27 April 2011
Senator the Hon John Hogg
President of the Senate
Parliament House
CANBERRA ACT 2600
Dear Mr President
Inquiry into the
Department of Defence's request for tender for aviation contracts and
associated issues
Pursuant to Senate standing order 38(7), I
present to you an interim report of the Senate Foreign Affairs, Defence and
Trade References Committee entitled Inquiry into the Department of Defence's
request for tender for aviation contracts and associated issues—interim report.
On
24 November 2010, the Senate referred the following matters to the Foreign
Affairs, Defence and Trade References Committee for inquiry and report by 1 May
2011:
- all
details concerning the Department of Defence’s Request for Tender (AO/014/09)
for the provision of air support to the Middle East Area of Operations, and
other aviation contracts let by the Commonwealth, to ensure that
value-for-money will be achieved, including:
- the
adequacy of the due diligence process around the choice of potential suppliers
from Standing Offer Panels and, more specifically, whether there was existing
or any subsequently discovered evidence to warrant non-selection of any of the
panel members, or whether the information obtained should have resulted in
further inquiry and investigation,
- the
requirements of tenders and how effectively these will be met,
- whether
the preferred respondent decision was influenced by any vested interests,
outside influences or any other perceived or actual conflicts of interest,
- the
role of departmental personnel in the tender processes and their adherence to
the Commonwealth’s procurement policy, as well as any conflict of interest
issues arising from the tender process and if any perceived or actual conflicts
were declared,
- the
methodology and adequacy of the decision processes and whether the services to
be supplied in the contract were determined on the basis of objective and
supportable, current and likely future requirements or were structured so as to
unfairly advantage a particular respondent,
- the
integrity of governance around the development of Request for Tenders and the
subsequent evaluation process, and whether the governance arrangements achieved
their intended purposes, including the processes to manage perceived and actual
conflicts of interests,
- whether
the governance arrangements were adequate and in fact did ensure that there
were no perceived or actual conflicts of interest, for any people involved in
the lead-up to the decision to tender, and during the tender review, assessment
and supplier selection processes, and
- whether
the respondents, including directors and other key personnel (whether
employees, agents or contractors nominated in the tender response) for the
proposed contracts, are fit and proper for the purpose of contracting with the
Commonwealth and the adequacy and methodology of this process; and
- the
adequateness and appropriateness of the processes in determining:
- whether
the respondents and associated companies supplying services to the respondents
have the financial and commercial capacity to deliver the services submitted in
their responses,
- whether
respondents have the capacity to deliver the services submitted in their
responses to a quality and standard that meets the requirements of the
Commonwealth and its regulatory authorities and, if so, whether the department
was fully satisfied with the services provided by their appointed foreign
carrier when they last provided such services (Request for Tender AO/014/09),
- whether
the department is in a position to guarantee the security status of all foreign
personnel involved in the air-transportation of troops between mainland
Australia and its deployment base adjacent to a war zone (Request for Tender
AO/014/09),
- whether
issues relating to respondents, or their related companies of their contracts
in South Africa are such as to warrant their exclusion for consideration on
ethical or probity grounds (Request for Tender AO/014/09), and
- any
other matters relevant to the probity of the procurement processes and the
respondents, including the appointment of a permanent and independent probity
auditor to oversee the awarding of all aviation contracts by the Commonwealth.
Recently, the committee held hearings in
Sydney and Canberra during which it requested additional information from a
number of witnesses. The committee is of the view that sufficient time should
be allowed for the witnesses to respond to the requests and for the committee
to consider their responses. In light of these developments, the committee has
agreed to present this interim report to the Senate and after further inquiry
intends to table its final report on 23 June 2011.
Yours sincerely
Senator Helen Kroger
Committee Chair |