Contract management in local government
Audit snapshot
What we reviewed and why
We reviewed two councils – one regional and one metropolitan – to form a view on whether they effectively manage their contracts to ensure the service delivery requirements are met.
Councils collectively spend over $720 million each year on contracts to deliver essential council services and support their functions.
It is important for councils to have effective contract management activities in place to ensure the contractor delivers the service to the required standard, on time and for the agreed amount while achieving value for money over the term of the contract.
Key council services and functions contracted out
What we concluded
We concluded that for the contracts we reviewed, both councils had key areas in their contract management activities that were not operating effectively. This included evaluating contractor performance against agreed performance standards, and assessing and managing contract risks.
Our key insights for councils
Our report provides key insights that all councils should consider in managing their contracts, including:
- identifying, assessing and managing any risks associated with contract arrangements
- assigning responsibility to staff who have the skills and knowledge needed to manage contracts, as well as a sound understanding of the contract terms and conditions and the contracted service or function
- providing training and having policies and procedures that provide sufficient information to help staff manage
contracts effectively - regularly monitoring and evaluating contractor performance against agreed performance standards
- keeping adequate records to support and inform the ongoing management of the contract
- establishing a contract management plan to help staff manage, monitor and report on contract performance.
