Testifying at the ACT Budget Estimates hearings today, ACT Auditor-General Michael Harris argued that procurement in the ACT is affected by a lack of expertise, deficiencies in legislation, and failure to follow guidelines.
Six audits, culminating in an audit on the ACT Government Procurement Board itself last week, had identified recurring themes of poor conduct of procurement; inadequate assessment of value for money; and procurement boards that were “not optimally effective or efficient in fulfilling their functions”, remarked the chair of the Select Committee on Estimates, Canberra Liberals MLA Mark Parton.
Two more audits, on the Human Resources Information Management Systems (HRIMS) program and on the IT Infrastructure Renewal project, are underway, and are likely to be completed by the end of the financial year.
“The majority of issues related to lack of expertise within the public sector, combined with a lack of frequency with which they dealt with particularly large procurements,” Mr Harris said. “The nature of the Territory and its infrastructure program has changed over time such that the public sector is now doing more procurements and larger procurements than it was before.”
He noted that the advent of Major Projects Canberra, created in 2019 to lead the procurement and delivery of the ACT’s infrastructure program, had mitigated that somewhat.
“Expertise sitting within that group is very good,” Mr Harris said.
However, the Auditor-General believes, there are systematic issues with the Government Procurement Act 2001; in last week’s report, he argued that the Act and Government Procurement Regulation 2007 “are unhelpful and inhibit the Board from being more effective and more efficient”.
“There are deficiencies in the legislation which make it difficult for the board to do its job,” Mr Harris told the committee today.
“There’s a lack of clarity in the objectives of the Act, and there’s a tension between a Director-General’s legitimate responsibility under the Financial Management Act 1996 to sign off on major projects and the Board’s role and responsibility to question, to interrogate, to provide assurance and a clearance that everything is as it should be when a major project or any project goes to market.
“A significant amount of the difficulty that’s been experienced would be avoided if the Act were to be looked at and amended to provide clarity as far as the Board’s role and function is concerned, and to provide it with a bit more teeth to insist on changes to procurement process where it believes those changes are necessary in the interests of value for money assessment and in the interests of fairness for those going to market to offer their services to government.”
Canberra Liberals MLA Peter Cain, Shadow Assistant Treasurer, asked Mr Harris whether he considered the level of governance was satisfactory.
“It’s fair to say that in several of the reports that I’ve tabled, I’ve expressed my concern about the level of governance,” Mr Harris replied.
For instance, the Canberra Institute of Technology awarded contracts totalling $8.78 million to Patrick Hollingworth over several years, despite the Board finding the three procurement proposals it read (2018, 2020, 2021) lacked clarity, specificity, measurability, and simplicity. The report found that the Board “was not assertive with its advice”.
Similarly, Mr Harris noted, the ACT Government had “acknowledged some deficiencies” about the $76 million HRIMS project started in 2017, which it discontinued this year.
Mr Harris noted that he had not found any evidence of deliberate misconduct in those or other procurements. (He reserved his opinion about the CIT, which the Integrity Commissioner, not he, was investigating.) Nevertheless, perhaps due to inexperience in the public sector, procurement guidelines were not followed, and the Board’s advice ignored.
(He noted: “There are certainly people within the public sector who have significant expertise and demonstrate it on a regular basis.”)
“There has been a lack of practice at doing these procurements, and that’s where I think the lack of expertise comes from,” Mr Harris said. “Procurement ACT have an exceptional range of guidelines and policies and procedures, and if they’re followed by practitioners, it’s very difficult to see how you would get into trouble with a procurement of any size.
“But the simple fact is on many occasions we’ve discovered that people have not followed the guidelines, the procedures, the policies that are in place, or taken the advice of the Procurement Board when they’ve offered it.”
Mr Harris recommended there should be more compulsory training for people going through procurement, and that people who choose to ignore the advice of the Board must be required to write down and publish the reasons why they’ve ignored that advice.
“That would go a long way towards changing the way in which procurements occur, without impacting on the legitimate responsibility that sits under the Financial Management Act,” Mr Harris said.
Mr Cain said the ACT Auditor-General had provided strong evidence of the Labor-Greens Government’s deficiencies in procurement expertise and governance, and called for Chris Steel, Special Minister of State, who oversees procurement, to resign.
“Multiple contracts suggest that hundreds of millions of taxpayers’ dollars have already been wasted. That is only the tip of the iceberg …,” Mr Cain said.
“It is evident the government is ignoring the Auditor-General’s advice, and the socio-economic health of Canberra is suffering greatly as a consequence.
“Earlier this week, it was reported the CIT’s ‘systems thinker’ [Patrick Hollingworth] has launched an almost $4 million civil lawsuit against the government for cancelling the contracts.”
Neither the ACT Government nor CIT have been able to comment on this issue, which is sub judice.
“Reform could not come more urgently, and the Special Minister of State, Chris Steel, has already demonstrated he is not the right person for the task,” Mr Cain said.
“The writing is on the wall for the Special Minister of State, and he needs to resign.”
