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9 August 2014 | Will Green
The Victorian Ombudsman in Australia has heavily criticised procurement practices at the now defunct Office of Living Victoria (OLV).
In a report ombudsman Deborah Glass said the OLV, an administrative office established in 2011 to integrate water and urban planning in Melbourne, split tenders to avoid procurement rules thresholds, paid consultants before a contract of employment had been signed and selected the highest quote in a competitive tender with no explanation.
The report said the OLV failed to comply with Victorian government procurement policies and there were examples of no competitive tendering, poor contract planning and management, lack of contracts and documentation and “poorly handled” conflicts of interest.
"Clearly there was a view within OLV that jobs and contracts were being given to a select few known individuals. The evidence supports this. On many occasions investigation staff found that there had been previous work and business relationships between OLV management and some contractors/consultants/agency staff which were not declared. The implications for this are issues of patronage and ‘jobs for mates'," the report said.
Glass said a week after she presented the report to the CEO of the OLV and the relevant government minister, the OLV - which had a budget of AUS$13.1 million (£7.2 million) in 2013/13, was abolished as a standalone agency.
“The underlying philosophy appeared to be based on the view of its senior management that it had to ‘crash through’ alleged bureaucratic intransigence and resistance to its reform agenda, and that public service inertia and processes would stymie effective and timely change,” she said.
The investigation included an analysis of 12 contracts and it found 11 were awarded to consultants and contractors that were just below the AUS$100,000 (£55,200) threshold where external scrutiny and approvals were required. "Later these ‘fixed price’ contracts were varied to cover additional expenditure,” said the report.
In one example a contractor was employed on three consecutive contracts, with no quotes requested from alternative candidates, resulting in payment of $AUS320,000 (£176,600) for a seven month period. It found the contractor had previously worked with Simon Want, who was himself appointed head of office at OLV with no formal interview or advertising of the role, receiving payment before his contract of employment was signed.
The report also said three quotes were obtained from firms to provide event management services at AUS$40,000 (£22,100), AUS$60,000 (£33,100) and $AUS160,000 (£88,300), with “the highest one accepted by Simon Want with no explanation as to why”.
The report said in response to the allegation Want said the correct processes were followed but not documented. “A formal assessment of quotes was undertaken, and a bid that provided certainty, value for money and competiveness was selected,” he said.
In his response to the allegations the report said Mike Waller, CEO of OLV, said the office was an administrative office and not a department and was therefore not subject to Victorian government procurement policies.
Glass said: “OLV failed to demonstrate respect for public sector values and accountability for its use of public funds. Its rearguard defence of those practices paved the way for its own demise.”