Commonwealth procurement in focus: key ANAO audit findings for 2025-26

Australian National Audit Office's (ANAO) procurement performance audits released in 2025–26 reinforce a familiar message for Commonwealth entities: compliance with frameworks is only part of the picture, with procurement execution and contract management still under close scrutiny.

Collectively, the ANAO reports on Commonwealth procurement processes, and the resulting contracts suggest a gap between procurement policy intent and operational practice and offer guidance to entities seeking to bridge this gap.

This article provides a high-level summary of the common themes of value for money, contract management, and governance arrangement emerging from the audit reports this financial year and identifies key considerations for Commonwealth entities.

Value for money

The value for money principle is a central consideration across the audit reports, where audited entities generally sought to achieve value for money, particularly with competitive processes. However, the ANAO observed that the way value for money was documented and evidenced varied across procurement processes.

Where request documentation did not clearly articulate the evaluation criteria, or procurement records did not adequately explain how assessment outcomes informed the final decision, it was more difficult for entities to demonstrate how value for money conclusions were reached. This was particularly seen in limited tender procurements where comparative market information is more constrained.

Practical consideration:

Commonwealth entities should:

• Seek quotes from multiple suppliers when using an established procurement panel to assist in promoting competition.
• Consider the completeness and quality of advice received before approving the commitment of public money. Briefing materials should clearly explain how value for money will be achieved.
• Include processes that treat all suppliers fairly. When existing suppliers are under consideration, an established process for managing the risk of incumbency can further support value for money by mitigating potential bias and ensuring open and effective competition.

Contract management - fit-for-purpose?

The importance of contract management was a central theme that emerged across the audits, with audit reports frequently indicating opportunities for improvement in managing contracts in line with achieving procurement objectives.

Notably, appropriate contract management which is supported by ongoing and active oversight across the life of the contract, is central to achieving intended procurement objectives and value for money. This is especially important where risks to capability, cost or schedule are not fully known at contract entry.

Where, for example, contracts were not supported by contract management plans, risk management plans, or clear performance frameworks, procurement objectives and value for money were put at risk.

Practical consideration:

Commonwealth entities should ensure, as apart of ongoing contract management for high risk, high value contracts, the implementation of contract management plans, which include key information about how the contract will be managed over its life.

Governance arrangements

Across the reports, a common theme was that procurement processes should be supported by appropriate governance arrangements and expert advice. Key examples of governance arrangements we consider important include approaches to record keeping procurement planning and risk assessments.

Record keeping

Unsurprisingly, accurate record keeping, which is commensurate with the scale, scope and risk of procurements, was identified as a key aspect of good governance arrangements.

Documentation should provide accurate information on the requirements for that procurement, the process that is to be followed, how value for money will be assessed and achieved, relevant approvals, and relevant decisions and their basis. The maintenance of such records is a fundamental element of accountability and transparency in any procurement process.

In absence of good record keeping, Commonwealth entities expose themselves to risks that legislative obligations are not met, internal policy requirements are not adhered to, records are not readily available and value for money is not demonstrably achieved.

Practical consideration:

Commonwealth entities must maintain accurate records of all stages of the procurement process and management of the resulting contract to support accountability and transparency in government.

Early procurement planning

The audit reports identified shortcomings in early procurement planning processes, which are critical to allow entities to maintain focus on long-term objectives, pace work effectively and achieve value for money. Specifically, the absence of statements of procurement objectives, milestones schedules, and risk assessments jeopardise maximising value for money for the Australian taxpayer.

Procurement begins when a need has been identified and a decision has been made on the procurement requirement. This means that procurement planning should be in place from the beginning of the procurement process.

Practical consideration:

Commonwealth entities should ensure that procurement planning occurs early before procurement decisions are made to allow entities to achieve procurement objectives and pace work effectively.

Communicate risk

The audit reports highlighted the need to clearly consider and communicate risks identified in tender evaluation and contracting decisions to decision-makers. Where risks are not consistently considered or clearly communicated to decision-makers, the ability to deliver intended outcomes and capabilities is undermined.

Practical consideration:

Commonwealth entities should support informed decision-making by ensuring that material risks are consistently considered and communicated to key stakeholders.

Conclusion

While the recent ANAO audit reports highlight familiar procurement challenges, they reinforce that compliance with procurement frameworks alone is not sufficient. Strong procurement outcomes depend on clear articulation of value for money, effective contract management and sound governance across the procurement lifecycle.