Western Australia Auditor General Colin Murphy has found that agencies need to do more to identify and manage potential conflicts of interests.

Murphy said in a statement that the conflicts arose from the procurement of Information and Communication Technology (ICT) contractors and through the acceptance of gifts and travel at the Department of Health.

The first audit in the Public Sector Performance Report assessed how well six agencies planned for, procured and managed their ICT contractors, having spent an estimated $360.85 million on external ICT goods and services in 2009 and 2010.

“Agencies need to proactively manage the risk of conflicts of interest by maintaining conflict of interest and gift registers,” Murphy said.

“Where contracting arrangements present potential conflicts, these should be recognised and mitigation strategies established and documented,” the Auditor said.

The report included other weaknesses such as lack of strategic ICT plans in certain agencies.

Without an up-to-date ICT strategy, agencies significantly increase the risk of making poor use of contractors and not getting best value for taxpayers’ dollar, the report said.

The report noted that certain agencies also did not fully comply with procurement policy for some of their contracting arrangements.

This included failure to develop business cases, establish contract management plans, seek appropriate approvals and lack of competitive tendering for some contracting arrangements.

“Good ICT systems and processes can deliver government services faster and at less cost to the taxpayer but need to be well designed and procured,” he said.

“Contractors can be a cost effective solution for the design and delivery of ICT systems but they can be an expensive waste of money if their roles are not clearly defined and their performance monitored,” he said.

The second item in the Public Sector Performance report is an investigation of the acceptance of gifts and benefits by employees of the Department of Health. The investigation was undertaken at the request of the Minister for Health.

Murphy said the management of potential conflicts of interest was a common theme across both audits.

“While we did not find any evidence of improper conduct or influence, we did find weaknesses in Health’s management of free travel and gifts, especially in the recognition of potential conflicts of interest and the management of those risks,” Murphy said.

Murphy found non-travel gifts were accepted by Health officers in breach of Department policy.

The policy does not allow gifts above a ‘negligible value’ to be accepted, but Health reported that 25 gifts valued from $30 to $350, including wine, champagne, books and ball tickets, were accepted by a small proportion of staff.

“Importantly, our testing found no instances of officers who reported having accepted gifts or travel benefits during the period we investigated were later involved in awarding contracts to the company that supplied them with the gift or travel,” Murphy said.

“Many companies in the health-care industry offer to fund health professionals to attend local or international medical events. The potential conflicts of interest associated with accepting these have been the subject of much ongoing debate," he added.

“Health has an obligation to address these risks when determining if the travel is appropriate – but quite simply, it would not be appropriate for any officers accepting gifts or travel to be involved in any procurement decisions relating to those companies,” he stressed.

The Department has now reviewed its approach to managing gifts and free travel and is currently implementing policy and process improvements.