A scathing audit report on the federal digital agency's handling of contracts has brought it under the close watch of Finance Minister Katy Gallagher.
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Senator Gallagher, who oversees the Digital Transformation Agency's new portfolio, on Thursday said she took the matters raised by the national audit office report seriously.
She responded to the Australian National Audit Office report, released on Wednesday, after it found the DTA fell short of ethical standards by increasing the value of a contract by 40 times the original cost.
The agency had also failed to adequately consider value for money when it varied its contracts, and had overpaid suppliers due to weaknesses in the agency's payment controls, between 2019 and 2021, the report found.
Senator Gallagher, who oversees the federal agency after it was moved into the Finance portfolio, said following the audit she would monitor the agency closely.
"The ANAO has investigated the Digital Transformation Agency's internal procurement processes during the period of the previous government and has identified some very concerning issues with process and behaviour," Senator Gallagher said.
"I take these matters very seriously and will closely monitor the way the DTA addresses these audit recommendations to ensure that the processes and behaviours that have been highlighted in this report are cleaned up and don't happen again."
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The national audit office recommended an overhaul of the agency's approach to contracting, after finding the DTA had not effectively managed any of the nine contracts audited - including two related to the ill-fated project to develop and roll out the COVIDSafe app.
It also urged the Finance Department to implement "reporting requirements for procurements from standing offers, such as panels, to provide transparency on whether an opportunity was open to all suppliers and, if not, how many suppliers were approached".
The audit report found the DTA's approach fell short of ethical requirements, singling out its handling of a contract with consultancy firm Nous Group for criticism.
In that case, the agency changed a contract with Nous Group relating to a myGov project 10 times over two years, growing it to 40 times its original value from $121,000 to $4.94 million, the report said.
The DTA has agreed to reforms, but defended its handling of the contracts saying they still achieved their intended goals and supported "critical delivery requirements" in the pandemic.
DTA chief executive Chris Fechner, who began his role after the period covered by the audit report, released a statement on Wednesday saying the agency was making improvements to its contracting practices.
"The DTA welcomes this review and takes seriously the ANAO's focus on providing increased transparency over our internal procurement framework and practices with a view to ensuring contracts are managed effectively and value for money continues to be achieved," he said.
Mr Fechner said the audit was not a review of the DTA's whole-of-government digital sourcing responsibilities, and that the audit findings "have no bearing whatsoever" on the agency's whole-of-government agreements, panels, marketplaces and BuyICT platform.