The cost of a Salesforce contract for the National Disability Insurance Scheme’s new customer relationship management system more than doubled to $76 million before being flagged for further investigation in a review of lobby-linked procurements.
As the government seeks to reboot the scheme amid fears of an unsustainable budget trajectory, the total value of National Disability Insurance Agency (NDIA) contracts with Salesforce has also jumped from an average of $10 million a year to $25 million.
But the contracts have been largely hidden from view as the NDIA does not fall under the Commonwealth Procurement Rules and, therefore, is not obliged to make public disclosures on AusTender.
Dubbed PACE, the Salesforce CRM being rolled out will replace a SAP system operated by Services Australia since the scheme’s inception, giving NDIA an “end-to-end” view of more than 550,000 participants, as well as service providers. It was first piloted in November last year.
The NDIA awarded Salesforce the CRM contract in April 2020 after a procurement conducted by what was then the Department of Human Services – which, unlike the NDIA, is covered by the CPRs.
At that time, the NDIA was under Martin Hoffman’s stewardship. Mr Hoffman, who resigned as chief executive last year, was secretary of NSW then-Department of Finance, Services and Innovation when Salesforce struck its umbrella contract with the state government in 2018.
The “software Salesforce platform” contract, initially for 36 months, was signed for $30.3 million and included undisclosed confidentiality provisions, according to a Senate Order disclosing NDIA contract from 2021.
But by February 2023, reference to the contract had disappeared in Senate orders, replaced by a $76.1 million “software/software maintenance and support” contract that runs over 62 months, between April 2020 and June 2025.
A spokesperson for the NDIA told InnovationAus.com that the two Salesforce contracts were the same and had been “extended and adapted”, making it the most expensive in the federal government.
According to AusTender, the contract between a federal government agency and Salesforce with the nearest value is a $21.8 million contract held by the Department of Health and Aged Care. The contract for a new aged care service provider management system ballooned by $8.3 million less than two months after it was first signed.
It is unclear why the two extra years on the NDIA contract are costed at $45.8 million when the first three average $10.1 million a year, or when the increased occured. A spokesperson would only say the agency is “committed to ensuring it has the most effective IT systems in place”.
Salesforce also holds several other current multi-million-dollar contracts with the NDIA, including another two “software/software maintenance and support” contract worth $18.9 million and $17 million over two years, respectively. None are published on AusTender.
As a corporate Commonwealth entity, the NDIA is not subject to the AusTender contract reporting requirements of the Commonwealth Procurement Rules (CPRs), despite entering contracts worth $843 million last financial year.
In total, the NDIA has signed several contracts with Salesforce valued at $119.8 million since April 2020, according to the most recent Senate Order 13 (Murry Motion) published by the agency in February this year.
Earlier this month, Labor MP and Joint Committee of Public Accounts and Audit chair, Julian Hill, revealed the $76 million Salesforce contract was one of one of 19 flagged in a review of Services Australia and the NDIA contracts last month.
The review, led by former head of the public service Dr Ian Watt, was ordered by Government Services minister Bill Shorten after media reports emerged alleging a lobbying scandal involving tech suppliers and former minister Stuart Robert.
It found no evidence of “clear misconduct” in the $618 million in contracts reviewed, but identified conflicts of interest, poor value for money consideration or inadequate records by Services Australia and the NDIA. Mr Robert has denied any wrongdoing or involvement.
For 19 procurements worth $374 million, the report recommended that the agencies involved undertake “further investigation”. The NDIA is understood to have begun preliminary inquiries to address issues identified.
At a hearing of the parliamentary inquiry into procurement, Mr Hill asked representatives of the NDIA to detail how the agency ensured the Salesforce procurement was a “competitive process that ensured value for money”.
While not subject to AusTender contract reporting requirements under the CPRs, the agency’s Accountable Authority Instructions require officials to procure goods and/or services in a manner consistent with the CPRs.
Governance, risk and integrity deputy chief executive Debbie Mitchell replied to Mr Hill by saying that “all appropriate protocols would have been followed to do an evaluation of value for money for that project”, which Mr Hill did not accept at face value.
“Well, I can’t take that at face value given Dr Watt’s report pointed out multiple contracts where the issue was that there was no value for money assessment or adequate document taken,” he replied, before the questions was put on notice.
Government Service Minister Bill Shorten last week outlined the government plans to reboot the NDIS, in part to address spiraling costs caused by fraud and overcharging by service providers.
He also confirmed that automated assessments would be here to stay but with an “ethical framework” to ensure that humans have visibility of decisions, and that further use of automation was likely.
Just days later, NDIA chief information officer Ian Frew announced his retirement and departure from the agency. Mr Frew, who joined as a contractor in 2018, steered NDIA’s systems during the transition to the full scheme.
In a parting LinkedIn post, Mr Frew described the NDIA as a “leader in federal government cloud technology”, having adopted “a ‘cloud-only’ approach using zero trust architecture and modern authentication technologies”.
