Footnotes
Executive summary and recommendations
[1]
The estimated annual contract price is approximately AUD $30.937 m
(exclusive of fuel costs) with a contract period of two years, plus two one
year options.
Chapter 1 - Introduction
[1]
Journals of the Senate, 24 November 2010, pp. 14–15.
[2]
Senate Foreign Affairs, Defence and Trade References Committee, Interim
Report: Inquiry into the Department of Defence's request for tender for
aviation contracts and associated issues (27 April 2011).
[3]
The relevant panel is the Air Transport Standing Offer Panel—DNL09009.
It was established by the Air Transport Deed of Standing Offer,
2 November 2009 (AusTender SON179438).
[4]
See: https://www.aph.gov.au/Senate/committee/fadt_ctte/aviation/index.htm
(accessed 23 March 2011).
[5]
See: https://www.aph.gov.au/Senate/committee/fadt_ctte/estimates/index.htm.
(accessed 23 March 2011).
[6]
'AFCD Review'. This document was provided to the committee as Department
of Defence, Submission 5, Attachment E.
[7]
'PwC Review'. This document was provided to the committee as Department
of Defence, Submission 5, Attachment B.
[8]
'Deloitte Review'. This document was provided to the committee as
Deloitte Touche Tohmatsu, Submission 3, Attachment. Defence also
provided a copy of this report to the Legislation Committee at the
Supplementary Budget Estimates hearing on 19 October 2010.
[9]
'AGS Review'. Defence provided a substantially un-redacted copy of this
report to the committee under cover of letter to the Committee Secretariat
dated 28 March 2011. A version with more substantial redactions was
provided to the Legislation Committee at the Supplementary Budget Estimates
hearing on 19 October 2010.
Chapter 2 - Background to the 2010 tender process
[1]
For convenience, a list of key entities and personnel is provided at
Appendix 4 to this report.
[2]
Department of Defence, Submission 5, Attachment A, p. 1.
[3]
Department of Defence, Submission 5, Attachment A, p. 1.
[4]
Department of Defence, Submission 5, Attachment A, p. 1.
[5] Department
of Defence, Submission 5, Attachment A, p. 1.
See further Department of Defence Audit and Fraud Control Division, Final
probity review report: probity review of tender process for air sustainment
services to the Middle East Area of Operations (MEAO ('AFCD Review'),
Review Task 11-058, September 2010, pp. 25–26.
[6]
Defence advised that these services were provided by Emirates and Etihad
Airways: Department of Defence, Submission 5, p. 2 (footnote 9).
[7]
Defence advised that chartered aircraft included Soviet-made Antonov
AN12 and AN 124 and Ilyushin IL 76: Submission 5, pp. 2 (footnotes 6 and
7), 28. Adagold Aviation was among the contractors who chartered these
aircraft: Senator the Hon Robert Hill, Minister for Defence, Senate Hansard,
8 September 2003, p. 14506.
[8]
Department of Defence, Submission 5, Attachment A, p. 2.
[9]
Department of Defence, Submission 5, Attachment A, pp. 1–2.
[10]
Department of Defence, Submission 5, Attachment A, p. 2.
[11]
Australian Government Solicitor, Legal and legal process review of the
procurement process for the Middle East Area of Operation (MEAO) Air
Sustainment Support Contract ('AGS Review'), 15 September 2010, p. 3; AFCD
Review, p. 7.
[12]
Department of Defence, Contracts Listing for 1/7/2004 to 30/6/2005,
Senate Order on Departmental and Agency Contracts, p. 44.
[13]
Mr Shaun Aisen, Proof Committee Hansard, Canberra, 29 March 2011,
p. 4; Department of Defence, Submission 5, Attachment A, p. 5.
[14]
Department of Defence, Submission 5, Attachment A, p. 2.
[15]
Lieutenant-General Ken Gillespie, Vice Chief of Defence Force, Committee
Hansard, Estimates, 1 November 2006, p. 85.
[16]
Department of Defence, Contracts Listing for 1/7/2005 to 30/6/2006,
Senate Order on Departmental and Agency Contracts, p. 243. As an indication
of the value of the contracts Defence's contracts listing shows contracts with
Strategic valued at $28.6 m, duration 212 days, commencing on 25 October 2005;
$34.4 m, duration 168 days, commencing 25 April 2006; $42.8 m, duration 186
days commencing 26 October 2006; $32 m, duration 213 days commencing 1 April
2007; and $35.5 m, duration 187 days commencing on 24 April 2008.
[17]
Department of Defence, Submission 5, Attachment A, p. 3. The
Department of Defence, Contracts Listing for 1/7/2008 to 30/6/2009, Senate
Order on Departmental and Agency Contracts shows contracts with Strategic
valued at $100 m, duration 890days, commencing on 16 May 2008 and $122 m,
duration 395 days, commencing 1 October 2008, pp. 213, 358.
[18]
Dr Brendan Nelson, MP, answer to question on notice, House of
Representatives Hansard, 12 September 2007, p. 207;
Lieutenant-General Ken Gillespie, Vice Chief of Defence Force, Committee
Hansard, Estimates, 1 November 2006, p. 85.
[19]
Department of Defence, Submission 5, Attachment A, p 5; Department
of Defence, Response to Questions on Notice, Supplementary Budget Estimates
2010-2011, response to question (b).
[20]
Contract Change Proposal No 7, dated 5 March 2010, cited in Department of
Defence, Submission 3, Attachment A, p. 19.
[21]
Department of Defence, Submission 3, Attachment A, p. 19.
[22]
The reasons for doing so are summarised in: Department of Defence, Submission
5, Attachment A, pp. 2–3 and discussed in chapter 3.
[23]
Department of Defence, Submission 5, Attachment A, pp. 2–3.
[24]
See for example, Deloitte, 'Examination of the procurement process for
Tender RFT AO/014/09-10 September 2010, p. 7.
[25]
Dr Ian Watt, Proof Committee Hansard, 29 March 2011, p. 46.
[26]
Department of Defence, Submission 5, Attachment A, pp. 3–4.
[27]
Department of Defence, Submission 5, Attachment A, p. 4.
[28]
In October 2010, Strategic was awarded an interim contract for flights
from 23 October to 22 November 2010, pending finalisation of the 2010
tender process: Department of Defence, Submission 5, Attachment A, p.
11, Annexure A.
[29]
Department of Defence, Submission 5, Attachment A, p. 4.
[30]
AFCD Review, p. 7. See also Department of Defence, Submission 5,
Attachment A, p. 10 and Department of Defence, Response to Questions on
Notice, Supplementary Budget Estimates 2010-2011, response to question (bb)
(Defence identified the contract price as $62 million over the two-year term).
[31]
Department of Defence, Submission 5, Attachment A, p. 11; Dr
Ian Watt, Proof Committee Hansard, 29 March 2011, p. 49.
[32]
Department of Defence, Submission 5, Attachment A, p. 4; Mr Danny
Foster, Pel Air Aviation, Proof Committee Hansard, Sydney, 28 March 2011,
p. 20. See further, AFCD Review, p. 12: 'the [Air Transport Standing Offer Panel]
is composed of highly competitive companies within an industry operating on
tight margins and offering almost identical services'.
[33]
Department of Defence, Response to Questions on Notice, Supplementary
Budget Estimates 2010-2011, response to question (bb); Dr Ian Watt, Proof
Committee Hansard, 29 March 2011, p. 48.
[34]
See Air Transport Deed of Standing Offer, 2 November 2009
(AusTender SON179438).
[35]
For instance, the committee heard evidence of multiple movements between
suppliers by persons associated with the 2010 tender process. See for example:
Major David Charlton, Statutory Declaration 7 September 2010, [5], [6], [9];
Strategic Aviation, Submission 6, p. 2; AFCD Review pp. 23–25; Deloitte
Review, pp. 42, 51–52; Mr Shaun Aisen, Proof Committee Hansard, 29 March
2011, pp. 4–5; 8–9; Mr Shaun Aisen, letter to Inspector-General, Department of
Defence, 14 July 2011, p. 2.
[36]
Department of Defence, Submission 5, Attachment A, p. 4.
[37]
Mr Danny Foster, Proof Committee Hansard, 28 March 2011, p. 20;
confidential correspondence to the committee, March 2011.
[38]
Senator the Hon Alan Ferguson, Committee Hansard, Estimates, 4
June 2003, pp. 408–409; Senator the Hon Robert Hill, Minister for Defence, Senate
Hansard, 8 September 2003, pp. 14506–14507.
[39]
Confidential correspondence to the committee, March 2011.
[40]
Phillip Coorey, 'We're barred from flying troops—pilots', Sydney
Morning Herald, 2 May 2006, p. 6 (referring to a complaint made by the
Australian Federation of Air Pilots to the then Minister of Defence, the Hon
Brendan Nelson MP).
[41]
The '7.30 Report', transcript, 'Troop Transport company failing aviation
safety standards, former staff say', 12 July 2007.
[42]
The '7.30 Report', transcript, 'Troop Transport company failing aviation
safety standards, former staff say', 12 July 2007.
[43]
See for example, Richard Barker, 'The sky's the limit', Age, 2
September 2010, p. 13.
[44]
Defence indicated that it referred the matter to the AFP on 10 September
2010, following media reports alleging collusion between two former ADF members
and Strategic: Department of Defence, Submission 5, Attachment A, p. 13.
See further, Department of Defence 'Referral of matters regarding the 2005
Defence contract for air support services to the Middle East Area of Operations
to the Australian Federal Police' Media Release MECC 428/10, 13 September 2010.
[45]
Mr Shaun Aisen, Proof Committee Hansard, 29 March 2011, p. 11.
Email Shaun Aisen to Lieutenant Colonel Andrew Hall, 30 March 2010.
[46]
Australian Securities and Investments Commission, extract from National
Names Index, accessed 7 April 2011.
[47]
According to media reports, Mr Aisen resigned in February 2011: Matt
O'Sullivan, 'Strategic feeling the pressure', Age, 14 March 2011, p. 3.
[48]
Mr Shaun Aisen and Mr David Blake, Proof Committee Hansard, 29
March 2011, p 1.
[49]
Strategic Aviation Pty Ltd, website, http://www.flystrategic.com.au/About_Us.aspx
(accessed 6 December 2010).
[50]
The Strategic Aviation Group is an Australian proprietary company limited
by shares, registered on 15 September 2008: Australian Securities and
Investments Commission, extract from National Names Index, accessed 7 April
2011.
[51]
Strategic Airlines is an Australian proprietary company limited by shares,
registered on 16 May 2008: Australian Securities and Investments Commission,
extract from National Names Index, accessed 7 April 2011.
[52]
In broad terms, a 'wet lease' refers to the leasing of an aircraft with
crew, often also including maintenance and insurance. See further: CASA 'Assessing
aircraft leases prior to adding aircraft to an AOC', Regulatory Policy
CEO-PN007-2010 (July 2010), p. 6.
[53]
Strategic Aviation Group, 'Strategic Airlines Strengthens Management
Team', media release 19 October 2010, p. 2.
[54]
Department of Defence, Submission 5, Attachment A, p. 5; Department
of Defence, Response to Questions on Notice, Supplementary Budget Estimates
2010-2011, response to question (b).
[55]
See for example, Department of Immigration and Citizenship, Report on
Senate Order on Departmental and Agency Contracts, 1 January-31 December
2010, pp. 63–64.
[56]
Foreign Affairs, Defence and Trade Legislation Committee, Estimates, Committee
Hansard, 25 February 2009, p. 97.
[57]
AFCD Review, p. 12.
[58]
AFCD Review, p. 12 (footnote 1).
[59]
See for example, Group Captain Robert Barnes, Statutory Declaration signed
20 April 2011, [2]–[5]; Jo-Anne Pope, Statutory Declaration signed 14 April
2011; Joshua Prucha, Statutory Declaration signed 14 April 2011.
[60]
Department of Defence, Submission 5, Attachment A, p. 13. See
further, Department of Defence 'Referral of matters regarding the 2005 Defence
contract for air support services to the Middle East Area of Operations to the
Australian Federal Police' Media Release MECC 428/10, 13 September 2010;
Richard Barker, 'The sky's the limit', Age, 2 September 2010, p. 13.
[61]
Mr Shaun Aisen, Proof Committee Hansard, 29 March 2011, p. 12.
[62]
Australian Securities and Investments Commission, extract from National
Names Index, accessed 7 April 2011; Mr Mark Clark, Statutory Declaration, 7 September
2010; Deloitte Report, p. 23.
[63]
Mr Mark Clark, Statutory Declaration, dated 7 September 2010; Deloitte
Report, p. 23; Adagold, 'About us', http://www.adagold.com.au/about,asp
(accessed 25 November 2010).
[64]
Mr Geoffrey Brown, Chief Audit Executive, Department of Defence, Committee
Hansard, Estimates, 19 October 2010, p. 61. See further, Adagold,
'Capability statement', http://www.adagold.com.au/capability.asp
(accessed 7 April 2011).
[65] 'Very, Very
Important Person'—a term used in the aviation industry to describe persons
afforded a status beyond that of 'VIP', for example heads of state, and
government or defence force principals.
[66]
Adagold, 'About us', http://www.adagold.com.au/about.asp
(accessed 25 November 2010). See further, Judy Hinz, '2010 Defence SME Top 20',
Australian Defence Magazine, December 2010–January 2011, p. 61.
[67]
Department of Defence, Submission 5, Attachment A, pp. 4–5.
[68]
Committee Hansard, Estimates, 4 June 2003, pp. 406–410; Senate
Hansard, 8 September 2003, pp. 14505–14506; Department of Defence, Submission
5, Attachment A, pp. 4–5, 28.
[69]
Department of Defence, Submission 5, Attachment A, p. 27.
[70]
Department of Defence, Submission 5, Attachment A, p. 27.
[71]
Defence advised that Adagold was the only tenderer to have done so:
Department of Defence, Submission 5, Attachment A, p. 27.
[72]
Department of Defence, Submission 5, Attachment A, p. 5.
[73]
This was stated to have provided visibility of the increased volumetric
freight requirements and the fact that Strategic's A330-200 aircraft could not
meet those requirements: AFCD Review, p. 23.
[74]
Department of Defence, Submission 5, Attachment A, p. 5.
[75]
Mr Warren Clark, Statutory Declaration, signed 7 September 2010.
[76]
Department of Defence, Submission 5, Attachment A, p. 5 (footnote
17).
[77]
Mr Warren Clark to the Committee, 4 May 2011.
[78]
The Deed of Standing Offer identifies the Attorney-General's Department
and the Department of Immigration and Citizenship as 'participant agencies'
eligible to utilise the panel arrangement: Air Transport Deed of Standing
Offer, 2 November 2009 (AusTender SON179438).
[79]
See for example, Department of Immigration and Citizenship, Report on
Senate Order on Departmental and Agency Contracts, 1 January–31 December
2010, pp. 1–2.
[80]
AFCD Review, p. 24; Department of Defence, Submission 5, Attachment
A, p. 5.
[81]
AFCD Review, p. 24.
[82]
Department of Defence, Submission 5, Attachment A, p. 28; Dr Ian
Watt, Proof Committee Hansard, 29 March 2011, p. 46.
[83]
Department of Defence, Submission 5, Attachment A, p. 26; Deloitte
Review, p. 26.
[84]
As advised by Defence in correspondence to the committee secretariat, 1 December
2010.
[85]
Department of Defence, Submission 5, Attachment A, p. 26; Deloitte
Review, p. 26.
[86]
Hi Fly website, http://www.hifly.aero/company.aspx
(accessed 6 December 2010).
[87]
Hi Fly website, http://www.hifly.aero/company.aspx
(accessed 6 December 2010).
[88]
Hi Fly website, http://www.hifly.aero/company.aspx
(accessed 6 December 2010). These six aircraft are listed on Schedule 1 to Hi
Fly's FAAOC issued by CASA: Air Operator's Certificate AOC # 1-BOV6-09, issued
26 October 2010.
[89]
Mr Adam Anastasi, Civil Aviation Safety Authority, Proof Committee Hansard,
29 March 2011 p. 39.
[90]
Air Operator's Certificate AOC # 1-BOV6-09, issued 26 October 2010.
[91]
Civil Aviation Safety Authority, Submission 7, pp. 1–2.
[92]
Defined in s 3 of the Civil Aviation Act as provisions of that Act
and the Civil Aviation Orders that relate to safety.
[93]
Civil Aviation Safety Authority, Submission 7, p. 2, citing
s 28 of the Civil Aviation Act.
[94]
Civil Aviation Safety Authority, Submission 7, p. 2, citing
s 27AE of the Civil Aviation Act.
[95]
Civil Aviation Safety Authority, answer to question taken on notice.
[96]
Department of Defence, Submission 5, Attachment A, p. 5.
[97]
Department of Defence, Submission 5, Attachment A, p. 27.
[98]
Department of Defence, Submission 5, Attachment A, p. 26. Defence
advised the Legislation Committee that the value of the performance guarantee
was 'assessed on the basis that [it] would cover the cost of another short-term
contract in the event of [the] contract falling over': Mr Geoffrey Brown, Chief
Audit Executive, Committee Hansard, Estimates, 19 October 2010, p. 67.
[99]
Mr Geoffrey Brown, Chief Audit Executive, Committee Hansard,
Estimates, 19 October 2010, p. 68; Department of Defence, Submission 5,
Attachment A, p. 26.
[100] In its submission, Defence
stated, '...subsequent analysis through the Deloitte Examination of financial
statements highlighted additional risks given the subcontractor/contractor
structure of the tender response. Following this, Defence recognised the potential
risks relating to financial viability and so sought to mitigate the risks by
seeking to execute a novation agreement between Adagold, Hi Fly and Defence.' Submission
5, p. 26.
[101] Strategic Airlines, website http://flystrategic.com.au/About_Us.aspx
(accessed 6 December 2010). Mr Shaun Aisen, Proof Committee Hansard, 29
March 2011, p. 1.
[102] Major David John Charlton,
Statutory Declaration, signed 7 September 2010, [1]–[3].
[103] Major David John Charlton,
Statutory Declaration, signed 7 September 2010, [4].
[104] The statutory declaration
was tabled at the Legislation Committee's Supplementary Budget Estimates
hearing of 19 October 2010. Major David John Charlton, Statutory Declaration,
signed 7 September 2010, [1]. Dr Raymond Bromwich, Proof Committee Hansard,
Canberra, 29 March 2011, pp. 80–81.
[105] Deloitte Review, p. 18.
[106] Major David John Charlton,
Statutory Declaration, signed 7 September 2010, [13].
[107] Major David John Charlton,
Statutory Declaration, signed 7 September 2010, [7]. See further, Australian
Securities and Investments Commission, Extract from National Names Index,
accessed 13 April 2011. Media reports indicate that the Commonwealth was among
the company's unsecured creditors, in respect of a 2008 contract administered
by the Attorney‑General's Department for the provision of air transport
services to the Indian Ocean Territories. See Richard Barker, 'The sky's the
limit', Age, 2 September 2010, p. 13. See further Joint Standing
Committee on the National Capital and External Territories, Inquiry into the
changing economic environment in the Indian Ocean Territories (April 2010),
p. 140; Attorney-General's Department, Annual Report 2009‑10, p. 166.
[108] Major David John Charlton,
Statutory Declaration, signed 7 September 2010, [8], [9], [10], [11].
[109] Mr Shaun Aisen, Proof
Committee Hansard, 29 March 2011, p. 11.
[110] AIS is an Australian
proprietary company limited by shares. It was registered on 30 March 2009:
Australian Securities and Investments Commission, Extract from National Names
Database, accessed 14 April 2011. The company is wholly owned by an entity
called Little Pockets Pty Ltd, which is in turn owned equally by Mr Rowan Keast
and Ms Melanie Keast: Deloitte Review, p. 24.
[111] Major David John Charlton,
Statutory Declaration, signed 7 September 2010, [7], [9].
[112] Major David John Charlton,
Statutory Declaration, signed 7 September 2010, [10], [14].
[113] Major David John Charlton,
Statutory Declaration, signed 7 September 2010, [14].
[114] Major David John Charlton,
Statutory Declaration, signed 7 September 2010, [10], [12]
[115] Major David John Charlton,
Statutory Declaration, signed 7 September 2010, [17]–[22].
[116] Richard Barker, 'The sky's
the limit', Age, 2 September 2010, p. 13; Dr Ian Watt, Proof
Committee Hansard, 29 March 2011, p. 46.
[117] Richard Barker, 'The sky's
the limit', Age, 2 September 2010, p. 13; Dr Ian Watt, Proof
Committee Hansard, 29 March 2011, p. 46.
[118] Major David John Charlton,
Statutory Declaration, signed 7 September 2010, [4]–[6].
[119] Mr Shaun Aisen, email
correspondence to Dr Raymond Bromwich, Inspector-General, Department of
Defence, 21 July 2010.
[120] Mr Shaun Aisen, Proof
Committee Hansard, 29 March 2011, p. 5; Mr Shaun Aisen, email
correspondence to Dr Raymond Bromwich, Inspector-General, Department of
Defence, 14, 16 July 2010; Mr Shaun Aisen, email correspondence to Mr Geoffrey
Brown, Chief Audit Executive, Department of Defence, 18 August 2010.
[121] Major David John Charlton,
Statutory Declaration, signed 7 September 2010, [16].
[122] Group Captain Robert Barnes,
Proof Committee Hansard, 29 March 2011, p. 64.
[123] Group Captain Robert Barnes,
Proof Committee Hansard, 29 March 2011, p. 68.
[124] Committee Hansard, 29
March 2011, pp, 8, 9 and 11.
[125] Mr Mark Clark, Statutory
Declaration, 7 September 2010; Deloitte Report, p. 23; Adagold Aviation, 'About
us', http://www.adagold.com.au/about,asp
(accessed 25 November 2010).
[126] Mr Mark Warren Clark,
Statutory Declaration, signed 7 September 2010. The statutory declaration was
tabled at the Legislation Committee's Supplementary Budget Estimates hearing of
19 October 2010: Mr Geoffrey Brown, Committee Hansard, Estimates,
Canberra, 19 October 2010, p. 111. The committee was informed that an
initial draft of the statutory declaration was undertaken by the Director of
Investigations within the Office of the Chief Audit Executive, Department of
Defence. The draft was based on transcripts of interviews of Mr Clark conducted
by the Office: Dr Raymond Bromwich, Proof Committee Hansard,
29 March 2011, pp. 80–81.
[127] Mr Mark Warren Clark,
Statutory Declaration, signed 7 September 2010, [2], [3].
[128] Mr Mark Warren Clark,
Statutory Declaration, signed 7 September 2010, [5], [6].
[129] Mr Mark Warren Clark,
Statutory Declaration, signed 7 September 2010, [12].
[130] Mr Mark Warren Clark,
Statutory Declaration, signed 7 September 2010, [15], [16].
[131] Mr Mark Warren Clark, Statutory
Declaration, signed 7 September 2010, [7].
[132] Mr Mark Warren Clark,
Statutory Declaration, signed 7 September 2010, [8].
[133] Mr Mark Warren Clark,
Statutory Declaration, signed 7 September 2010, [9].
[134] Mr Mark Warren Clark,
Statutory Declaration, signed 7 September 2010, [10].
[135] Mr Mark Warren Clark,
Statutory Declaration, signed 7 September 2010, [11].
[136] Mr Mark Warren Clark,
Statutory Declaration, signed 7 September 2010, [20].
[137] Dr Watt, Committee
Hansard, 29 March 2011.
Chapter 3 - The conduct of the 2010 tender process
[1]
A chronology of events is also provided at Appendix 5 to this report.
[2]
Department of Defence, Submission 5, Attachment A, p. 3.
[3]
Department of Defence, Submission 5, Attachment A, p. 3.
[4]
Department of Defence, Submission 5, Attachment A, p. 3.
[5]
Department of Defence, Submission 5, Attachment A, p. 3.
[6]
Department of Defence, Submission 5, Attachment A, p. 3; Deloitte
Review, p. 12.
[7]
Department of Defence, Submission 5, Attachment A, p. 3. See
further, AFCD Review, pp. 16–17; AGS Review, p. 3; Deloitte Review, p. 12; Dr
Ian Watt, Proof Committee Hansard, 29 March 2011, p. 46.
[8]
Department of Defence, Submission 5, Attachment A, p. 3; AFCD
Review, p. 16.
[9]
Department of Defence, Submission 5, Attachment A, p. 3; AFCD
Review, p. 16.
[10]
Department of Defence, Submission 5, Attachment A, p. 3; Dr Ian
Watt, Proof Committee Hansard, 29 March 2011, p. 49. See further: Group
Captain Robert Barnes, Statutory Declaration, signed 20 April 2011; Jo-Anne
Pope, Statutory Declaration, signed 14 April 2011; Joshua Prucha, Statutory
Declaration, signed 14 April 2011.
[11]
Department of Defence, Submission 5, Attachment A, p. 3.
[12]
Air Transport Deed of Standing Offer, 2 November 2009
(AusTender SON179438).
[13]
AFCD Review, p. 4.
[14]
Air Transport Deed of Standing Offer, 2 November 2009
(AusTender SON179438).
[15]
Air Transport Deed of Standing Offer, 2 November 2009
(AusTender SON179438).
[16]
Deloitte Review, p. 8. See further, AGS Review p. 6.
[17]
Commonwealth Procurement Guidelines (CPGs), December 2008, [8.35].
[18]
CPGs, [8.35]; Department of Finance and Deregulation, Establishing and
Using Panels, Good Procurement Practice Guide 4, December 2007, [3.2];
Defence Procurement Policy Manual (DPPM), April 2011, Chapter 4.8.
[19]
See especially Division 2 (Mandatory Procurement Procedures), [8.35]–[8.37],
which govern the establishment of panels. Note that the Mandatory Procurement
Procedures apply to 'covered procurements' (defined as those which exceed the prescribed
monetary thresholds in the CPGs and are not otherwise exempt).
[20]
See, for example, Department of Finance and Deregulation, Guidance on
the Mandatory Procurement Procedures, Financial Management Guidance 13,
Appendix B—Panels; Department of Finance and Deregulation, Establishing and
Using Panels, Good Procurement Practice Guide 4; DPPM chapter 4.8.
[21]
Department of Finance and Deregulation, Establishing and Using Panels,
Good Procurement Practice Guide 4, December 2007, [3.3], [3.5].
[22]
Department of Finance and Deregulation, Establishing and Using Panels,
Good Procurement Practice Guide 4, December 2007, [3.4].
[23]
CPGs [8.35].
[24]
Department of Finance and Deregulation, Guidance on the Mandatory
Procurement Procedures, Financial Management Guidance 13, Appendix B—Panels.
[25]
AGS Review, p. 6.
[26]
Department of Defence, Submission 5, Attachment D ('Air Transport
Deed of Standing Offer'), Clause 5.1(c).
[27]
Department of Defence, Submission 5, Attachment D ('Air Transport
Deed of Standing Offer'), Clause 5.2(b).
[28]
Department of Defence, Submission 5, Attachment D ('Air Transport
Deed of Standing Offer'), Clauses 6.6, 13.3.
[29]
Department of Defence, Submission 5, Attachment D ('Air Transport
Deed of Standing Offer'), Clause 13.4.
[30]
Department of Defence, Submission 5, Attachment D ('Air Transport
Deed of Standing Offer'), Clause 22.
[31]
Department of Defence, Submission 5, Attachment D ('Air Transport
Deed of Standing Offer'), Clause 22 (a).
[32]
Department of Defence, Submission 5, Attachment D ('Air Transport
Deed of Standing Offer'), Clauses 22 (b), (d).
[33]
Department of Defence, Submission 5, Attachment D ('Air Transport
Deed of Standing Offer'), Clause 22(c).
[34]
See the Defence Procurement Policy Manual (DPPM), Chapter 5.1, 'Planning
complex and strategic procurements'.
[35]
Department of Defence, Submission 5, Attachment A, Annexure A;
Deloitte Review, Appendix C.
[36]
Review, p. 14, citing 'Procurement Strategy for the Contracting of Air
Sustainment Services in Support of Operation Slipper', [14]. See further,
Department of Defence, Submission 5, Attachment A, p. 21.
[37]
Deloitte Review, p. 7, citing 'Procurement Strategy for the Contracting of
Air Sustainment Services in Support of Operation Slipper'.
[38]
Deloitte Review, p. 7.
[39]
Department of Defence, Submission 5, Attachment A, Annexure C
(Procurement Risk Management Plan, 23 March 2010).
[40]
Department of Defence, Submission 5, Attachment A, Annexure A;
Deloitte Review, Appendix C.
[41]
Deloitte Review pp. 15–16; Department of Defence, Submission 5, Attachment
A, p. 22.
[42]
Department of Defence, Submission 5, Attachment A, p. 23.
[43]
AFCD Review, p. 11; Mr Geoffrey Brown, Dr David Lloyd and Dr Ian Watt, Proof
Committee Hansard, 29 March 2011, pp. 53–56.
[44]
AFCD Review, p. 11.
[45]
Proof Committee Hansard, 28 June 2011, p. 10.
[46]
Proof Committee Hansard, 28 June 2011, p. 11.
[47]
Proof Committee Hansard, in camera, 28 June 2011, p. 3.
[48]
Proof Committee Hansard, 29 March 2011, p. 11.
[49]
Department of Defence, Submission 5, Attachment A, pp. 3–4; RFT
AO/014/09-10, p. 1.
[50]
RFT AO/014/09–10, pp. 2 (definitions section), 20 (item 8).
[51]
Department of Defence, Submission 5, Attachment A, p. 20.
[52]
Department of Defence, Submission 5, Attachment A, p. 18. See
further RFT AO/014/09–10, item 10(a). Note however, that the costs of fuel were
met by the Commonwealth: item 7.9.
[53]
RFT AO/014/09-10, pp. 13-14 (Clause 7.13).
[54]
Department of Defence, Submission 3, Attachment A, p. 19.
[55]
Department of Defence, Submission 3, Attachment A, p. 19.
[56]
Department of Defence, Submission 3, Attachment A, p. 19.
[57]
Department of Defence, Submission 5, Attachment A, p. 19.
[58]
Department of Defence, Submission 5, Attachment A, 15. See further
Deloitte Review, p. 11.
[59]
RFT AO/014/09–10, p. 23 (item 9.20). See also item 9.25(a)(xiii) which
enabled the Commonwealth to waive any requirement or obligation under the
Request or the Deed of Standing Offer.
[60]
Deloitte Review, pp. 14–15. See further, Department of Defence, Submission
5, Attachment A, p. 20.
[61] Mr Shaun
Aisen, email correspondence to Lieutenant Colonel Andrew Hall and Group Captain
Robert Barnes, 30 March 2010.
[62] Mr Shaun
Aisen, email correspondence to Lieutenant Colonel Andrew Hall and Group Captain
Robert Barnes, 30 March 2010.
[63] Mr Shaun
Aisen, email correspondence to Lieutenant Colonel Andrew Hall and Group Captain
Robert Barnes, 30 March 2010.
[64] Lieutenant
Colonel Andrew Hall, email correspondence to Mr Shaun Aisen, 8 April 2010.
See further Group Captain Robert Barnes, Proof Committee Hansard, 29
March 2011, p. 69.
[65] Lieutenant
Colonel Andrew Hall, email correspondence to Mr Shaun Aisen, 8 April 2010.
[66] Lieutenant
Colonel Andrew Hall, email correspondence to Mr Shaun Aisen, 8 April 2010.
[67] See
AFCD
Review, p. 27.
[68]
Department of Defence, Submission 5, Attachment A, p. 19.
[69]
AFCD Review, p. 12.
[70]
AGS Review, p. 9.
[71]
Major David Charlton, Statutory Declaration, signed 7 September 2010,
[10], [14].
[72]
Major David Charlton, Statutory Declaration, signed 7 September 2010,
[10].
[73]
Department of Defence, Submission 5, Attachment A, Annexure A;
Deloitte Review, pp. 19–20; Dr Ian Watt, Proof Committee Hansard, 29
March 2011, p. 47.
[74] AFCD Review,
p. 27.
[75]
Department of Defence, Submission 5, Attachment A, p. 3.
[76]
Department of Defence, Submission 5, Attachment A, p. 3.
[77]
Department of Defence, Submission 5, Attachment A, p. 18; AFCD
Review, p. 8.
[78]
Referred to as the Technical/Operational TEWG.
[79]
Referred to as the Financial TEWG.
[80]
Department of Defence, Submission 5, Attachment A, p. 18.
[81]
RFT AO/014/09-10, item 9.22; Department of Defence, Submission 5, Attachment
A, pp. 17–18; AFCD Report, p. 9.
[82]
RFT AO/014/09-10, item 9.22.
[83]
RFT AO/014/09-10, item 9.22.
[84]
AFCD Review, p. 9.
[85]
Department of Defence, Submission 5, Attachment A, p. 18; AFCD
Review p. 10.
[86]
AFCD Review, p. 10.
[87]
AFCD Review, p. 12.
[88]
Department of Defence, Submission 5, Attachment A, p. 18.
[89]
Department of Defence, Submission 5, Attachment A, pp. 18–19.
[90]
Clauses 18, 21 and 22 of the TEP, cited in Department of Defence, Submission
5, Attachment A, p. 23.
[91]
Deloitte Review, p. 18.
[92]
Department of Defence, Submission 5, Attachment A, p. 22.
[93]
Deloitte Review, p. 18.
[94]
Department of Defence, Submission 5, Attachment A, p. 24. See further,
Deloitte Review, pp. 18–19.
[95]
Department of Defence, Submission 5, Attachment A, pp. 15–16.
[96]
Deloitte Review, p. 8.
[97]
Group Captain Robert Barnes, Proof Committee Hansard, 29 March
2011, pp. 69–71.
[98]
Group Captain Robert Barnes, Proof Committee Hansard, 29 March
2011, p. 70.
[99]
Group Captain Robert Barnes, Proof Committee Hansard, 29 March
2011, pp. 70–71.
[100] Mr Geoffrey Brown, Proof
Committee Hansard, 29 March 2011, p. 72.
[101] AFCD Review, pp. 22–23.
[102] Department of Defence, Summary
of advice provided by Clayton Utz to Defence in relation to the appointment of
a probity auditor (14 April 2011), response to Question on Notice 3(j).
[103] Defence made available to
the committee a summary prepared by Mr Power of his telephone conversation with
Squadron Leader Cole on 9 June 2010: Department of Defence, Summary of
advice provided by Clayton Utz to Defence in relation to the appointment of a
probity auditor (14 April 2011), response to Question on Notice 3(j).
[104] Department of Defence, Summary
of advice provided by Clayton Utz to Defence in relation to the appointment of
a probity auditor (14 April 2011), response to Question on Notice 3(j).
[105] Department of Defence, Summary
of advice provided by Clayton Utz to Defence in relation to the appointment of
a probity auditor (14 April 2011), response to Question on Notice 3(j).
[106] See further: Mr Geoffrey
Brown, Dr David Lloyd and Dr Ian Watt, Proof Committee Hansard, 29 March
2011, pp. 53–56. See also, AFCD Review, pp. 11–12; AGS Review, p. 9; Deloitte
Review, p. 15.
[107] Dr David Lloyd, Proof
Committee Hansard, 29 March 2011, p. 55.
[108] Group Captain Robert Barnes,
Proof Committee Hansard, 29 March 2011, p. 59. See further, Department
of Defence, Submission 5, Attachment A, p. 16.
[109] Department of Defence, Submission
5, Attachment A, p. 4.
[110] Department of Defence, Submission
5, Attachment A, pp. 3–4 (footnote 13). See further DPPM, 5.6—Evaluation of
tenders, p. 5.6–14.
[111] Proof Committee Hansard,
28 June 2011, p. 16.
[112] Clayton Utz, Advice to
Tender Evaluation Board re Source Evaluation Report, 9 July in camera evidence.
[113] Proof Committee Hansard,
28 June 2011, p. 16 and in camera Hansard, 28 June 2011.
[114] Clayton Utz, Request
ALSO/014/09-10 for the Provision of Air Sustainment Services to the MEAO
(Request) – Advice to Tender Evaluation Board re Source Evaluation Report,
Committee Hansard, in camera, 28 June 2011.
[115] Committee Hansard, in
camera, 28 June 2011, p. 5.
[116] Committee Hansard, in
camera, 28 June 2011, p. 5.
[117] Committee Hansard, in
camera, 28 June 2011, p. 7.
[118] Department of Defence, Submission
5, Attachment A, Annexure A.
[119] Department of Defence, Submission
5, Attachment A, Annexure A. See further, DPPM 5.6—Evaluation of tenders,
p. 5.6–15.
[120] Department of Defence, Submission
5, Attachment A, Annexure A.
[121] Department of Defence, Submission
5, Attachment A, Annexure A.
[122] Report provided to the
committee as a confidential document.
Chapter 4 - Complaints about the 2010 tender process
[1]
Mr Shaun Aisen, email correspondence to Dr Raymond Bromwich, 14 July
2010.
[2]
Mr Shaun Aisen, email correspondence to Dr Raymond Bromwich,
Inspector-General, Department of Defence, 16, 19, 21 July 2010. See also Mr
Shaun Aisen, email correspondence to Mr Geoffrey Brown, Chief Audit Executive,
Department of Defence, 22, 28, 31 July 2010; 4, 18, 28 August 2010.
[3]
See further, Department of Defence, Submission 5, Attachment A,
pp. 5–6; AFCD Review, 4.2.
[4]
Strategic Aviation, Submission 6, p. 2. See also, Mr Shaun Aisen,
letter to Dr Raymond Bromwich, 14 July 2010; Mr Shaun Aisen, email to Mr
Geoffrey Brown, 4 August 2010 (forwarding email correspondence with HQ1JMOVGP
from 30 March to 9 April 2010).
[5]
Mr Shaun Aisen, email to Mr Geoffrey Brown, 18 August 2010.
[6]
Mr Shaun Aisen, Proof Committee Hansard, 29 March 2011, p. 4. See
also Strategic Aviation, Submission 6, p. 2; Mr Shaun Aisen, email
correspondence to Mr Geoffrey Brown, 4, 18 August 2010.
[7]
Strategic Aviation, Submission 6, p. 2; Mr Shaun Aisen, email
correspondence to Mr Geoffrey Brown, 4 August 2010 (forwarding email
correspondence with HQ1JMOVGP between 30 March and 9 April 2010).
[8]
Mr Shaun Aisen, email correspondence to Mr Geoffrey Brown, 4 August 2010
(forwarding email correspondence with HQ1JMOVGP between 30 March and 9 April
2010).
[9]
Mr Shaun Aisen, email correspondence to Dr Raymond Bromwich, 21 July
2010.
[10]
Mr Shaun Aisen, email correspondence to Dr Raymond Bromwich, 21 July 2010.
[11]
Strategic Aviation, Submission 6, p. 4; Mr Shaun Aisen, email
correspondence to Dr Raymond Bromwich, 21 July 2010.
[12]
Mr Shaun Aisen, letter to Dr Raymond Bromwich, 14 July 2010. See also, Mr
Shaun Aisen, email correspondence to Dr Raymond Bromwich, 16 July 2010; Mr
Shaun Aisen, email correspondence to Mr Geoffrey Brown, 18 August 2010.
[13]
Mr Shaun Aisen, email correspondence to Mr Geoffrey Brown, 18 August 2010.
[14]
Mr Shaun Aisen, email correspondence to Mr Geoffrey Brown, 18 August 2010.
[15]
Mr Shaun Aisen, email correspondence to Mr Geoffrey Brown, 28 July 2010.
See also, Mr Shaun Aisen, Proof Committee Hansard, 29 March 2011, pp. 2–5;
Strategic Aviation, Submission 6, pp. 3–4.
[16]
Mr Shaun Aisen, email correspondence to Mr Geoffrey Brown, 28 July 2010; Mr
Shaun Aisen, email correspondence to Mr Geoffrey Brown, 4 August 2010
(forwarding email correspondence with HQ1JMOVGP between 30 March and 9
April 2010). See also, Mr Shaun Aisen, Proof Committee Hansard, 29 March
2011, p. 4; Strategic Aviation, Submission 6, pp. 3–4.
[17]
Mr Shaun Aisen, email correspondence to Dr Raymond Bromwich, 21 July 2010.
See also, Mr Shaun Aisen, Proof Committee Hansard, 29 March 2011, p. 2;
Strategic Aviation, Submission 6, p. 3.
[18]
Mr Shaun Aisen, email correspondence to Dr Raymond Bromwich, 19 July 2010;
Mr Shaun Aisen, email correspondence to Mr Geoffrey Brown, 18 August 2010;
Strategic Aviation, Submission 6, p. 4.
[19]
Mr Shaun Aisen, letter to Dr Raymond Bromwich, 14 July 2010.
[20]
Mr Shaun Aisen, letter to Dr Raymond Bromwich, 14 July 2010.
[21]
Mr Shaun Aisen, letter to Dr Raymond Bromwich, 14 July 2010.
[22]
Mr Shaun Aisen, Proof Committee Hansard, 29 March 2011, p. 4.
[23]
Mr Shaun Aisen, letter to Dr Raymond Bromwich, 14 July 2010.
[24]
Shaun Aisen to Dr Ian Williams, Inspector General, 14 July 2010
(confidential document).
Chapter 5 - Internal review of the 2010 tender process
[1]
Mr Geoffrey Brown, Proof Committee Hansard, 29 March 2011, p. 87.
[2]
Department of Defence, Submission 5, Attachment A, p. 6.
[3]
AFCD Review, p. 3.
[4]
Australian Government Department of Finance and Deregulation, 'Guidance
on Ethics and Probity in Government Procurement', Financial Management
Guidance No. 14 (January 2005). The guide was developed to support the
Commonwealth Procurement Guidelines (CPGs), to help officials understand their
policy obligations when undertaking procurement activities (p. 2).
[5]
AFCD Review, p. 6.
[6]
AFCD Review, p. 6.
[7]
AFCD Review, pp. 21–22.
[8]
AFCD Review, pp. 6–7.
[9]
AFCD Review, p. 4.
[10]
AFCD Review, p. 5.
[11]
AFCD Review, p. 17
[12]
AFCD Review, pp. 16–17.
[13]
The review noted the evidence of an unsuccessful tenderer to this effect:
AFCD Review, p. 15.
[14]
AFCD Review, p. 14.
[15]
AFCD Review, p. 9.
[16]
AFCD Review, pp. 21–23.
[17]
AFCD Review, pp. 17, 23–24.
[18]
AFCD Review, p. 24.
[19]
AFCD Review, p. 26.
[20]
AFCD Review, p. 19.
[21]
AFCD Review, pp. 19–20.
[22]
AFCD Review, p. 25.
[23]
AFCD Review, p. 18.
[24]
AFCD Review, p. 10. This matter was further examined in the AGS Review,
discussed in chapter 6 of this report. See further, AGS Review, p. 6.
[25]
AFCD Review, pp. 7–8.
[26]
AFCD Review, pp. 11, 12.
[27]
AFCD Review, p. 11.
[28]
AFCD Review, pp. 11, 12.
[29]
AFCD Review, p. 11.
[30]
AFCD Review, p. 11.
[31]
AFCD Review, p. 11.
[32]
AFCD Review, p. 11.
[33]
AFCD Review, pp. 11, 13.
[34]
AFCD Review, p. 12.
[35]
Richard Baker, 'Concerns over Defence contract', Sydney Morning Herald and
the Age, 12 August 2010.
[36]
Proof Committee Hansard, 29 March 2011, pp. 73–83. A number of
witnesses referred to time constraints and the need to have the contract in
force. See for example, Mr Scala, AGS, Proof Committee Hansard, 28 June
2011, p. 6; Mr Brown, Proof Committee Hansard, 29 March 2011, p. 86.
[37]
Proof Committee Hansard, 29 March 2011, pp. 75, 77, 82 and 86. See
also observation in PwC's Independent peer review of the Department of
Defence—Audit and Fraud control Division's probity review concerning the
Provision of Air Sustainment Services to the Middle East Area of Operations
(MEAO), 8 October 2010, p. 7 and the AFCD Review, p. 6.
[38]
Proof Committee Hansard, 29 March 2011, p. 75.
[39]
See also paragraph 6.73.
[40]
AFCD Review, p. 25.
[41]
Mr Geoffrey Brown, Proof Committee Hansard, 29 March 2011, pp. 73,
74, 75.
[42]
Proof Committee Hansard, 29 March 2011, pp. 75 (Mr Geoffrey Brown),
76–80 (Dr Raymond Bromwich). This matter was also the subject of comment in the
PwC review, detailed below.
[43]
AFCD Review, pp. 22–23. See further, Dr Raymond Bromwich, Proof
Committee Hansard, 29 March 201, p. 83.
[44]
Department of Defence, Submission 5, Attachment A, p. 7; PwC
Review, p. 2; Mr Steven Baker, Proof Committee Hansard, 29 March 2011,
p. 14; Mr Geoffrey Brown, Proof Committee Hansard, 29 March 2011, p. 83.
[45]
Australian Government Department of Finance and Deregulation, 'Guidance on
Ethics and Probity in Government Procurement', Financial Management Guidance
No. 14 (January 2005). See footnote 4.
[46]
PwC Review, p. 2; Department of Defence, Submission 5, Attachment
A, p. 7; Mr Steven Baker, Proof Committee Hansard, 29 March 2011, p. 14.
[47]
Department of Defence, Submission 5, Attachment A, p. 7. See
further, PwC Review, Appendix A (terms of reference and quotation as contained
in a letter from PwC to Defence dated 18 August 2010).
[48]
Department of Defence, Submission 5, Attachment A, p. 7.
[49]
Mr Geoffrey Brown, Proof Committee Hansard, 29 March 2011, pp. 83–84.
See also, Mr Steven Baker, Proof Committee Hansard, 29 March 2011, pp.
18–21.
[50]
PwC Review, p. 5.
[51]
PwC Review, pp. 2, 3.
[52]
PwC Review, p. 3.
[53]
PwC Review, p. 3.
[54]
PwC Review, pp. 2, 7.
[55]
PwC Review, p. 3.
[56]
PwC Review, p. 3.
[57]
PwC Review, p. 7 (observation 1).
[58]
PwC Review, pp. 7–8.
[59]
PwC Review, p. 8 (observation 3).
[60]
PwC Review, p. 8 (observation 4).
[61]
PwC Review, p. 9 (observation 5).
[62]
PwC Review, p. 9 (observation 6).
[63]
PwC Review, p. 7.
[64]
PwC Review, pp. 8–9.
[65]
PwC Review, p. 9.
[66]
PwC Review, p. 8.
[67]
Proof Committee Hansard, 29 March 2011, pp. 74–79; 87–88.
[68]
Dr Raymond Bromwich, Proof Committee Hansard, 29 March 2011, p. 77.
See further p. 82.
[69]
Dr Raymond Bromwich, Proof Committee Hansard, 29 March 2011, p. 79.
[70]
Dr Ian Watt, Proof Committee Hansard, 29 March 2011, p. 88.
[71]
Dr Ian Watt, Proof Committee Hansard, 29 March 2011, p. 88.
[72]
Dr Ian Watt, Proof Committee Hansard, 29 March 2011, p. 88.
[73]
Proof Committee Hansard, 29 March 2011, p. 16.
[74]
Proof Committee Hansard, 29 March 2011, p. 14.
[75]
PwC Review, p. 3.
[76]
Proof Committee Hansard, 29 March 2011, p. 31. See also para. 5.15
and accompanying footnotes.
Chapter 6 - External reviews of the 2010 tender process
[1]
Mr Shaun Aisen, email correspondence to Mr Geoffrey Brown, 28 August
2010.
[2]
Mr Shaun Aisen, email correspondence to Mr Geoffrey Brown, 28 August
2010.
[3]
Mr Shaun Aisen, email correspondence to Mr Geoffrey Brown, 28 August
2010.
[4]
Mr Shaun Aisen, email correspondence to Mr Geoffrey Brown, 28 August
2010.
[5]
Department of Defence, Submission 5, Attachment A, pp. 7–8.
[6]
Department of Defence, Submission 5, Attachment A, p. 8.
[7]
Department of Defence, Submission 5, Attachment A, p. 8 and
Annexure B.
[8]
Senator the Hon David Johnston, Shadow Minister for Defence, letter to
Dr Ian Watt, 31 August 2010, p. 1.
[9]
Senator the Hon David Johnston, Shadow Minister for Defence, letter to
Dr Ian Watt, 31 August 2010, p. 1.
[10]
Department of Defence, Submission 5, Attachment A, p. 8.
[11]
Department of Defence, Submission 5, Attachment A, p. 8.
[12]
Department of Defence, Submission 5, Attachment A, p. 11; Dr Ian
Watt, Proof Committee Hansard, 29 March 2011, p. 49.
[13]
Department of Defence, Submission 5, Attachment A, p. 8.
[14]
Dr Ian Watt, Proof Committee Hansard, 29 March 2011, p. 84. Defence
also noted the depth of resources available to large firms and their rapid
response capacity—including, for example, through AFCD's outsource co-partner
arrangement with PwC: Mr Geoffrey Brown, Proof Committee Hansard, 9
March 2011, pp. 83–84.
[15]
Richard Baker, 'Defence bidders got inside help', the Age, 2
September 2010.
[16]
The full terms of reference are set out at pp. 3–4 of the Deloitte Review.
[17]
Department of Defence, Submission 5, Attachment A, p. 8.
[18]
Department of Defence, Submission 5, Attachment A, p. 8.
[19]
Mr Peter Bars, Proof Committee Hansard, 28 March 2011, p. 16.
[20]
Deloitte Review, p. 2.
[21]
Deloitte Review, p. 2.
[22]
Deloitte Review, p. 11.
[23]
Deloitte Review, pp. 11–12.
[24]
Deloitte Review, p. 12.
[25]
Deloitte Review, p. 16.
[26]
Deloitte Review, p. 15.
[27]
Deloitte Review, p. 15.
[28]
Deloitte Review, p. 15.
[29]
Deloitte Review, p. 18.
[30]
Deloitte Review, pp. 17–18.
[31]
Deloitte Review, pp. 19–20.
[32]
Deloitte Review, p. 10.
[33]
Deloitte Review, p. 8.
[34]
Mr Dennis Krallis, Proof Committee Hansard, 28 March 2011, p. 12.
[35]
These were Adagold (subsidiaries, related companies and key members or
employees); Alltrans (parent company and key members or employees); AIS (parent
companies and key members or employees): Deloitte Review, p. 21.
[36]
Deloitte Review, p. 24.
[37]
Deloitte Review, p. 23.
[38]
Deloitte Review, p. 27.
[39]
Deloitte Review, p. 26.
[40]
Deloitte Review, p. 27.
[41]
Deloitte Review, p. 27.
[42]
Deloitte Review, p. 29.
[43]
Deloitte Review, p. 28.
[44]
Deloitte Review, pp. 28–29.
[45]
Deloitte Review, p. 29.
[46]
Deloitte Review, p. 33.
[47]
Deloitte Review, pp. 31–32.
[48]
Deloitte Review, p. 33.
[49]
Deloitte Review, p. 7.
[50]
Deloitte Review, p. 34.
[51]
Deloitte Review, p. 35.
[52]
AGS Review, p. 1.
[53]
AGS Review, p. 1. See also Proof Committee Hansard, 28 June 2011,
p. 2.
[54]
Department of Defence, Submission 5, Attachment A, p. 8.
[55]
AGS Review, p. 5.
[56]
See AGS Review, Annexure A.
[57]
AGS Review, Annexure B.
[58]
AGS Review, p. 2.
[59]
AGS Review, p. 2.
[60]
AGS Review, p. 2.
[61]
AGS Review, p. 7.
[62]
AGS Review, p. 7.
[63]
AGS Review, p. 7.
[64]
AGS Review, p. 7.
[65]
AGS Review, p. 7.
[66]
AGS Review, p. 7.
[67]
AGS Review, pp. 7–8.
[68]
AGS Review, p. 7.
[69]
AGS Review, p. 8.
[70]
AGS Review, p. 8.
[71]
AGS Review, p. 8. See further, Department of Finance and Deregulation, Guidance
on the Mandatory Procurement Procedures, Financial Management Guidance 13,
Appendix B—Panels.
[72]
AGS Review, p. 8.
[73]
AGS Review, p. 8.
[74]
AGS Review, p. 9.
[75]
AGS Review, p. 9.
[76]
AGS Review, pp. 9–10.
[77]
AGS Review, p. 10.
[78]
AGS Review, p. 10.
[79]
AGS Review, p. 10.
[80]
AGS Review, p. 10.
[81]
AGS Review, p. 10.
[82]
AGS Review, p. 10.
[83]
Proof Committee Hansard, 28 June 2011, p. 5.
[84]
AGS Review, pp. 10–11.
[85]
Clayton Utz, Advice to Tender Evaluation Board re Source Evaluation
Report, 9 July in camera evidence.
[86]
Proof Committee Hansard, 28 June 2011, p. 16 and in camera Hansard,
28 June 2011.
[87]
Proof Committee Hansard, 28 June 2011, p. 4.
[88]
Proof Committee Hansard, 28 June 2011, p. 17.
[89]
Proof Committee Hansard, 28 June 2011, p. 4.
[90]
AGS Review, p. 11.
[91]
AGS Review, p. 11.
[92]
AGS Review, p. 11.
[93]
Richard Barker, 'The sky's the limit', Age, 2 September 2010, p.
13.
[94]
Richard Barker, 'The sky's the limit', Age, 2 September 2010, p.
13.
[95]
AFCD Review, pp. 5, 25.
[96]
Department of Defence, Submission 5, Attachment A, p. 13.
[97]
Department of Defence, Submission 5, Attachment A, p. 13; Dr Ian
Watt, Proof Committee Hansard, 29 March 2011, p. 46. See further, Department
of Defence 'Referral of matters regarding the 2005 Defence contract for air
support services to the Middle East Area of Operations to the Australian
Federal Police' Media Release MECC 428/10, 13 September 2010.
[98]
Deloitte Review, pp. 15, 18.
[99]
AGS Review, pp. 9–10. See further, AFCD Review, p. 11.
[100] Department of Defence, Submission
5, Attachment A, pp. 10–11.
[101] Department of Defence, Submission
5, Attachment A, pp. 26–27.
[102] Department of Defence, Submission
5, Attachment A, pp. 32–35.
[103] Deloitte review, p. 2; AGS
review, p. 5.
[104] Mr Bromwich, Proof
Committee Hansard, 29 March 2011, p. 81.
[105] Deloitte Review, p. 2.
[106] Deloitte Touche Tohmatsu, Submission
3, p. 1. See further, Department of Defence, Submission 5,
Attachment A, p. 9.
[107] Department of Defence, Submission
5, Attachment A, pp. 8–9. See also Mr Brown, Proof Committee Hansard,
29 March 2011, p. 75.
[108] Department of Defence, Submission
5, Attachment A, p. 9; Mr Peter Bars, Proof Committee Hansard,
Sydney, 28 March 2011, p. 2; Mr Geoffrey Brown, Proof Committee Hansard, 29
March 2011, pp. 84–85.
[109] Department of Defence, Submission
5, Attachment A, pp. 8–9; Deloitte, Submission 3, p. 1.
[110] Mr Geoffrey Brown, Proof
Committee Hansard, 29 March 2011, pp. 86–87; Mr Peter Bars, Proof Committee
Hansard, 28 March 2011, p. 2. See also the evidence of PwC in respect of
the development of terms of reference, which were prepared by PwC and approved
by Defence: Mr Steven Baker, Proof Committee Hansard, 29 March 2011, p.
20.
[111] Department of Defence, Submission
5, Attachment A, p. 10. See further, Mr Geoffrey Brown, Proof Committee
Hansard, 29 March 2011, p. 87; Deloitte, Submission 3, p. 1, but
compare the oral evidence of Deloitte, that their request to access the AGS
Review was denied by Defence on the basis of privilege: Mr Dennis Krallis, Proof
Committee Hansard, 28 March 2011, p. 4.
[112] Dr Ian Watt, Proof
Committee Hansard, 29 March 2011, pp. 47–48. See further, Deloitte, Submission
3, p. 2; Mr Dennis Krallis, Proof Committee Hansard, 28 March 2011,
p. 13.
[113] Deloitte Touche Tohmatsu, Submission
3, p. 2; Mr Dennis Krallis, Proof Committee Hansard, 28 March 2011,
p. 2. See further, Department of Defence, Submission 5, Attachment A,
pp. 9–10. Mr Geoffrey Brown, Proof Committee Hansard, 29 March
2011, pp. 84–87.
[114] Mr Dennis Krallis, Proof
Committee Hansard, 28 March 2011, p. 13.
[115] Mr Dennis Krallis, Proof
Committee Hansard, 28 March 2011, p. 13.
[116] However, AGS consulted with
Deloitte in the preparation of its advice and shared thoughts and findings on a
progressive basis AGS Review, pp. 1, 5.
[117] AGS Review, p. 5.
[118] AGS Review, p. 5.
[119] Proof Committee Hansard,
28 June 2011, p. 7.
[120] See paragraph 5.14.
[121] Proof Committee Hansard,
28 June 2011, p. 2.
Chapter 7 - The awarding and performance of the 2010 contract
[1]
Defence, Submission 5, Annex A and Dr Ian Watt, Proof
Committee Hansard, Estimates, 19 October 2010, p. 11.
[2]
Department of Defence, Submission 5, Attachment A, Annexure A.
[3]
Department of Defence, Submission 5, Attachment A, Annexure A.
[4]
Air Operator's Certificate AOC # 1-BOV6-09, issued 26 October 2010.
[5]
Department of Defence, Submission 5, Attachment A, p. 15; Dr Ian
Watt, Proof Committee Hansard, 29 March 2011, p. 46.
[6]
Clause 16.5(a).
[7]
Clause 16.5(b).
[8]
Clauses 16.6(a),(b), (d), (e).
[9]
Clause 16.6(c).
[10]
Clause 16.6(f).
[11]
Item 7.16.
[12]
Dr Ian Watt, Secretary's opening remarks to the Senate Foreign Affairs
Defence and Trade References Committee, tabled 29 March 2011, p.17.
[13]
Dr Ian Watt, Secretary's opening remarks to the Senate Foreign Affairs
Defence and Trade References Committee, tabled 29 March 2011, pp. 1–2.
[14]
Mr Shaun Aisen, Proof Committee Hansard, 29 March 2011, p. 2.
[15]
Rear Admiral Ray Griggs, Proof Committee Hansard, 29 March 2011, p.
51.
[16]
Mr Shaun Aisen, Proof Committee Hansard, 29 March 2011, pp. 3–4.
[17]
Mr Shaun Aisen, Proof Committee Hansard, 29 March 2011, p. 4.
[18]
The TEP included criteria assessing: overall compliance with the
requirements; the respondent's understanding of the requirements; compliance
with specific performance requirements; and demonstrated technical and
managerial capacity to meet the requirements: AFCD Review, p. 9.
[19]
Deloitte Review, pp. 28–29.
[20]
AGS Review, p. 9. See further, Department of Defence, Submission 5,
Attachment A, pp. 27‑28.
[21]
Vice Admiral Griggs and Dr Watt, Proof Committee Hansard, 28 June
2011, p. 17.
[22]
Department of Defence, Submission 5, Attachment A, pp. 32–35; Dr
Ian Watt, Secretary's opening remarks to the Senate Foreign Affairs Defence and
Trade References Committee, tabled 29 March 2011, pp. 18–22.
[23]
Department of Defence, Submission 5, Attachment A, pp. 32–33.
[24]
Department of Defence, Submission 5, Attachment A, pp. 33–45.
[25]
Department of Defence, Submission 5, Attachment A, pp. 34–35; Dr
Ian Watt, Secretary's opening remarks to the Senate Foreign Affairs, Defence
and Trade References Committee, tabled 29 March 2011, pp. 19–22.
[26]
Department of Defence, Submission 5, Attachment A, pp. 34–35.
[27]
Mr Geoffrey Brown, Proof Committee Hansard, 29 March 2011, pp.
88–89.
[28]
Mr Geoffrey Brown, Proof Committee Hansard, 29 March 2011, pp.
88–89.
Chapter 8 - Taking stock
[1]
Terms of Reference, paragraphs (a)(iii),(iv),(vi),(vii).
[2]
Terms of Reference, paragraphs (a)(ii), (v).
[3]
Terms of Reference, paragraphs (a)(i),(viii); (b)(i)-(iv).
[4]
Terms of Reference, paragraph (b)(v).
[5]
Department of Finance and Deregulation, Ethics and Probity in
Procurement, Financial Management Guidance 14.
[6]
These are: the AFCD Review, the PwC Review, the Deloitte Review, the AGS
Review and the committee's inquiry.
[7]
See, for example, Committee Hansard, Estimates, 23 February 2011,
pp. 89–91; Committee Hansard, Estimates, 19 October 2010, pp. 8–10,
49–71; Department of Defence, Response to Questions on Notice, Supplementary
Budget Estimates 2010-2011.
[8]
See, for example, the series of articles by journalist Richard Baker,
including: 'Concerns over Defence contract', Age, 12 August 2010, p. 5;
'Defence bidders got inside help', Age, 2 September 2010, p. 1;
'The sky's the limit', Age, 2 September 2010, p. 13; 'Pledge to probe
Defence contract', Age, 3 September 2010, p. 6; 'Pledge to probe Defence
contract', Age, 3 September 2010, p. 6; 'Probes on deal to fly
troops', Age, 13 September 2010, p. 1; 'Police to probe $30m Defence
deal', Age, 14 September 2010, p. 5; 'Defence contract row widens', Age,
30 September 2010, p. 13; 'Defence must act on contract cover-up claims', Age,
18 November 2010, p. 18.
[9]
Department of Finance and Deregulation, Guidance on Ethics and
Probity in Government Procurement, Financial Management Guidance 14
(January 2005) ('FMG 14'), p. 16.
[10]
FMG 14, p. 16.
[11]
Proof Committee Hansard, 28 June 2011, p. 17.
[12]
See chapter 5, paragraphs 5.18–5.19 and 5.36–5.5.41.
[13]
See chapters 5 and 6.
[14]
See chapters 5 and 6.
[15]
See chapter 6.
[16]
See chapter 2. See further Dr Raymond Bromwich, Proof Committee Hansard,
29 March 2011, pp. 80–81.
[17]
PwC Review, p. 8. See further chapter 5.
Chapter 9 - Governance arrangements—probity
[1]
Terms of Reference, paragraph (a)(iii).
[2]
Terms of Reference, paragraph (a)(iv).
[3]
Terms of Reference, paragraph (a)(vi).
[4]
Terms of Reference, paragraph (a)(vii).
[5]
See chapters 2 and 3.
[6]
See chapter 2.
[7]
See chapters 2 and 3.
[8]
See chapter 2.
[9]
See chapters 3 and 4.
[10]
See chapters 3 and 4.
[11]
See chapter 3.
[12]
See chapters 2 and 3.
[13]
See chapter 3.
[14]
See chapters 3 and 4.
[15]
See chapters 2 and 3.
[16]
See chapter 2.
[17]
See chapter 3.
[18]
See chapter 3.
[19]
Department of Finance and Deregulation, Ethics and Probity in
Procurement, Financial Management Guidance 14, January 2005 ('FMG 14'), p.
28.
[20]
FMG 14, p. 30.
[21]
Australian National Audit Office, Better Practice Guide—Fairness and
Transparency in Purchasing Decisions: Probity in Australian Government
Procurement, ('ANAO Better Practice Guide') August 2007, p. 33.
[22]
DPPM, Chapter 3.13.
[23]
DPPM, p. 3.13-3, [12].
[24]
DPPM, p. 3.13-3, [13].
[25]
DPPM, p. 3.13-4.
[26]
DPPM, p. 3.13-3, [16].
[27]
DPPM, p. 3.13-6.
[28]
See chapter 6.
[29]
Department of Defence, Submission 5, Attachment A, p. 22.
[30]
See chapter 3.
[31]
Department of Defence, Summary of advice provided by Clayton Utz to
Defence in relation to the appointment of a probity auditor (14 April
2011), response to Question on Notice 3(j). See further chapter 3.
[32]
See chapter 3.
[33]
See chapter 3. See further the observations of the Deloitte and AGS
Reviews in chapter 6.
[34]
See chapter 3. See further the observations of the Deloitte and AGS
Reviews in chapter 6.
[35]
See chapter 3. See further the observations of the Deloitte Review in
chapter 6.
[36]
See chapters 5 and 6.
[37]
See chapters 3 and 4.
[38]
See for example, Department of Defence, Submission 5, Attachment A,
pp. 16, 22.
[39]
See chapter 3. See further Department of Defence, Submission 5,
Attachment A, p. 23.
[40]
Department of Defence, Summary of advice provided by Clayton Utz to
Defence in relation to the appointment of a probity auditor (14 April
2011), response to Question on Notice 3(j).
[41]
See for example, AFCD Review, p. 12: 'while the advice not to appoint an
independent probity advisor may have been reasonable at the time, with the
benefit of hindsight, the review concluded that a complete risk assessment ...
should have identified the desirability for an independent probity advisor'.
See further, Mr Geoffrey Brown, Proof Committee Hansard, 29 March
2011, p. 88; Dr Ian Watt, Proof Committee Hansard, 29 March 2011, p. 88
(evidence on the benefits of hindsight with respect to the decision not to
interview Mr Aisen).
[42]
See for example, Department of Defence, Submission 5, Appendix A,
pp. 16, 22.
[43]
Department of Defence, Submission 5, Attachment A, p. 16. See
further, p. 22.
[44]
Department of Defence, Submission 5, Attachment A, p. 22.
[45]
See Chapter 3. See further AFCD Review, p. 12.
[46]
Department of Defence, Summary of advice provided by Clayton Utz to
Defence in relation to the appointment of a probity auditor (14 April
2011), response to Question on Notice 3(j).
[47]
Group Captain Robert Barnes, Proof Committee Hansard, 29 March
2011, p. 64.
[48]
Department of Defence, Submission 5, Attachment A, p. 16. See
further, chapter 7.
[49]
DPPM, Chapter 3.2.
[50]
DPPM, Chapter 3.13.
[51]
DPPM, p. 3.2-2.
[52]
Terms of Reference, paragraph (b)(v).
[53]
This included Pel-Air Aviation Pty Ltd, Submission 2, p. 2.
[54]
Pel-Air Aviation Pty Ltd, Submission 2, p. 2. See further, Mr Danny
Foster, Proof Committee Hansard, 28 March 2011, pp. 19–26.
[55]
Mr Danny Foster, Proof Committee Hansard, 28 March 2011, p. 20.
[56]
See especially, FMG 14.
[57]
See FMG 14. See further, Australian National Audit Office, Better
Practice Guide—Fairness and Transparency in Purchasing Decisions: Probity in
Australian Government Procurement, August 2007.
[58]
Confidential correspondence to the committee, March 2011.
Chapter 10 - Governance arrangements—conflicts of interest and confidentiality
[1]
See for example, Deloitte Review p. 19.
[2] Deloitte
Review, p. 19. Defence Instruction (General) PERS 25-2—Employment and voluntary
activities of Australian Defence Force Members in off-duty hours.
[3] Defence
Instruction (General) PERS 25-3—Disclosure of interests of members of the
Australian Defence Force. It is, however, acknowledged that Major Charlton was
subject to legal and ethical requirements of general application—for example,
the Crimes Act 1914 (Cth) s 70(2) (the offence of the unauthorised
disclosure of information by a Commonwealth officer); the Criminal Code Act
1995 (Cth) s 135 (the offence of dishonestly obtaining a gain or
financial advantage from the Commonwealth); Defence Force Discipline Act
1982 (Cth) s 58 (the offence of the unauthorised disclosure of
information likely to be prejudicial to national security or defence); and
DI(G) PERS 25-6—conflicts of interest and acceptance of offers of gifts and
hospitality, p. 3 (general duty to disclose actual or perceived conflicts of
interest).
[4] DI
(G) PERS 25-2, paragraph 3(c); DI (G) PERS 25-3, paragraph 3. See further,
Deloitte Review p. 19.
[5]
Defence Instruction (General) PERS 25-4—Notification of post-separation
employment, annex a.
[6]
DI (G) PERS 25-4, annex b, paragraph 3.
[7]
High-level statements on the disclosure and management of conflicts of
interest also appear in various other Defence policy documents and industry
publications. See for example, Department of Defence, Guidance on Conflict
of Interest Issues for Defence Personnel, Circular Memorandum No 53/98,
[1]; Department of Defence, Defence and Industry—an Ethical Relationship (1998),
pp. 2–4; Department of Defence, Ethics Matters in Defence Resource
Management (2002), pp. 10–12.
[8]
Department of Defence, Submission 5, p. 35.
[9] DI(G)
PERS 25-4, paragraph 28.
[10]
AGS Review, p. 7.
[11]
Department of Defence, Submission 5, p. 35.
[12]
Department of Defence, Secretary's Opening Remarks (tabled 29 March
2011), pp. 20–21.
[13]
See chapter 6.
Chapter 11 - Findings on tender design
[1]
Terms of Reference, paragraph (a)(ii).
[2]
Terms of Reference, paragraph (a)(v).
[3]
Department of Defence, Submission 5, Attachment A, p. 3; Deloitte
Review, p. 12.
[4]
See paragraphs 3.3–3.5.
[5]
Department of Defence, Submission 5, Attachment A, p. 3. See
further, AFCD Review, pp. 16–17; AGS Review, p. 3; Deloitte Review, p. 12; Dr
Ian Watt Proof Committee Hansard, 29 March 2011, p. 46.
[6]
See paragraph 6.16.
[7]
See paragraph 5.7.
[8]
AFCD Review, p. 5.
[9]
See, for example, Mr Shaun Aisen, email correspondence to Lieutenant
Colonel Andrew Hall, 8 April 2010.
[10]
See paragraph 6.56, AGS Review, p. 79.
[11]
AFCD Review, pp. 11, 12.
[12]
AGS Review, pp. 7, 10–11.
[13]
AFCD Review, p. 11.
[14]
AGS Review, p. 10.
[15]
AFCD Review, pp. 11, 12.
[16]
AFCD Review, p. 10.
[17]
AFCD Review, p. 11; AGS Review, pp. 9–10.
[18]
See paragraph 6.65.
[19]
AFCD Review, p. 14.
Chapter 12 - Findings on due diligence and other relevant matters
[1]
Terms of Reference, paragraphs (a)(i),(viii); (b)(i)-(iv).
[2]
Terms of Reference, paragraph (b)(v).
[3]
Terms of Reference, paragraph (a)(i).
[4]
Terms of Reference, paragraph (a)(viii).
[5]
Terms of Reference, paragraph (b)(i).
[6]
Terms of Reference, paragraph (b)(ii).
[7]
Terms of Reference, paragraph (b)(iii).
[8]
Terms of Reference, paragraph (b)(iv).
[9]
Deloitte Review, pp. 21–24 (terms of reference, paragraph 4.6).
[10]
Deloitte Review, p. 23.
[11]
CPGs, Division 1, Part 4—Value for Money.
[12]
Deloitte Review, pp. 21–23.
[13]
Deloitte Review, pp. 25–26.
[14]
Deloitte Review, p. 25.
[15]
Civil Aviation Safety Authority, Submission 7, p. 3.
[16]
AFCD Review, p. 12; Mr Geoffrey Brown, Proof Committee Hansard, 29
March 2011, p. 88; Dr Ian Watt, Proof Committee Hansard, 29 March 2011,
p. 88.
[17]
Department of Defence, Submission 5, Attachment A, p. 22;
Appendix 5 - Chronology of significant events 2005-2011[1]
[1]
This chronology was compiled from information taken from many different
sources. Please consult the relevant sections in the report for more detail.