Some Outsourcing Arrangements Now Subject to Ombudsman Investigation

The Migration and Ombudsman Legislation Amendment Act 2005 commenced on 12 December 2005. Its amendments to the Ombudsman Act 1976 have clarified the Commonwealth Ombudsman's powers of investigation over the actions of some government contractors.

While the amending Act includes a raft of immigration reforms - particularly in the making of protection visas, and their review - the clarification of the Ombudsman's jurisdiction has broader implications for all Commonwealth government agencies.

As Senator Ellison said, when introducing the Bill into the Parliament:

These amendments remove uncertainty about the Ombudsman's jurisdiction over government contractors.

The amendments apply to "Commonwealth service providers". They are defined as any party to a contract (or subcontract), with a department or prescribed authority, who is responsible for providing goods or services to the public.

The amendments do not apply to contractors who provide goods or services to government - for example, corporate, personnel or IT services.

Under the amended Ombudsman Act, if a Commonwealth service provider (or its employee):

• takes action that relates to a matter of administration,
• while exercising a power or performing a function, for or on behalf of, a department or prescribed authority,

then that service provider's (or that employee's) action is taken to be the action of the department or prescribed authority.

Such actions are subject to the expanded investigatory powers of the Ombudsman, including the Ombudsman's powers to obtain information and to enter premises.

Notably, the Ombudsman is required to report:

• conduct by a Commonwealth service provider that, if it was the conduct of an officer of the contracting agency, would be a breach of duty or misconduct,
• together with any other conduct that the Ombudsman considers should be brought to the relevant agency's attention.

In addition to the normal contractual mechanisms of accountability adopted by government agencies, the amend-ments to the Ombudsman Act confirm the Ombudsman's jurisdiction of investigation as one more mechanism to hold contractors accountable for their actions.

This additional avenue of review does not mean that government agencies have a lesser role to play in monitoring their outsourcing arrangements. Rather, the amendments make it even more important for agencies to keep their contractors in check. Otherwise, consequences can follow for the agencies themselves.

For example, under the amendments, Secretaries of departments and chief executives of authorities may be required to attend and produce documents if the Ombudsman believes that a Commonwealth service provider has information relevant to an investigation, but the Ombudsman does not know the identity of the employee of the service provider who holds that information.

Consequently, the amendments present a timely reminder for government agencies to review the processes in place to monitor their outsourcing arrangements. While the ability of an agency to contract out its powers or functions is unaffected, agencies are now even more accountable for the proper management of their service-provider contracts.

The amendments, somewhat belatedly, implement the Government's response to the recommendations of the Joint Committee of Public Accounts and Audit, in its Report 379 Contract Management in the Australian Public Service (October 2000).

Stepping back from the JCPAA's recommendation of a simple, inclusive expansion of the Ombudsman's jurisdiction to cover all government contractors, the amendments only apply to contractors providing goods and services to the public.

The Government did not extend the Ombudsman's jurisdiction further as it was thought that:

"members of the public would not have sufficient interest in the actions of those contractors to warrant extending the Ombudsman's jurisdiction to them." (Government Response to the JCPAA Report)

Whether or not this view fully accounts for the Ombudsman's "own motion" power of investigation is another matter.

Government agencies must now pay even closer attention to their accountability obligations in relation to their outsourcing arrangements.

Given that the clarified Ombudsman's jurisdiction only carries an investigatory dimension – not the prospect of direct enforcement – agencies may consider adding teeth to their contracting out arrangements, by imposing contractual obligations on their contractors to implement any recommendations of the Ombudsman, following from the new powers of investigation under the Ombudsman Act.

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