[Peetwo]

Murky Mandarin & possible dodgy deals with KPMG -

Here we go again -   In what seems to be a common theme surrounding M&M's department & agencies, Sterlo in an abbreviated session with the department is sniffing around yet another possible dodgy deal & perceived conflict of interest issue. 

Continuing on from the bottom of my 'bump in the night' post (with additional Hansard), quoted here:

ASA at Estimates 05/05/16 - Hansard

Hmm...how come everyone else seems to have a copy of the AQON?? 
One other passage of more than passing interest, which I almost missed & on the subject of ASA, trough feeding, conflicts of interest and dodgy deals, occurred between Sterlo & Murky right at the start of the DoIRD session:

...Senator STERLE: Are you able to point us in what areas they are at this stage?

Mr Mrdak : In terms of the department itself, they predominantly range around some specific functions which could be considered for no longer continuing. Some areas that have been identified include the performance of some functions such as the administration of financial assistance to local government and other payment processes, which could be considered for centralisation in other areas of government such as the Department of Finance; and ceasing areas such as the department's performance of activities in maritime regulation, and whether that better sits with the Australian Maritime Safety Authority. It also indicates areas where government may wish to consider larger structural changes, such as considering the future of Airservices Australia.

Senator STERLE: How?

Mr Mrdak : Whether the government wishes to consider future options for different governance and ownership arrangements for some of our statutory bodies, including Airservices Australia.

Senator STERLE: So that could be outsourcing?

Mr Mrdak : It could be or it could be looking at taking it into different ownership structures to what they currently are.

Senator STERLE: What could they be? The reason I am asking is: we all know for Airservices Australia there is no competition, and it is quite a bit of a money earner for the government. Could you shine a light for us on how that could be done in a different way?

Mr Mrdak : The Functional and Efficiency Review did look at international examples of where governments have placed their air traffic control provider—air services provider—in different governance structures, particularly the United Kingdom and Canada, where they have been placed in either part-private ownership or a not-for-profit government body. They were models that were looked at in the scope. The Functional and Efficiency Review recommended that we consider further options for the future of Airservices Australia..

Senator STERLE: So 'functions ceasing' is, as it suggests, 'How can we outsource certain parts of the department or work that is conducted by the department or agencies around the department?' Was there a flipside where there was a study looking at how you could bring stuff back?


Mr Mrdak : That was not an area that the functional efficiency review settled on as one of its 18 areas of action.


Senator STERLE: We will watch that space with some interest. The government is going into caretaker mode in the next couple of days, but is there an indication of when it will respond to that?


Mr Mrdak : I think the indications are it will probably be part of the next midyear financial review or the budget process.


Senator STERLE: Who conducted the review?


Mr Mrdak : The review was undertaken by KPMG and the lead reviewer was Mr Warwick Smith with KPMG.


Senator STERLE: It was only KPMG; no-one else?


Mr Mrdak : That is correct.


Senator STERLE: Is it true that KPMG were paid almost $600,000 for this work?


Mr Mrdak : That is correct. I can get you the final amount, but it is of that order.


Senator STERLE: Yes, please. Does KPMG otherwise provide services to the department?


Mr Mrdak : Yes, it does. KPMG is on our panel of providers for a range of services—professional services and advice.


Senator STERLE: Could I ask you what they are?


Mr Mrdak : They would range across the department. Where we look for advice, either financial or professional advice, in relation to areas such as our infrastructure program or in any of our line divisions where we are looking for professional advice, KPMG is one of the firms that we have on the various departmental panels.


Senator STERLE: I have a list here and I would like to tick off that I have the right information around where KPMG has contracts directly with DIRD under the AusTender website. Is there a diesel supply contract?


Mr Mrdak : That is correct—for our Indian Ocean Territories.


Senator STERLE: Is that at $280,000 a year?


Mr Mrdak : I do not have that in front of me. I can check that.


Senator STERLE: I reckon Mr Murphy might know.


Mr Murphy : In fact, I am looking through my list and I have one for an assurance and compliance program for $125,000, but I cannot find that one, so we will take that on notice.


Senator STERLE: Does anyone have the AusTender website open? I just want to make sure I have the right info. I do not doubt that I do, but I would like to check.

Mr Murphy : What I have in front of me is the consultancy that we have entered into from 1 January this year through to 31 March, so, if this was prior to that, I would not have it.


Senator STERLE: My information is for the calendar year 2015. Would it be hard to get that in front of us just to confirm or deny and set me straight?


Mr Murphy : We will try to do that now.


Senator STERLE: I have in front of me that KPMG have a contract to do with the department's diesel supply contract, at $280,000; a local government territories risk and control mapping contract, at $120,000; assurance and compliance project review 1, at $415,000; comprehensive health services for Norfolk Island, at $183,000; a wider economic benefits project, at $275,000; and the development and implementation of the Norfolk Island multipurpose service contract, at $600,000.


Mr Mrdak : We will check those.


Senator STERLE: Okay, and I will do some quick sums—that is a lot of money. We are getting close to $1½ million, I believe. Anyway, you will check that for me. Are we far from confirming it?


Ms Potter : I am having trouble bringing it up.


Senator STERLE: I think my information would be pretty spot on, so let's go with this.

Mr Mrdak, it is not hypothetical. Would it be fair for me to assume that there is a massive conflict of interest in having an external provider of services to the department review where the department is resourced to deliver government priorities?


Mr Mrdak : No. The government established the functional efficiency reviews to be independent reviews. They certainly did do a very independent analysis of the department and the portfolio. I do not believe there is any conflict of interest in the fact that they are a provider of other services. We selected KPMG on the basis of a tender process. They provided a proposal, which we accepted and contracted, to undertake the efficiency review.


Senator STERLE: We have talked a lot about the 'pub test' since Mrs Bishop's indiscretions. There is a government department engaging KPMG to the tune of $600,000. You stated that part of the review was 'functions ceasing', so this same mob, KPMG, who have the $600,000 to look for where efficiencies could be found in outsourcing, are actually a client of yours to whom you are outsourcing certain parts of the department's work to the tune of $1½ million dollars. It is a bit like banning live cattle exports—if we ask all the processors, of course they are going to want to ban live cattle exports. I find that very conflicted. Senator Heffernan, the chair, might think I am wrong.


CHAIR: No.


Senator STERLE: This is why ask. A number of mobs out there could do the work that KPMG do. If I was the one issuing the contracts, foremost in my mind would be, 'This could look a little stinky.'


Mr Mrdak : I can see the point you are making. Ultimately, at the end of the day, the department has the opportunity to respond to the report and government will make the final decisions, but I do understand the point you are making. As I said, it was a thoroughly independent review and there was no suggestion that the review's recommendations are in any way tailored to future work possibilities for KPMG, in my view.


Senator STERLE: It comes back to questioning from Senator Ludwig at the last round of estimates, which you have answered on notice. Part of the spend on the purchase of publications was for What a Waste: Outsourcing and How It Goes Wrong. The suspicion in me says, 'This is a glowing example of how it can go wrong.' I think you have made my point clear. To me, it certainly does not pass the pub test.


Senator DODSON: I want to know how you have mitigated the risk or ensured probity prevails in this situation.


Mr Mrdak : For the functional efficiency review, we set up a team within the department to provide information and support to the study team. That obviously enabled us to ensure that the data provided to the team was accurate all times. Also, at the end of the day, there were extensive discussions with us in relation to the proposals that the functional efficiency team review was putting forward. So we did look very carefully and provide advice to them on areas that we thought were not going to be workable for outsourcing or for other alternative providers, and that was reflected in the final report that KPMG provided. So we were very scrupulous in ensuring that we were clear to them on areas that we thought were and were not able to be performed by other parties or contractors.


CHAIR: Congratulations on your first question, Senator Dodson.


Senator DODSON: Under your tutelage, Mr Chair.


Senator STERLE: I did the sums and it is close to $1½ million of work for the Department of Infrastructure and Regional Development that KPMG currently enjoys. Are you aware that KPMG is on the lobbyist register?


Mr Mrdak : I was not aware that they are on the lobbyist register.


Senator STERLE: You are now.


Mr Murphy : Actually, we are aware of that. There was a question on notice from Senator Ludwig which asked us to state which lobbyists we may have engaged. In answering that question, we identified that KPMG are on the lobbyist register; however, their lobbyists who have been explicitly listed on that register have not been involved in any of the work that we have done with KPMG.


Senator STERLE: I understand, but it is very hard for me to be comfortable about any form of lobbyist. I think I have made my point clear and I would be very interested, once the government, whoever it may be, goes through the $600,000 review of KPMG, to see what comes as suggestions from KPMG. I have no doubt that they may be part of the tendering mob—do you go to tender?


Mr Mrdak : Yes, we do.


Senator STERLE: And is it evenly spread around? Do some companies get more than others?


Mr Mrdak : We generally look at the capacity of the firms bidding for the work. We look at ensuring we get a good panel and a range of firms on the panel that give us expert skills, but we often look at a range of criteria when we award work.


Senator STERLE: Do you have a preferred tenderer's list—is that which call it?—or do you just chuck it all out there and see what comes on each?


Mr Mrdak : It varies on the contract. We have what we call a panel for various skills, be they accounting or project advice and the like. Firms have prequalified, effectively, and given a schedule of rates for those panels, which enables us to go quickly to those panels and target our tenders to those firms that have already demonstrated their skills in particular areas.


Senator STERLE: Okay; I will go to Mr Murphy now. What companies that you outsource to are also registered as lobbyists?


Mr Murphy : None. We have only had interaction with one lobbying firm, or firm that sits on the lobbyists register as lobbying—


Senator STERLE: So, it is only the one? It is only KPMG?


Mr Murphy : The lobbyists register lists individuals who are identified as lobbyists. KPMG have indicated a number of people who are lobbyists who are on the lobbying register; we have had nothing to do with them.


Senator STERLE: But KPMG are on the lobbyists list?


Mr Murphy : Yes.


Senator STERLE: That is what I have asked: can you confirm that.


Mr Murphy : I do not know. With other firms that may do some lobbying and some other, for example, consulting activities—


Senator STERLE: Do you, the department, check the lobbyists list before you issue contracts for outsourcing?


Mr Murphy : Anyone who is on the lobbying register has to indicate that they are a lobbyist, and we do not consider them for other work.


Senator STERLE: So KPMG is the only outsourcing company—


Mr Murphy : No—individuals. KPMG, if they wanted to use one of their people who was on the lobbying register to provide other services, would have to indicate that they were on the lobbying register.


Senator STERLE: Okay. I understand that. But for work that you, the department, outsource, clearly—and you have led me to believe—there are no other companies who you outsource work to that are also on the lobbyists register.


Mr Murphy : No, I am not saying that. I do not know—for example, the legal firms that we engage to provide legal advice conceivably could have other members of their firms on the lobbying register. I do not know that, because we do not engage them for lobbying purposes.


Senator STERLE: Okay. All right. KPMG has a large chunk of work that they have accessed—they have a big chunk of $600,000 and then nearly $1½ million of ongoing outsourcing. Are there any other companies who you engage or have engaged—where you outsourced—that have had work of a similar or higher value to KPMG?


Mr Mrdak : There would be a range of firms of similar and higher amounts that we contract through a year, yes, Senator. We use a range of professional services firms, particularly in our infrastructure advice work. We do engage other major firms, professional firms, through the year.


Senator STERLE: Okay. Now, that would not be secret list, would it?


Mr Mrdak : No, we would be happy to provide that to you.

Urban developers & Secondary Airports; ASA & OneSKY with Thales/ICCPM; and now KPMG with their snouts in the trough. Where will it stop nobody knows but IMO it is high time there was a Federal anti-corruption body overseeing the trough-feeding pollies & fat-cat bureaucrats.  

Good to see that even with the sad departure of the Heff that Sterlo has absolutely no intention on easing up on keeping the bureaucracy on their toes & honest in Senate Estimates -


MTF...P2