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Audit Act - Auditor-General - Reports - Audit reports 1989-90 - No. 9 - Department of Defence: Post Separation Employment


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The Auditor-General

Audit Report No 9 1988-89

D epartm ent o f Defence

P ost Separation Em ploym ent

A u stralian G overnm ent P u b lish in g Service, C an b erra

© Com m onw ealth of A ustralia 1989

ISSN 1033-968 X

ISBN 0 644 10542 9

T h is w ork is copyright. A p art from a n y u s e a s p e rm itte d u n d e r th e

C o p y rig h t A ct 1968, n o p a r t m a y b e r e p r o d u c e d b y a n y p r o c e s s

w ith o u t w ritte n p e rm issio n from th e D irecto r P u b lish in g a n d M a rk e t­

ing. AGPS. In q u iries s h o u ld b e d ire c te d to th e M anager, GPO Box 84,

AGPS P re ss, C a n b e rra , ACT 2601

THE PAELL-____ _ C01l8S0tiv«£RU J parliam entary pa pe r

No. 1 8 2 of; 1989 Ordered to be printed by authority _________ ISSN 0727-4181

Printed in Australia by R. D. Ru b ie. Commonwealth Government Printer, Canberra

AUSTRALIAN AUDIT OFFICE

A u stra lia n A udit Office C anberra, ACT 31 A ugust 1989

D ear Mr P resident D ear M adam S peaker

In accordance w ith th e a u th o rity c o n tain ed in th e Audit Act 1901, I tra n s m it to th e P a rlia m e n t a R eport, signed on 31

A ugust 1989, on a u d its, ex am in atio n s a n d in sp ectio n s c a r­ ried out u n d e r th e p rovisions of th e A udit A ct an d o th e r Acts.

The H onourable th e P re sid e n t of th e S en ate, The H onourable th e S p e a k e r of th e H ouse of R epresentatives,

P arliam ent House, C anberra, ACT

Yours sincerely.

J . C. Taylor A uditor-G eneral

CONTENTS

Page

1. Overview 1

2. In tro d u ctio n 2

3. B ack g ro u n d - P ublic Service G uidelines 3

4. D ep a rtm e n t’s resp o n se to P ublic Service G uidelines 4

5. C om pliance 5

6. A ssent a rra n g e m e n ts 8

7. C o-ordination of a d m in istra tio n 14

8. Revised policy 16

9. C onclusions 19

10. R ecom m endations 19

A tta ch m en t A 23

A tta ch m en t B 24

A ppendix 28

*amj- __ r r ;

1 4

Key fin d in g s

An ap p ro p ria te ad m in istrativ e fram ew ork for po st separation e m p lo y m e n t h a s b e e n d e v e lo p e d b y th e D e p a rtm e n t of

D efence in accordance w ith Service-wide guidelines. (Section 8.3).

E x te n d e d d e la y s o c c u rre d in th e im p le m e n ta tio n of p o st

se p a ra tio n em ploym ent guidelines. (Section 5.1).

R ecent policy in itiativ es have b een designed to improve the effectiveness of po st se p a ra tio n em ploym ent procedures. (Section 8.2).

Periodic review s of th e effectiveness of a s s e n t arrangem ents sh o u ld be u n d e rta k e n . (Section 6.2).

A U D IT O F P O S T SEPARATIO N

EMPLOYMENT

1. Overview 1.1 The A u stralian A udit Office (AAO) h a s reviewed the a d m in is tra tio n by th e D ep artm en t of Defence and the A u stra lia n Defence Force (ADF) of p ro ced u res regulating

th e a c c e p ta n c e of b u s in e s s a p p o in tm e n ts by D efence p e rso n n e l (both service a n d civilian) on resig n atio n or re tire m e n t. T he review a ss e s se d th e adequacy of the

D e p a rtm e n t’s p ro ced u res over th e decade following the ‘R eport of th e Com m ittee of Inquiry into Public D uty and Private In te re st’ (Bowen Report).

1.2 T h e AAO fo u n d t h a t a s u ita b le a d m in is tra tiv e

fram ew ork required by Service-wide guidelines h ad been developed, a lth o u g h th e re w ere extended delays in its im plem entation.

1.3 T he D ep artm en t h a s recently sought to extend this ad m in istrativ e fram ew ork w ith proposals to place certain req u ire m en ts on in d u stry . Specifically, ten d erers are to provide a s ta tu to ry declaration attestin g to th e fair gain­

in g of in f o r m a tio n , w h ic h , in d e f a u l t, w o u ld be

actionable a s a m isrep resen tatio n .

1.4 The recen t policy proposals did not stem from a

com prehensive an aly sis of loss of staff to industry, or of cases b y-passing a ss e n t procedures, b u t were based on a n u m b e r of o th er factors, including:

• a b a c k g ro u n d of is o la te d c a s e s w h ere a co n flict of

in te re st could be co n stru ed

• th e conclusion th a t existing p ro ced u res were difficult to a d m in is te r a n d la rg e ly in effectiv e (on th e b a s is of

lim ited aw areness by staff and lack of enforceability)

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• th e dem and for scarce project m anagem ent and other skills by the expanding A ustralian defence industries, and

• recen t m ajor overseas Defence procurem ent fraud.

1.5 The AAO considers th a t th e D ep artm en t’s response is appropriate to the perceived relatively m inor incidence of loss of staff to in d u stry involving conflicts of interests. The lim ited available d a ta on cases by-passing th e a s ­

sen t arrangem ents, m ean s th a t th e AAO is not able to

sta te conclusively th a t th e perceptions are accurate, al­ though it appeared likely th a t they were. In the AAO’s view, th e re w as no evidence to suggest th a t legislative m e a s u r e s a re n e e d e d a t t h i s s ta g e to c o n tro l p o s t

sep aratio n em ployment.

1.6 A n u m b e r o f r e c o m m e n d a t io n s to im p ro v e

d ep artm en tal ad m in istra tio n were m ade, including the need for periodic review of th e effectiveness of the new procedures.

1.7 The D ep artm en t h a s advised th a t, in general, it

agrees w ith the findings an d recom m endations flowing from th e review. A listing of th e AAO recom m endations and th e D epartm ent’s response to each recom m endation is contained at the end of the th is report.

1.8 The D epartm ent also advised th a t revised or new in stru c tio n s relating to p o st sep aratio n em ploym ent are being issu ed separately for th e service and civilian ele­ m en ts of the Defence organisation. Defence Instruction

(Public D uty and Private Interest) h a s been reviewed to reflect cu rre n t policy, agreed by Service Offices and a r­ r a n g e m e n ts a re b e in g m a d e for its p u b lic a tio n . A

sep arate in stru c tio n for civilian personnel of th e D epart­ m ent is to be published shortly.

2. Introduction 2.1 The A ustralian A udit Office (AAO) h a s reviewed the a d m in istra tio n by th e D ep artm en t of D efence an d the A ustralian Defence Force (ADF) of p rocedures regulating

th e ac c e p ta n c e of b u s in e s s a p p o in tm e n ts by Defence perso n n el (both Service and civilian) on resignation or retirem ent. The review covered the decade following the ‘Report of th e Committee of Inquiry into Public D uty and

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Private In te re st’ (Bowen Report) in J u ly 1979; specifically from th e initial in tro d u ctio n of th e Public Service Board (PSB) G u id elin es o n th e su b je c t in M arch 1980 (su b ­ seq u en tly reviewed in April 1987) to th e developm ent of

rev ised policy p ro p o s a ls by th e D ep a rtm e n t in M arch 1989.

2 .2 T h e re v ie w a s s e s s e d th e a d e q u a c y of th e

D ep artm en t’s p ro ced u res in th is area, henceforth term ed ‘P ost S ep aratio n Em ploym ent’ (PSE). The focus w as on th e D ep artm en t of Defence, b u t th e re w as also some con­ sid eratio n of Service-wide aspects.

2.3 W ithin th e D epartm ent of Defence, th e review in ­ volved exam ination of:

• th e D ep artm en t’s resp o n ses to th e PSB G uidelines

• p arliam e n tary a n d m edia in terest in Defence cases

• th e operation of a s s e n t procedures, including review of c a se s processed

• th e D ep artm en t’s loss of staff to th e private sector, and in p articu lar, w h e th e r cases were by-passing the assen t p ro ced u res, an d

• t h e D e p a r t m e n t ’s r e v is e d p o lic y p r o p o s a ls , a n d

com parison w ith overseas adm inistrations.

2 .4 D is c u s s io n s w ere h eld w ith m a n y a re a s of th e

D e p a rtm e n t (in c lu d in g th e C a p ita l P ro c u re m e n t O r­ g a n is a tio n , th e H u m a n R e s o u rc e s D ivision, a n d th e

In s p e c to r-G e n e ra l’s Office). D etails are set out in At­ ta c h m e n t A.

3. Background - Public S ervice G uidelines 3.1 Public service guidelines relating to PSE rely on the v o l u n t a r y d i s c l o s u r e b y th e e m p lo y e e w h e re th e

p ro p o s e d PSE c o u ld give ris e to co n flict of in te re s t.

T h e re is no le g is la tio n en a b lin g en fo rcem en t of p o st

em ploym ent restrictions.

3.2 G uidelines w ere initially introduced in M arch 1980 an d required:

• identification of sensitive positions

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• o c c u p a n ts of s e n s itiv e p o s itio n s to s e e k a s s e n t to

o u ts id e em p lo y m en t. T he a s s e n t p ro c e d u re s w ere adm inistered by th e PSB

• form er officers who h ad occupied sensitive positions or were involved in specified functions to seek asse n t to certain types of em ploym ent for a period of two years following separation, and

• officers not occupying sensitive positions b u t who were c o n c e r n e d a b o u t th e p r o p r ie t y o f t h e i r o u ts id e

em ploym ent to notify th e appropriate authority.

3.3 In April 1987 p rocedures were revised. The revised procedures:

• s tr e a m lin e d th e p r o c e s s fo r a p p r o v in g a s s e n t -

a d m in is tra tio n w as devolved to d e p a rtm e n ts except w h e n th e a s s e n t w a s s o u g h t b y d e p a r t m e n t a l

secretaries. In sensitive cases or w here conditions on th e giving of a s s e n t w ere im p o sed , th e S e c re ta ry ’s reco m m en d atio n w as to be referred to th e M inister. C onditions could be im posed for up to two years

• did n o t refer to sensitive positions, and

• a p p lie d to all S e c r e ta r ie s , m e m b e rs of th e S e n io r

Executive Service (SES) and to any o th er officers whose proposed PSE could give rise a conflict of interest.

4. D epartm ent’s response to Public Service G uidelines 4.1 The D e p a rtm e n t re s p o n d e d to th e service-w ide

gu id elin es an d to P arliam en tary a n d p re s s in te re s t in

p a rticu la r cases by issuing in stru c tio n s and developing procedures. A detailed chronology of th e resp o n ses is set out in A ttachm ent A.

4.2 R esponsibility for ad m in istratio n over th e decade h a s rested prim arily w ith th e H um an R esources Division (or p red ec esso r) w ith s e p a ra te a re a s of th a t D ivision re sp o n sib le for th e S ervices a n d th e C ivilians (under D irector-G eneral Services P ersonnel Policy, an d A ssis­ t a n t S e c r e ta r y , C ivil P e r s o n n e l r e s p e c tiv e ly ).

R esp o n sib ilities have in clu d ed th e developm ent of in­ s t r u c t i o n s a n d th e p r o v is io n of P S E S e c r e t a r ia t s .

I n s tr u c ti o n s fo r th e S e rv ic e s a re is s u e d u n d e r th e

auspices of th e Secretary and th e Chief of th e Defence

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Force, an d for civilians by th e S en io r Advisor, H um an R esources Division.

4.3 R ecently o th e r a re a s of the D epartm ent have b e­

com e involved. The C apital P ro cu rem en t O rganisation (CPO) h a s developed a section of its C apital Procurem ent M an u al, a n d m o n ito rs a s s e n t c a s e s considered w ithin th e CPO. The Inspector-G eneral w as assigned a role in

c o -o rd in a tin g th e developm ent a n d im p lem en tatio n of new policy proposals.

4.4 The revised policy proposals w hich were approved by th e D e p a rtm e n ta l E xecutive on 6 M arch 1989, in ­

c lu d e d th e r e q u ir e m e n t fo r c o m p a n ie s s u b m ittin g

te n d e rs to Defence to com plete sta tu to ry declarations a t­ t e s t i n g to th e f a ir g a in in g o f in f o r m a tio n .

Im plem entation is to involve co n su ltatio n w ith a num ber of bodies, including th e A ttorney-G eneral’s D epartm ent, th e P u b lic S ervice C o m m issio n , a n d th e D efence In ­ d u s try Com m ittee.

5. C om pliance

Instructions

5.1 The D ep artm en t w as slow to issu e and to revise in ­ s tr u c t io n s fo r b o th S erv ice a n d C iv ilian a re a s . For

exam ple:

• th e re w as a two y e a r delay in th e issu e of the initial

in stru c tio n for th e Services. The Services’ instruction w as issu ed in F eb ru ary 1982, alm ost two years after the issu e in M arch 1980 of the PSB circu lar prom ulgating

th e Bowen Code of C onduct

• a lth o u g h th e co rresp o n d in g in s tru c tio n for civilians w as issu ed on a m ore tim ely b a sis in O ctober 1980, the revision of th e in stru c tio n w as n o t timely. Revision did n o t b e g in u n til 1985, a lm o st th re e y e a rs a fte r th e

in s tru c tio n la p se d in O ctober 1982. S u b seq u en tly , m ore th a n a year w as ta k e n to revise the instruction,

• th e revised a rran g em en ts were form alised for civilian a re a s w ith the issu e of m em oranda in J u n e /J u ly 1987. By c o n t r a s t , im p le m e n ta tio n o f th e re v is e d

arran g em en ts for th e Services h a d not been form alised a t th e tim e of th e a u d it alth o u g h su ch arrangem ents

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h a d been operating on a n inform al b a sis for some time, and

• revised in stru c tio n s im plem enting th e PSB’s April 1987 s tre a m lin e d a s s e n t a rra n g e m e n ts w ere available in d raft form for th e Services and civilians in J u ly and November 1987 respectively, b u t h ad not been finalised a s at April 1989. D uring 1988 there w as debate on the c o n t e n t of th e i n s t r u c t i o n s , a n d in 1 9 8 9 , th e

a m e n d m e n ts w ere o v e rta k e n by th e re v ise d policy p ro p o s a ls . T he D e p a r tm e n t’s D e fen ce P e rs o n n e l M anual h ad also not been u p d ated for th e April 1987 revisions.

5.2 T here w ere a n u m b e r of co n se q u e n c e s of th ese

delays, including:

• alth o u g h th e April 1987 PSB guidelines removed the linkage betw een th e requirem ent to seek a sse n t and the occupancy of a designated sensitive position, there was a n u m b e r of c a s e s w h e re in d iv id u a ls did n o t seek

a ss e n t b ecau se they were not in designated sensitive positions, and

• a l th o u g h no lo n g e r r e q u ir e d b y th e re v is e d PSB

g u id e lin e s , c a s e s fo r th e S erv ices c o n tin u e d to be

ap p ro v ed a t M in iste rial level in 1987, a n d som e in

19 8 8 . U n d e r th e re v is e d in s tr u c tio n s M in iste ria l

approval w as only required w hen conditions were to be im posed.

5.3 It w as also likely th a t m any Service are a s continued to m o n ito r th e curren cy of sensitive positions, despite the ab an d o n m en t of su ch positions. The AAO did not p u rsu e w hether th is occurred.

Sensitive Positions 5.4 The D epartm ent w as slow to compile and to revise lists of positions w hose occu p an ts would have access to sensitive inform ation. The initial list covering both the Services and civilians took alm ost two years to finalise (from J u n e 1980 to M arch 1982), a n d review s s u b ­

s e q u e n tly u n d e r ta k e n b y th e S erv ice s a n d civ ilian s

separately, took approxim ately one year.

5.5 The AAO noted lack of co-ordination of Service and civilian areas in the review process. An initial review for the Services w as finalised on a timely b asis (in the three

6

m o n th s, from M arch to May 1985). However, largely b e­ c a u se of external in te re st th ere w as a need to repeat the review. The second review (comm encing O ctober 1985) applied th e criteria for identifying positions used in the

c iv ilia n review w h ic h h a d c o m m en ce d s e p a ra te ly in

A u g u s t 1 9 8 5 . T h e s e c o n d S e rv ic e rev iew w a s n o t

finalised u n til a y e a r later, in O ctober 1986.

5.6 It is noted th a t th e extended tim e fram es for the

developm ent a n d review of the D ep artm en t of Defence lists could be in c o n siste n t w ith th e dynam ic n a tu re of

th e s e n sitiv ity of c e rta in p o sitio n s, eg, in th e c a p ita l

p ro cu rem en t area. In addition, th e significant elem ent of ju d g e m e n t in th e d esig n atio n of sensitive positions w as a p p a re n t in th e D ep artm en t’s identification of incon­ s is te n c ie s a c ro s s th e th re e S erv ices in th e p o sitio n s

identified (as to levels of positions, an d th e functional a re a s covered), a n d in th e varying views on positions j u s ­ tifying d esignation a s sensitive.

5.7 O n the b a s is of th ese findings, together with the

lik elih o o d th a t th e d e sig n a tio n of p o sitio n s ten d ed to

lim it th e application of th e policy to personnel in such p o sitio n s, th e AAO s u p p o rts the April 1987 revision of th e public service guidelines abolishing th e requirem ent to com pile lists of sensitive positions. The AAO notes th a t th e change h a d th e im portant im plication of placing

th e o n u s on th e individual ra th e r th a n on the d e p a rt­

m e n t to identify th e p otential for conflict of interest.

Other

5.8 The following additional com pliance m a tters were identified:

• t h e i s s u e o f P S E w a s la rg e ly n o t c o v e re d in

d e p a r t m e n t a l t r a i n i n g c o u r s e s d e s p ite ad v ic e of

O ctober 1985 to th e M inister th a t th is w as the case.

The AAO recommends th a t coverage of PSE be included in appropriate train in g courses for both civilians and th e Services (Recom m endation No 1)

• tw o of th e th re e S ervices h a d n o t im p lem en ted th e

November 1986 requirem ent for reference to PSE to be in c lu d ed a s p a rt of th e ir d isch arg e procedures. The c iv ilia n re q u ire m e n t (in itially p ro m u lg a te d in J u ly 1 9 8 6 ) to a d v is e s e p a r a t i n g s t a f f of th e a s s e n t

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p rocedures w as not consistently applied by th e various pay cen tres in th e ACT exam ined by the AAO. The AAO recommends th a t referen c e to PSE re q u ire m e n ts be in c o rp o ra te d in to th e D e p a r tm e n t’s ex it in terv iew checklist for civilians, final clearance certificates for the Services, a n d the Services’ discharge h an d b o o k s and resettlem en t sem in ars (Recom m endation No 2)

• consolidated d a ta on the em ploym ent of departm ental s ta ff in th e p riv ate s e c to r w h ilst on leave from th e

D e p a rtm e n t w ere n o t p ro v id ed to th e S e c re ta ry , as re q u e s te d in S e p te m b e r 1985. T h is a re a w a s n o t

p u rs u e d a s it w as o u ts id e th e scope of th e c u rre n t

review

• th e 43 cases seeking a sse n t in 1987 an d 1988 included:

- one case w here th e M inister w as not advised of con­ ditions applying, and

- two cases w here conditions were im posed w hich were approved a t D eputy S ecretary level ra th e r th a n a t Min­ isterial level as required

(D elegation of th e M in iste r’s approval is covered in Recom m endation No 7)

- th e re w ere a t least six a s s e n t cases w here details had n o t b e e n r e g is t e r e d b y th e P S E C o m m itte e

S ecretariats. (The AAO’s analysis w as not exhaustive in th is area and there m ay well have been others). For seven of th e 36 Service a sse n t cases (from 1982 on­ w a rd s ), d a ta on o u tc o m e s w ere m is s in g (the PSE

S ecretariat w as not advised). As the guidelines for the p rep aratio n of an n u al reports require th e inclusion of inform ation on PSE cases, th e AAO recommends th a t records relating to all applications for assen t, includ­ in g th e o u tc o m e s of c a s e s , b e h e ld a t a c e n tr a l

location. (Recom m endation No 3)

6. A ssent arrangem ents 6.1 The AAO reviewed th e ad m in istratio n of the assen t a rra n g e m e n ts for b o th civilian a n d Service personnel, focusing prim arily on the period 1987 to 1988. The ob­ je ctiv e s w ere to identify th e n u m b e r of c a s e s seeking

a sse n t an d to asse ss th e operation and effectiveness of the a sse n t arrangem ents. D ata on staff seeking assen t

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to o u tsid e em ploym ent are available from th e sep arate PSE S ecretariats for th e Services an d civilians. For the civilians d a ta are held from 1987 a n d for th e Services

from 1982.

Assent cases - civilians 6.2 Eleven staff so u g h t a sse n t in 1987 and sixteen in

1988. A ssent w as g ran te d w ith conditions in five cases. The average elapsed tim e to process applications (from d ate of receipt of application to date of assent) w as three a n d a h a l f m o n t h s (e x c lu d in g tw o 1 9 8 8 c a s e s n o t

finalised a s a t M arch 1989).

6.3 The AAO n oted d ep artm en tal findings th a t the ef­ fectiveness of th e a s s e n t arran g em en ts a s a regulator of ex tern al em ploym ent for civilian a re a s w as limited by the m any cases w here th e individuals sep arated to external

e m p lo y m e n t b e fo re th e a s s e n t p ro c e d u re s h a d b e e n

finalised. Of th e 19 cases processed in 1988, records of s e p a r a t i o n d a t e s w e re p ro v id e d to th e I n s p e c to r -

G eneral’s office (in th e recent PSE policy review) in 15 cases. In n in e of th e se cases although applications for a ss e n t h a d b een su b m itted in advance of separation and (excepting th e one case w here alm ost four m o n th s notice

h a d b e e n given) th e average notice w as only nine days. All c a se s involving th is sh o rt notice were not approved before sep aratio n .

6.4 These findings indicate th a t the a sse n t procedures m u s t b e fin a lis e d w ith in a tig h tly c o n s tra in e d tim e

period, or th a t applications m u st be su b m itted earlier to allow for sufficient processing tim e. The proposed draft in stru c tio n for civilians em phasises th e need for assen t ap p licatio n s to be su b m itted well in advance of sep ara­ tion.

Assent cases - Services 6.5 Fewer Service th a n civilian perso n n el sought assen t to e x te rn a l em ploym ent. T h ere w ere eleven c a s e s in

1987 an d five in 1988; an d from 1982 to 1988 a to tal of only 3 6 p e rso n n e l so u g h t a s s e n t. Of th e se, n in e teen

cases were approved by the M inister, an d five otherw ise approved. In a fu rth e r seven c a s e s d a ta on th e o u t­

co m es w ere m issin g an d for th e rem a in in g five cases

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a sse n t w as eith er not required or th e a sse n t req u est w as w ithdraw n. In th e two y ear period 1987-1988, condi­ tions were im posed in only one instance.

6.6 T he average elap se d p ro cessin g tim e for a ss e n t

c a s e s for th e S erv ices w a s th r e e m o n th s . A lth o u g h

d e ta ils of s e p a ra tio n d a te s w ere n o t a n a ly se d by th e

AAO, th e requirem ent for Service personnel to give three m o n th s notice in advance of sep aratio n , sh o u ld m ean th a t sufficient time is available to process applications.

Comment

6.7 The low incidence of co n d itio n al a s s e n t (19% of

c a se s in 1987-1988 for civ ilian s, a n d 5% of Services

cases for th e sam e period) is noted. S uch conditions can im pact significantly on individuals. For exam ple, there w as one case w here an individual’s em ploym ent w ith a firm w as term inated. The AAO also identified conflicting

policy objectives in the area of PSE. The D epartm ent of Defence w ishes to regulate, b u t not to prevent the move­ m e n t of p e rso n n e l in to in d u s try . A ny o b stru c tio n of

m ovem ent (e.g., use of em ploym ent co n tra cts backed by legislation) could prevent th e recru itm en t of scarce skills by industry. E nhanced in d u stry knowledge of Defence requirem ents can be of benefit to the D epartm ent. The AAO notes th a t such conflicting objectives cau se difficul­

ties for adm inistration.

Problems with defining confict of interest 6.8 T he a n a ly sis of th e a s s e n t a rra n g e m e n ts h ig h ­

lighted th e ju d g m en tal n a tu re of the decisions required. For th e 43 cases seeking a sse n t in 1987 an d 1988, there were:

• two cases w here there w ere varying d epartm ental views on w h eth er there w as a conflict of in terest

• one case w here views varied on w hether approval to the external em ploym ent should be granted, and

• six cases w here th ere were varying views on th e need for application of conditions to th e assent.

6.9 The c u rre n t public service g u id elin es w hich are

reflected in the proposed civilian personnel instruction, id e n tify fu n c tio n s a n d c e r ta in ty p e s of em p lo y m en t

w hich m ay give rise to sensitivities. The c u rre n t in ­

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s tru c tio n for the Services in co rp o rates criteria approved b y th e S e c re ta ry a n d th e C hief of th e D efence Force

w h ic h o rig in ated from th e D e p a rtm e n t’s A ugust 1985 ‘G uidelines on th e Identification of Sensitive Positions’. T hese criteria attem p t to specify m ore precisely the cir­ c u m sta n c e s in w hich conflicts of in terest m ight arise so

far a s th e D ep artm en t of Defence is concerned.

6.10 The AAO reviewed th e criteria in te rm s of w hether th e y provided a n ad eq u ate fram ew ork for assessing the likelihood of jo b s giving rise to conflict of interest. It w as considered th a t th e re w as scope for additional reference to v a ria tio n s in th e se n sitiv ity of som e p o sitio n s over

tim e . T h e AAO w a s a d v is e d t h a t in m a jo r c a p ita l

p ro c u re m e n t, th e p o te n tia l for conflict of in te re s t in ­

c r e a s e s m a rk e d ly d u rin g c e rta in p h a s e s of p ro jec ts.

A lth o u g h d ifficu lt to be c ateg o rica l, th e m o st critical

p e rio d w a s a fte r th e re q u e s t for te n d e rs , an d before

aw ard of th e c o n tra c t. The AAO recommends th a t th e D ep artm en t provide guidelines, in train in g m odules and th e p ro p o sed e th ic s b ro c h u re , w hich specify th e p rin ­ ciples to be observed an d outline th e circum stances in w hich conflicts of in te re st m ight arise for departm ental

staff. (R ecom m endation No 4)

6.11 The AAO n o te d th a t th e c u rren tly proposed in­

s tru c tio n for civilians, p laces th e o n u s on individuals an d not on th e D ep artm en t to raise th e possibility th a t a conflict of in te re st m ight either exist or occur. This a s ­ s i g n m e n t of r e s p o n s i b i l i t y is c o n s i s t e n t w ith th e

abolition of sensitive positions, an d is endorsed. How­ ever, in th e AAO’s view , b e c a u s e of th e p ro b lem s of

identifying conflicts of in terest, it w ould be desirable for su p erv iso rs to be accorded a role in identifying the need for in d iv id u a ls to se e k a s s e n t. The AAO recommends th a t th e D epartm ent consider incorporating into PSE in ­

s t r u c t i o n s a n d t r a i n i n g m o d u le s r e f e r e n c e to a

req u irem en t for supervisors to be alert to the need for

individuals to seek a sse n t and for supervisors to provide advice w here appropriate. (Recom m endation No 5)

Cases by-passing assent procedures 6.12 The AAO so u g h t to identify cases by-passing the a s s e n t a rra n g e m e n ts , p a rtic u la rly th o s e c a se s w here th e re should have been applications for assen t because

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of th e existence of th e p otential for a conflict of interest. With th e change in th e p rocedures in 1987 requiring a s ­ s e n t to be s o u g h t only w h e n th e re w a s a co n flict of

i n t e r e s t o r w h e n s u c h c o n flic t c o u ld b e c o n s tru e d ,

d e ta ile d k n o w led g e of a n in d iv id u a l’s p re a n d p o st

em ploym ent circu m stan ces is necessary in determ ining w hether asse n t should have been sought.

6.13 In th e course of th e review, b ased on file exam ina­ tio n a n d in te rv ie w , th e AAO id e n tif ie d o n ly fo u r

n o n -assen t seekers w here a case could have been m ade th a t a ss e n t sh o u ld have been sought. However, there were a fu rth e r 70 cases (20 civilian an d 50 Service cases sep aratin g w ithout seeking a sse n t to em ploym ent with

Defence associated in d u stries) w here detailed inform a­ tio n w as n o t av a ila b le to e n a b le a c o n c lu s io n to be

draw n on w h eth er a sse n t should have been sought. Of these 70 cases, four of the civilians an d 28 of the Service p e rs o n n e l left th e C ap ital P ro c u re m e n t O rg a n isa tio n

during th e period 1 J a n u a iy 1987 to 30 O ctober 1988. The o th e rs covered a ran g e of a re a s, an d a variety of

tim efram es.

6.14 The AAO raised w ith the D epartm ent the need for a record of cases w here individuals sep arated from sen ­ sitive are a s w ithout seeking a ssen t, th u s m aking such cases available for fu tu re scrutiny. The D epartm ent a r­ gued th a t m any individuals w ould not be aw are of their fu tu re circum stances and th ere would be adm inistrative

difficulties in su ch a n arrangem ent. However, the AAO considers some m onitoring of possible by-passing of a s ­ sen t is desirable (see R ecom m endation 6)

Staffing turnover data 6.15 The AAO sought to ascertain w h eth er th e num bers seeking asse n t were reasonable by analysing departm en­ tal tu rn o v er statistics.

Civilians

6.16 D ata on staff tu rn o v er are available for civilians from th e D epartm ent’s personnel and estab lish m en t con­ tr o l s y s te m (S P E C S ). T h e AAO o b ta in e d d a t a on

s e p a ra tio n s in 1987 a n d 1988 for som e of th e a re a s

w ithin the D epartm ent w here PSE issu es were likely to be of m ajor concern and for classifications m ore likely to

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be susceptible to conflict of in terest (ASO 6 and above). Covered w ere p a rts of th e C apital P rocurem ent O rganisa­ tio n (including th e Defence C ontracting O rganisation, Air Force a n d Army M ateriel areas, an d p a rts of the form er

D efence L ogistics O rganisation), an d Air Force Supply Division. These a re a s h a d ab o u t 1 000 staff.

6 .1 7 W ithin th e s e a re a s , th e re w a s a to ta l of eight

sep a ra tio n s at ASO 6 (or equivalent) an d above in 1987, a n d 23 in 1988. The average tu rn o v er ra te s for all clas­ sific a tio n levels in th e s e a re a s w ere le ss th a n for th e

D ep artm en t a s a w hole (9.6% com pared w ith 18%). D ata ob tain ed by th e Inspector-G eneral’s office for other areas w ith in th e CPO (including Navy M ateriel) indicated an a d d itio n a l 23 s e p a ra tio n s a t ASO 6 o r above in 1988.

B ased on d ep artm en tal advice it ap p ea rs th a t only four of th e s e w ere know n to have ta k e n u p em ploym ent in

Defence asso ciated in d u strie s w ithout seeking assent.

6.18 The AAO also noted th a t although th e total civilian tu r n o v e r fo r th e D e p a r tm e n t in 1988 w a s s iz e a b le

(2423), m o st tu rn o v e r w as a t th e low er classificatio n

levels w here conflict of in te re st w as less likely to be a

problem . T u rn o v er a t th e h ig h er levels w as far lower. F or exam ple, th e P ublic Service Com m ission’s Senior Ex­ e c u tiv e S ta f f in g U n it r e p o r te d o n ly th r e e SES

resig n atio n s acro ss th e D epartm ent in 1988. There was a to ta l of only eight resignations at C om puter System s Officer (CSO) G rade 4 or 5 levels in th a t year.

6.19 The AAO concluded th a t although the n u m b ers of c iv ilia n s se e k in g a s s e n t a p p e a re d low, th e indicative tu rn o v e r data, w hich show ed com paratively low turnover in th e m ore sensitive areas, provided some support for

th e reaso n ab len ess of th e se num bers.

Services

6.20 The available tu rn o v er d a ta for th e Services were insufficiently detailed to be useful. D ata were only avail­ a b le b y b r o a d c a t e g o r ie s (se x a n d r a n k - o ffice r,

non-com m issioned officer and other), and were not d is­ aggregated down to individual Service B ranch/D ivision level. The AAO noted th a t shortcom ings in separation s ta tis tic s w ere id e n tifie d a s p a r t of th e re c e n t C ross

C om m ittee en q u iry into loss of Service personnel, and

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ad d itio n al s ta tis tic s are proposed. The AAO su p p o rts th is work.

Comment

6.21 The AAO an aly sis of civilian tu rn o v er statistic s h a s been indicative ra th e r th a n conclusive, an d sim ilar an aly sis in rela tio n to th e Services h a s n o t b een pos­

sible. At th e p resent tim e the D epartm ent h a s not m ade provision for m onitoring th e im plem entation and effec­ ti v e n e s s o f th e a s s e n t p r o c e d u r e s ( th is w a s a

recom m endation of th e Bowen Com m ittee). To enable the D epartm ent to be in a position to evaluate th e effec­ tiveness of its a sse n t arrangem ents, it is recommended th a t periodic reviews of operating p rocedures be u n d e r­ ta k e n in c lu d in g a n a ly s is of s e p a r a tio n d a ta a n d a n

assessm en t of any identified cases w here a sse n t arran g e­ m en ts have been by-passed. (Recom m endation No. 6)

7 Co-ordination o f adm inistration 7.1 Scope for increased co-ordination of adm inistrative arran g em en ts betw een the Service an d civilian areas of the D epartm ent w as noted. In th e AAO’s view, there is scope for a single PSE S ecretariat, and for co-ordinated developm ent of Service an d civilian in stru c tio n s. This should involve co-ordination of the initial drafting of in ­ stru ctio n s, ra th e r th a n a review for consistency at a later stage as currently occurs. There were also some m inor procedural differences betw een the Service and civilian areas (eg, use of term in atio n form s by civilians b u t not by th e Services).

7.2 In respect of th e proposed revised in stru c tio n s for the Services and civilians, th e AAO noted th a t some dif­ feren ce s in th e c o n su lta tiv e a rra n g e m e n ts applied in b o th c o n te n tio u s an d n o n -c o n te n tio u s cases, an d the levels of approval in n o n -co n ten tio u s cases, had been identified on departm ental files.

7.3 T he p ro p o s e d re v ise d in s tr u c tio n fo r civ ilian s

provides th a t all applications for a sse n t are to be con­ sid ered by th e civilian PSE C om m ittee S ecretariat, at w hich time th e F irst A ssistan t S ecretary H um an R esour­ ces (FASHR) and the F irst A ssistan t Secretary In d u stiy Policy and O perations (FASIPO) have the opportunity to

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c o m m e n t o n c o n te n tio u s a p p lic a tio n s . W here it is

believed th a t th ere is a possibility of a conflict of in te r­ est, a com m ittee will consider th e application. If there are conditions to be im posed or if approval is to be w ith­ held th e Com m ittee will m ake recom m endations to the S ecretary for forw arding to th e M inister. If co n sen t is unconditional, approval is a t D eputy S ecretary level.

7.4 The draft in stru c tio n for th e Services requires each S ervice C hief of P e rso n n e l to c o n s u lt FASIPO in co n ­ s id e rin g ea c h a p p lic a tio n for a s s e n t. In c o n te n tio u s

cases, th e a p p lican t’s Service Chief of Personnel m akes reco m m en d atio n s directly to h is Chief of Staff for s u b ­ m issio n to th e M inister. An inform ation copy is sen t to D ep u ty S ecretary level on su b m issio n to th e M inister.

N o n -c o n te n tio u s c a s e s a re ap proved by th e A ssista n t Chief of Personnel.

7.5 In th e AAO’s view, on efficiency grounds, the con­ s u lta tio n u n d e rta k e n , an d the levels of approval applied in a s s e n t p ro ced u res, sh o u ld be a t th e m inim um level

c o m m e n su ra te w ith th e significance of th e cases con­ c e r n e d . In t h i s r e g a r d , it is recommended t h a t

M inisterial approval be sought for th e D epartm ent and th e ADF to have th e pow er to im pose conditions to the a ss e n t or to reject cases w ithout reference to the Mini­ ster. (Recom m endation No 7). Highly contentious cases, w ould continue to be su b m itted to th e Minister.

7 .6 O th e r d ifferen ces betw een th e two proposed in ­

s tru c tio n s w ere th a t th e civilian in stru c tio n applied to staff for two y ears after separation, w hilst the Services’ in s tru c tio n m a d e no s u c h provision. T he civilian in ­

s tru c tio n covered em ploym ent w ith a new employer, b u t did n o t cover self em ploym ent w hich m ight resu lt in a conflict of in terest situ atio n , eg, a n ex-employee setting u p a s a c o n s u lta n t. T he AAO recommends t h a t th e

D ep artm en t review the scope for g reater consistency in, an d for ratio n alisatio n or increased co-ordination of, the ad m in istratio n of PSE across Service and civilian areas. T h is review s h o u ld be u n d e rta k e n a s p a rt of th e im ­

p l e m e n ta tio n of th e r e c e n t p o lic y p r o p o s a ls .

(Recom m endation No 8)

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7.7 The AAO noted an d sup p o rted th e rem oval in the

p ro p o sed in s tru c tio n s of th e m an d ato ry ap plication of the a sse n t p rocedures to officers in th e S enior Executive Service and above or th e ir equivalent levels in th e three

Services. It is d esirab le on efficiency g ro u n d s an d in

te rm s of the credibility of the guidelines, th a t only those needing to apply do so.

8. R evised policy 8.1 The AAO observations and findings in relation to the M arch 1989 Defence policy proposals an d associated recom m endations w here applicable are now detailed.

Background ίο initiatives 8.2 The proposals were based on a n u m b e r of factors:

• a b a c k g ro u n d of is o la te d c a s e s w h e re a co n flict of

in te re s t situ a tio n could be co n stru ed , som e of which have been raised in th e P arliam ent or th e m edia

• th e conclusion th a t existing p rocedures w ere difficult to a d m in is te r a n d la rg e ly in e ffe ctiv e (b e c a u se of th e

lim ite d a w a r e n e s s of s ta f f , a n d th e la c k of

enforceability)

• th e dem and for scarce project m anagem ent and other skills by th e expanding A ustralian Defence industries, and

• recen t m ajor overseas Defence p rocurem ent fraud.

8.3 The AAO noted th a t th e initiatives did not stem

from a co m p reh en siv e a n a ly sis of staffin g lo ss to in ­

d u stry , in clu d in g a s s e s s m e n t of c a se s b y -p assin g the a s s e n t a r r a n g e m e n ts . T he AAO c o n s id e rs th a t th e

D ep artm en t’s resp o n se is ap p ro p riate to th e perceived relatively m inor incidence of staffing loss to in d u stry in ­ volving th e potential for conflict of in terest. The limited availability of data on cases by-passing the a sse n t a rra n ­ g e m e n ts m e a n s t h a t th e AAO is n o t a b le to s ta t e

conclusively th a t perceptions are accurate. It appeared likely, however, th a t they are. C om petitor com panies, m em bers of the Parliam ent, and the m edia have an in ­ t e r e s t in e x p o sin g c a s e s , a n d few s u c h c a s e s w ere

identified in the course of th e review. In th e AAO’s view there is no evidence to suggest th a t legislative m easu res are necessary to control PSE.

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Implementation 8.4 T here were several findings:

• a lth o u g h th e view s of th e Services w ere sought, the Services largely did not participate in th e development o f th e p o lic y p r o p o s a ls w h ic h w e re s u b s e q u e n tly

ap p ro v ed by th e D ep artm en tal Executive. It is noted th a t im plem entation for b o th th e Services and civilians is in ten d ed , a n d th e Chief of th e Defence Force h a s

agreed to th e endorsed proposals

• th e respective roles in th e longer an d sh o rter term s of th e In sp e c to r-G e n e ra l’s office, th e H um an R esources Division, an d th e ADF in the adm inistrative of PSE were som ew hat unclear. The AAO recommends th a t the roles

of th e In sp ecto r-G en eral's Division, th e ADF, and the H u m a n R eso u rces D ivision in th e im plem entation of th e revised policy an d s u b se q u e n t ad m in istratio n be clarified an d responsibility for prim e carriage assigned

(R ecom m endation No. 9)

• a n im p le m e n ta tio n s c h e d u le for th e new in itia tiv es in d ic a tin g m ile sto n e s an d tim efram es, h a s not been d e v e lo p e d . N o tw ith s ta n d in g f a c to r s o u ts id e th e

d e p a rtm e n t’s c o n tro l, n am ely th e c o n su lta tio n w ith e x te rn a l a g e n c ie s, th e AAO recom m ends th a t ta rg e t d a t e s ( in c lu d in g a tim e f r a m e fo r e v a lu a tio n ) be

d eterm in e d to facilitate the tim ely im plem entation of th e revised policy initiatives (Recom m endation No. 10)

Consultation with industry 8.5 In D ecem ber 1988, the D epartm ent consulted with th e D efen ce I n d u s tr y C o m m ittee, c o m p risin g s e n io r d ep artm en tal and in d u stry representatives, on a n u m ber

of proposals:

• com m itm ent of firm s to an in d u stry code of ethics on d e a l in g s w ith d e p a r t m e n t a l o ffic ia ls r e g a r d in g

em ploym ent

• e stab lish m en t of regional com m ittees of in d u stry and d e p a rtm e n ta l re p re s e n ta tiv e s to co n sid e r conflict of in te re st cases, and

• firm s to identify ex-D efence s ta ff em ployed and any c u rre n t em ploym ent negotiations w ith Defence staff in resp o n ses to R equests for Tender.

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8.6 A lthough fu rth e r p ap ers were to be provided to in­ d u s t r y b y th e D e p a r tm e n t fo r d e v e lo p m e n t o f an

in d u stry response, su ch p ap ers were not provided, and the topic w as not d iscu ssed a t th e M arch 1989 meeting of th e Committee. The AAO w as advised th a t th e m atter h a d not been p u rsu e d b ecau se th e policy fram ew ork on w hich th e in itial c o n s u lta tio n h ad o ccu rred h a d been

overtaken by th e M arch 1989 policy proposals. Given th e im portance of o b taining in d u stry ’s su p p o rt for the new policy proposals, co n su ltatio n is essential. The AAO

recommends th a t early c o n s u lta tio n be h eld w ith the D e fe n c e I n d u s t r y C o m m itte e o n th e n ew

8 .7 T h e e n d o r s e d n e w p o lic y p r o p o s a ls r e q u ir e

te n d erers to provide a s ta tu to ry declaration attestin g to th e fair g aining of inform ation. S u ch d eclaratio n s in

default are actionable a s a m isrepresentation. The AAO noted, however, th a t p rocedures to highlight and inves­ t i g a te a n y ‘f a l s e ’ s t a t e m e n t s w ith i n s t a t u t o r y

declarations by com panies h ad not been agreed. E ssen ­ tially , th is re q u ire s th e D e p a rtm e n t to identify w hen

co m p an ies have obtained inform ation im properly from c u rre n t or form er staff, an d have u sed th e inform ation in the prep aratio n of te n d er docum ents, or have im properly in flu e n c e d or a tte m p te d to in flu e n c e d e p a r tm e n ta l

em ployees. An a d m in istrativ e stra te g y su p p o rtin g an e a rlie r v ersio n of th e s ta tu to ry d e c la ra tio n w hich re ­ quired the nam es of ex-departm ental staff to be advised, w as rejected by the D epartm ent as adm inistratively u n ­ wieldy. This earlier strategy required com panies in, or

anticipating, c o n tra c tu a l re la tio n sh ip s w ith Defence to d e c la re fo rm er A u s tra lia n D efence Force o r D efence civ ilia n o fficers em ployed b y th e co m p an y , for com ­ p arison w ith d ata b ases on the n am es of sep aratin g and com pany staff.

8.8 In respect of the c u rre n t statu to ry declaration, the AAO w as a d v ise d th a t an y p ro b le m c a s e s w ould be

know n to th e D epartm ent, and investigation would only be required in such lim ited cases. The AAO agrees th a t the d ep artu re of key staff would be know n. Also, as pre­ viously stated, com peting com panies have a n interest in

proposals. (Recom m endation No. 11)

bringing cases to th e atten tio n of th e D epartm ent or the P arliam ent or th e m edia, an d only a sm all n u m b er of key cases w ere identified in th e course of th e audit.

8.9 Finally, a s th e D epartm ent h a s acknowledged, en ­ forcem ent p articularly in relation to sep arated staff, and to staff leaving to becom e private c o n su lta n ts, rem ains p r o b le m a tic . T h e AAO s u p p o r ts th e D e p a r tm e n t’s

strateg ies in th is area: to m inim ise th e u se of co n su lt­

a n ts, an d to p u t m ore inform ation into th e public arena.

9. C onclusions 9.1 The m ajor co nclusions of th e review are:

• t h e r e is a n e e d fo r a n a p p r o p r ia te a d m in is tra tiv e

fram ew ork in resp ect of PSE

• th e re w as no evidence to suggest legislative m easures are n ecessary to control PSE

• th e re have b een p ro trac ted delays in th e D epartm ent’s im p le m e n ta tio n of th e p u b lic serv ice g u id e lin e s in resp ect of PSE

• S erv ice a n d C iv ilia n a r e a s of th e D e p a rtm e n t have

o p e r a t e d s u b s t a n t i a l l y i n d e p e n d e n tl y in th e

a d m in is tra tio n of PSE, a n d th e re is som e scope for

r a t i o n a l i s a t i o n a n d g r e a t e r c o - o r d in a tio n of

arran g em en ts, and

• p e rio d ic rev ie w s of th e e ffe c tiv e n e ss of th e a s s e n t

a rra n g e m e n ts in c lu d in g a n a ly sis of s e p a ra tio n d a ta sh o u ld be u n d erta k en .

10. R ecom m en d ation s 10.1 The recom m endations of th e review w hich have b een se t out in th e preceding p arag rap h s, are detailed

below to g eth er w ith th e D ep artm en t’s response.

Recommendation No 1 C overage of PSE be in c lu d e d in a p p ro p ria te tra in in g

co u rses for b o th civilians an d th e Services. (Section 5.8)

R esp on se - Agreed

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Recommendation No 2 Reference to PSE req u irem en ts be incorporated into the D epartm ent’s exit interview checklist for civilians, final clearance certificates for th e Services, a n d the Services’ discharge handbooks and resettlem ent sem inars. (Sec­ tion 5.8)

R esponse - Agreed

Recommendation No 3 Records relating to all applications for assen t, including i th e o u tco m es of c a se s, be h eld at a c e n tra l location. .

(Section 5.8)

R esponse - The cu rre n t arrangem ents, w hereby separate S ervice/civilian records are m a in tain ed are considered adequate. Functional responsibility for personnel w ithin th e D e p a rtm e n t a n d th e Service O fficers leaves little scope to com bine the records.

Recommendation No 4 The D epartm ent and the A u stralian Defence Force pro­ vide g u id elin es in tra in in g m o d u les an d th e proposed eth ics b ro ch u re w hich specify th e p rin cip les to be ob­

served and outline circ u m stan c es in w hich conflicts of in te re s ts m ight arise for d ep a rtm e n ta l staff. (Section 6 . 10)

R esponse - Agreed.

Recommendation No 5 The D epartm ent and the A u stralian Defence Force con­ sid er incorporating into PSE in stru c tio n s an d train in g m odules reference to a requirem ent for supervisors to be alert to th e need for individuals to seek a sse n t and for

supervisors to provide advice w here appropriate. (Sec­ tion 6.11)

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R esp on se - A g re e d , th e r e q u ir e m e n t in r e la tio n to

s u p e rv is o rs ’ re s p o n s ib ility have b e e n in c o rp o ra te d in b o th s e ts of in stru ctio n s.

Recommendation No 6 Periodic reviews of operating p ro ced u res be un d ertak en , including statistic al an aly sis of sep aratio n d ata and an a sse ssm e n t of any identified cases w here a sse n t arran g e­ m e n ts have been b y-passed. (Section 6.21)

R esp on se - A ccepted, b u t th e re are questions of re so u r­ ces, privacy a n d ability to enforce th e p rocedures th a t need to be ad d ressed .

Recommendation No 7 M inisterial approval be sought for th e D epartm ent and th e ADF to have th e power, except on contentious cases, to im pose co n d itio n s to th e a s s e n t, or to reject cases

w ithout reference to th e M inister. (Section 7.5)

R esp on se - The p re se n t p rocedures are considered to be a d eq u a te a s any case w here conditions are im posed is likely to be co n ten tio u s an d require the M inister’s invol­ vem ent.

Recommendation No 8 The D epartm ent review th e scope for g reater consistency in, an d for ratio n alisa tio n or increased co-ordination of, th e a d m in is tra tio n of PSE a c ro s s Service and civilian

a re a s . T his review be u n d e rta k e n a s p a rt of th e im ­

p le m e n ta tio n of th e re c e n t policy p ro p o sals. (Section 7.6)

R esp on se - C onsistency of approach w here appropriate, h a s b e e n ach iev ed th ro u g h lia iso n a rra n g e m e n ts b e ­ tw een th e civilian and ADF policy are a s an d a separate review is not necessary.

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Recommendation No 9 The roles of th e Inspector-G eneral’s Division, the H um an R esources Division and the ADF in th e im plem entation of th e revised policy and su b se q u en t ad m in istratio n be

clarified and responsibility for prim e carriage assigned. (Section 8.4)

Target d ates (including a tim efram e for evaluation) be set to fa c ilita te th e tim ely im p le m e n ta tio n of th e revised policy initiatives. (Section 8.4)

R espon se - The proposed issu e of u p d ated in stru ctio n s is seen a s im plem enting the revised policy initiatives.

E arly c o n s u lta tio n be h eld w ith th e D efence In d u stry Com m ittee on the new policy proposals. (Section 8.6)

R esponse - Agreed.

R esponse - Agreed.

Recommendation No 10

Recommendation No 11

C. .

31 A ugust 1989 C anberra, ACT

J.C . Taylor A uditor-G eneral

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ATTACHMENT A

O rganisations co n su lted during th e audit The following o rg an isatio n s/p eo p le w ere th e m ajor ones con­ su lte d d u rin g th e audit:

C apital P ro cu rem en t O rganisation

• Chief of C apital P rocurem ent

• Chiefs of M ateriel (Navy, Army, RAAF)

• Senior A ssista n t S ecretary - C o n tracts (SASCON)

• F irs t A s s is ta n t S e c re ta ry - P roject D evelopm ent and

C om m unications

• F irst A ssista n t S ecretary - M ateriel Policy

• F irst A ssista n t S ecretary - C apital E quipm ent Program

• F ir s t A s s i s t a n t S e c r e t a r y - I n d u s t r i a l P o licy a n d

O perations

Defence Logistics O rganisation

• Supply S ystem s R edevelopm ent Project

• Logistics C om puter C entre

• Project DESINE

H um an R esources Division

Insp ecto r-G en eral’s Office

Defence T raining Centre

Public Service Com m ission

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ATTACHMENT B

Chronology o f ev en ts relating to th e adm inistration o f PSE The D epartm ent’s response to the Service-wide developm ents (as outlined in p a rag rap h s 6 - 7) an d to other external in p u ts (P arliam entary and m edia in terest in p a rticu la r cases) w as as

follows:

June 1980 Service and civilian area s of th e d ep artm en t were req u ested to compile lists of sensitive positions

16 October 198 is s u e d D e p a r tm e n ta l P e rs o n n e l I n s tr u c ti o n (DPI) 9 / 8 0

reflecting PSB 1 9 8 0 /6 of M arch 1980 (although th is in s tru c ­ tion lapsed au tom atically in O ctober 1982, two y ears after issu e, it w as n o t replaced u n til N ovem ber 1986, six y ears after issue)

1 7 February 1982 issue of Defence In stru ctio n (General) Pers 25-1 pro m u lg at­ ing the Bowen Code of C onduct for m em bers of th e Defence force

25 March 1982 th e listing of sensitive positions for b o th th e Services and

Civilians w as finalised

5 March 1985 review of sensitive positions (Services)

30 May 1985 review of Service positions finalised

16 August 1985 review of sensitive positions civilians

19 September 1985 M inister for Defence requested guidelines on the em ploym ent of D epartm ental staff w ith com panies who m ay com pete for ten d ers

4 October 1985 the M inister w as advised th a t action w as being ta k e n to issue re q u e s te d g u id e lin e s a n d t h a t th e y w o u ld be g iv e n ap-

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p ro p ria te a tte n tio n in d ep artm en tal train in g courses. (The la tte r action w as n o t im plem ented).

Since th e com m encem ent of th is au d it, however, th e CPO h as in co rp o rated PSE a s a topic in its in-house in d u ctio n course. (There is no coverage of PSE in th e Service’s train in g courses)

24 October 1985 review of sensitive positions (Services) in response to revised guidelines for identifying su ch positions

20 December 1985 is s u e of rev ised D efence In s tru c tio n (G eneral) PERS 25-1 (Services). (The in s tru c tio n w a s am e n d e d to in c lu d e th e

criteria to be u sed to identify sensitive positions. It followed c o rre s p o n d e n c e from th e M in iste r for F in a n c e of 14 May

1985 to th e M inister for D efence noting th a t senior Service a n d d e p a rtm e n ta l officials w ere resp o n sib le for identifying and designating sensitive positions w hereas in th e public se r­ vice pro ced u res, S ecretaries w ere finally responsible)

24 July 1986 issu e of advice to s e p a ra tin g sta ff - civilians - ASO 6 and

above or equivalent required

31 July 1986 review of civilian positions finalised (206 non-SES positions were designated a s sensitive)

15 October 1986 review of Service positions finalised (216 non-SE S positions w ere s e n s itiv e ). (The D e p a rtm e n t id e n tifie d d iffe re n c e s acro ss th e Services in relatio n to th e m inim um ra n k level of

sensitive p o sitio n s, a n d th e fu n ctio n al a re a s involved, and th e ab sen ce of overseas positions)

12 November 1986 issu e of D ep artm en tal C ircular M em orandum 7 /8 6 (civilians)

19 November 1986 Services - sep aratin g staff to be advised of PSE requirem ents - prom ulgation by each of th e Services requested (Audit notes th a t Navy incorporates inform ation on PSE into th eir pre-dis­

charge checklist w hich is given to every p erso n leaving the Navy. The RAAF and Army equivalent to th e checklist (dis­ charge handbook) co n tain s no sim ilar reference

The subject is not covered a t the Services’ resettlem en t sem i­ n a rs (it should be)

4 June 1987 esta b lish m e n t of a m ech an ism to co n sid er ap p licatio n s for a sse n t (civilians)

4 June 1987 revised advice to sep aratin g staff (civilians)

14 July 1987 draft in stru ctio n for th e Services reflecting PSB G uidelines of April 1987 circulated for review

20 July 1987 m a in ten a n ce of the list of sensitive positions no longer re ­ quired (civilians)

November 1987 draft new section (on O fficial C onduct’) of Capital E quipm ent P rocurem ent M anual circulated for com m ent

30 November 1987 d ra ft in s tru c tio n for civ ilian s on p e rfo rm a n ce of e x tern al w ork reflecting PSB guidelines of April 1987 circulated for

review

30 August 1988 section of CEP M anual on Official C onduct’ issued

24 October 1988 ‘A pplication for Approval of PSE’ form to be sen t to ASO 6 an d above u p o n receip t of notice of in te n tio n to se p a ra te

(civilians)

5 December 1988 C onsultation w ith the Defence In d u stry Comm ittee on PSE, including a n in d u strial code of ethics and estab lish m en t of regional D efence/industry com m ittees

16 January 1989 S ecretary requested review of d ep artm en tal policies on PSE

3 March 1989 SASCON req u este d th e A tto rn ey -G en eral’s D ep artm en t (A­ G’s) clearance of wording to go into R FT s w hich relates to im proper use of inform ation gained from cu rren t or form er

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D efence em ployees. A dditionally, A-G’s advice so u g h t on w h e th e r th e D e p a rtm e n t c o u ld invoke p re c e d e n ts u n d e r

F inance D irection 2 5 /4 (to be cancelled) to d eb ar com panie fro m p ro v id in g se rv ic e s to D efence for sp ecified p erio d s. T here h a d b een no reply from A-G’s a t 15 May 1989

6 March 1989 D ep artm en tal Executive agreed to revised policy on PSE.

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APPENDIX: The titles listed below are th o se p u blished in th e F inancial Year 1989-90 an d ap p ea r in series order:

A udit Report No 1 D epartm ent of Defence - O verseas P rocurem ent

A udit Report No 2 D epartm ent of V eterans' Affairs

A udit Report No 3 Industry, Technology an d Comm erce Portfolio

A udit Report No 4 D epartm ent of Em ploym ent, E ducation and T raining - Aboriginal S tu d e n t A ssistance Schem es

A udit Report No 5 D epartm ent of Em ploym ent, E ducation an d Training - J o b s ta rt

A udit Report No 6 D epartm ent of Em ploym ent, E d u catio n an d T raining - Post g rad u ate aw ards

Audit Report No 7 D epartm ent of Em ploym ent, E ducation an d Training - Com m onw ealth R ebate for A pprentice Full Time T raining

A udit Report No 8 D ep a rtm e n t of th e A rts, Sport, th e E n vironm ent, T ourism and T erritories - ACT A dm inistration

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