The focus of this audit was to assess whether agencies have appropriate processes for tendering and for extending existing contracts. We also assessed how well agencies manage conflicts of interest in their procurements.

We assessed the policies and documented practices at 8 agencies using the following lines of inquiry:

1. Are the policies for tendering and for contract extensions and renewals adequate?
2. Have the processes for tenders above $250,000:

1. resulted in adequate testing of the market by giving all relevant suppliers appropriate opportunity and is the awarding of contracts appropriately reported?
2. provided adequate controls for managing conflicts of interest in procurement?

3. Are agencies adequately controlling:

1. contract extensions and renewals above $50,000, including testing of the market before extending or renewing contracts?
2. contract variations, including approval of variations within delegated limits and where appropriate initiating a new tender process?

Where State Supply Commission policies and regulations applied to our lines of inquiry, we tested for compliance.

We included Western Power in the audit even though it is not bound by State Supply Commission requirements, being a state owned corporation rather than a public sector agency. In our view, the State Supply Commission requirements represent good practice and in this context are relevant to Western Power.

We assessed tender processes finalised after 1 July 2015, and contract extensions processed from 1 July 2014 to the time of our audit in the fourth quarter of 2016.

We conducted this across government benchmarking audit (AGBA) under section 18 of the Auditor General Act 2006 and in accordance with Australian Auditing and Assurance Standards. AGBAs assess and benchmark agencies against common business practices to identify good practices and control weaknesses so that agencies, including those not audited, can compare their own performance.