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Compliance in a crisis

07 April 2022

5 min read

#Australian Government, #Procurement

Published by:

Lachlan Speak

Compliance in a crisis

Lawyers advising government over the last two years are well aware that ensuring compliance with legal and accountability requirements in a crisis presents particular challenges. The Australian National Audit Office (ANAO) recognises these issues and has provided guidance to assist Australian Government entities facing the need for rapid implementation of programs.

Emergency events such as the COVID-19 pandemic, fires and recent floods in New South Wales and Queensland are a salient reminder to prepare for the next crisis before it happens by keeping up to date with the ANAO’s views on how accountability requirements can be addressed in urgent situations. The ANAO’s recent areas of focus indicate that if you find yourself facing such a situation, it is highly likely that a review by the ANAO will follow.

Need for compliance

After the pressures placed on government in the last two years, it is no surprise that the most downloaded guidance from ANAO’s website is their Rapid Implementation of Australian Government Initiatives. The expectation that government entities move quickly to implement projects and reforms is ever-present and has been a particular feature of recent times. Interestingly, this paper was developed based on case studies which seem quite reasonable in their timeframes by today’s standards, such as the delivery of the National Innovation and Science Agenda, where an implementation plan was identified four months before the first measures were due to be implemented. Despite this, the principles set out in the paper can be usefully applied to recent events.

The ANAO paper, Responding to Disaster and Pandemic Issues, contains a salient reminder of the need for accountability in emergency circumstances:

“The imperative to act quickly does not diminish the importance of good governance. While focus may need to shift from strategic to tactical governance, establishing fit-for-purpose arrangements to ensure delivery of essential services (both rapid response activities and business as usual) while gaining assurance over compliance with legal requirements and quality expectations is necessary.”

Accordingly, the ANAO will continue to expect good governance and associated legal requirements to be satisfied in an emergency situation.

Current focus areas

Consistent with ANAO’s approach, the responses from government entities, including most recently from the Department of Foreign Affairs and Trade, to crisis situations feature heavily in the ANAO’s current work program. The ANAO’s Annual Audit Work Program 2021-22 indicates that responses to crisis situations are often the subject of the ANAO’s attention. Significant areas of focus include:

  • Australia’s COVID-19 vaccine rollout
  • international travel restrictions during COVID-19
  • COVID-19 support to the aviation sector
  • overseas crisis management and response, including the effectiveness of the Department of Foreign Affairs and Trade’s management of returning overseas Australians in response to the COVID-19 pandemic
  • administration of the JobKeeper scheme. 

With this in mind, it is important to be prepared for the next crisis by developing an awareness of the expectations of the ANAO and appropriate accountability before the situation arises.

Risk management

Relevantly, risk has been defined in the Commonwealth Risk Management Policy as the “effect of uncertainty on objectives” and risk management as the “coordinated activities to direct and control an organisation with regard to risk”.[1] Indeed, section 16 of the Public Governance, Performance and Accountability Act 2013 provides the substantive obligation that accountable authorities of Commonwealth entities must establish and maintain appropriate systems of risk oversight and management.

Whilst risk tolerance may increase during the urgent nature of the emergency event, it remains critical that government entities articulate appropriate and acceptable risk tolerance early in the program implementation phase. Doing so will ensure effective risk management is supported and appropriate resources are allocated.

In its Emergency Management: Insights from the Australian Government’s COVID-19 Response (Emergency Management Guidance), the ANAO suggests taking the following actions to further manage risk:

  • formalising roles and responsibilities for managing different aspects of the identified risks
  • understanding different entities’ risk tolerances
  • establishing arrangements to monitor the effectiveness of agreed risk management controls and treatments
  • ensuring appropriate oversight of shared risks by relevant entities and interdepartmental governance and coordination bodies.

Managing emergency procurements

Government entities should pay particular attention when managing emergency procurements. Under paragraph 2.6 of the Commonwealth Procurement Rules (CPRs), accountable authorities may decide that the CPRs do not apply to a procurement under certain situations, such as for national security or to protect public health.

Further, the situation may permit non-competitive or limited tenders due to the relevant entity’s extreme urgency brought about by unforeseen events, such that the goods or services could not be obtained in time under an open tender. Even if these conditions are met, the ANAO considers that the following steps (set out in the Emergency Management Guidance) should be completed when an emergency procurement is undertaken:  

  • establishing probity measures early in the process
  • documenting an evaluation plan that sets out consistent criteria underlying the procurement decision
  • using benchmarks to demonstrate value for money
  • maintaining adequate records to facilitate transparency.

If government entities can identify and implement each of these steps at an early stage, potential consequences that may prove detrimental to the procurement process can be mitigated.

Although these steps relate to emergencies, government entities are encouraged to take these steps in all of their procurement decisions to ensure their procurement remains fair, ethical, transparent and probity compliant at all times.

Key takeaways

As we navigate through the COVID-19 global pandemic, the risk environment faced by the public sector has evolved and become more complex. This has prompted the ANAO to respond swiftly to account for a rapidly changing situation. Likewise, it is critical that government entities prepare for the next crisis by keeping up to date with the ANAO’s views on how accountability requirements can be addressed in urgent situations. 

If you have any questions, please contact us or send us your enquiry here.

Authors: Elizabeth Carroll & Lachlan Speak

[1] Commonwealth of Australia, Commonwealth Risk Management Policy (1 July 2014), 8.

The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Lachlan Speak

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