Last week’s Australian National Audit Office report on the management of the Gillard/Rudd and Abbott governments’ offshore processing contracts — a “companion audit” to last year’s report on how those contracts were let — rightly received plenty of media attention. As with last year’s remarkable report, it revealed a staggering litany of failures by the Immigration Department, not merely in the immediate wild rush by Julia Gillard to re-establish offshore processing in 2012 on Nauru and Manus Island but in the years afterward, when cooler heads and more time should have enabled adherence to long-established Commonwealth procurement rules.

What was overlooked, however, was that like its companion report, it illustrated how Transfield — which these days calls itself Broadspectrum — benefited from remarkably benign treatment at the hands of Immigration bureaucrats, just as it did in the awarding of the massive, billion-dollar contracts that formed the basis of the offshore processing regime. If the 2016 report raised serious questions about why Transfield was in essence handed a vast contract simply by ringing the secretary of the department of Immigration, last week’s report shows a peculiar pattern in which Transfield, time after time, received kid-glove treatment or got the benefit of the doubt on the management of its contracts — even when other contractors didn’t get it.

[Transfield’s $2.7 billion PR nightmare]

The report reels off example after example — some minor and bureaucratic, others massive and extraordinarily costly — of how Transfield benefited from Immigration’s almost hands-off approach to its multibillion-dollar offshore processing contracts. 

What contract management plans?

After the initial 2013 contracts to establish offshore processing were replaced in 2014 with longer-term contracts, in a rare effort to organise some sort of proper process, the department asked Transfield, as with other contractors, to provide more than two dozen management plans for how it would carry out key tasks in the contract for providing detention services. Transfield only provided around half of the required plans to the department by the due date, and in any event the department took so long to examine them that some were actually approved only a few weeks before the notional end of Transfield contract. “On 5 December 2016,” the ANAO notes, “DIBP advised that Transfield had provided 22 of a total of 35 management plans. “

Transfield responded to the ANAO saying that the department never told it when to provide many of the plans. You might, however, expect that common sense would dictate providing them before the notional end of the contract, in October 2015 (more of that in a moment).

Fantasy audits, pointless checks and self-reporting

The department also developed a monthly audit schedule for the duration of the contract with both Transfield and its other Nauru contractor, Save the Children, that would enable “an accurate tracking of Transfield’s performance, stimulates action on emerging issues and supplies a rich backdrop of relevant information against which to make strategic decisions.” Sounds good — except only three audits were ever done. And when the department discovered — surprise, surprise on Nauru — that mould was a serious problem in the tents of asylum seekers, it got around to asking Transfield to remediate the mould in 2015, five months after being alerted, then waited over a year — until August 2016 — to check whether anything had been done. However:

“there had been no progress on mould remediation in the single adult males’ compound and DIBP requested that Transfield commence mould remediation in the families and single adult females’ compound. DIBP advised the ANAO that as at 1 December 2016, mould remediation works had been completed for four of the 13 marquees in the single adult males’ compound and that mould remediation continues in the families and single adult females’ compound.”

The department blamed asylum seekers for refusing to vacate compounds to allow cleaning.

Worse still, Transfield was allowed to self-report on how it was performing in the contract, without being required to furnish supporting detail. “National Office determined that it would accept Transfield’s rating without supporting evidence,” the ANAO notes. Then again, the department didn’t even know what evidence it would require if it did decide to try to verify Transfield’s self-reports. “Not all performance measures were monitored or audited and the department had not determined what evidence it required to support the service providers’ individual assessment reports.”

[Secret emails reveal how Transfield got Nauru contract]

Transfield also got off lightly compared to Save The Children when it came to investigating staff. The department notoriously forced STC to remove staff from Nauru on the basis of an entirely fabricated Coalition claim that they had coached asylum seekers to invent stories of abuse. Transfield, on the other hand, was allowed to investigate its own staff who were the subject of abuse complaints and determine how to deal with them, in its own good time. 

“In two further instances, Transfield removed staff from the families’ compound but they remained employed. The department observed (in a report by the department’s Child Protection Panel) that Transfield was slow to respond to the complaints; its response was iterative (that this occurred over a number of months) and its investigation was limited.”

Bills for the bureaucrats

As part of its contract, Transfield routinely passed on to the department bills for purchases of a set list of goods and services. From mid-2015, however, the department agreed that Transfield should only provide substantiation for a tiny fraction of transactions — to relieve what Transfield now says was the “large administrative burden” placed on it to show it wasn’t gouging the department. Much of the blame here lies with the department, which didn’t bother to keep records when it did actually try to check the bills Transfield was passing on. The department also let Transfield decide which items should form part of the “pick list” of routinely acquired goods and services without bothering to check if it was getting value for money.

Transfield was also paid extra for services that it was already contractually obliged to pay for. As the ANAO drily notes, “the department also approved, as additional service requests, services already paid for and delivered under the contract”. The department also ran up $24 million worth of additional service requests without bothering to check if it could have obtained better value for money from other contractors.

Transfield also appears to have benefited from a strange laxity by the department when it came to extending contracts. According to the ANAO, “contract extensions for The Salvation Army and G4S 2013 contracts were undertaken in compliance with contract provisions”. However, “other extensions were not undertaken in accordance with the original contract requirements” — in particular:

“three of the four extensions for one contract exceeded the maximum duration for the contract—in total Transfield’s 2014 contract was extended for 24 months, when the maximum period for extensions specified in the initial contract was six months.”

That extension is currently costing taxpayers over $1 billion. And the department made no effort of any kind to establish whether it could have got better value for money elsewhere — it simply rolled over Transfield’s contract. Indeed, it didn’t even know how much the current extension, until October 2017, will cost. 

Curiously, Transfield in its otherwise lengthy and highly defensive response to the ANAO, is silent on that issue.

The department’s tendering and management of the offshore processing contracts have both been a debacle, as the ANAO has forensically revealed. As the report notes, it’s not as though the department doesn’t have significant and extensive experience in managing detention contracts — we’ve been locking asylum seekers up since the Keating years. But Transfield appears to have been a particularly successful beneficiary of the Department of Immigration’s appalling mishandling of the process — the tune of billions of dollars.

Peter Fray

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Peter Fray
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