Fraud Control Plan

Reference

Category

Fraud

Legislation/Policy

Not Applicable

Additional Information

Guidance

A clause of this type would be included to manage potential fraud risks associated with performance of the Contract.  It should only be used where the cost of the Fraud Control Plan is commensurate with the scope and scale of the procurement or to manage an identified risk.

Generally, where this clause is used, inclusion of complementary clauses detailing a range of related requirements may be required. 

Related clauses may include:

  • making good any Customer losses;
  • consent for access to personal information to enable investigations; and
  • a framework to establish appropriate investigation procedures into suspected incidents (i.e. the Supplier the Customer or independent party).

Option 1

This basic Fraud Control Plan clause will allow the Customer to require a Fraud Control Plan to be developed by the Supplier.  Where a risk assessment has identified that the Contract is high risk - or fraud is likely and the value is significant, the Option 2 clause should be used.  Unless the Customer makes available a copy of the Fraud Control Framework, the Option 2 wording should also be used where the Supplier is less likely to be able to access the Fraud Control Framework.

Option 2

For high risk or high value contracts where a Fraud Control Plan clause is required, this clause provides more certainty around what needs to be included and how the process will be managed throughout the term of the Contract.

Clauses

Option 1

Fraud Control Plan

  1. Within one month of the Contract Start Date, the Supplier must prepare a Fraud Control Plan that is consistent with the Commonwealth Fraud Control Framework 2017 (Fraud Control Plan) and provide a copy of the Fraud Control Plan to the Customer.
  2. The Supplier must review and update the Fraud Control Plan at least every six months over the term of the Contract, or whenever there is a significant change in the structure or activities of the Supplier. The Supplier must provide the Customer with details of any review and a copy of any update to the Fraud Control Plan.


Option 2

Fraud Control Plan

  1. Within one month of the Contract Start Date, the Supplier must prepare a Fraud Control Plan that is consistent with the Commonwealth Fraud Control Framework 2017 and otherwise meets the requirements of this clause. 
  2. The Fraud Control Plan must:
    1. cover the entire Contract, including any part of the Contract being performed by any subcontractor or other person or under any other arrangement established by the Supplier relating to the Contract; and
    2. contain appropriate fraud prevention, detection, investigation, reporting and audit processes and procedures.
  3. At a minimum the Fraud Control Plan must:include a summary of fraud risks and vulnerabilities associated with the Contract;
    1. propose treatment strategies and controls to manage each identified fraud risk and vulnerability;
    2. provide information about how the Fraud Control Plan has been, or will be, implemented within the Supplier, its subcontractors and its supply chain;
    3. propose strategies to ensure the Supplier meets its obligations set out in the Fraud Control Plan;
    4. include mechanisms and timeframes for collecting, analysing and reporting fraud incidents to the Customer;
    5. provide details of how the Supplier will ensure the Fraud Control Plan is working and remains in place for the duration of the Contract;
    6. include protocols for detecting and handling fraud incidents;
    7. include mechanisms on how the Supplier will ensure that its officers, employees, agents and/or subcontractors are made aware of what constitutes fraud, fraud risks and arrangements for handling fraud incidents relating to the Contract; and outline key roles and responsibilities for fraud control within the Supplier’s organisation.
  4. The Supplier must review and update the Fraud Control Plan at least every six months over the term of the Contract, or whenever there is a significant change in the structure or activities of the Supplier. The Supplier must provide the Customer with details of any review and a copy of any update to the Fraud Control Plan.


Notes

While use of this clause is optional, it may be appropriate for some contracts to include a clause of this type, where the cost of the Fraud Control Plan is commensurate with the scope and scale of the procurement.

Standardisation of contractual text results in efficiencies for both Parties to a Contract. Before deciding whether a particular clause is appropriate, procurement officials should carefully consider the context of their procurement. Capitalised terms (unless otherwise defined) are based on the definitions in the CCS Glossary.  Definitions of any relevant defined terms may need to be added.

Clause wording would generally need to be changed where a different approach is required for the procurement – for example, where it is appropriate to include more detailed provisions for dealing with identified potential fraud risks or a right for the Customer to comment on and/or require amendments to the draft Fraud Control Plan before it is finalised.

There may also be procurements where it is not appropriate for the Customer to commit to particular methods of reporting – for example, where the Contract involves sensitive international, commercial or security considerations and/or where the Customer needs to have the ability to take certain actions quickly in its absolute discretion.

Otherwise, where this clause is included, the clause wording should be used without change.

Terms that are capitalised may need to be changed to align with the Contract terminology.

Last updated: 02 August 2018