Airservices chief executive Jason Harfield says the nation’s air traffic manager has implemented all the recommendations of a critical audit of procurement arrangements related to the OneSky project and is establishing a more accountable culture among its staff.
Federal Parliament’s Joint Committee of Public Accounts and Audit heard from Harfield on Friday in relation to Airservices’ contracting of the International Centre for Complex Project Management (ICCPM) to provide services related to OneSky, which aims to combine both the civil and military air traffic management systems into one program.
The ICCPM contract was the subject of an audit from the Australian National Audit Office (ANAO), which was critical of the Airservices’ procurement practices and highlighted some “systemic failures” within the organisation.
Harfield told the Committee Airservices had accepted all the ANAO report’s six recommendations, which cover procurement policies and procedures, as well as the culture within the organisation.
“We acknowledge that our procurement framework and its implementation could be improved and we have accepted all of the ANAO’s recommendations,” Harfield said.
“All of the recommendations in the report have been actioned and addressed as of 30th September this year.”
The ANAO conducted its audit at the request of the Senate Rural Affairs and Transport Legislation Committee and the Minister for Infrastructure and Regional Development.
The audit, which was published in August, examined whether Airservices had effective procurement arrangements in place, with a particular emphasis on whether consultancy contracts entered into with ICCPM in association with the OneSky Australia program were effectively administered.
It found Airservices did not follow its own policies and procedures in contracting ICCPM to provide services related to the OneSky project.
“A key shortcoming in Airservices’ procurement policies and procedures is that they do not give appropriate emphasis to the use of competitive processes,” the ANAO report said.
“In addition, Airservices routinely failed to adhere to its policies and procedures in procuring services from ICCPM. As a result, Airservices’ procurement of services from ICCPM, on an exclusively sole-sourced basis, did not deliver value for money.”
Harfield acknowledged that “in hindsight, we should have gone out to the market”.
“But because we had had a relationship with ICCPM and we were forming up with the Department of Defence to do this procurement and they had extensive expertise in Defence procurement practices, processes and complex management expertise it was, I’ll call it, naturally assumed that they were the best people,” Harfield said.
The ANAO report noted there were 42 engagements of ICCPM employees and sub-contractors through 18 procurement processes, which were all on an exclusive sole-sourced based and did not deliver value for money.
Harfield said procurement processes had not been changed to reflect the need for a more competitive approach.
“There was a culture of authorised exemptions. So in other words, you would go along to the financial delegate and get authorisation to do a sole source. What we’ve changed around is that you have to do a competitive process,” Harfield said.
“The barriers to be able to do it have been put in place. The norm is actually to do a competitive tender.”
Further, Harfield said the changes being implemented at Airservices were designed to establish stronger accountability within the organisation.
“Part of the change process that we are going through is to build that accountable performance culture, which actually has that as part of very much managing the performance of individuals and holding people to account,” Harfield said.
“One of the things that our organisation from a cultural perspective would talk about accountability and responsibility, which is all fine and you can say that I am accountable for X or responsible for Y, but the added element that was probably part of the cultural piece was no one was being held to account.
“That is one of the areas that we are focusing on.”
Auditor-General Grant Hehir told the Committee the response of Airservices showed the organisation was moving in the right direction.
“The description of what they have undertaken sounds like the type of things that we would expect to have occurred,” Hehir said.
“I think the emphasis on cultural change is quite important given the systemic nature of the issues that we have identified.”
Harfield said Airservices had just completed a probity audit of the OneSky program, with the report to be presented to the board next week.
The audit was to “ensure that the changes we’ve made to the probity framework as a result of this audit have been implemented appropriately and are effective”, he said.
The ANAO is undertaking a second performance audit of Airservices, which looks into the conduct of the OneSky tender process “from initiation to finalisation of the election and contracting process, with a focus on the achievement of value with public resources in accordance with appropriate probity protocols”.
Hehir said the second audit was a separate topic to the matters raised relating to ICCPM in this first audit.
“Our second audit is about the OneSky procurement process. They touch on each other but they don’t really cover the same ground,” Hehir said.
“The audit will look at issues like the procurement process undertaken for OneSky, including the probity arrangements around it, so they have a similar topic area but difference substance.”
The report from that second audit was due to be published in the middle of 2017.