Deloitte was the only supplier approached for a major overhaul of the myGov platform that has netted the consulting giant more than $45 million so far, a scathing audit of the Digital Transformation Agency’s procurement practices has uncovered.
Concerns have also been raised with a similar approach used to source a funding case for a future stage of the myGov update, with the subsequent contract with Nous Group increasing to “40 times its original value” in two years after a procurement process that fell short of “ethical behaviour requirements”.
Both procurements were probed by the Australian National Audit Office (ANAO) in its audit released on Wednesday, which revealed the DTA failed to follow the Commonwealth Procurement Rules (CPRs) on nine key procurements worth almost $55 million.
Deloitte was contracted to deliver “enhancements to the myGov portal” under the ‘myGov Upgrade Horizon 1’ procurement in March 2020, having initially handed it $1 million to develop a prototype for a new government digital experience platform, dubbed GovDXP.
The audit found the DTA approached Deloitte directly for the work despite it being a panellist on the Digital Marketplace and accepted a “verbal offer”, as it did with Nous Group for the myGov funding case support procurement.
The contract – which was not published on AusTender until 52 days later in breach of Commonwealth Procurement Rules – was “incorrectly” reported as $9.5 million on AusTender but was later revised up to $19.5 million.
Since then, the value of the contract has climbed to $28.1 million – an increase of 44 per cent. Together with other contracts relating to the myGov refresh, the federal government has paid the US consulting giant more than $45 million for its work.
The ANAO said the discrepancy was only discovered by the DTA “one month after the contract had been signed”, despite several reports citing the incorrect figure just days after the contract was published.
The audit also found the DTA reported the contracts as resulting from an ‘open tender’ despite approaching the contractors “directly outside of the Digital Marketplace portal” for both myGov procurements.
With the use of a direct approach, the ANAO said there was no evidence the myGov Upgrade Horizon 1 procurement was conducted in line with the CPRs, with no procurement plan developed and no consideration of value of money.
The rationale for directly approaching Deloitte for the work is not explicitly laid out in the audit. The DTA cites the urgency of the COVID-19 pandemic for several other procurements conducted in early 2020 but failed to set aside the CPRs relating to the pandemic for any of the procurements.
The audit also found the myGov refresh “did not have a record of the spending advice or approval”, calling into question whether the DTA provided complete advice to decision-makers on value for money and whole-of-life procurement value.
For the procurement of the myGov funding case support from Nous Group, the audit found the original $121,000 contract – sourced using a direct approach – climbed to $4.9 million – an increase of 40 times, or 3,894 per cent.
The audit also indicates that Nous Group began its work before a variation to an existing Services Australia contract had been finalised, and that when a contract was developed it was done so through emails with the supplier.
“The scope of an additional contract was developed between the Nous Group and the DTA through emails,” the audit said.
“The contract was reported on AusTender as an ‘open tender’ through the Digital Marketplace, although it was never advertised on the Digital Marketplace, the Digital Marketplace portal was not used, and no tender evaluation report was completed.
“The DTA advised the ANAO that due to the ‘urgency of the business need’ the consulting firm had been approached directly.”
The audit also indicated that the DTA attempted to use the myGov funding case support contract to source contractors for the DTA Review, but that the corporate procurement team pushed back against this idea.
The DTA ultimately conducted another direct approach to Nous Group, this time through the Digital Marketplace, for work on the DTA Review, but other additional work was subsequently added to the myGov funding case support contract.
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