ELEANOR HALL: The Auditor-General today flayed the Federal Government over its tender process for the Australia Network contract, pointing to several serious flaws in the process.
The Auditor General’s report, which was released this morning, says the process cost the two tenderers – the ABC and Sky News – time and money.
The Government aborted the $223 million AusNet tender last year, after twice rejecting recommendations to award it to Sky.
The Prime Minister says the decision to give it instead to the ABC was the right decision, but the Coalition says the report provides yet more evidence that the Federal Government can’t be trusted to follow due process.
This report from our chief political correspondent, Sabra Lane:
SABRA LANE: The Auditor-General’s report is damning, portraying a messy and confused decision making process.
The ABC and the Australian News Channel – Sky News – were the only two bidders for the $223 million contract.
The Auditor found the manner in which the high profile tender process was carried out brought into question the Government’s ability to deliver such a sensitive process fairly and effectively, and that it presented the Government in a poor light.
The Prime Minister, Julia Gillard, and the Opposition Leader, Tony Abbott.
JULIA GILLARD: Look, we’ll respond to the Auditor-General’s report as we do – we respond to audit reports. On the Australia Network tender, the Government determined that it was best that the ABC do that work and that was the right decision.
TONY ABBOTT: We’ve seen more evidence of Government bungling today with the Australia Network. It shows that this Government can’t be trusted with money, can’t be trusted to follow due process and senior members of this Government can’t be trusted to be honest with each other about what’s happening.
SABRA LANE: In 2009, the Department of Foreign Affairs recommended AusNet be permanently awarded to the ABC, but in late 2010 the former foreign minister, Kevin Rudd, decided it should go out to open tender.
But the Auditor General’s report says the tender process for the first five months was silent on how the final decision would actually be made.
In December 2010, Mr Rudd decided the secretary of the Foreign Affairs Department should be the person to make the final decision, to avoid conflicts of interest, and that the secretary would base his decision on the recommendation from a special evaluation board, set up specifically to assess the bids and that there wasn’t an explicit role from Cabinet.
The board twice recommended that Sky News be the successful applicant because it offered the best value for money.
But in the first instance, the secretary of the Foreign Affairs Department, Dennis Richardson, didn’t want to make the final decision because he knew there were differing views amongst ministers about how the final decision should be made.
In June last year, Cabinet decided to make the Communications Minister, Stephen Conroy, the minister responsible for the final decision and crucially, it was then explicitly spelled out in the changed tender process that Senator Conroy could make a decision that didn’t reflect the views of the evaluation board.
After a series of leaks to newspapers, which detailed confidential information, Senator Conroy abandoned the tender process and called in the police to investigate and last December he awarded the contract permanently to the ABC.
The Auditor found the process was flawed, open to perceptions of conflict of interest, and that it cost Sky TV and the ABC money and time.
In a submission to the Auditor, Sky said the process was a “failure of administration”, not in the national interest and that it was unfairly treated during the episode.
It says the tender process cost it a minimum of $1.4 million. The Government confirmed today it had paid compensation but hasn’t confirmed the amount, citing confidentiality clauses.
The Communications Minister, Stephen Conroy, is overseas. Liberal Senator Simon Birmingham has followed the process and says there are still many unanswered questions.
SIMON BIRMINGHAM: Well, Sabra, this is a scathing report and it shows that the handling of the Australia Network tender was a debacle from start to finish by the Gillard Government.
There is obviously more explanation that is needed from the Government as to why these decisions were taken in the manner they were taken – why was Senator Conroy put in charge of a tender when he did have a very obvious potential conflict of interest?
Why was the security in the Department of Communications and Senator Conroy’s own office so lax that we saw this situation where information about the tender process could openly leak and corrupt the tender process, ultimately.
These are the things the Government needs to answer and Senator Conroy, in particular, as well as the Prime Minister have a lot of questions to answer.
SABRA LANE: It’s been revealed today that the Government has paid out compensation to Sky News. Sky, in its submission to the Auditor General, said it felt unfairly done by this whole process, that it was unfair and not in the national interest.
SIMON BIRMINGHAM: Well, Sky spent $1.4 million on this tender, the ABC spent nearly half a million dollars on this tender, the Department of Foreign Affairs and Trade spent around three quarters of a million dollars on this tender, all to see the tender ultimately scrapped by the Government because of its inept handling, so there’s a huge amount of wasted taxpayer money, wasted corporate effort by both the ABC and Sky and, of course, we have the situation where, frankly, any private business would look at Sky’s experience here and wonder why on earth they would ever subject themselves to another Government tender process, especially one where they were up against a Government instrumentality like Sky was with the ABC.
SABRA LANE: Should anyone lose their jobs over this?
SIMON BIRMINGHAM: Well, Senator Conroy has many questions to answer, as does the Prime Minister, over why they got this so wrong, how they got this so wrong, and if they don’t give adequate questions [answers] then Senator Conroy’s ongoing role should be brought into question.
ELEANOR HALL: That’s the Liberal Senator Simon Birmingham ending that report from our chief political correspondent, Sabra Lane.