Systematic changes needed for Canberra’s procurement problems

Joseph Brookes
Senior Reporter

Former head of the Public Service Dr Ian Watt has called for systematic changes to the rules guiding $80 billion in annual Commonwealth procurements, warning little has improved in more than a decade.

Just hours after he urged a procurement inquiry to recommend systemic changes, evidence was presented that former Coalition minister Stuart Robert stood to gain financially from his friends’ company, which allegedly helped multinational companies win millions of dollars’ worth of government contracts.

Dr Ian Watt appears before the Joint Committee of Public Accounts and Audit on Friday

Dr Watt, who was head of Prime Minister and Cabinet from 2011 to 2014, was called in late last year to review contracts linked to the alleged lobbying scandal involving Mr Robert, consulting firm Synergy 360 and technology vendors.

Dr Watt, whose review was limited to the actions of officials only and not the behaviour of the former minister, the firm or the vendors, found no clear misconduct but alarming patterns of poor procurement practices.

He made recommendations to the agencies involved and recommended 19 of the individual procurements – together worth $374 million – be further investigated.

On Friday, the senior public service veteran urged the current parliamentary inquiry of procurement to recommend to the government sweeping changes for all agencies by changing the Commonwealth Procurement Rules and introducing more accountability.

The Commonwealth is now spending more than $80 billion annually on procurements – almost 5 per cent of GDP, according to Dr Watt.

But there are still widespread problems in culture, capability and a failure to ensure value for money is being obtained, he said.

“Really, there’s no solution short of doing this systematically across the board, for agencies as a whole… And I think really, it’s time for the Australian government, the Australian Public Service to look much more systematically these issues,” Dr Watt told the inquiry.

Dr Watt, who has also run the Defence and Finance departments, said agency heads needed to take more accountability for procurements, regardless of whether they were initiated by predecessors.

“It’s important that the government signal very clearly to agency heads that this is one of the things is going to bite you. And I think that would help,” he said.

“What I learned as an agency head was, quite simply, you may not have made the decisions that your predecessors made, but you’re responsible for them. And that I think is something that I think all agency heads should ponder over.

“I’m sure my colleagues will say ‘Well, that’s gratuitous advice and thank you very much.’ But it’s actually true.”

The Audit Committee’s inquiry was established to further investigate several damning audits of departments procurements in recent years but added the consideration of the Watt review last month.

Services Minister Bill Shorten ordered a review of contracts linked to Synergy 360 after the Nine newspapers published leaked emails showing the company received advice from Mr Robert during his time as a backbencher and minister about how to secure government contracts.

Mr Shorten has warned of “corruption” and demanded Mr Robert explain his actions and relationship with the consulting company, which has been part-owned by his business partner and chief political fundraiser.

Mr Robert has denied any suggestion of misconduct and said the Watt review had shown no misconduct. However, it reviewed only agency materials and examined the behaviour of only officials.

On Friday the procurement inquiry heard evidence from Synergy 360 shareholders, David Milo and John Margerison, the latter having run the Queensland MP’s political fundraising vehicle.

Mr Margerison told the inquiry he had directed his accountant in 2017 to send the earnings from Synergy 360 to a company called Australia Property Trust, which was part owned by Robert.

A spokesperson for Mr Robert has again rejected any suggestion of improper conduct.

Mr Margerison said he had never personally received any financial benefit from Synergy 360.

The inquiry also heard that a senior public servant linked to one of the contracts awarded to Synergy 360 had a longstanding personal relationship with the company’s other shareholder, Kham Xaysavanh.

Services Australia officials told the inquiry such a relationship should have been disclosed and the agency will be “further investigating” matters raised at the inquiry.

Do you know more? Contact James Riley via Email.

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