THE Joint Committee of Public Accounts and Audit (JCPAA) will be holding a second public hearing on Friday, June 28, for its inquiry into the 2022–23 Defence Major Projects Report (MPR).

“The MPR is an important accountability mechanism and the discipline of the MPR over many years has had a positive impact on Defence’s internal management of major projects,” Committee Chair Julian Hill MP said.

“More evidence is needed regarding how Defence assesses military off-the-shelf options during procurement processes. For decades, previous reviews of Defence procurement have insisted that a military off-the-shelf option must be considered and compared to ‘bespoke’ options in new capability procurement.

“The committee also wants to understand how changes to scope are decided after a project is underway as variations to scope can be a key reason for delays and cost escalations. How are capability and delivery managers engaged in the context of scope changes and who ultimately decides? It’s important that industry realities and cost and schedule impacts are fully considered when a decision is made to change the scope of a new capability after initial procurement.”

The details are as follows:

Date: Friday, June 28, 2024

Time: 3pm – 5pm (AEST)

Venue: Committee Room 2R1, Parliament House         

The hearing will be broadcast live and will be accessible from the Parliament House website.

Details on the inquiry—including the terms of reference and submissions received—are available on the Committee website.

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THE Parliamentary Joint Committee on Intelligence and Security (PJCIS) has tabled its annual review of six Australian intelligence agencies.

The review, covering the 2021-2022 period, found that amidst a changing strategic environment where espionage and foreign interference has overtaken terrorism as Australia’s principal security concern, Australia’s intelligence agencies largely worked in an effective, and increasingly collaborative, manner.

"The committee found that, on the whole, agencies performed their roles well, particularly considering the challenging operational environment faced by agencies over the reporting period," Committee Chair, Peter Khalil MP said.

The Committee made one recommendation. Noting the rapid pace and ambition of elements of the Australian Signals Directorate’s (ASD) REDSPICE program, the committee recommended that ASD provide the committee with an additional update six months after each ASD submission to the review of administration and expenditure, for the duration of the REDSPICE program.

"The work of Australia’s intelligence agencies is becoming increasingly complex and challenging," Mr Khalil said. "ASD’s defence of Australia in the cyber realm will be significantly boosted by the REDSPICE program, which is intended to deliver forward-looking capabilities essential to maintaining Australia's strategic advantage and capability edge over the coming decade and beyond.

‘It is important, given the significant investment involved, that the committee be kept up to date with the maturity of the REDSPICE program," Mr Khalil said.

The committee’s report can be found via the committee’s webpage: Parliamentary Joint Committee on Intelligence and Security – Parliament of Australia (aph.gov.au)

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THE House of Representatives Standing Committee on Climate Change, Energy, Environment and Water will hold its first public hearing in Canberra tomorrow for its inquiry into the transition to electric vehicles (EVs).

Committee Chair, Tony Zappia MP, said, "The committee is looking forward to hearing evidence from the Department of Climate Change, Energy, the Environment and Water (DCCEEW) alongside the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA) to find out what work has been done to date and what the future needs might be to support Australia’s transition to electric vehicles.

"The committee will also hear from peak bodies and associations that will provide a customer and industry focus on what Australia’s future needs might be to support the country through the transition to electric vehicles. This is the first of a series of public hearings to be held across Australia," Mr Zappia said.

The program for Friday’s public hearing can be found here.

The committee will conduct further public hearings between July to September 2024. Further information about the inquiry, including the terms of reference, and submissions is available on the committee’s website.

Public hearing details

Date: 28 June 2024
Time: 8.45am – 12.40pm
Location: Committee Room 2R2, Parliament House

Witnesses: Department of Climate Change, Energy, the Environment and Water (DCCEEW), Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA), Australia Electric Vehicle Association, National Road Transport Association, Australian Automotive Aftermarket Association, Electric Vehicle Council.

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THE FORMER Federal Government breached finance law by failing to undertake any value for money assessments before awarding a (then) $35 billion Defence contract, current value still unknown, according to the Joint Committee of Public Accounts and Audit.

The Joint Committee of Public Accounts and Audit has tabled its final report for its Inquiry into the Defence Major Projects Report (MPR) 2020-21 and 2021-22 and Procurement of Hunter Class Frigates.

The committee’s interim report for the inquiry in June 2023 dealt with cost, schedule, and capability performance assessments in both MPRs and other common themes including the impacts of COVID-19, Defence projects of interest and concern, and issues around risk management and capability forecasting.

This final report has considered the future of the MPR itself and highlighted key issues and concerns with the ongoing Hunter Class Frigate program.

On the $??,000,000,000 Hunter Class Frigates procurement

The committee was deeply concerned that no value for money assessment was ever undertaken by Defence or the former Government on the Hunter Class Frigates’ tenders, despite which the National Security Committee of Cabinet decided to proceed with a (then) $35 billion procurement of a ship from BAE Systems that was not a mature design.

Perplexingly, clear failings in the procurement identified by ANAO were only belatedly accepted by Defence after the committee initiated this inquiry and Defence conducted its own internal review.

Committee Chair Julian Hill MP said, "Ministers are not supposed to be rubber stamps or daleks, and there are two possibilities as to how this happened: 1) either no one noticed that no value for money assessment was undertaken or 2) they did know but didn’t care and blithely decided to proceed with a (then) $35 billion procurement anyway.

“Ultimately as this was a Cabinet process via the National Security Committee of Cabinet no one will ever really know what happened; whether there was a conspiracy or predetermined decision that BAE win the prize, or whether it was simply shocking incompetence by this group of Ministers in the then government.”

Further issues raised in the audit that were of significant concern to the committee included:

• the absence of any explanation why 10 percent was mysteriously knocked off the price from all tenderers in the evaluation and advice to government – the committee’s report reaches blunt conclusions on this point:
  • “While the committee would love to think the Commonwealth could just buy everything for 10 percent less than a tendered price, it’s a patently ridiculous proposition and vague claims there might be an “efficiency dividend” raise reasonable questions about the competence of officials involved. Indeed, it is not apparent to any member of the committee whether there has ever been an Australian shipbuilding project for such a major new capability that has run under budget.”
• the Hunter Class Frigate itself was assessed by Defence experts as a mature design when it had in fact never been built or even fully designed;
• key documents regarding the decision-making process went and remain missing.

Mr Hill said, “Defence must reassess how it determines maturity in future large-scale acquisitions, particularly as foreign governments will always be keen to sell expensive military hardware to Australia. A balance is needed between that approach and acquiring ‘off-the-shelf’ military capability.”

The committee makes five recommendations in relation to the Hunter Class Frigate program. Four of these request updates from Defence on changes arising from its internal review, progress with the project, how it will assess design maturity in the future, and its new recordkeeping framework.

The committee is also recommending that the Commonwealth Procurement Rules now explicitly require a value for money assessment in a tender evaluation plan as a default option which must then be cleared by the Department of Finance.

Future of the MPR

The committee said it regarded the MPR as an important accountability mechanism that should continue for the foreseeable future, albeit with potential adjustments.

Mr Hill said, "Although other external accountability and assurance mechanisms for scrutinising Defence activities exist, the MPR provides a structured level of scrutiny across major capability projects that would not be provided through these other processes.”

"The discipline of the MPR has positive impacts on Defence’s internal management of major projects.”

The committee noted the tension between national security considerations and need for ANAO to provide transparency to the Parliament and is recommending that a confidential submission and related briefings with Defence, where information cannot be published, now be provided by ANAO as a supplement to the MPR. 

The report can be downloaded from the inquiry website.

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THE Joint Committee of Public Accounts and Audit has tabled its report into probity and ethics in the Australian public sector, finding the sector too often fails to comply with both the intent and the requirements of legal and regulatory frameworks.

“Complying with the letter of the law while ignoring the intent does not cut it,” Committee Chair, Julian Hill MP said.

“Too often the public sector is falling short of the high standards of professionalism required of it. Risk tolerance for non-compliance is unacceptably high and ‘getting things done’, even if it involves cutting corners, has sometimes become more important than complying with the law.

“In particular, it was concerning to hear during the inquiry that even when officials were found acting contrary to finance law, multiple witnesses and entities referred to a ‘lack of malintent’, to having ‘acted in good faith’, and ‘delivering on decisions of government’. This is plainly and unambiguously wrong.

“Officials in the Department of Health even received corporate ‘congestion busting’ awards for former Minister Greg Hunt’s hospital grants project which breached finance laws. Public money was paid without any apparent legislative authority and in blatant defiance of legal advice.

“Frankly, the committee wishes that breaking finance law was indeed innovative and a new situation, but unfortunately the evidence in this and numerous other inquiries make clear it’s not," Mr Hill said.

“The committee has observed over many years, including through this inquiry, a pattern of persistent resistance to accountability across the public sector. Agency heads do not consistently have frameworks in place to be reasonably confident their officers are acting according to the letter and the intent of the law, and thus demonstrating probity.”

To foster an Australian Public Sector that acts with probity and integrity, the committee concluded that a focus on three critical and interdependent aspects of the system is necessary: frameworks, culture, and accountability.

“The key, however, to ensuring the public sector acts with probity and integrity is overwhelmingly not the rules per se—it is ethical leadership: the ‘golden thread’ that binds and animates the system in a positive direction. Ethical leadership must be demonstrated at all levels, especially by accountable authorities and senior officers,” Mr Hill said.

The Committee made 11 recommendations, including recommendations that seek to embed assurances with regard to probity and ethics in public sector accountability systems and mechanisms.

Under the recommendations, the Australian Public Service Commission (APSC) is to develop guidance with a definition of culture and metrics to build, measure and assess organisational culture as it applies to probity. Further, there should be a new requirement for all entities to develop and maintain an overarching Integrity Framework.

The report can be downloaded from the inquiry website.

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NDIA officials failed to disclose years of secret gifts and hospitality received from global IT giant Salesforce despite the company securing lucrative government contracts and massive variations.

The Joint Committee of Public Accounts and Audit tabled its final report today for its Inquiry into procurement at Services Australia and the National Disability Insurance Agency (NDIA) finding key aspects fell short of the Commonwealth Procurement Rules and ethical requirements.

The findings follow the release of the inquiry’s interim report in September 2023, which focussed on the activities of the Synergy 360 consulting firm as an advisor to the technology company Infosys in obtaining Government IT contracts.

That report raised serious questions about potential financial impropriety and improper relationships with parties receiving contracts from the Commonwealth and referred those matters to the National Anti-Corruption Commission (NACC).

In this final report for the inquiry, the committee investigated the procurement of NDIA’s new customer relationship platform, known as the PACE system, from the US based global IT company Salesforce.

Committee Chair, Julian Hill MP said, "It was perplexing that the value for money assessments in this procurement gave no explicit weighting to price as a key factor in scoring and ranking proposals.”

"The sizes of the contract variations were significant, now $135 million up from $27 million at inception … a substantial proportion was due to significant changes in scope. Other vendors were basically denied the opportunity to tender for the product ultimately being delivered.”

The most concerning issue to emerge from the evidence was what appeared to be clear breaches of NDIA’s Gifts and Hospitality policies by its officials.

Mr Hill said, "Although NDIA gave evidence that no declarations of any hospitality relating to this contract were made by its staff, Salesforce subsequently provided written evidence of more than 100 instances of hospitality and/or gifts, including meals, drinks and golf outings, passing to NDIA officials over an almost five-year period. This was before and after the award of the contract, and throughout the period of contract variations.”

“The premise stated by NDIA for its hospitality policy is that none of its officials should accept gifts that could be seen to compromise their integrity. This was clearly not followed.”

After the interim report was tabled, the committee learned also that Synergy 360 made an unsolicited approach to Salesforce in advance of the PACE tender process and that meetings took place between former Minister Stuart Robert, Synergy 360 and Salesforce before and after the awarding of the contract.

Mr Hill rsaid, "Three meetings with former Minister Robert occurred with no written records available of what was discussed or evidence that other potential vendors who were not Synergy 360 clients were afforded similar access. Ultimately Salesforce secured a major government contract and later benefited from a series of lucrative variations.”

The committee makes five recommendations in this final report including that the:

• Department of Finance and the Digital Transformation Agency take appropriate action to understand the extent to which inappropriate cultivation of Commonwealth officials may be occurring by major ICT vendors; and
• Australian National Audit Office consider future audits of potential gifts and hospitality issues in the public sector to identify practices of concern.

The Chair has also written to Salesforce asking:

• If Salesforce’s Office of Global Ethics and Integrity had approved each and all of these payments in accordance with their own corporate policy?
• Who makes these decisions within Salesforce’s Office of Global Ethics and Integrity?
• If Salesforce’s Office of Global Ethics and Integrity has ever declined a request to approve hospitality for an Australian Commonwealth official?
• For Salesforce to provide a table within three months of the tabling of this report of all hospitality provided to all Commonwealth officials by agency for the last three years (names redacted) consistent with the format Salesforce helpfully provided in relation to the NDIA, and advice as to whether each item was approved by Salesforce’s Office of Global Ethics and Integrity.  

The report can be downloaded from the inquiry website.

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THE Joint Standing Committee on Treaties (JSCOT) has tabled a report recommending the ratification of the Nairobi International Convention on the Removal of Wrecks (Nairobi Convention).

Committee Chair Josh Wilson MP said, “Australia is a country with a significant coastline and shipping industry. Joining the Nairobi Convention would provide economic, environmental, and human safety benefits for Australia. Through this Convention, Australia would be able to remove or have removed wrecks in its Exclusive Economic Zone. This includes objects that are lost at sea that pose a danger to navigation.”

“Ratifying this treaty is important because of the increasing risk of wreck incidents," Mr Wilson said. "This is due to the rise in e-commerce and the use of bigger container ships that travel more frequently at full capacity which face greater pressures to quickly load and unload.”

As part of the Convention, registered ship owners of States Parties are held financially liable for any wrecks they create and those over 300 gross tonnage must have insurance or other financial security to cover the cost of removing the wrecks.

As part of its inquiry, the committee held a public hearing and addressed key issues such as the economic benefits of the Convention, underwater cultural heritage, the application of the Convention to the territorial sea, shifting wrecks, insurance issues and the offshore oil and gas industry.  

The committee supported ratification and recommended that binding treaty action be taken for this treaty as well as the following minor treaty action which is also contained in the report:

• Amendment to Appendices I and II of the Convention on the Conservation of Migratory Species of Wild Animals.

The report can be found on the committee website, along with further information on the inquiry.

For more information about this committee, visit its website.

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THE House of Representatives Standing Committee on Communications and the Arts is holding hearings this week for its inquiry into the challenges and opportunities within the Australian live music industry.

Industry stakeholders, including peak bodies, government agencies and statutory authorities, have been invited to speak with the committee.

Committee Chair, Brian Mitchell MP, said, "Live music has significant cultural, social, and economic value, and so the committee looks forward to discussing the operational and regulatory challenges that have been raised in the many submissions to the inquiry.

"The committee hopes to gain insights into what uniquely frames the current Australian live music environment — beyond post-COVID-19 supply chain issues and inflationary pressures which do continue to significantly impact the sector; but also challenge most sectors of the economy," Mr Mitchell said.

Some of the key challenges offered by contributors include exponentially high increases in insurance premiums relative to the quantum of increase in other inputs; costs and impediments in meeting state, territory and local government regulatory requirements, and changing audience preferences and behaviour.

The committee has also received evidence about the changing modes of discoverability of artists, the current royalties regime and the revolution in production and dissemination of recorded music which impacts the livelihood of live music professionals.

Details of the public hearings are below, with the full programs and terms of reference available on the inquiry webpage.

More information about the committee, including membership, may be found on the Committee’s website.

Public hearing details

Date: Wednesday, 26 June 2024
Time: 12.45pm – 1.30pm
Location: Committee Room 1R6, Parliament House, Canberra

Date: Friday, 28 June 2024
Time: 9am – 1.20pm
Location: Committee Room 1R2, Parliament House, Canberra

These hearing will be broadcast live at aph.gov.au/live.

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