Federal officials spent $374 million in taxpayer funds on contracts tainted by concerns over conflicts of interest, poor value for money and inadequate records, according to an internal review that examined deals linked to a Canberra consultant and friend of former cabinet minister Stuart Robert.
The damning review has called for further investigation into 19 contracts because of the danger of conflicts of interest and other failures in deals awarded to clients and contacts of David Milo and his consulting firm Synergy 360.
A former head of the federal public service, Ian Watt, issued the findings in a review completed this month after the government asked him to examine deals linked to Milo and identified in leaked emails revealed by this masthead last year.
The document, obtained by this masthead, sends a warning to public service chiefs about the risk of wasting taxpayer funds using “single source” tenders that prevent open competition and put big companies in the box seat to win lucrative deals that lasted for years.
The deals include contracts worth $263 million with Indian tech giant Infosys for work with Services Australia and the National Disability Insurance Agency (NDIA) during the period when Milo was helping the company and Robert was minister for government services.
“Many procurements lacked appropriate conflict of interest documentation in accessible records,” Watt wrote in the review dated March 6.
“Further, a small number of procurements had poorly managed actual, potential or perceived conflicts of interest.”
Robert has denied helping Synergy 360 and its clients win government work and denied any conflict of interest while he was a minister. Further, this masthead is not suggesting that Robert was paid for his advice and assistance.
Asked whether Robert provided information to Milo that helped Synergy 360 and its clients win government contracts, the former minister’s spokesman said Services Australia had confirmed that its review of the projects did not look at ministerial involvement.
“This is because there wasn’t any,” the spokesman said. “Mr Robert has not been contacted by Services Australia, the NDIA or any person conducting any review. Mr Robert has not received or been asked to provide input to any report prepared for either agency.”
Milo made no comment when asked on Friday if he gained information from Robert that could be passed on to clients to help them win bids for government projects.
Asked last year whether he was lobbying for his clients to win government contracts, Milo said: “We support any government review and continue to operate within the same stringent procurement policies that apply to all professional service providers.”
Services Australia and the NDIA set up a taskforce to look into 95 contracts worth $618 million and signed between July 2015 and December 2022 involving clients and contacts of Milo after the revelations about the relationships by this masthead last November and December.
The leaked emails revealed several meetings between Robert, as a minister, and Synergy 360, a firm whose shareholders are his close friends, Milo and political fundraiser John Margerison.
The emails lifted the lid on the political access that Synergy 360 offered its clients, with one email from the firm to a potential client asking for an up-front payment such as $100,000 “before any meeting with ministers” could be arranged.
The Watt review looked at a period that included Robert’s first stint as minister for human services, from September 2015 to February 2016, and his second stint in the portfolio as minister for government services and the National Disability Insurance Scheme (NDIS) from May 2019 to March 2021.
Of the 95 contracts, many were found to comply with procurement rules but 28 were found to be inconsistent with good practice, with 19 of these raising so much concern that they required further investigation.
But the review was constrained from the beginning because it did not consider the behaviour of Robert as minister or Milo and Synergy 360 as consultants, focusing instead on the decisions within the Australian Public Service and the two agencies, Services Australia and the NDIA, which manages the NDIS.
“There were no examples of clear misconduct related to the procurements,” Watt concluded.
“However, there were clear examples of poor practices and seemingly too close relationships between APS officials and suppliers that were not properly managed.
“Conduct was sometimes well below usually acceptable practice.”
Government Services Minister Bill Shorten, who asked the agencies to review the contracts, said the findings were extremely serious and needed further investigation.
“The scope of the review was high-level but Dr Watt and the Taskforce were unequivocal that there were severe deficiencies in a number of these contracts,” he said.
“This is unacceptable. There was a pathology of very poor decision making which raises more questions than answers. We need an investigative body with the power to compel witnesses and evidence to look into these matters.”
Infosys became a crucial supplier to Services Australia when it won a contract in November 2019 to deliver an Entitlement Calculation Engine to process income support payments, a bid helped by Milo and Synergy 360 at the time Robert oversaw the agency as minister for government services – a cabinet ministry then prime minister Scott Morrison appointed him to in May of that year.
The leaked emails show Robert met Milo and Infosys at several points before and after Services Australia finalised the contract in November 2019. Documents reported by this masthead last November suggested the minister met Milo and Infosys executives on June 26 in Sydney, then held a meeting with Infosys executives on November 19 in Sydney. He met Milo on December 30 on the Gold Coast, leading Milo to file a report to clients saying he provided “feedback from the minister” to Infosys about how the Services Australia project was tracking.
Robert also travelled to Melbourne on February 1, 2020, to speak at an Infosys conference at the Australian Open where the company’s top executives, such as chief operating officer Pravin Rao, were meeting clients.
Watt was the secretary of the Department of Prime Minister and Cabinet from 2011 to 2014 after being named to the post by then prime minister Julia Gillard and holding the position for more than a year after Tony Abbott took office. He was previously secretary of the Department of Defence and the Department of Finance.
His findings are being treated as a warning to all public service chiefs across the commonwealth because the federal government spent $80 billion on procurement last financial year, signing more than 90,000 contracts in circumstances that are also exposed to potential conflicts or failures.
Watt identified problems with “single sourced” contracts that lined up the potential supplier – in some cases, Milo and his consulting firm – without going to a full tender to take competitive bids for the work.
The former department secretary also warned of problems with contracts that began with small amounts of money but were scaled up over time to generate far bigger payments to suppliers without enough oversight.
“While there may be sound business reasons for this, they may result from a too-convenient relationship between agencies and suppliers, and produce a compatibility which undermines competition and increases inequitable treatment of suppliers,” he wrote.
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