2.1
The Department of Health (Health) seeks approval from the Committee to proceed with the proposed Fit-out of Existing Leased Premises at The Sirius Building, Woden, ACT. The aim of the project is to implement the Department of Health’s New Ways of Working program, referred to by Health as the NWOW program, by consolidating all Woden based staff into a newly fitted-out Sirius Building.
2.2
The estimated cost of the project is $64.25 million (excluding GST).
2.3
The project was referred to the Committee on 21 October 2021.
Conduct of the inquiry
2.4
Following referral, the inquiry was publicised on the Committee’s website and via media release.
2.5
The Committee received one submission and one confidential submission. A list of submissions can be found at Appendix A.
2.6
On 16 November 2021, the Committee conducted a project briefing, and public and in-camera hearing via teleconference. A transcript of the public hearing is available on the Committee’s website.
2.7
On 26 November 2021, the Committee conducted a site inspection of the Sirius Building in Woden, ACT.
Need for the works
2.8
The Department of Health currently occupies two ACT locations (Woden and Symonston). The Woden campus is the Department’s primary location, consisting of the Sirius Building and Scarborough House. These two adjacent buildings currently accommodate approximately 4,600 staff, over approximately 62,466 square metres.
The Sirius Building is the largest of the Department’s tenancies. It can currently accommodate up to around 4,000 people over 10 floors. Its 45,967 square metres footprint is 45 per cent of the Department’s current 102,000 square metre footprint nationally. The Department last undertook a full fit out of the Sirius Building prior to initial occupancy in 2010.
2.10
In its submission to the inquiry, Health stated that the new fit-out will support many more working styles and greater flexibility than the current ’one size fits all’ approach. It will also upgrade critical semi-specialist work areas such as the executive area and the National Incident Centre.
2.11
In addition, the consolidation of all staff into the Sirius Building will enable Health to reduce its property footprint down from approximately 16 square metres per person to 14 square metres per person in compliance with the Commonwealth Property Management Framework.
After completion of the proposed works there would be nine refitted floors providing accommodation for approximately 4,150 staff with important enhancements including greater staff amenities supporting wellbeing and improved productivity, improved utilisation to meet whole-of-government targets whilst retaining a COVID-safe workplace and a greater ability to modify spaces to support a greater variety of work.
Options considered
2.13
In its submission, Health stated that in 2018 it undertook a cost benefit analysis of three options:
Option 1: Renewal of lease for existing premises – this approach would not comply with the Whole of Australian Government (WoAG) guidelines and was not consistent with the Department’s Property Leasing Strategy. This option would also result in significantly increased maintenance costs as existing fit-outs reach their end of useful life. It was calculated that Scarborough House would require a total refreshed fit-out at a cost of approximately $29 million.
Option 2: Consolidation into a single new building – approach to market/new building – this option would be consistent with the Department of Finance WoAG Leasing Strategy, would comply with contemporary building standards, and increase market competition. This approach would likely have taken longer to complete; in addition, costs associated with a new building would have been borne by the Department.
Option 3: Early extension of the Sirius lease and refit of Sirius Building – the building landlord, Mirvac Group, proposed a lease extension to the Department offering an early extension based on favourable market conditions. This proposal also provided additional lease incentive funding to enable the refit of the existing fit-out.
2.14
Health stated that Option 3 provided the maximum time and funding to undertake the staged refit of the Sirius Building.
In its submission, Health concluded that:
The cost-benefit analysis favoured the third option. Negotiations with the Sirius Building owner on an early extension to the Sirius tenancy have secured a lease through to 2035 supported by additional lease incentives for refit. In conjunction with the establishment of the Fairbairn site from mid-2022, this provides maximum opportunity to make a staged refit and consolidation of our Woden footprint into a single building with the lowest risk. It represents the best value for money and, subject to the committee's deliberations, would allow for relinquishment of the Scarborough House lease when it expires in June 2025.
Scope of the works
2.15
The proposed fit-out of the Sirius Building at 23 Furzer Street, Woden ACT is comprised of 10 commercial floors and two levels of basement parking, across a total of 47,389 square metres. Currently, the building can accommodate up to approximately 4,000 staff using a traditional office layout, with an approximate workplace density of 16 square meters per person.
2.16
This proposal aims to increase the capacity of the building to accommodate all Woden based staff using the NWOW program, achieving an average occupational density of 10 square metres per person and 14 square meters per work point.
2.17
The proposed scope of works for the ground floor and levels 2 to 8 and level 10 of the Sirius Building includes:
Integration of services into the existing base building works including electrical, lighting control, voice and data communications, audio visual equipment, security, and fire and hydraulic services.
Office accommodation including partitioning of unallocated offices, meeting and conference rooms, reception areas, utility and storerooms, secure rooms, training rooms, break-out areas and staff amenities, and communication equipment rooms.
Workstations including desks, team storage units and personal lockers.
Ground floor upgrades including security and concierge, surge space, secure and non-secure conference and training rooms, secure and non-secure business lounge, and wellbeing and social areas.
An executive suite for the Secretary and Deputy Secretaries.
Unallocated offices for SES Band 1 and 2 officers.
Meeting rooms with a variety of both video and conference call equipment.
Individual rooms suitable for staff undertaking sensitive focus work.
Individual and semi-enclosed ergonomic work points suitable for interruptible individual and small team-based work.
Individual focus and semi-enclosed ergonomic work points that are unassigned and used as quiet workspaces for deep focus work in an office setting.
Small meeting rooms and dialogue settings that are semi-private and equipped with technology to enable remote team members to join meetings.
A business centre on the ground floor outside of the security perimeter.
Large meeting rooms that are enclosed and bookable to support team meetings or formal collaborative work.
Secure storage and semi-specialist fit-outs operational rooms.
Banks of lockers for storage of laptops and personal equipment.
Break-out and social connection spaces to allow for meals, coffee, and tea breaks.
Open plan office accommodation for the APS and Executive Level workforce.
Multipurpose rooms to provide parents, carers and first aid amenities.
2.18
In addition to these fit-out works, Health negotiated with the building owner to upgrade base buildings services including end of trip facilities over the next 15 years. The upgrades were negotiated with the building owner as part of the commitment to the lease extension, and do not result in increased rent payable by the Department.
2.19
The design of the fit-out includes a ratio of 1.7 work points for every 1 staff member and comprises premium ergonomic workstations supplemented by an additional 5 to 7 collaborative work settings and 2 to 3 networking seats for every 10 staff members.
2.20
During the hearing the Committee questioned the Department on its working from home arrangements for staff. Health stated that:
We currently have 4,600 people that are nominally working in the [Woden] precinct, in the two buildings. But, since the pandemic, we have been enthusiastic advocates of flexible work arrangements…. In August 2021, immediately before the lockdown in the ACT, we had approximately 2½ thousand on any given day in the office at Sirius and Scarborough, which is about 60 per cent occupancy of the buildings. That has been the level of occupancy a bit over a year into our flexible work journey.
Staff consultation
2.21
In June 2020, the Parliamentary Standing Committee on Public Works approved a medium works notification for the fit-out of a pilot floor within the Sirius Building on level 9 of the building.
2.22
The pilot allowed the NWOW program principles to be piloted before a complete refit, with 483 staff from three divisions moving into the pilot floor upon completion of the refit in July 2021.
2.23
Health told the Committee that staff surveyed about their initial experience on the pilot floor have ‘highlighted high levels of staff satisfaction, with 71 per cent of people rating their first weeks on the floor as good (53%) or excellent (18%)’.
2.24
When asked by the Committee if any concerns had been raised by staff, Health stated that:
There were no fundamental concerns that staff raised about the consolidation into one building—no concerns at all. In terms of the approach we're taking—the New Ways of Working approach, which includes unallocated desks and offices—there is obviously a change journey that we're going through with staff on that. On the pilot floor—which is level 9 of Sirius, where we introduced this in the middle of the year—we now have about 500 people, and the concerns that they had prior to starting to use the floor have been assuaged. They're comfortable and are seeing the best sense of the space. So we'll keep working with them to make sure that we understand all the potential issues, work though those and support staff to make that change.
2.25
In relation to the ongoing impacts of COVID-19 on workplaces, Health stated:
In response to COVID-19, the Department invested in tools and technology to support staff to operate effectively and securely, whether working remotely or in the office. This was originally planned to occur gradually as part of the NWOW Program. It was accelerated to support the Department’s work during the COVID-19 pandemic. This also resulted in the Department requiring to accelerate the use of collaborative technologies to support flexible work arrangements.
Cost of the works
2.26
The Department of Health proposed Fit-out of Existing Leased Premises at The Sirius Building, Woden ACT has an estimated total cost of
$64.25 million, exclusive of GST.
2.27
The project will be funded from a combination of Departmental capital appropriations and lease incentives provided by the landlord.
2.28
Health provided further details on project costings in its confidential submission and during an in-camera hearing.
2.29
The Committee is satisfied that the costings provided to it have been adequately assessed by the proponent entity.
Revenue
2.30
There will be no direct revenue generated by the project.
2.31
The Department told the Committee that a decision regarding the use of level 10 had yet to be reached, however Health was considering the option of subleasing the floor in the future. Health expanded upon this at the public hearing:
Level 10 of the Sirius Building is currently not in scope for this program of works; 450 additional workstations will remain available on the floor for temporary surge capacity, for sublease or for further refit, subject to committee consideration at that time, should future departmental growth demand.
Public value
2.32
To ensure the project sees value for money and delivers public value, Health told the Committee that it would be ‘re-using the furniture as much as possible’ from the existing fit-outs to minimise ‘whatever write-off is left’.
2.33
In addition, Health told the Committee that it would ‘be undertaking comprehensive due diligence in the selection of head contractors’ to ensure value for money, and to mitigate ‘against the risk of inadvertently engaging with contractors or subcontractors that are not always compliant with law’.
2.34
Overall, the proposal aims to generate savings through the discontinuation of the Scarborough House lease at an estimated cost of $7.2 million per annum and mitigate the need to refresh the existing Scarborough House fit-out at an estimated cost of $29 million.
Committee comment
2.35
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.
2.36
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.
2.37
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: The Department of Health Fit-out of Existing Leased Premises at The Sirius Building, Woden, ACT.
2.38
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.