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Financial management

Purchasing

Customs used a number of mechanisms to ensure that purchasing processes comply with the Commonwealth’s core purchasing policy principles:

• the Chief Executive Instructions (CEIs) provide instruction and guidance
• an Accredited Purchasing Unit in Canberra provided advice and assistance with complex purchasing processes to all areas of Customs
• internal audit reviews of purchasing processes were conducted.

During the reporting period:

• purchasing guideline documents dealing with tender evaluation, procurement planning, method of procurement approval, contract negotiation and purchasing advice were produced
• course material was reviewed and a purchasing policy awareness training course trialled
• the February 2001 Australian National Audit Office (ANAO) Better Practice Guide – Contract Management and the November 2000 Joint Committee of Public Accounts and Audit report 379 Contract Management in the APS were reviewed to identify potential process improvements
• sections of the CEIs dealing with contracts and tendering were revised
• the Financial Management Information System was used to identify contracts arranged to ensure that Customs complied with mandatory reporting requirements.

A selection of tender processes was internally audited to establish that value for money had been achieved. The Audit and Evaluation Committee also monitored improvements to processes in response to ANAO Report No 12 1999-2000 – Management of Contracted Business Support Processes.

Customs facilitated the involvement of Australian and New Zealand small to medium enterprises (SMEs) in tender processes. In particular, prospective tenderers were invited to contact Customs if they considered SMEs were not being given a fair opportunity to participate.

Asset management

Sound asset management ensures that Customs maximises one of its major resources to achieve its corporate goals effectively and efficiently. In 1999-2000 Customs reported that assets management had been devolved to divisional, branch and regional business groups. During 2000-01 support and technical advice continued to be provided to business groups to assist them in this new function.

The asset management framework was reviewed and updated. This framework will underpin the further development of formal asset management plans, policies and procedures.

Commonwealth properties occupied by Customs

Most Commonwealth-owned properties occupied by Customs have been sold as part of the Government’s property disposal program. Properties sold by the Department of Finance and Administration (Finance) during 2000-01 were on Thursday Island in Queensland and in Port Hedland in Western Australia.

Discussions are continuing between Customs and Finance concerning the sale of remaining properties at Neutral Bay in New South Wales, Townsville in Queensland and Dampier in Western Australia.

Devolved banking

Customs successfully implemented devolved banking during 2000-01. Customs is now in a position to significantly improve the delivery of its cash management and associated banking services. The cargo management re-engineering project provides further opportunities to improve cash management during 2001-02, to ensure the banking environment can support the business outcomes of the project.

Consultants and competitive tendering and contracting

Consultants

Customs let 102 consultancy service contracts during 2000-01 (52 in 1999-2000). Expenditure on consultancy services was approximately $4.2 million. This included contracts entered into during the year and 31 contracts from previous years that were still in progress.

For the purposes of this report, 'consultant' was taken to include 'an entity, whether an individual, a partnership or a corporation, engaged to provide professional independent and expert advice or services'. Non-consultancy contracts for services, which are typically far more restrictive in the degree of latitude afforded to the contractor, were not included.

Further information on consultants required for annual reporting purposes is available on the Customs Internet site at http://www.customs.gov.au/media/annual2001/consultants.htm

Competitive tendering and contracting

Major functions already outsourced include Customs Coastwatch aerial surveillance, information technology support, legal services and internal audit.

Customs outsourced its internal audit functions in 1995. This contract was due to expire on 31 July 2001. Customs began a tender process for the provision of internal audit and risk management services for the next three years, with an option for extension for an additional three years.

Government policy on competitive tendering and contracting requires Customs to market test relevant activities and services, starting with corporate services. Market testing of corporate services began following a risk analysis that determined the first group of activities for attention.

Expressions of interest for the management of the Customs uniform, corporate wardrobe and protective clothing and equipment requirements were sought in December 2000. This was the first part of a two-stage market testing strategy. Seven respondents were short-listed from this process and invited to submit a request for tender (RFT). The RFT will be released to the short-listed applicants in early 2001-02.

Expressions of interest will also be sought early in 2001-02 for the provision of records management, mail and distribution services. Information and data was gathered during 2000-01 and documentation for the expression of interest developed. A detailed consultative and liaison process involving regional offices and affected areas was undertaken in developing service specifications before release of the expression of interest to the market.

Preparations for market testing of the pay and accounts shared services functions began during 2000-01. A single-stage open tender will be used to approach the market. Agreement on the scope of the market test was reached and development of the service specifications for the RFT commenced.

Market testing activity was also undertaken in a Customs operational support activity. Expressions of interest were sought for cargo unpack/repack and associated services in February 2001. This market test covers the provision of labour and specialist equipment to assist in the unpack and repack of cargo containers entering the country. Associated services include de-fumigation, transport, and a secure unpack site for some ports. Following completion of the expressions of interest evaluation, a decision on whether to proceed to an RFT is expected in early 2001-02.

Customs is continuing to carefully assess opportunities to use competitive tendering and contracting processes to support business improvement and the efficient achievement of its objectives.

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