Chapter 2 Proposed fit-out of new leased premises for the Human Services Portfolio at
Greenway, Australian Capital Territory
The proposed fitout of new leased premises for the Human Services
Portfolio on Cowlishaw Street in Greenway, ACT, aims to provide additional
office space for the portfolio, consolidating a number of dislocated premises
across Canberra. The new premises would accommodate up to 1,747 staff.
The estimated cost of the project is $38.5 million.
The proposal was referred to the Committee on 12 May 2011.
Conduct of the inquiry
The Committee received one submission, one supplementary submission and
one confidential supplementary submission detailing the project costs. A list
of submissions can be found at Appendix A.
The Committee undertook a site inspection, public hearing and an
in-camera hearing on the project costs on 24 June 2011 in Canberra.
The transcript of the public hearing as well as the submissions to the
inquiry are available on the Committee’s website.
Plans for the proposed works are detailed in Submission 1: Department of Human
Need for works
The DHS submission states that the works are needed in order to
accommodate a large portion of the portfolio’s staff currently dispersed around
Canberra. Approximately 6,700 staff are accommodated in 26 separate leased
properties in Tuggeranong, Symonston, Belconnen, Woden and Griffith. The vast
majority of these leases will expire during the next three years, and the
proposal will allow DHS to consolidate its locations, reduce the number of
leases and improve its adherence to Commonwealth property guidelines.
The proposal forms part of the Corporate Office Accommodation Strategy,
which aims to accommodate all Canberra based ‘national office’ staff into eight
leases. Two of those leases – this proposal combined with the existing Caroline
Chisholm Centre – would provide over 60 percent of that accommodation, across
two proximate sites in the Tuggeranong town centre.
The Committee finds that there is a need for the proposed works.
Scope of works
The proposed scope of the works is detailed in Submission 1: DHS.
In short, the project proposes to fitout approximately 26,000 m2 of
- enclosed offices for
Senior Executive Service (SES) officers;
- open plan
workstations for Executive Level 1 and 2, and APS level employees, with
demountable partitions and personal storage units;
- one major entry
reception and security control point;
- ‘hotelling’ work
points, for visiting staff use;
- compactus, shared
storage, resource and photocopier/printer rooms;
- meeting, break out,
carers’ and first aid rooms, and a prayer room;
- building facilities
- a café;
- 117 bicycle racks and
27 showers, as well as lockers for staff use;
- data and voice
cabling and additional packaged air conditioning to support information and
Fitout works are expected to be completed by the end of June 2013.
The Committee finds that the proposed scope of works is suitable to meet
the needs of the project.
Cost of works
The total estimated out-turn cost for this project is $38.5 million
(excluding GST). The Committee received a confidential supplementary submission
detailing the project costs and held an in-camera hearing with DHS on those
The Committee is satisfied that the costings for the project provided to
it are adequate.
As explained in the DHS submission, and at the public hearing, a full
procurement process was undertaken between 2007 and 2010. However, this process
ended in March 2010 with advice to the Commonwealth that ‘there was unlikely to
be an outcome that could demonstrate value for money based on the tenders that
were received at that point in time.’
As the original process failed to identify a proposal that could be
adopted, DHS sought probity advice about the possibility of continuing negotiations
with the leading tenders from the failed process. Following that advice, DHS
engaged in negotiations with the first-ranked tenderer from the original
process. These negotiations were undertaken separately from the concluded
(unsuccessful) process, in an effort to see whether a ‘value-for-money
solution’ could be developed. These negotiations were not successful, and DHS formally
notified the tenderer that there was no prospect of developing such a solution.
After DHS had made that notification, it commenced separate negotiations
with the second-ranked tenderer. These negotiations were ultimately successful,
resulting in a technically suitable proposal that was considered to represent
Whilst DHS has assured the Committee that it sought and followed probity
advice at every stage in this unusual process, and there is no suggestion that
there are any defects in this case, such processes must be of the utmost
integrity and fairness to all involved.
However, it is extremely undesirable for DHS to be in such a situation
in the first place. A tender process that fails to identify suitable and good
value proposals is not misfortune. It is evidence of insufficient planning.
When viewed with the budget overrun in the Caroline Chisholm Centre project (on
which the Committee reported in 2006), it is clear that DHS has a continuing
need for better accommodation planning. Especially given the size and
complexity of its operations, DHS must ensure that its property strategy is
more robust, more flexible and better informed.
All agencies must ensure that their tender processes are robust and
sufficiently informed by market conditions so as to avoid failure. The Commonwealth
should not need to enter separate negotiations with developers outside the
formal and public tender process.
Overall, the Committee is satisfied that this project has merit in terms
of need, scope and cost.
Having examined the purpose, need, use, revenue and public value of the
work, the Committee considers that it is expedient that the proposed works
The Committee recommends that the House of Representatives
resolve, pursuant to Section 18 (7) of the Public Works Committee Act
1969, that it is expedient to carry out the following proposed work: Proposed
fit-out of new leased premises for the Human Services Portfolio at Greenway,
Australian Capital Territory.