The Ombudsman found several issues with ACTIC’s processes when it procured the services of its CEO. Photo: Claire Fenwicke.
The ACT Integrity Commission (ACTIC) has rejected “any breach of applicable procurement legislation or regulations” occurred after the Ombudsman investigated the circumstances surrounding a contract awarded to ACTIC’s former CEO.
The Ombudsman’s office began investigating after it discovered a $150,000 contract was awarded by ACTIC to its own CEO (referred to as Mr A) while Mr A was still CEO.
”The procurement lacked appropriate probity and risk mitigation measures to withstand public scrutiny and did not have appropriate risk treatments in place,” Ombudsman Iain Anderson found in his special report.
Mr Anderson and his team investigated ACTIC’s compliance with laws around disclosure and management of conflicts of interest, procedural fairness in relation to apprehensions of bias in decision-making, and procurement practices in relation to this contract.
Mr A submitted his resignation in January 2022 (to take effect at a future date) and offered to work as a consultant two days a week to ensure continuity.
Mr A confirmed his last day (on 1 August) as being 22 August, emailing a proposal with drafts of procurement documents.
The Ombudsman found all “material decisions” for the procurement were made before the procurement processes began, including the Commissioner instructing the CFO to process the proposal as a single-source select tender, and an agreed hourly rate of $350 (established before Mr A filled out a request for quotation form for the CFO).
Mr A advised the Commissioner the procurement should be exempt from the open and competitive tender process, was the one who drafted the statement of requirements for the role (of which he was the sole tenderer) and drafted the exemption of the procurement of his services from the competitive process.
His draft exemption document was then “picked up [almost] verbatim” in the procurement documentation.
”Mr A used his knowledge to draft the procurement documents and exemption, which framed Mr A as the only person capable of providing services,” Mr Anderson noted.
Conflict of interest documents were included in the CFO’s endorsement of the contract on 18 August, but weren’t made public.
“There were no records in the Commission’s conflict of interest register of any declarations of conflicts of interest for this procurement … There is no record of the Commissioner declaring or considering a potential apprehension of bias,” Mr Anderson noted.
“There is no record of any steps being taken to manage the then-CEO’s clear conflict of interest in the process … Although he was still the CEO, Mr A did not declare a conflict when he provided the draft exemption and statement of requirements to the Commissioner.”
The contract was executed two days before Mr A’s last day as CEO. He began as a consultant the next day.
ACTIC Commissioner and Mr A provided documents on the need for procurement, Mr A’s suitability for the role, and an application for an exemption from the usual procurement processes after they were asked by the Ombudsman.
“I maintain the view that these matters should have been clearly documented at the time of the procurement, not retrospectively addressed in response to my investigation,” Mr Anderson wrote.
“The conflicts of interest declaration had not previously been provided to the Speaker of the Legislative Assembly nor the Inspector.”
Mr Anderson found it appeared Mr A had breached his statutory obligations to ”take all reasonable steps to avoid conflict of interest” during the process.
Both the Commissioner and Mr A argued a declaration of interest wasn’t necessary as Mr A wasn’t the final decision-maker on the contract.
Mr Anderson disagreed.
“Mr A stood to gain financially through being awarded the contract, which provided him with a source of income after ceasing to be CEO,” he said.
”’The Commissioner was aware of the conflict and, as the decision-maker, [he] should have ensured Mr A declared the conflict and that measures were put in place to manage the conflict.”
Mr Anderson clarified he wasn’t suggesting the Commissioner was biased in the decision-making, but there was concern the circumstances gave rise to reasonable apprehension of bias.
Mr A submitted invoices totaling $113,326.23 for four months of work. He terminated his contract two months early as he felt he’d “progressed matters” to a logical point where someone else at ACTIC could take over.
Mr Anderson recommended ACTIC engage independent procurement advice as an ”integral part” of any proposed single select tender process, develop a procurement policy ”consistent with the requirements” from the government, and develop and maintain a register of mandatory staff training which includes training on conflicts of interest, bias and procurement training.
ACTIC only accepted the last recommendation.
ACTIC Commissioner Michael F Adams KC said his office already followed the ACT procurement framework and policies.
“We don’t need our own special procurement policy. We followed, and continue to follow, ACT Government guidelines on probity in procurement,” he said.
“The relationship between the former CEO and me was purely professional arising from our statutory appointments in the work of the Commission. There was therefore no conflict of interest involved in my decision to enter into the consultation contract with him.”
The Ombudsman was not required to publish this special report until its annual operational review in October, but said he considered it appropriate given the public interest issues identified and the rejection of two recommendations.
