Scathing audit: Australian Passport Office under fire for unethical contracts

At least 18 public servants are under investigation for misconduct with taxpayer money including spending more than $135,000 scouting a seaside resort for a conference that was later held in Canberra.

A scathing audit of the Australian Passport Office’s procurement processes concludes they “have fallen short of ethical standards”.

The Australian National Audit Office identified multiple problems including that contracts were awarded without going to open tender, cost estimates were wildly inaccurate, and conflicts of interest were not properly managed – including at least two occasions where an employee’s spouse won contracts.

The audit office launched the examination after it spotted questionable procurement practices during an earlier audit of the passport office’s efficiency.

The Department of Foreign Affairs and Trade has agreed with all the ANAO’s recommendations and launched its own investigation into 18 employees and contractors.

The ANAO examined 331 contracts worth $1.58 billion – 243 of which started after June 2019 – then scrutinised in closer detail 73 of the new contracts, worth a combined $405.1 million.

These included contracts for the secure delivery of passports, call centre services, accountant services, supply of artworks, and labour hire as the office ramped up its capacity with massive demand after borders reopened.

None of the 243 contracts – worth a total of $476.5 million – entered into over the four-and-a-half year period had come about via an open request for tender.

Nearly three-quarters of the time, the passports office had identified its preferred company before starting the procurement process. In one case the successful tendered got their paperwork in late and was still awarded the contract, against the rules.

The audit also highlighted $31,422 in travel costs for four public servants to take “planning trips” to Port Douglas – where they also “accepted complimentary entry to a tourist attraction” that was not reported or approved.

Taxpayers were subsequently on the hook for $104,196 in cancellation fees and a non-refundable deposit paid to a resort in the Queensland coastal town after it was decided to hold a “Passport 6” conference in Canberra instead.

The Canberra venue cost a further $19,940.

Nor were conflicts of interest adequately managed and in 16 cases they were not declared.

These included cases where the chair of an evaluation panel had previously been the boss of one of the people being assessed, another where a panel member was a contractor for one of the suppliers (which subsequently won three of the four contracts, worth $1.6 million), and two occasions when a DFAT employee’s spouse was the successful contractor.

The audit office also uncovered instances of a senior official being invited out for coffee to discuss a contract that was then issued without going to tender, a manager having “regular social interactions” with a contractor and the same person using their network to “assist an individual introduced by a mutual acquaintance to find contract work in a different entity”, for which they received a gift voucher to say thank you.

It also found instances of staff telling contractors how to fill in forms applying for tenders and contract extensions

DFAT has pledged to change its procurement practices “to improve compliance and efficiency” and said it had “initiated activities to address specific areas of concern regarding actions of staff”.