Audit highlights NSW telco procurement shortcomings

NSW government agencies have been paying too much for telco services according to the results of an audit released today.

Out of six NSW government agencies audited, only one of them was effective in negotiating lower rates for telco services, with the remaining five being "price takers" in the period covered by the report.

The six agencies covered by the NSW Auditor-General's report – Sydney Trains, NSW Businesslink, Fire and Rescue NSW, Department of Education and Communities, Forestry Corporation of NSW, and Essential Energy – in 2012-13 spent $115 million on telco services and equipment, representing a third of the government's expenditure.

The Government Telecommunications Agreement arrangements under which telco services were purchased in the audit period expired at the end of March this year.

"The GTA arrangements did not use the government’s purchasing power to deliver the full potential for savings in telecommunications to all agencies," the report states.

"The GTA arrangements allowed negotiation with suppliers on price and services but did not actively encourage and support it. Agencies we spoke to assumed that the GTA operated like other State contracts and the ceiling price represented the best rates that agencies could get."

Essential Energy was the only agency that could demonstrate it was achieving value for money.

"The other agencies had weaknesses or gaps in their processes that meant we could not conclude that they were achieving the best value from their telecommunications arrangements," the report states.

The new arrangements for telco procurement which took effect in April this year more clearly make government agencies take responsibility for negotiating value for money with telco suppliers.

"Whether these arrangements will deliver value for money in practice will depend on whether the agencies take up the support and advice available; and how good that advice is," the report conclude.

A report issued in September by Victoria's Auditor-General highlighted a massive blowout in mobile voice and data services among government agencies in that state.