extensions are approved by an appropriate officer, in accordance with delegated authorisation limits.
- Extensions are approved before the expiration date of the original contract or previously extended term, for continuity in the provision of services.
|
Contractor performance review |
- There is documented evidence that contractor performance has been assessed before a contract extension is approved.
|
Recordkeeping |
- There is documented evidence that the terms of the contract extension have been mutually agreed by the entity and the contractor.
- Documents for approval of contract extensions are retained in accordance with recordkeeping plans, to promote accountability and transparency in decision making.
|
Contract variations |
Approval |
- Contract variations are approved by an appropriate officer, in accordance with delegated authorisation limits.
- Consideration is given to the cumulative impact of variations, to ensure that the scope of the original contract is not significantly altered, and that a separate procurement process is not required.
|
Proposal for variation |
- Contract variations are supported by proposals with detailed description of the nature of the variation, with associated cost, time and scope implications.
|
Recordkeeping |
- The variation proposals and approval documents are retained in accordance with recordkeeping plans, to promote accountability and transparency in decision making.
|
Source: OAG