'Systems thinker' Patrick Hollingworth sues CIT over cancelled $5 million contract

“Complexity and systems thinker” Patrick Hollingworth is suing Canberra Institute of Technology for more than $3 million for breaking its $5 million contract for services to support its organisational change project.

According to the statement of claim lodged in the ACT Supreme Court, his company Redrouge Nominees, trading as Think Garden, is claiming $3,383,327 – the balance of the contract after CIT’s initial payment of $1,666,663 and approximately $50,000 in legal costs sustained in the cancellation of the agreement.

Think Garden claims that CIT breached the contract multiple times and that it has suffered loss and damage.

It says that under the contract, CIT would be liable for the full amount agreed on ($4,999,990) if it cancelled the agreement. CIT has denied that this was the “common intent” of the agreement.

CIT hired Think Garden for two years on 28 March 2022, the latest and most lucrative of a series of contracts that brought the total won by the company to nearly $9 million.

But by June, questions were being asked about the contracts and the nature of the services, descriptions of which nobody could understand.

Tender documents say the final contract was intended to “establish and self-sustain practices that allow for iterative learning cycles across a range of temporal (weeks, months, years and decades) and spatial (individuals, teams, departments, colleges/divisions) scales”.

The contracts were criticised for using jargon and not containing measurable outcomes.

Opposition Leader Elizabeth Lee said the contracts’ vague language immediately sounded alarm bells and they were “wilfully opaque”.

“What is it? How do we know we get value for delivering whatever that is?” she asked.

Tertiary Education Minister Chris Steel issued a “please explain” to CIT and on 23 June, the contracts were referred to the ACT Integrity Commission and CIT CEO Leanne Cover was sent on indefinite leave for the duration of the investigation.

CIT paused the agreement indefinitely on 27 June.

The statement of claim says that in the lead-up to this, the CIT executive team failed to show at Think Garden workshops on 7 and 8 June, and on 27 June cancelled the monthly contract meeting that was required under the agreement.

On 7 July, Think Garden gave notice that CIT was in breach of the agreement, citing the meeting cancellation, CIT staff failing to engage with Think Garden so it could do the work it had been contracted for, and the pausing of the agreement, which Think Garden had not agreed to.

On 21 July, Think Garden provided formal notice to CIT that it was terminating the agreement and demanded $3,350,713.95 by 28 July.

But CIT only paid Think Garden $9163.95 on 18 August.

Under the contract, CIT had been scheduled to make five instalments – $1,666,663 on 28 March 2022, $1,249,998 on 28 November 2022, $1,249,998 on 28 May 2023, $812,498 on 28 November 2023 and $20,833 on 24 March 2024.

The statement of claim says that in lieu of the contract balance, Think Garden may seek damages.

A hearing is set for 31 October.

An audit report tabled last week on the Government Procurement Board contained a case study on the CIT contracts that showed Think Garden’s tender for the work of $5,680,000 was about $3.7 million higher than the nearest competitor.

It only came back to the final figure due to Think Garden applying a discount for CIT being a preferred client and if it made an upfront payment.

The report also revealed that CIT did not reveal to the Procurement Board for some time that Mr Hollingworth was already a contractor.