- DEWR and the AEC
Proposed fit-out of new premises at London Quarter Block 40, Section 100, Canberra City, ACT
2.1The Department of Employment and Workplace Relations (DEWR) and the Australian Electoral Commission (AEC) seek approval from the Committee to proceed with the proposed fit-out of office space at London Quarter, Block 40, Section 100 of Canberra City in the Australian Capital Territory. The aim of the project is to address the deficiencies and inadequacies caused by the aging infrastructure of the Departments’ current office accommodation across Canberra.
2.2The estimated cost of the project is $149.26 million (excluding GST).
2.3The project was referred to the Committee on 26 October 2022.
Conduct of the inquiry
2.4Following referral, the inquiry was publicised on the Committee’s website and via media release.
2.5The Committee received one submission and one confidential submission. A list of submissions is at Appendix A.
2.6On 2 February 2023, the Committee conducted a project briefing, and public and in-camera hearings – in person and via videoconference. A transcript of the public hearing is available on the Committee’s website.
Need for the works
2.7Currently DEWR and the AEC lease eleven (11) buildings across Canberra totalling 90,231 metres squared of leased office accommodation. Nine (9) of these leased sites are located within the Canberra CBD with two others located in the nearby suburbs of Dickson and Barton.
2.8According to DEWR and the AEC (‘the Departments’), the existing premises are nearing the end of their usable life, with some nearing 30-years old. The condition of some current fit-outs is described as aged and not meeting the current needs and work styles of staff. The Departments further described the fit-outs as inflexible in terms of design and inhibiting the ‘Departments’ ability to undertake a variety of work in the most appropriate settings’, resulting in an inefficient use of space.
2.9The expiry dates of the current eleven leases range from October 2022 to May 2025. To address the shortfall in accommodation prior to the completion of the proposed fit-out in March 2026, the Departments state that ‘short-term lease extensions and the absorption of surge space into current buildings’ are available to enable the Departments to continue operations until the fit-out of the new site is complete.
2.10The Departments’ relocation to London Quarter will reduce office space by over 22 per cent from 90,231m2 to 70,000m2, resulting in an approximate saving of $9 million per year in leasing costs once the Departments have fully relocated.
Options considered
2.11The Departments told the Committee that in 2020 and 2021, in accordance with the whole-of-Australian-government leasing strategy, the then Department of Education, Skills and Employment, along with the AEC, undertook a joint approach to market for office accommodation in the Canberra CBD. The Department of Education (DE) has a memorandum of understanding for property services with DEWR and will also be moving into London Quarter.
2.12The joint approach to market was undertaken in two stages and resulted in the consideration of eleven submissions for final proposals.
2.13Following the call for RFP, seven proposals were received via AusTender. Using the criteria as set out on pages 10 and 11 of their submission, the Departments identified a new premises to be constructed in Canberra City at Block 40 Section 100 Canberra, known as London Quarter.
2.14At the public hearing the Departments explained that staying in their current leases was not an option. One of the buildings is due to be demolished and several of the other buildings require ‘significant work to happen on them to maintain those buildings.’ This would require the Departments to seek alternative accommodation at an additional cost while the maintenance work was carried out.
2.15By going to market for a combined approach, DWER and the AEC have simplified the work required to manage the project which should result in ‘fewer over-laps in responsibilities and less potential for disputes over matters such as interference’.
2.16The Departments expect to be the sole occupants of the office building with the ground floor available for retail and commercial outlets. For this project, the Department of Education will be represented by DEWR as the property management lead agency. DEWR and the AEC will work collaboratively to deliver this joint agency tenancy fit-out.
2.17When questioned by the Committee whether other town centres in the Canberra region had been considered, the Departments said that due to the Commonwealth leasing strategy and the existing staffing footprint, other town centres had not been considered.
Scope of works
2.18DEWR and the AEC propose to fit-out the London Quarter site which consists of one commercial office building with four interconnected cores and a basement carpark. The site will provide the Departments with an approximate total area of 70,000m2 across the four cores.
2.19As part of the fifteen-year lease agreement, there is provision for 650 parking spaces for use by the Departments and 200 public spaces within the building basement. The allocation of car parks will be 620 for DEWR and the Department of Education (DE) and 30 for the Australian Electoral Commission. The flexible design of the car park also allows for reconfiguration should the Departments require less parking or there be a requirement for additional public spaces in the future.
2.20In their submission the Departments describe the fit-out design as being:
…predominantly open plan with modular workstations supported by enhanced meeting capacity, breakout areas and support facilities. Offices and formal meeting areas will be in the core of the building to maximise the use of natural light for staff. Offices and meeting spaces will be modular and fully interchangeable as business requirements dictate.
2.21The scope of works for the proposed fit-out include the following:
- Base Building – Integration of services into the base building works, including electrical, mechanical, communications, security, fire and hydraulic services;
- Supplementary air-conditioning in larger meeting rooms, training rooms, computer rooms and amenities rooms;
- A lighting control system to reduce energy consumption in tenant areas
- Data cabling throughout the tenant areas including phone and computer outlets at each work point.
- Supplementation of the base building fire services where required to ensure compliance with relevant codes (additional exit lights, fire detection and sprinkler) as necessary.
- Architectural designed office accommodation including construction of reception areas, a security alarm system, an electronic access control system, general office fit out and open plan work areas;
- Most offices and meeting rooms are to be constructed in the central cores so as not to limit natural light from external windows;
- A Command Centre facility, required by the AEC to monitor specific operational activities and functions
- Customer service areas;
- Breakout spaces, quiet rooms and casual meeting space;
- Computer rooms built to specification;
- Storage facilities;
- Conference and training facilities;
- First Aid and multipurpose rooms;
- Amenities areas;
- Kitchens;
- Showers and lockers; and
- Secure areas.
- The building will be serviced by 21 passenger lifts, and will accommodate staff at a fit-out density of one person to a maximum of 12m2 of Net Lettable Area (NLA).
- The density target is set by the Commonwealth Property Management Framework (Resource Management Guide 500), with the current target being 14m2 of useable office area per occupied work-point. All new Commonwealth Government leases are expected to meet this target.
- With regards to the energy efficiency of the building DEWR and the AEC advised that:
Unlike some of the departments' existing office accommodation, the proposed performance of the new building will meet, and indeed exceed, the requirements of several current government policies, including energy efficiency… The proposed solution that we have on the table at London Quarter will be designed to have a full electric energy supply and meet the 5.5-star NABERS energy rating, with the potential to achieve a six-star rating once in operation. So, in addition to the energy rating, the building will also achieve a minimum of four-star NABERS whole-building water rating, with aspirations of achieving five-star NABERS whole building—again, once the building is in operation.
2.25The project is due to commence in late 2023, with an estimated completion date of 31 March 2026.
Staff consultation
2.26At the public hearing DEWR and the AEC told the Committee that they had ‘undertaken over 30 discovery workshops with over 400 staff, generating close to 6,000 insights from our staff on how we work now, but more importantly how we want to work in the future.’
2.27Through the staff consultation process the Departments said that:
…we have heard that our staff are open to flexibility and understand that as we want to move to more flexible ways of working we actually need to use our spaces in a much smarter way. We want to create workspaces that bring staff into the office and environments where, when they are in the office, they can actually work effectively, either alone or in a team. The flexibility of that fit-out design is going to ensure the departments can implement a desk use policy that does support the specific requirements of each department represented here today, and individual teams, whether that is the allocated individual seating or more flexible approaches to use of desks and other spaces. DEWR, by way of example, will implement a flexible model that provides staff with some predictability in its seating arrangements by establishing team neighbourhoods for staff to work within.
2.28At the public hearing the Departments told the Committee that the main design principles for the fit-out focuses on creating a sense of belonging for staff ‘by connecting with colleagues, reconnecting to the organisation [post COVID disruptions], being inspired by a shared purpose and knowing they're doing meaningful work’.
2.29The Departments’ stated that:
In a modern workplace, people want to be able to access space based on the task that they are doing at any particular point in time, and that is why our space will include well-designed multipurpose spaces that can support a wide range of activities that we are going to be undertaking. The new fit-out will make it easier, faster and less expensive to adjust our workspaces as we evolve. This will be delivered by flexible and adjustable furniture and minimising those fixed rooms and joinery.
Cost of the works
2.30The proposed fit-out of the new leased premises has an estimated total cost of $149.26 million, excluding GST. It will provide approximately 70,000 square metres of office accommodation within the Canberra CBD.
2.31The cost per square metre of the project will be $2,119.
2.32DEWR and the AEC provided further details on project costings in their confidential submission and during an in-camera hearing.
Revenue
2.33There will be no direct revenue generated by this project.
Public value
2.34The Departments state that the development of London Quarter will have a positive impact on the local community, as the proposed site is currently underutilised as an on-grade carpark. Further, the additional office space is consistent with the aim of ACT Government to increase the amount of employment in the region and stimulate business activity.
2.35It is estimated that approximately 400 people will be employed on site for the 36-month build period with a further 200 additional people employed at peak periods.
Committee comment
2.36The Committee considers that DEWR and the AEC’s proposed project should proceed as it is satisfied with the project’s purpose, need, and value for money. Further, the Committee recognises that the consolidation of the currently disparate Departmental workforce will save approximately $9 million a year in leasing costs.
2.37The Committee was disappointed to hear that other Canberra town centres had not been considered. However, the Committee acknowledges that the majority of the current 5,500 workforce across the Departments are already based in the CBD, within walking distance of the new site.
2.38The Committee was also pleased to hear that the projected future growth of both the AEC and DEWR had been factored into the fit-out design and could be accommodated through the flexible design.
2.39The 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 works: Department of Employment and Workplace Relations and the Australian Electoral Commission—Proposed fit-out of new premises at London Quarter Block 40, Section 100, Canberra City, ACT.
2.40Proponent entities must notify the Committee of any changes to the project scope, time, cost, function or design. The Committee also requires that a post-implementation report be provided within three months of project completion. A report template can be found on the Committee’s website.