The hits keep coming for Defence. The Australian National Audit Office has just revealed another big bungled project by the department, one that was a decade in the making.
While it lacks the champagne glamour of the Defence-Thales munitions scandal and only costs hundreds of millions, not billions, the debacle over “myClearance” demonstrates that Defence’s inability to manage procurement — a core task for such an institution — is department-wide.
It’s also a likely unique case of procurement process so bad that the company that benefited objected to it.
“myClearance” might sound like a colonoscopy prep, but it is in fact the notional answer to longstanding problems with the systems used by the Australian Government Security Vetting Agency within Defence to vet people for security clearances across the public sector — a process much criticised by other agencies for its glacial speed.
In 2014, Defence decided that its vetting platform needed to be replaced, and thus began what became the Vetting Transformation Project — given impetus, no doubt, by the Abbott government’s hysteria over the Snowden revelations and the idea of “inside threats” used to justify draconian penalties for intelligence and security whistleblowers. The project’s initial budget was $68 million. By the time it went to cabinet in 2018, the estimated cost was $276.3 million, split between acquisition and operation for 20 years.
The cost then blew out to $488 million as Defence officials went through what would eventually be over 30 procurement processes — a blowout so big that, unusually, Defence internally decided that that might have been straining the friendship a bit. Defence’s chief information officer was told to come back with a better set of proposals for the project. Defence later went back to the government for two “modules” costing $307 million. That got the nod. The Vetting Transformation Project, now dubbed “myClearance” went live in late 2022.
But by then Defence has used up nearly all of the money and only achieved the first, core module. What about the second module? Forget about it, Defence decided. It told the government late last year it “expected to use the entire funding provision, inclusive of the $14.7 million contingency, to deliver a reduced scope”.
So, roughly five times the initial budget and much of the project didn’t get delivered was “descoped”. Not bad. You can’t really say “they don’t do things by halves in Defence”. At least, not in this case.
Cost blowouts are pretty standard in Defence, even if “myClearance” is an IT platform, not a nuclear sub or jet fighter. But the procurement processes for the platform and support services were riddled with errors. The auditors were especially critical of the process for a “prime systems integrator” — which would have “a primary role in the design and implementation of the new IT system”.
The bureaucrats handling that process wanted to use an existing Defence ICT (information and communications technology) panel. Defence legal explicitly told them not to, because what that panel had been assembled for was not what they wanted to use it for — but they went ahead and used it anyway. They also broke procurement rules by specifying particular goods and services that needed to be delivered.
Then something remarkable happened. Officials had negotiated with Accenture and another potential provider over the contract as a result of the panel process. Eventually they decided that they would go with Accenture. But in the meantime, senior Defence officials had decided the cost of the whole project was too big and needed scaling back. So those officials went to Accenture and asked what it could deliver at a lower price.
This broke a cardinal rule of procurement: you never give a tenderer a chance to substantially alter what they’re offering — which is effectively starting a new procurement process — without giving everyone else the same chance as well. Breaches of that rule have proved inordinately costly for the Commonwealth in the past because other providers who’ve missed out can sue the government.
In fact it was so obvious that, astonishingly, it was Accenture that tried to pull Defence up on it. “On 9 January 2020 Defence met with Accenture to discuss the upcoming [analysis of alternative, or AoA]. Defence records indicate that during the meeting, Accenture raised concerns that the AoA represented a new procurement process. The meeting record further indicated that Defence was offering Accenture ‘every opportunity to explore options for an affordable [case and vetting] capability and indeed to procure the capability through the existing processes’.”
Defence’s probity adviser also tried to pull it up, warning the department was breaching procurement rules and the process risked being seen as inequitable to other providers. This led to what must have been a tart exchange of emails: “Defence told the probity advisor that the AoA was considered to be a separate exercise, and was not part of the procurement activity, as the procurement process had been ‘paused’. The probity advisor acknowledged this information and observed that the activities must still be compliant with the [Commonwealth procurement rules].”
Defence went ahead with Accenture.
It’s one for the record books — a procurement process so blatantly rotten that the beneficiary itself tried to stop it. Only in Defence.
