Thursday, 30 November 2023
Higher Education, Infrastructure: Review, Defence Procurement, Attorney-General's Department; Order for the Production of Documents
by leave—I table documents relating to orders for the production of documents concerning higher education statistics, infrastructure review, Hunter class frigates and the Islamic Revolutionary Guard Corps.
by leave—I rise to take note of the documents produced in relation to the Hunter class frigates. A few short weeks ago, we had a summary document presented to a committee of this parliament from the Secretary of the Department of Defence in relation to Defence's review of the procurement process for the Hunter frigates project. I remind senators that the Hunter frigates project is the single-largest procurement project that the Commonwealth has currently entered into. It's a $45 billion project.
The summary of the review that was provided by Secretary Moriarty was about six pages in length, and it was a shocking read. It was shocking to see how risk and value for money weren't analysed in the procurement process. It was an extraordinary document insofar as Secretary Moriarty, who oversaw the second half of that process, failed to accept any personal responsibility for extraordinary institutional failings. Having read that summary by the current secretary, on behalf of my party, the Greens, I put in this OPD to require the production of the full review—not the summary review by the secretary but the full review—of Defence's procurement of the Hunter class frigates.
I just want to put on record that the minister has been I think quite frank in the response. The OPD was earlier this week and this was produced today in accordance with the order made by the Senate. There are some redactions in relation to security. Having had the document for only a few short minutes before it was presented to the chamber, I have done an initial review of it. The initial review of this document makes it very clear that the summary review provided by the Defence secretary was a heavily sanitised version of the review.
This review was undertaken by two highly-paid consultants, and at least one of whom is a former senior ranking member of the ADF. This review cost more than $½ million, but in the context of a $45 billion project perhaps Defence didn't even notice that. This review has scathing findings of what has gone wrong. Any secretary that accepted responsibility for what happened on their watch, on receipt of this document, would not have provided a sanitised summary to his minister and this parliament. Any secretary who was responsible for a project like this should have simply resigned. That's what Secretary Moriarty should have done and if he didn't resign then the minister should have sacked him after this.
This is an extraordinary indictment of the procurement process run by Secretary Moriarty. Don't take my word for it. Here's what the team said:
Across the planning, shortlisting and down-select stages of the HCF procurement, the Review Team found shortfalls that undermined the ability of Defence to achieve value for money during the course of the HCF procurement and to comply with the PGPA Act, the CPRs and the DPPM (including mandatory requirements).
I'll just stop there. The defence review failed to comply with the mandatory Commonwealth procurement rules, failed to comply with mandatory federal legislation on procurement and failed to comply with Defence's own procurement plan. It has made the Australian government enter into a $45 billion program for a critical part of defence procurement which is already years delayed and, as pretty much any independent analysis says, will not provide the kind of security outcome that was required in the procurement process.
Just stopping there this review is damning, but it goes on and says:
Ultimately, these shortfalls resulted in recommendations to government that could not be adequately traced to the evaluation of tenders conducted by the formally designated Tender Evaluation Organisation (TEO) in accordance with promulgated tender documentation.
So you can't link the recommendation to the tender evaluation. It's extraordinary. Then it says:
Moreover, the resulting recommendations could not be traced to a comparative assessment and ranking of tenders to determine which one best supported the achievement of the HCF project objectives (as advised to tenderers) on a value for money basis.
There was no effective comparative for value for money. It goes on:
The Review Team also found that advice to government failed to convey material outcomes of the tendering process, which was appropriately planned and conducted but for completing a comparative evaluation and ranking of the tenders.
So the secretary misled his minister. The secretary failed to give full advice to his minister and that led to the government entering into a $45 billion procurement project without a proper ranking of tenders and without full advice. It goes on. The review also found:
… there was no consistent expression of the goals and purpose of the HCF procurement from commencement of the procurement in June 2014 up until first pass—
They didn't even know what they were assessing. It says:
Planning for the procurement fell into a process of disjointed advice to government driven by competing needs rather than deliberate steps to maintain clear, coherent goals and formulate a procurement method commensurate with the scale, scope and risk of the procurement.
Did I mention that the person in charge of this is still the secretary earning $900,000 a year, having led the Australian public into a $45 billion procurement which failed on pretty much every possible basis? He's still getting paid—what?—$3,000 a day, having done this. How is this the case? The review goes on:
Notwithstanding well-founded advice to government at initial pass in June 2014, advice to government following initial pass—
and this is where Secretary Moriarty was responsible throughout—
generated growing incompatibility between project objectives themselves, and with the procurement method. Defence did not appear to recognise the impact these incompatibilities would have on the ability to achieve value for money.
How can you let the person who did this on a $45 billion procurement project be in charge of Defence while you're planning to spend $368 billion or more on nuclear submarines? What does it take to get sacked from the Department of Defence and the ADF, if not this? The review goes on:
The Review Team found Defence did not adequately recognise that the shortlisting of alternatives for the HCF was part of the formal HCF procurement process—
You can't make this up! It continues:
The Review Team found that Defence departed from the agreed process during the shortlisting of alternatives, originally intended to be logical and demonstrate rigour. This led to shortfalls in terms of the extent of reasonable enquiries made to facilitate accountable and transparent decision making; the level of diligence, fairness and consistency applied during shortlisting considerations; and the overall effectiveness of this stage of the procurement.
So, apart from diligence, fairness and consistency, what else is there that you would expect? They failed on diligence, fairness and consistency. Then this is the icing on the cake:
An absence of formal documentation means that there is no evidence to demonstrate that the shortlisting activities and decision were commensurate with the scale, scope and risk of the HCF procurement.
How is he still the secretary? Where's the accountability? How many more billions need to be wasted before someone is held to account?
I seek leave to continue my remarks later.
Leave granted; debate adjourned.