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Procurement of the 'how many $billion?' Hunter Class Frigates and the future of the Defence Major Projects reports

THE FORMER Federal Government breached finance law by failing to undertake any value for money assessments before awarding a (then) $35 billion Defence contract, current value still unknown, according to the Joint Committee of Public Accounts and Audit.

The Joint Committee of Public Accounts and Audit has tabled its final report for its Inquiry into the Defence Major Projects Report (MPR) 2020-21 and 2021-22 and Procurement of Hunter Class Frigates.

The committee’s interim report for the inquiry in June 2023 dealt with cost, schedule, and capability performance assessments in both MPRs and other common themes including the impacts of COVID-19, Defence projects of interest and concern, and issues around risk management and capability forecasting.

This final report has considered the future of the MPR itself and highlighted key issues and concerns with the ongoing Hunter Class Frigate program.

On the $??,000,000,000 Hunter Class Frigates procurement

The committee was deeply concerned that no value for money assessment was ever undertaken by Defence or the former Government on the Hunter Class Frigates’ tenders, despite which the National Security Committee of Cabinet decided to proceed with a (then) $35 billion procurement of a ship from BAE Systems that was not a mature design.

Perplexingly, clear failings in the procurement identified by ANAO were only belatedly accepted by Defence after the committee initiated this inquiry and Defence conducted its own internal review.

Committee Chair Julian Hill MP said, "Ministers are not supposed to be rubber stamps or daleks, and there are two possibilities as to how this happened: 1) either no one noticed that no value for money assessment was undertaken or 2) they did know but didn’t care and blithely decided to proceed with a (then) $35 billion procurement anyway.

“Ultimately as this was a Cabinet process via the National Security Committee of Cabinet no one will ever really know what happened; whether there was a conspiracy or predetermined decision that BAE win the prize, or whether it was simply shocking incompetence by this group of Ministers in the then government.”

Further issues raised in the audit that were of significant concern to the committee included:

  • the absence of any explanation why 10 percent was mysteriously knocked off the price from all tenderers in the evaluation and advice to government – the committee’s report reaches blunt conclusions on this point:
    • “While the committee would love to think the Commonwealth could just buy everything for 10 percent less than a tendered price, it’s a patently ridiculous proposition and vague claims there might be an “efficiency dividend” raise reasonable questions about the competence of officials involved. Indeed, it is not apparent to any member of the committee whether there has ever been an Australian shipbuilding project for such a major new capability that has run under budget.”
  • the Hunter Class Frigate itself was assessed by Defence experts as a mature design when it had in fact never been built or even fully designed;
  • key documents regarding the decision-making process went and remain missing.

Mr Hill said, “Defence must reassess how it determines maturity in future large-scale acquisitions, particularly as foreign governments will always be keen to sell expensive military hardware to Australia. A balance is needed between that approach and acquiring ‘off-the-shelf’ military capability.”

The committee makes five recommendations in relation to the Hunter Class Frigate program. Four of these request updates from Defence on changes arising from its internal review, progress with the project, how it will assess design maturity in the future, and its new recordkeeping framework.

The committee is also recommending that the Commonwealth Procurement Rules now explicitly require a value for money assessment in a tender evaluation plan as a default option which must then be cleared by the Department of Finance.

Future of the MPR

The committee said it regarded the MPR as an important accountability mechanism that should continue for the foreseeable future, albeit with potential adjustments.

Mr Hill said, "Although other external accountability and assurance mechanisms for scrutinising Defence activities exist, the MPR provides a structured level of scrutiny across major capability projects that would not be provided through these other processes.”

"The discipline of the MPR has positive impacts on Defence’s internal management of major projects.”

The committee noted the tension between national security considerations and need for ANAO to provide transparency to the Parliament and is recommending that a confidential submission and related briefings with Defence, where information cannot be published, now be provided by ANAO as a supplement to the MPR. 

The report can be downloaded from the inquiry website.

 

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Significant Parliamentary concerns re Salesforce and NDIA: procurement, gifts and hospitality

NDIA officials failed to disclose years of secret gifts and hospitality received from global IT giant Salesforce despite the company securing lucrative government contracts and massive variations.

The Joint Committee of Public Accounts and Audit tabled its final report today for its Inquiry into procurement at Services Australia and the National Disability Insurance Agency (NDIA) finding key aspects fell short of the Commonwealth Procurement Rules and ethical requirements.

The findings follow the release of the inquiry’s interim report in September 2023, which focussed on the activities of the Synergy 360 consulting firm as an advisor to the technology company Infosys in obtaining Government IT contracts.

That report raised serious questions about potential financial impropriety and improper relationships with parties receiving contracts from the Commonwealth and referred those matters to the National Anti-Corruption Commission (NACC).

In this final report for the inquiry, the committee investigated the procurement of NDIA’s new customer relationship platform, known as the PACE system, from the US based global IT company Salesforce.

Committee Chair, Julian Hill MP said, "It was perplexing that the value for money assessments in this procurement gave no explicit weighting to price as a key factor in scoring and ranking proposals.”

"The sizes of the contract variations were significant, now $135 million up from $27 million at inception … a substantial proportion was due to significant changes in scope. Other vendors were basically denied the opportunity to tender for the product ultimately being delivered.”

The most concerning issue to emerge from the evidence was what appeared to be clear breaches of NDIA’s Gifts and Hospitality policies by its officials.

Mr Hill said, "Although NDIA gave evidence that no declarations of any hospitality relating to this contract were made by its staff, Salesforce subsequently provided written evidence of more than 100 instances of hospitality and/or gifts, including meals, drinks and golf outings, passing to NDIA officials over an almost five-year period. This was before and after the award of the contract, and throughout the period of contract variations.”

“The premise stated by NDIA for its hospitality policy is that none of its officials should accept gifts that could be seen to compromise their integrity. This was clearly not followed.”

After the interim report was tabled, the committee learned also that Synergy 360 made an unsolicited approach to Salesforce in advance of the PACE tender process and that meetings took place between former Minister Stuart Robert, Synergy 360 and Salesforce before and after the awarding of the contract.

Mr Hill rsaid, "Three meetings with former Minister Robert occurred with no written records available of what was discussed or evidence that other potential vendors who were not Synergy 360 clients were afforded similar access. Ultimately Salesforce secured a major government contract and later benefited from a series of lucrative variations.”

The committee makes five recommendations in this final report including that the:

  • Department of Finance and the Digital Transformation Agency take appropriate action to understand the extent to which inappropriate cultivation of Commonwealth officials may be occurring by major ICT vendors; and
  • Australian National Audit Office consider future audits of potential gifts and hospitality issues in the public sector to identify practices of concern.

The Chair has also written to Salesforce asking:

  • If Salesforce’s Office of Global Ethics and Integrity had approved each and all of these payments in accordance with their own corporate policy?
  • Who makes these decisions within Salesforce’s Office of Global Ethics and Integrity?
  • If Salesforce’s Office of Global Ethics and Integrity has ever declined a request to approve hospitality for an Australian Commonwealth official?
  • For Salesforce to provide a table within three months of the tabling of this report of all hospitality provided to all Commonwealth officials by agency for the last three years (names redacted) consistent with the format Salesforce helpfully provided in relation to the NDIA, and advice as to whether each item was approved by Salesforce’s Office of Global Ethics and Integrity.  

The report can be downloaded from the inquiry website.

 

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Live music inquiry — public hearings

THE House of Representatives Standing Committee on Communications and the Arts is holding hearings this week for its inquiry into the challenges and opportunities within the Australian live music industry.

Industry stakeholders, including peak bodies, government agencies and statutory authorities, have been invited to speak with the committee.

Committee Chair, Brian Mitchell MP, said, "Live music has significant cultural, social, and economic value, and so the committee looks forward to discussing the operational and regulatory challenges that have been raised in the many submissions to the inquiry.

"The committee hopes to gain insights into what uniquely frames the current Australian live music environment — beyond post-COVID-19 supply chain issues and inflationary pressures which do continue to significantly impact the sector; but also challenge most sectors of the economy," Mr Mitchell said.

Some of the key challenges offered by contributors include exponentially high increases in insurance premiums relative to the quantum of increase in other inputs; costs and impediments in meeting state, territory and local government regulatory requirements, and changing audience preferences and behaviour.

The committee has also received evidence about the changing modes of discoverability of artists, the current royalties regime and the revolution in production and dissemination of recorded music which impacts the livelihood of live music professionals.

Details of the public hearings are below, with the full programs and terms of reference available on the inquiry webpage.

More information about the committee, including membership, may be found on the Committee’s website.

Public hearing details

Date: Wednesday, 26 June 2024
Time: 12.45pm – 1.30pm
Location: Committee Room 1R6, Parliament House, Canberra

Date: Friday, 28 June 2024
Time: 9am – 1.20pm
Location: Committee Room 1R2, Parliament House, Canberra

These hearing will be broadcast live at aph.gov.au/live.

 

 

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PJCIS to review listing of Ansar Allah as a terrorist organisation under the Criminal Code

THE Parliamentary Joint Committee on Intelligence and Security has commenced a review of the listing of Ansar Allah as a terrorist organisation under the Criminal Code Act 1995 (Criminal Code).

Ansar Allah, also referred to as the Huthi or Houthi movement, is a Zaydi Shia violent extremist organisation based in Yemen. Since its formation in the early 1990s, Ansar Allah has evolved from a religiously motivated organisation to an organisation with political and military motivations.

Ansar Allah has conducted numerous violent terrorist attacks between 2022 and 2024 directed at Yemeni government forces, civilians, foreign states and foreign owned vessels passing through the Bab el-Mandeb Strait.

Ansar Allah’s listing by the Australian Government in May 2024 is the first time it has been designated as a terrorist organisation under the Criminal Code.

Listing Ansar Allah as a terrorist organisation triggers the application of a number of offences under the Criminal Code relating to membership of, support for, or association with the organisation.

Section 102.1A of the Criminal Code provides that the committee may review listings of terrorist organisations and report its findings to each house of Parliament within the 15 sitting day disallowance period.

Members of the public are invited to make submissions to this review by July 12, 2024.

Further information on the inquiry can be obtained from the committee’s website.

 

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Treaties Committee to examine UK accession to CPTPP and the listing of new endangered species

THE Joint Standing Committee on Treaties (JSCOT) will hold a public hearing for its inquiry into the Protocol on the Accession of the United Kingdom of Great Britain and Northern Ireland to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and associated side-letters, and the inquiry into Amendments to Appendices I, II and III of the Convention on International Trade in Endangered Species of Wild Fauna and Flora.

Committee Chair Mr Josh Wilson MP said of CPTPP, “Significantly, the United Kingdom would be the first non-founding country to join CPTPP since it was signed by 11 countries in 2018, and its accession would expand the trade partnership beyond the Pacific region.

"The United Kingdom’s accession to the CPTPP is expected to build upon the recent Australia-United Kingdom Free Trade Agreement (A-UKFTA) in terms of goods and services and provide additional strategic benefits for Australia. The Committee will examine these potential benefits.”

On the CITES treaty, Mr Wilson said, “The amendments add new species to the list of flora and fauna for which international trade is prohibited or monitored. The committee will seek to understand how the new listings support Australia’s strong commitment to effective regulation of the international trade in wildlife and conservation of threatened species.”

Public hearing details

Date:Tuesday, 18 June 2024
Time: 12pm to 1.20pm approximately
Location: Committee Room 2R2

The hearing can be accessed online and the program for this hearing is available on the Committee website, along with further information about the inquiry. 

 

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Ending Live Sheep Exports By Sea Bill: report released

THE Australian Parliament’s Agriculture Committee has presented its advisory report for its inquiry into the Export Control Amendment (Ending Live Sheep Exports by Sea) Bill 2024, which will end the live sheep export trade by sea by May 1, 2028.

The inquiry examined the provisions of the bill, including the authority for Commonwealth spending to assist those impacted to prepare and adapt.

Committee Chair, Meryl Swanson MP, said, "The bill fulfils the Albanese Government’s election promise to end the live export of sheep by sea while providing time and money for the orderly transition of industry to new avenues of production and trade."

While acknowledging the strong opposition of sections of industry and local WA communities, Ms Swanson said, "This matter has been extensively canvassed by governments and communities. The time has come to transition away from this trade. Like all transitions, it will not be without pain, but the outcome will provide industry with long-term certainty in line with community expectations."

In addition to recommending that the bill be passed, the Committee has made two recommendations including that the Australian Government:

  • considers making additional funding available to support the industry transition, potentially through the 2026 stocktake of industry progress; and
  • continues to seek opportunities to work with the Western Australian Government to refine and implement the transition support package.

The Committee held two public hearings in Canberra and Muresk, Western Australia, which took important evidence from a range of stakeholders representing industry, government, local communities and animal welfare groups. It received more than 13,000 contributions from people supporting and opposing the bill and offering feedback on its contents.

The Committee thanked those who contributed to the inquiry through written submissions, correspondence and giving evidence at public hearings.

The full report can be found on the Committee’s inquiry webpage.

 

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2024 My First Speech competition begins

THE 2024 edition of the national My First Speech competition for year 10, 11 and 12 students opened today and is now accepting submissions.

The competition asks students to write and record a 90-second speech on a topic they are passionate about as if they are making their first speech in the House of Representatives. A winner from each year group is selected and flown to Canberra with a parent or guardian where they deliver their speech at Parliament House. Winners will also meet MPs, tour Parliament House, and learn more about the democratic process.

A panel of judges, which includes Members and the Speaker of the House of Representatives, Milton Dick MP, will choose the winner from each year group.

“I am so pleased to see this great competition return for another year. Last year we had a record number of entries, and the competition was strong.” Speaker Milton Dick said.

“Not only is this competition a fundamental part of engaging our young Australians in democracy, but it also gives us a glimpse into the issues that are important to them.”

Entries close at 5pm (AEST) on 27 July 2024. More details can be found on the My First Speech website at: aph.gov.au/myfirstspeech.

 

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Treaties Committee to examine Australia-Tuvalu Falepili Union

THEJoint Standing Committee on Treaties (JSCOT) will hold a public hearing for its inquiry into the Australia–Tuvalu Falepili Union.

Committee Chair Josh Wilson MP said, “This treaty is an expression of fellowship and cooperation between Tuvalu and Australia and a broader example of Australia’s commitment to building strong relationships with our Pacific neighbours.

“The very heart of this agreement, the Tuvaluan concept of Falepili, is a shared commitment to look out for each other as good neighbours. The committee will examine how the agreement may lead to a stronger and more integrated partnership as Tuvalu and Australia navigate our shared challenges.

"The goals of this union include building climate resilience, safeguarding our collective peace and regional security, and supporting human mobility.”

The committee will hear from officials from the Department of Foreign Affairs and Trade, as well as key academics.

Public hearing details

Date: Wednesday, 19 June 2024
Time: 12pm-2pm approximately
Location: Committee Room 1R4

The hearing can be accessed online and the program for this hearing is available on the Committee website, along with further information about the inquiry. 

 

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Inquiry into food and beverage manufacturing in Australia

THE House Standing Committee on Industry, Science and Resources will hold a day of public hearings in Brisbane on Thursday, June 13, as part of its inquiry into food and beverage manufacturing in Australia.

The committee will hear from a range of stakeholders, including:

  • peak industry bodies for food and beverage manufacturing;
  • the academic, scientific, research and development sector;
  • domestic food and beverage brands; and
  • Queensland’s independent statutory body regulating food safety.

Committee Chair, Rob Mitchell MP said, “After visiting several sites the previous day, this hearing will be an opportunity for the committee to learn more about the wide range of research and development currently being undertaken for the food and beverage manufacturing sector.”

On Wednesday, the committee will visit Barambah Organics, the Health and Food Sciences Precinct jointly run by the Queensland Government, CSIRO, and the University of Queensland, and the Centre for Agriculture and the Bioeconomy at Queensland University of Technology.

The committee will conduct further interstate public hearings in July and August 2024. Further information about the inquiry, including the Terms of Reference, is available on the Committee’s website: aph.gov.au/isr

Public hearing details

Date: Thursday, 13 June 2024
Time: 9am to 2pm (AEST)
Location: CR3, Queensland Parliament, 2A George Street, Brisbane City QLD 4000.
Witnesses: Centre for Agriculture and the Bioeconomy/Queensland University of Technology, Food and Agribusiness Network/Turbine, Food and Beverage Accelerator/University of Queensland, Safe Food Production Queensland, Australian Organic Limited, End Food Waste Australia.

 

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Manufacturing Division welcomes vote to split from CFMEU

THE CFMEU Manufacturing Division has welcomed the announcement from Employment and Workplace Relations Minister, Tony Burke, that the Federal Government would provide the opportunity for members to vote on their future.

Manufacturing Division members will now have the chance to determine if they want their union to be outside of the CFMEU.

Mr Burke was "100 percent right in his assessment that the status quo in the CFMEU is dysfunctional and cannot continue" a statement from the Manufacturing Division read.

CFMEU Manufacturing national secretary, Michael O’Connor said, "We welcome this, the government is doing the right thing, they have listened to us and are respecting the good judgment of our members.

“Our members, who work in floorcovering, cabinetry and joinery, glass and glazing, installation and shopfitting, timber and wood products, pulp and paper, furniture, textile, clothing and footwear and building products and materials manufacturing, deserve the right to decide how they want to be represented by their union.

“This government has a good track record of backing workers’ rights and this is no exception. We will now move to ensure a vote of our members on this question can occur as a matter of priority.

“We will be encouraging every member to vote in the secret ballot and ensure they are fully informed of the benefits to them from the Manufacturing Division becoming independent of the CFMEU.”   

The Manufacturing Division made an application to the Fair Work Commission more than two years ago to put the demerger question to rank and file Manufacturing Division members and, following CFMEU Construction Division efforts to block the vote from occurring, has supported a Private Members Bill Senator Jacqui Lambie introduced to Parliament earlier this year which would facilitate a vote.

Last year the Mining and Energy Union was allowed a vote on whether to leave the CFMEU and 98 percent of members voted in their thousands to leave.

“Our members will now get the same opportunity as mining and energy workers got last year, to determine the future of their union,” Mr O'Connor said.

“We thank Senator Lambie and Minister Burke, who are backing us in, to give our members an opportunity for a brighter future outside of the CFMEU and a more respected and active role in the labour movement, free from the shackles of the dysfunctional CFMEU,” Mr O’Connor said.

 

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Electoral Matters Committee wants to hear from Australians about civics education in schools!

THE Joint Standing Committee on Electoral Matters is seeking direct feedback from students and schools about civics and citizenship education.

The committee has released a survey on civics and citizenship education in Australian schools as part of its current inquiry. If you are a primary or secondary school student, a recent school leaver or an educator, the committee wants to hear from you. Here is the survey link:

Joint Standing Committee on Electoral Matters - Civics education survey (surveymonkey.com)

Committee Chair, Kate Thwaites MP, said "The committee is keen to get the perspectives of school students and educators on the way civics is taught in Australian schools. This survey will help the committee understand how students and educators feel about civics and citizenship education, how civics and citizenship are taught in Australian schools, and how students and educators engage with social and political issues.

"It is concerning that many young Australians don’t have the grounding in civics to set them up to be confident participants in our democracy.

"Data from the National Assessment Program–Civics and Citizenship shows that in 2019 just 38 percent of Year 10 students and 53 percent of Year 6 students achieved the ‘proficient’ standard.

"The committee is investigating how civics forms part of the Australian curriculum, examining the importance of media literacy, and listening to the voices of young people about how best to improve civics education," Ms Thwaites said.

"The committee will engage with young people, along with people in remote communities, new migrants and culturally and linguistically diverse Australians, to ensure that everyone in Australia is able to participate fully in our democratic system."

Further information about the inquiry is available on the inquiry website.

 

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