3.1
The National Disability Insurance Agency (NDIA) and the Department of Human Services (DHS) seek approval from the Committee to proceed with proposed fit-out of new leased premises at 13-19 Malop Street in Geelong, Victoria.
3.2
The estimated cost of the project is $27 million excluding GST.
3.3
The project was referred to the Committee on 1 December 2016.
Conduct of the inquiry
3.4
Following referral, the inquiry was publicised on the Committee’s website and via media release.
3.5
The Committee received two submissions and two confidential submissions from the Department. A list of submissions can be found at Appendix A.
3.6
On 20 February 2017, the Committee conducted public and in-camera hearings. A transcript of the public hearing is available on the Committee’s website.
Need for the works
3.7
The NDIA currently leases 10,420 square metres of office accommodation in six temporary sites across Geelong. The leases for these premises expire between January 2017 and March 2018, and as a result NDIA is seeking to consolidate its leases while also combining its presence in Geelong with the DHS presence.
3.8
At the public hearing, NDIA emphasised the importance of having their Geelong-based staff collocated:
This will really assist us to continue to build the scheme as thoroughly as it can and, while we can still do that from separate locations, you can readily appreciate the sort of collaboration and effort that is necessary in order to roll out the scheme in the most effective way that it can.
3.9
NDIA elaborated on the concerns it has with its current accommodation in Geelong:
The lack of a single location has meant that the national office is somewhat restricted in its ability to support the full roll out of the scheme. The ability to work more collaboratively and efficiently as a department is compromised. It creates management difficulties with multiple teams being split across sites and with facilities not fit for purpose. For example, in our Market Square shopping centre offices, we are located close to the car park and the amount of foot traffic raises potential security issues while Christmas and other music together with lost children broadcasts provide a significant distraction.
3.10
DHS currently leases space in two separate buildings in Geelong, with a total of 4,768 square metres of space being leased. At the public hearing, DHS told the Committee that consolidating their presence in Geelong would create ‘operational efficiencies’, and further that:
This proposal would enable the Department to relinquish the existing leases at Brougham Street and Ryrie Street and replace them with a consolidated lease of 5,022 square metres, providing the Department with estimated savings of $3.7 million over the initial ten year lease term. The modest space increase of 254 square metres provides an additional ten seats, which allows slightly more staff to be accommodated at Malop Street. The proposed fit-out works will accommodate the operational requirements of our smart-centre staff, incorporating an open plan, high density fit-out that provides good acoustics.
Options considered
3.11
NDIA and DHS told the Committee that three options were considered when it conducted the cost benefit analysis for the project:
The option to approach the market [was conducted] for newly constructed or existing vacant premises for the required space with a view to consolidation into one building. A request for tender process was undertaken, which resulted in two viable proposals for consolidation into a single building. A financial and qualitative analysis indicates that the 13—19 Malop Street proposal is best value for money for the Commonwealth.
The status quo option does not meet ongoing operational requirements and financial modelling indicates this option is more expensive over the initial 10 year lease compared with the proposed new lease at 13-19 Malop Street, Geelong. If the status quo was to be maintained and a 10 year lease with two further five year options renewals were implemented, full refurbishments would be necessary and would include significant base building works to improve the buildings to acceptable standards for a potential 20 year commitment. Temporary 12 month leases and fit-outs of additional floors would be necessary to provide staging space to facilitate the required base building and refurbishment works.
The option to relocate to surplus leased government space in the Geelong central business district is not viable as no existing Commonwealth leased or owned accommodation in Geelong could accommodate the operational requirements of the NDIA and DHS.
Scope of the works
3.12
The NDIA component of the proposed works is ‘typical of a national office function, with workstations, meeting rooms and flexible workspaces appropriate for a national office and visiting staff’.
3.13
In a submission, NDIA outlined the scope of the fit-out works for its national office:
564 workpoints, including 520 open plan workstations and 44 quiet rooms and booths;
3.14
Access for people with disabilities was a major feature of the NDIA fit-out, given the makeup of the workforce, more than 20 percent of whom identify as disabled:
The fit-out is designed to provide a comfortable, functional and inclusive environment for staff, regardless of their ability. This includes access to the building and office areas, door widths and heights, lift arrangements, parking, toilets, workstation flexibility and lighting for people with visual impairments.
3.15
The DHS component of the works will provide a consolidated smart centre. At the public hearing, DHS described the role of its smart centres:
The smart centres are virtual centres located within DHS that carry out telephone and processing work across DHS’s programs, including Centrelink, Medicare and Child Support.
3.16
In the submission, DHS explained the scope of works required for the smart centre:
The DHS proposed fit-out works provide 409 open plan workstations and a small number of built areas, including 12 collaborative spaces, three multi-function rooms, two first aid rooms, four utility rooms, three offices and two break rooms.
3.17
For this project, according to NDIA and DHS, ‘fit-out works are proposed to be undertaken concurrently with the base building construction’.
Cost of the works
3.18
The project has a budget of $27 million. This includes design, fit-out, project management costs, and associated contingencies.
3.19
The NDIA and DHS provided further detail on project costings in its confidential submission and during an in-camera hearing.
3.20
The Committee is satisfied that the costings for the project provided to it have been adequately assessed by the proponent entity.
Committee comment
3.21
The Committee did not identify any issues of concern with the proposal and is satisfied that the project has merit in terms of need, scope and cost.
3.22
Having regard to its role and responsibilities contained in the Public Works Committee Act 1969, the Committee is of the view that this project signifies value for money for the Commonwealth and constitutes a project which is fit for purpose, having regard to the established need.
3.23
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 works: National Disability Insurance Agency and Department of Human Services fit-out of new leased premises in Geelong, Victoria.
3.24
Proponent 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.
Chair