Background

The Department of Immigration and Citizenship (DIAC) seeks to ‘enrich Australia through the well-managed entry and settlement of people'.¹ Key tasks include: entry, stay and departure arrangements for non-citizens; migrant and humanitarian settlement arrangements; border (immigration) control and security; citizenship; and ethnic and multicultural affairs.²

One of the Department's responsibilities is the administration of immigration detention under the Migration Act 1958. Global Solutions Limited (GSL) provides detention services under contract to DIAC.³ The initial term of the contract with GSL ran from August 2003 to August 2007, with total costs for this period expected to exceed $400 million.

In March 2006 an ANAO performance audit report was tabled in Parliament on DIAC's management of the tender process for the detention services contract with GSL.⁴ The audit identified shortcomings in governance arrangements and project administration.

In response to that audit and other reviews critical of a number of aspects of its previous administrative practices, DIAC has commenced implementing substantial administrative reforms.⁵ The department stated that it has ‘implemented significant changes in our governance and client services areas, significantly strengthened professional development of our staff and other enabling areas of the department.'⁶ The strategic aim is to make the department: ‘an open and accountable organisation; have well trained and supported staff; and ensure fair and reasonable dealings with clients.'⁷

As part of the aim to make the department a more accountable organisation, the DIAC Secretary wrote to the Auditor-General on 20 September 2006 requesting that the ANAO undertake a performance audit of the governance arrangements for the
re-tendering of the detention and health services contracts. The Auditor-General approved a performance audit of the early stages of the re-tendering project on 26 October 2006.

The decision to re-tender the detention services contract and to provide associated health services under separate arrangements had been announced in March 2006. DIAC established a re-tendering project in early April 2006. The Project Plan envisaged release of Request for Tender (RFT) documents in November 2006 and finalisation of the new contract to coincide with the expiry of the GSL contract in August 2007. DIAC has engaged several expert advisors as well as a Probity Auditor and a contracted project manager to support the re-tendering project team.⁸

Following feedback provided by industry and consideration of a proposed Service Delivery Model, DIAC decided to delay the release of the RFT until April 2007, with a view to signing the new contract in December 2007. Transition to the new contract is expected to be completed by the end of March 2008.

The Audit

Audit objective and scope

The audit objective was to assess whether the early stages of DIAC's preparations for the re-tendering of the detention and health services contracts were consistent with sound practice. The audit focused on governance arrangements, in particular the recordkeeping arrangements, roles and responsibilities of personnel, expert advisors and the probity auditor—matters raised in the previous audit report. The audit did not examine the RFT, which is not due to be issued until April 2007.

Conclusion

Overall, the ANAO concluded that the early stages of DIAC's preparations for the re-tendering project were sound, demonstrating a significant improvement in the practices identified by the earlier audit. In developing governance and project management arrangements for the re-tendering of detention and health services contracts, DIAC paid attention to the experiences gained and lessons learned from the previous tender process. Arrangements for key personnel, expert advisors and the probity auditor were appropriate. Detailed recordkeeping policies and systems had been established for the re-tendering project, but implementation of policies in respect of recording and timely reporting of some decisions and security classification of documents was not consistent.

The Detention Services Tender Branch was required to develop plans for the re-tendering of detention and health services contracts against tight timeframes. Initially, project management arrangements were underdeveloped, with gaps in project description, risk management, budgeting, project performance measurement and project close arrangements. During the early stages of the project, DIAC developed an adequate project management framework that addressed most of these deficiencies. However, DIAC is still to develop a whole of life budget for the project. Development of a whole of life budget would strengthen management assurance about the cost-effectiveness of the re-tendering project and enable more transparent project monitoring and cost control.

Having established a framework for the re-tendering of the detention and health services contracts, the challenge in going forward will be to implement consistently the re-tendering plans and arrangements.

Key Findings

Planning

DIAC has established an extensive planning framework covering the re-tendering project, including an overarching Project Plan with a range of subsidiary plans and a Project Management Plan, that clearly seeks to address previous audit findings and recommendations for improvement.

The assurance framework developed by DIAC is generally sound. DIAC's plans incorporate a clear focus on assurance through:

• use of experts, including mandated sign offs;
• a hierarchy of committees with defined responsibilities;
• planned external and internal scrutiny;
• a performance reporting mechanism; and
• planned post-implementation evaluation and review.

The performance measurement framework for the project requires further clarification and more measurable performance indicators to provide greater assurance about the effectiveness of project administration. Also, the value of the planned post-implementation evaluation and review would be enhanced by DIAC collecting ‘lessons learned' information for the project close (end) report during the course of the project and by clarifying the success measures for the project's ‘business benefits' (outcomes).

Project management

Approval for the re-tendering project to commence was not clearly documented, although it could be inferred from management documents.

The project also commenced without an approved budget. An allocation was later made to cover the expected costs in 2006–07 using standard internal DIAC budget processes. By the time of the audit, the project timeframe had been extended into 2007–08. The anticipated costs for the project had increased sharply due to scope changes during the course of the project. However, there was no approved revised budget for the life of the project that reflected the revised timeframe and costs. Internal management reporting of project costs had been inconsistent and incomplete.

The absence of an approved budget for the life of the project and inconsistent management reporting not only contributed to uncertainty within the project team about funding levels, but also reduced management assurance about cost control and value for money in project administration.

Recordkeeping

DIAC was conscious of the need to improve recordkeeping from the outset of the re-tendering project and has sought to build better practices into its recordkeeping policies and practices.

In the absence of finalised corporate recordkeeping guidelines specific to tendering and procurement processes, DIAC had to develop policies and procedures specific to the re tendering project. The ANAO considers that the finalised policies and procedures provide a sound basis for recordkeeping for the re-tendering project.

Minutes of meetings were consistently recorded, agreed and maintained for the key decision making bodies examined by the ANAO. DIAC developed a version control protocol specifically for the project that was applied consistently to the key documents examined. DIAC has also taken steps to record instances where expert advice is not acted upon. However, the required reporting of departures from the Project Plan could have been more timely.

Adherence by staff and expert advisors to the recordkeeping protocol in terms of security settings for documents stored in the DIAC records management system was inconsistent. Consequently, access to documents stored on the records management system by DIAC staff was much less restricted than intended. DIAC has now taken steps to remind staff of their record keeping responsibilities.

Key personnel, expert advisors and the probity auditor

DIAC has put in place sound arrangements for personnel, expert advisors and the probity auditor for the current re-tendering project.

DIAC established robust administrative structures for the project team. Roles and responsibilities are clearly defined and well-understood, and staff have the relevant training and skill-set required for the
re-tendering project.

DIAC has engaged seven expert advisors, including a probity auditor, to assist the project team. The ANAO considers that the contracts clearly define the roles, responsibilities and accountabilities of the expert advisors and their deliverables are regularly monitored. There is clear separation between the role of the probity advisor and the probity auditor. The contract for the probity auditor clearly stipulates his independence and the level of assurance he is to provide. Contracted sign-offs at each of the key milestones are clear and appropriate.

Appropriate approvals were obtained for the contracts with the expert advisors. However, there is a risk that some contracts may need to be extended beyond 2006–07 requiring different approvals in some cases. In considering the need to extend contracts, DIAC should not only review the necessary approvals but should also take the opportunity to review the impact of contract extensions on the final budget projections for the project.

The process to manage conflict of interest for the re-tendering project was sound. Participants in the project were aware of what constitutes conflict of interest, what steps to take when there was perceived or actual conflict, and probity issues relating to conflict of interest were appropriately discussed and documented.

Recommendations

The ANAO made two recommendations which aim to strengthen DIAC's governance arrangements for the re-tendering of the detention and health services contracts.

DIAC Response to the Audit

The department welcomes the ANAO audit related to preparations for the re-tendering of the department's detention and health services contracts. It provides the department with assurance that the framework for this strategic procurement activity is sound, as well as providing constructive suggestions to further improve its practices for the re-tendering of the detention and health services contracts.

The department agrees with the recommendations and is taking steps to ensure that these recommendations are addressed.

In response to the recommendations:

• The department is considering the project budget for 2007–08, during which the project will be finalised;
• The project team will conduct "lessons learned" workshops at the end of key phases of the project for the purposes of collecting information to inform the project, and for the project close report;
• Project staff are undertaking further recordkeeping training to ensure they understand the functionality of TRIM;
• The project team are documenting key decisions to act upon them in a timely manner.

Footnotes

1 Department of Immigration and Multicultural Affairs, Annual Report 2005–06, p. 26. On 23 January 2007 the Department was renamed having been termed the Department of Immigration and Multicultural Affairs (DIMA) from 27 January 2006, and the Department of Immigration Multicultural and Indigenous Affairs (DIMIA) previously. In this audit the Department's current title is used, except in references and quotations, where the historical title is used.

2 ibid., p. 26.

3 The tender bid for the Detention Services Contract was submitted under the name of Group 4 Falck Global Solutions. Subsequent to the signing of the Contract, Group 4 Falck changed its name to GSL Australia Pty Ltd (GSL). For ease of understanding, this report will refer to GSL.

4 ANAO Report No.32 2005–06, Management of the Tender Process for the Detention Services Contract.

5 The reviews included the Palmer Report (MJ Palmer, Inquiry into the Circumstances of the Immigration Detention of Cornelia Rau, 2005) and the Comrie report (Commonwealth Ombudsman, Inquiry into the Circumstances of the Vivian Alvarez Matter, 2005), as well as Mick Roche, Detention Services Contract Review, February 2006.

6 DIAC Secretary letter to the Auditor-General, 13 December 2006.

7 ibid.

8 The expert advisors comprise: financial and commercial advisor; legal advisor; probity advisor; tender evaluation advisor; risk management advisor; and communications advisor.