Airservices did not follow its own policies and procedures in contracting an external company, the International Centre for Complex Project Management (ICCPM), to provide services related to the OneSky project, the Australian National Audit Office (ANAO) has found.
At the request of the Senate Rural Affairs and Transport Legislation Committee and Minister for Infrastructure and Regional Development, the ANAO conducted an audit into Airservices’ oversight and implementation of OneSky, which aims to combine both the civil and military air traffic management systems into one program.
The move to have ANAO look into the matter came after a parliamentary committee in August and September 2015 raised questions surrounding the OneSky tender process, particularly after Airservices contracted ICCPM in 2012 to establish the request for tender.
Specifically, the committee heard examples that could give rise to perceptions of conflict of interest.
The ANAO report, published on Wednesday, examined whether Airservices had effective procurement arrangements in place, with a particular emphasis on whether consultancy contracts entered into with ICCPM in association with the OneSky Australia program were effectively administered.
It said Airservices did not prepare a business case for its strategic partnership with ICCMP.
Moreover, the ANAO said “no performance indicators were established to enable monitoring and evaluation of whether the partnership was delivering the expected benefits”.
“A key shortcoming in Airservices’ procurement policies and procedures is that they do not give appropriate emphasis to the use of competitive processes,” the ANAO report said.
“In addition, Airservices routinely failed to adhere to its policies and procedures in procuring services from ICCPM. As a result, Airservices’ procurement of services from ICCPM, on an exclusively sole-sourced basis, did not deliver value for money.”
In September 2015, the Senate Committee heard Steve Hein, who was for a period of time Airservices’ executive general manager of future service delivery, worked previously at ICCPM. His wife Deborah Hein is chief executive of ICCPM. In one instance, the Senate committee heard Steve Hein signed a quotation from Deborah Hein for the cost of contracting two people from ICCPM that was being forwarded to the Airservices chief executive for consideration.
Also, the then chairman of ICCPM Chris Jenkins, was at the time was the managing director of the company that won the tender as the successful supplier to commence work on the Onesky project, Thales.
The report said Airservices had agreed to pay ICCPM total fees of more than $9 million under various contractual arrangements. Daily rates for individual contractors were between $1,500 and $5,000 for an eight-hour day.
The ANAO said Airservices “demonstrated a lack of organisational commitment to the effective implementation of probity principles in respect to the ICCPM arrangements”.
It was also “common” for Airservices to depart from its documented procurement policies and procedures for the various ICCPM procurements, with internal controls “regularly bypassed”.
“Where they were applied, the controls were often ineffective,” the ANAO said.
“In addition, the records made by Airservices of each procurement decision were often perfunctory. This approach to recording decisions to spend money, together with internal controls being bypassed, contributed to a lack of transparency over the decisions to procure services from, or through, ICCPM.”
The ANAO report included six recommendations, including that Airservices “address systemic failures in the adherence to the organisation’s procurement policies and procedures and the cultural underpinnings of those failures”, improve its procurement framework and enhance its procedures for managing probity in procurement processes.
Airservices said in a statement in response to the report it had accepted all the recommendations, noting actions to address each of the recommendations were near completion.
“Airservices acknowledges it can improve its procurement processes and better manage perceived conflicts of interest,” it said.
“While Airservices recognises improvements can be made with respect to procurement, we have full confidence in the tender evaluation process established for the OneSKY Australia program and are satisfied that the governance arrangements surrounding the tender evaluation were extremely robust.”
“We look forward to progressing the implementation of Australia’s next generation civil-military air traffic management system, which is critical for the continued growth of Australia’s aviation sector.”
The full report can be read on the ANAO website.
The ANAO would also examine in a second performance audit the conduct of the OneSky tender process “from initiation to finalisation of the election and contracting process, with a focus on the achievement of value with public resources in accordance with appropriate probity protocols”.
“The consideration of any probity impacts on the tender process will be examined within the scope of the second audit,” the ANAO said.