‘We might need to turn up the tap’: how DTA cowboys trashed public service standards

It’s now clear that the collapse in ethical and administrative standards that characterised the Morrison government wasn’t limited to the ministerial arena: the Digital Transformation Agency (DTA) has been comprehensively discredited in a savage auditor-general report that exposes astonishing failures in basic governance around the tens of millions of dollars spent by the agency in IT procurement.

This is a report that literally has to be read to be believed: not merely did the DTA fail to meet basic standards around procurement, but its executives also flagrantly breached core procurement rules in spite of being told they were doing so. The Australian National Audit Office (ANAO) looked at nine procurements for IT services between July 1, 2019, and June 30, 2021, and found none of them was done properly. They totalled more than $54 million and included the disastrous COVIDSafe app. There were failures at every stage of the process for every procurement. The ANAO concludes:

The DTA’s procurement of ICT-related services has been ineffective … The DTA has established a procurement framework, but its implementation and oversight has been weak … the DTA has not been following its internal policies and procedures, and there are weaknesses in its governance, oversight and probity arrangements for procurements … its approach fell short of ethical requirements. None of these procurements fully complied with the Commonwealth Procurement Rules … the DTA has not managed contracts effectively.

That is, the DTA failed in literally every aspect of procurement, from planning through to managing the resulting contracts.

Procurement might be eye-glazing for those outside the public service but it’s where the big bucks are made for the private sector. Even outside major departments like Defence, Home Affairs and Health, the Commonwealth hands out billions of dollars in contracts every month — all supposedly governed by strict guidelines called the Commonwealth Procurement Rules.

For private firms looking to latch on to a huge flow of taxpayer money, often for shoddy work or work public servants used to do as core business, procurement is the place to be.

And this report shows just how easy it was to make money out of the DTA, which during the audited period was run by Randall Brugeaud, now at the Australian Bureau of Statistics. The staggering lack of basic standards at DTA is illustrated in four remarkable case studies:

ConceptSix

In January 2021, a senior executive meets with an executive from consultant company ConceptSix. A month later the latter is hired on a MyGov-related job after being approached through a government panel. More ConceptSix people are hired after another panel offer; “there is evidence that ConceptSix had knowledge of the procurements before the opportunities were published”. DTA staff on the selection panel had previously worked with some of the ConceptSix people but didn’t declare it. An outside firm is brought in to vet the whole process but interviews no one. DTA never bothers to do anything about it.

CyberCX

Amid the Morrison government’s cybersecurity hype in 2020, a firm called CyberCX approaches DTA and offers to help out with an initiative to “Harden Australian Government IT”. Brugeaud agrees to meet CyberCX; a DTA official warns that the company shouldn’t be given any competitive advantage. Meetings ensue, and CyberCX tells DTA which government panels it is on so that it can be directly approached via them. DTA then decides to approach a range of firms for the initiative, with Brugeaud saying he wants to ensure firms get an opportunity to bid.

Sixteen firms get approached, including CyberCX. CyberCX fails to submit a response on time (apparently due to internal “miscommunication”). Several firms are assessed as satisfactory by DTA, but then they are dumped and, on the basis that it could do it more cheaply, CyberCX is directly approached. There’s no paperwork. Inevitably, “as at May 2022 the contract value had been varied four times and increased to 8.5 times its original value ($8,513,313)”.

Delv

Consultant Delv is paid twice for the same work on the discredited COVIDSafe app — and it happens twice. DTA has no clue it has paid $380,000 too much to Delv until March this year, when ANAO points it out. DTA claims it is “human error” and by June says Delv (generously) has agreed that it has been overpaid. By August, when the report was written, Delv hadn’t repaid a single cent.

Nous

The most astonishing case of all: in 2020 the Morrison government decides it wants a review of the DTA’s role and mandate. DTA senior officials conclude they want Nous Group to do it, and start looking for ways to engage them without having to go to market. An official realises Nous is involved with an unrelated contract for MyGov, so a plan is hatched — expand the MyGov contract into a review of the DTA. “We might need to turn up the tap,” a senior official says. DTA’s procurement area goes ballistic. “The existing Nous contract cannot be used for the DTA review,” it tells management. But Brugeaud and his team are undaunted and approach Nous anyway. DTA’s finance area objects.

Alternative providers could legitimately claim to have been excluded from the opportunity of submitting a competing quote, and DTA’s previous relationship with the selected provider could be seen as having given the selected provider an unfair advantage, breaching DTA’s ethical obligations under the PGPA Act and Commonwealth Procurement Rules.

But Nous gets a $142,890 contract for the review. Within just 17 days, DTA executives want to increase the size of the contract. “The proposal is inconsistent with effective and ethical stewardship of public resources,” a staff member objects. The increase was approved anyway. Eventually Nous gets $260,085 as part of 10 separate variations to the same contract that increases the initial $121,000 contract to $4.9 million.

The DTA admits that the report “identifies shortfalls in relation to internal procurement processes, controls and education” but notes that “each of the sampled procurements still achieved their intended outcomes”. It told ANAO that it “is already actively working to address all recommendations and has introduced additional controls that will assist in driving the required uplift and strengthening of its procurement processes, overarching contract management, probity, and conflicts of interest posture”.