ACT Skills Minister Chris Steel told the Canberra Institute of Technology Board today that its “apparent lack of process and questioning” of the multi-million-dollar contracts with consultant Patrick Hollingworth was “unacceptable”, and the procurements have “seriously damaged” the institution’s reputation.

Mr Steel has announced he will use his powers under the CIT Act 1987 to direct the Board to strengthen governance arrangements, particularly around financial risk controls for contracts over a certain size, and make it clear that the CIT needs to focus on teaching and learning.

Although the CIT is an independent authority, the minister can, under section 7 of the Act, give a direction to the CIT in relation to the exercise of its functions, and the CIT must comply with the direction.

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“I’ve got very limited powers under the CIT Act, but one thing I can do is to issue broad directions to the CIT,” Mr Steel said.

“I can’t tell them to do a specific thing under the legislation. The governance arrangements are very clear that it is managed by this CEO and the Board, but I have taken action to the extent of my powers.”

The Board’s oversight of contracts had raised serious concerns about CIT’s governance framework and risk controls relating to procurements, Mr Steel informed outgoing chair Craig Sloan in a letter today.

The Board, Mr Steel noted, was “entrusted with public funding to deliver vocational education and training for Canberrans” under the Financial Management Act 1996.

But the minister was “yet to be convinced” that the contracts with Hollingworth – including a $4,999,990 million contract in March – were warranted or represented value for money.

“There are real questions over what it will deliver – its lack of performance benchmarks, KPIs [Key Performance Indicators] – and whether it’s value for money for the quantum of money that they want to spend,” he said.

Mr Steel said he was “disappointed” the Board was unaware of the March contract and its financial implications, particularly given both the minister and his office, as well as the Government Procurement Board, raised concerns last year, as early as March, about previous contracts.

“Following a response which I didn’t think was adequate, I had given the clear message that I thought the contracts were out of line with community expectations,” Mr Steel said. “That message was repeated again by my office. The CIT still went ahead and procured this latest and very large contract.

“It is unclear what actions, if any, were undertaken to address my concerns,” Mr Steel told Mr Sloan.

Mr Sloan’s term as chair ends this month. Mr Steel will send the incoming chair his statement of expectations next week, “making clear the high standards of transparency, probity, and governance the ACT Government requires from our public skills and training provider”, and require the Board to review its governance arrangements and skills matrix.

“The upcoming appointment of a new CIT Board Chair represents an important opportunity to re-set and move forward in a manner that better aligns with government and community expectations for the conduct of Canberra’s public skills and training provider,” Mr Steel told Mr Sloan.

That includes making sure CIT meets industry and student needs, Mr Steel said, and changing to meet the broader needs of the economy.

Mr Steel would not be drawn on whether he thought CEO Leanne Cover should resign. Her employment was a matter for the Board, he said. But he wants the Board to review the CEO’s management of contractual matters.

“Careful stewardship of an organisation’s financial, human, and reputational resources is both a core responsibility and an important performance indicator for any senior executive,” he informed Mr Sloan.

The CIT announced earlier this week that it would hold an independent internal audit. Mr Steel replied that he was “underwhelmed” by the response; he had expected “stronger and more decisive action”. He has requested that report by the end of July. He also thinks the Board should place the current contract on hold until the audit is complete.

The ACT Government has also invited the Auditor-General to undertake an independent review, which Mr Steel is confident will take place.

Opposition leader Elizabeth Lee said neither Mr Steel nor Chief Minister Andrew Barr had come clean to the public about what they knew, when they knew it, and why under their watch millions more taxpayer funds had gone into the contracts.

“This is a government that is in desperate damage control and wanting desperately to be seen to be doing something – whilst, of course, they must know that this absolutely stinks; the public don’t buy it.

“And now, after all this has happened, to turn around and say: ‘Oh, I’m unsatisfied, and I’m looking for answers.’ It’s too late. The Minister for Skills must go.”

Mr Steel said that he had taken action as a minister by asking questions and providing a clear message to the CIT that the early contracts were not in line with community expectations. It was, he said, “unacceptable” that CIT had gone ahead anyway.

That, in Ms Lee’s opinion, is more evidence against Mr Steel. “At best, it’s clear that the CIT board have no confidence in the minister to absolutely and blatantly ignore the concerns that were raised… The minister has absolutely dropped the ball on this serious situation.”

Ms Lee was also concerned about how the contract debacle would affect CIT’s future.

“We are facing a critical skills shortage. CIT’s role as the publicly-funded vocational training provider is crucial to the growth of our city, and to have this situation, where it is going to be very difficult to come back from, happen under the watch of this minister, who continues to stand by the fact that it’s not his problem, is astounding.”

In the 10 days since the media had become aware of the contracts, Ms Lee said distraught teachers had contacted her office: “Teachers who funded material and resources from their own pockets so that their students can still get a good education… Teachers who have volunteered their time because they want to pass on their skills to the next generation.”

Mr Steel said it was disappointing the contracts had distracted from CIT’s core mission of delivering high-quality vocational education and training.

“The Board needs to reset the relationship with staff to make sure that they put in place the proper governance and risk controls going forward so that this type of issue doesn’t happen again,” he said.

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