The Integrity Commission has found that a Department of Education manager improperly awarded or attempted to influence $2.6 million in contracts for a friend to produce digital education resources.
An investigation report summary (PDF, 7.6 MB), tabled in the Tasmanian Parliament today, outlined the manager’s breaches of procurement requirements from 2016-2018, during which he provided or attempted to provide financial gain to his close friend by:
- failing to adequately declare a conflict of interest, to identify the nature of the friendship, or the way in which the friend and/or his business was advantaged;
- breaking a significant project into smaller budgets to avoid requirements to go to competitive tendering, leading to provision of a series of contract briefs each capped at $50,000 for work likely to have a total value of $1m over three years;
- undertaking direct sourcing of services from his friend, including the awarding of 21 contracts during 2016 for what was, in effect, one combined project that would have been subject to tender processes; and
- liaising with his friend during procurement processes, while the friend was a director of one company and subsequently when the friend established his own business.
The manager had either provided or attempted to provide financial gain to the friend through projects that included interactive digital resources worth $139,770; an online learning hub for $547,500; multi-media projects from 2016-2018 directly sourced from the friend’s business to a total value of $1.1m; and four further multi-media projects worth $871,100.
The friend had approached two people to form a company in 2015, after the manager indicated the potential for production of significant digital media products. The company was paid almost $140,000 for interactive digital resources, with a series of invoices issued for figures just under $10,000.
The manager subsequently engaged the company’s representatives to develop tender specifications for an online learning hub when he was aware the company would submit a tender.
The company won the tender, for a price twice that of other tenderers. However, the friend resigned from the company in March 2016 to form a new business with another individual, after a disagreement about project management and the refusal of the other two company directors to allow his friend to join them as a director.
Despite the manager insisting on a joint venture between the company and the friend’s new business, negotiations broke down between the parties and a new procurement process was initiated. Ultimately, the department’s Procurement and Review Committee became involved, recommending the establishment of an evaluation panel chaired by an independent person.
The new business, operated by the friend, then provided a series of quotes for multi-media projects in response to briefs capped by the manager below $50,000, avoiding the necessity for open testing of the market. The manager accepted the quotes, resulting in payments of more than $500,000 to the new business in its first month of existence. The business was paid a total of $889,000 in the 2016 calendar year, almost $151,000 in 2017 and $62,000 in 2018.
KPMG representatives were engaged as probity advisors for four subsequent tenders, valued at $871,100. The tender processes met accepted probity standards, but the manager advised the evaluation panel on creative responses without providing a full declaration of the relationship with his friend.
The Department of Education began investigating irregularities in early 2017 and later sought assistance from the Commission, which began an own-motion investigation in mid-2018.
The Board of the Commission has not named the manager or the private individuals due to the fact that the manager was not a senior officer, as defined under the Integrity Commission Act 2009 (Tas) and has already resigned; that the private individuals are not subject to the Act; and in consideration of privacy and health implications for the manager and private parties. The report acknowledges that products resulting from contracts have been recognised as high quality.
The Board has referred the findings to the Secretary of the Department of Education for action.
Media contact
Chris Carney
Acting Director, Misconduct Prevention
contact@integrity.tas.gov.au
1300 720 289