Procurement practices at NDIA have breached the rules, say a parliamentary committee. Photo: File.
The National Disability Insurance Agency (NDIA) seriously broke the rules in its procurement practices, according to a parliamentary committee which delivered a severe rebuke over how a large ICT contract was handled.
Value for taxpayers’ money was ignored, fair tendering processes snubbed, and officials flouted the government’s fists and hospitality policy to an “unacceptable” level.
The Joint Committee of Public Accounts and Audit has tabled its final report from its inquiry into procurement at Services Australia and the NDIA.
The report focusses on the award of a large contract to the ICT vendor Salesforce for a new customer relationship and management software platform known as the PACE system.
While evidence received indicates PACE has been working appropriately, aspects of the procurement fell short of the Commonwealth Procurement Rules and ethical requirements.
Committee chair and Labor MP Julian Hill said the inquiry was surprised to learn that no explicit price weighting was included in NDIA’s value-for-money assessments when ranking the tender proposals for this procurement.
He said significant contract variations were examined closely by the committee, showing Salesforce’s contract value rose from an initial $27 million at inception in April 2020 to $135 million by October 2023.
“While some of this was explicable by a necessary expansion of user licences, a substantial proportion was due to significant changes in scope,” Mr Hill said in his report.
“Of concern is that other vendors had no opportunity to tender for the product that was ultimately delivered as these variations in scope occurred after the contract had been awarded.
“In addition, more than $20 million was added to the Salesforce contract for ‘professional services’ raising questions about cost control and value for money assessments.”
Of most concern to the committee was how the agency’s officials enjoyed gifts and hospitality from Salesforce more than 100 times without disclosure.
“The most egregious issue to arise from this procurement activity however is what appear to be clear breaches of the NDIA’s Gifts and Hospitality policy by officials over a long period of time,” the report stated.
“NDIA informed the committee that any gifts or benefits of over $100 in value must be pre-approved and then recorded in a compliance log but that no such disclosures had been made in relation to the Salesforce contract.
“The committee then received a detailed itemised list from Salesforce containing more than 100 instances of hospitality and/or gifts passing to NDIA officials over an almost five-year-period both before and after the PACE contract bid and award, and throughout the periods of the contract variations.
“These included close to 50 items above $100 in value per person including meals, drinks and golf outings.”
According to the report, the NDIA hospitality policy states none of its officials should accept gifts that can be seen to compromise their integrity.
“It would be hard to see how a contract manager could maintain their integrity whilst accepting gifts from a vendor,” the NDIA told the inquiry.
The agency also gave evidence that an obligation on officials to not accept any gifts began the moment a procurement started to be planned.
“The committee concurs fully with these principles,” Mr Hill said.
“Breaches of disclosure requirements and gifts and hospitality policies are simply unacceptable.
“It is understood NDIA officials would need to engage with counterparts at Salesforce during the operation of this substantial contract.
“Some social elements to this may be reasonable, but any such interactions must be carefully conducted and managed to ensure that probity and integrity standards are maintained.”
The committee hasn’t sought the identities and roles of the NDIA officials who accepted gifts from Salesforce.
The NDIA has an internal investigation underway.
Mr Hill said the episode raised further serious questions about how widespread this sort of practice and culture by Salesforce and other major ICT vendors may be in other Commonwealth entities.
“The committee has sought additional information from Salesforce regarding the operation of its self-styled ‘Office of Global Ethics and Integrity’ which is supposed to have individually approved every instance of hospitality to government officials worldwide,” he said.
“Given concerns regarding potential systemic inappropriate cultivation of public servants by Salesforce over a long period of time the committee is requesting a further report on all hospitality Salesforce has provided to Commonwealth officials in all entities over the past three years.”
An interim report of the committee tabled in September 2023 focussed primarily on the activities of the Synergy 360 consulting firm in advising the multinational software company Infosys in obtaining government contracts.
The committee investigated the alleged involvement of Synergy 360 with former Coalition minister Stuart Robert, but made no findings of malfeasance in relation to any individuals involved based on the evidence it received.
“Regrettably, however, a number of the committee’s requests via formal summons for witnesses to appear and for documents to be presented in relation to these alleged activities were wilfully ignored,” Mr Hill said.
“These matters were therefore handed over by the committee to the National Anti-Corruption Commission for its consideration as it has the necessary investigatory powers and resources to potentially resolve these questions should it choose to do so.”
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