Home Affairs lets Paladin self-report on whether it is meeting its obligations

The company at the centre of the latest Home Affairs contract scandal, Paladin, will be allowed to self-report on whether it is meeting the performance requirements of its vast contract to provide services for offshore asylum seekers — in direct defiance of Audit Office criticism of self-reporting by the company’s predecessors.

In a scathing audit report in 2017, the Australian National Audit Office shredded the then-immigration department’s management of its offshore detention contracts (the tendering process for which had been the subject of a separate bombshell report). One of the many problems identified by the ANAO was that despite linking contract payments to performance measures, the department simply let contractors like Transfield self-report on how well they were meeting performance measures. 

Performance measurement relied on the service providers conducting self-assessments (individual service provider reports, known as ISPRs) and providing those assessments to DIBP on a monthly basis. The department did not establish minimum expectations regarding the reports or supporting documentation. In addition, DIBP did not consistently apply audit or other review processes to gain independent assurance over providers’ self-assessments.

However, Home Affairs has ignored the lessons of its Transfield contract debacle in its contract with Paladin — which like several of the contracts savaged by the ANAO from the Gillard and early Abbott years was prepared in extreme haste. In the Department’s contract with Paladin, it will only be required to “self-monitor and self-report on performance against the agreed performance measures” with “agreed evidence packs”.

The department has the power to conduct audits, but the contract provides it has to give at least 10 workings days’ notice that it will conduct them, and provide in advance a list of the documents it wants to see, in contrast to standard audit procedure where auditors are allowed full access to all documents.

The continued reliance on self-assessment is one of several peculiar features of the controversial contract. Another is the use of an advance payment to the company, which lacked the infrastructure or experience to provide the kinds of “garrison support and welfare services” required.

Advance payments are used in Commonwealth procurement — but almost always for major defence hardware acquisition projects; their use for the provision of services at the Commonwealth level appears very rare. Advance payments last featured controversially in Tony Abbott’s handing of a $1.5 billion advance payment to Victoria for the aborted East-West Link project, in the absence of a proper assessment of the project and against the advice of the relevant department, in order to make the 2013-14 budget deficit look worse.

It’s also concerning that Christian Porter, who is supposed to be the Attorney-General, lacks a basic understanding of Commonwealth procurement processes. His claim yesterday that the contract was the result of “a full independe Commonwealth procurement process” is obviously untrue: this was limited tender — possibly a sole source tender — with the market not given an opportunity to respond to a government request for tender.

In fairness, however, ministers know little about procurement processes. The scepticism of Peter Dutton’s claims that he had nothing to do with the contract is misplaced; departments, hopefully complying with the Commonwealth procurement rules, are charged with letting and managing contracts, not ministers, no matter how large the size.

Critics insisting Dutton “should have known” about the Paladin contract don’t understand the basics of Commonwealth procurement, which is designed to keep ministers and their staff out of the process. The problems with the Paladin contract, like the debacle around previous offshore processing contracts, has little to do with the ministers in charge — ranging from Chris Bowen and Tony Burke to Scott Morrison and Peter Dutton — and everything to do with systemic problems within Home Affairs that only a judicial inquiry can root out.