A company being paid $31 million to deliver commercialisation advice on behalf of the government used inside advice to land the job and then helped a family member’s company secure a grant from the program, according to allegations aired in the Senate.
The companies allegedly involved have denied the allegations, including claims of a large finder’s fee for helping land the lucrative tender, and say they acted within the guidance of the Industry department.
But the allegations, made under Parliamentary privilege late last month, have reopened scrutiny of the tender for the former federal government’s Entrepreneurs’ Programme, which has already been heavily criticised by the federal watchdog.
Green Senator Barbara Pocock late last month aired new allegations of conflicts of in the controversial Entrepreneurs Program, some of which Industry department officials agreed to investigate.
The federal watchdog has already found the $160 million procurement of delivery partners for the program was “deficient”, including significant errors and certain tenderers receiving unfair advantage.
The procurements of delivery partners began in 2019, with the Industry department offering up to $182 million for a handful of private providers to help deliver the Entrepreneurs Programme around the country.
An Abbot government initiative that has now been scrapped, the program uses delivery partners to provide “expert business advisory and facilitation services”, including support on bids for the government’s accelerating commercialisation grants of up to $1 million.
The delivery partners insist the program has helped bring local innovations to market and given a platform for startups to raise hundreds of millions more from private investors.
But the program has been dogged by a tender process that broke procurement rules, with the Industry department is still in the process of compensating unsuccessful tenderers for years later.
Senator Pocock, under protection of parliamentary privilege, aired a new allegation that one of the successful delivery partners had used another Industry department contractor, Northgate Australia, to help its bid for the lucrative program.
“Is the Department aware of an allegation that one of the department’s contractors, Northgate Australia, assisted one of the winning tenderers, and that that contractor was paid a $900,000 success fee or there abouts?” she asked.
Officials said they are aware of the allegation but had seen “no evidence to suggest it is correct”.
The department has undertaken no formal inquiries into it, however, and took on notice whether it has ever approved Northgate to assist tenders for the program.
NorthGate Australia is a small consultancy that had acted as a commercialisation advisor for the department during the first iteration of the Entrepreneurs’ Programme under a $1.4 million contract.
Its founder Joe Barber told InnovationAus.com that he spoke with with a number of bidders before the tender “as did most of the cohort of commercialisation advisors at the time”.
The Industry department took on notice whether it had ever approved for the incumbent contractors to assist the new tenderers, and did not answer questions from InnovationAus.com about it.
Mr Barber unreservedly denied the allegation NorthGate acted improperly or received a success fee from i4 Connect, which was selected as a delivery partner and awarded a $30 million contract in 2020.
i4 Connect told InnovationAus.com it had also interacted with numerous commercialisation advisors in assembling its bid for the delivery partner role, but no success or finders fees were paid.
Senator Pocock raised further questions about i4 Connect, which had formed as an entity specifically to bid for the program and had only three employees when selected.
“You awarded a $31 million contract to a newly registered company with no track history, and no inherent value. That’s what I see from the documentation that I’ve seen,” Senator Pocock said.
i4 Connect facilitated a more than $400,000 grant from the Entrepreneurs Program to a company Smart Oyster, now known as Ocean Farmr, that develops mobile maps for aquaculture farmers.
Ms Pocock said family members of i4 Connect owner and director, Norm Jenkins, were shareholders in the grant recipient, and asked the industry department to investigate the “dense set of relationships of ownership through several structures”.
“…I hold real concerns about the independence and I see it as a very significant area for investigation,” Senator Pocock said.
The founder of i4 Connect, Mr Jenkins, had also made an investment in Smart Oysters himself, which was declared to the department and acknowledged as an actual conflict of interest, according to the Australian National Audit Office (ANAO) inquiry into the procurement of delivery partners.
But the audit found it was never appropriately resolved or mitigated.
Mr Jenkins told InnovationAus.com that “i4 Connect followed department procedures in disclosing the interests of its personnel.”
The Industry department has agreed to take a series of questions about the allegations on notice.
Under its former Secretary, the department chose not to investigate any individual for fraud or corruption in the procurement of delivery partners because no individuals were identified by the ANAO and the watchdog’s recommendations went to “departmental processes and oversight rather than individual behaviour”.
The department has commissioned a third-party report into potential fraud in the administration of the program. Officials last month said this investigation found “no evidence of fraud” but the fraud inquiry also did not focus on individuals.
The department has refused to release the fraud report because it could reveal its “fraud investigation techniques” and because it contains confidential commercial information.
Current Industry department secretary Meghan Quinn said the department has accepted all recommendations of the ANAO and has since “improved the internal integrity approach to the awarding of procurements.
“We will investigate the information you’ve provided,” she told Senator Pocock.
“I want to reassure you that, firstly, the program has closed; secondly, there has been extensive work done both through the department in response to the [Australian National Audit Office] and above that. We’ve also reviewed things in light of the [National Anti Corruption Commission] being put in place.
“We do take integrity very seriously and we will come back to you with information.”
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