The Real Lesson From the Queensland Health Debacle
By Ted Smillie on Monday, February 10th, 2014
Features in QESP NewsletterVolume 26 , Issue 1 - ISSN 1325-2070
My Forum post The latest on the Queensland Health “Debacle” quoted from an article about the Commission of Inquiry’s Report and suggested that the Report could be a good read in its own right. That was the Report where the Commissioner, The Hon Richard Chesterman AO RFD QC, said “The replacement of the QH payroll system must take place in the front rank of failures in public administration in this country. It may be the worst.”
I took my own advice and read the report (skimming through some of it, since it runs to 264 pages.) It does give a clear, scathing description of what went wrong and why. What becomes clear is that the real reason for the disaster was a badly flawed tender process. In some sections, the Report reads like a whodunit where the implacable Commissioner tracks down the culprits. Examples are:
Page 23: Mr Nicholls noted the oddity that someone virtually unknown, in the country only a few months and with only six weeks’ experience of CorpTech and the vastly complicated SS Initiative should have become the principal adviser to the Under-Treasurer on the future of the Initiative.
Page 28: The report contained no reference to a Prime Contractor and did not recommend that the structure of the SS Initiative, by which CorpTech designed and delivered the services, be altered in favour of an external contractor which would take over those roles.
Page 29: Mr Burns’ conduct during his May review, and his interaction with Mr Bloomfield of IBM, became a subject of particular interest to the Inquiry.
Page 31: The evidence shows that Mr Burns entertained a distinct preference for IBM in the course of his May review.
Page 35: It is, I think, the case that Mr Burns recommended the further review intending to undertake the role himself. He wrote his own encomium disguised as a proposal from Arena, and had Mr Uhlmann sign it…..Fortune is said to favour the bold. Certainly Mr Burns’ effrontery was quickly rewarded.
Page 36: As a result of receiving Mr Uhlmann’s April Snapshot review and Mr Burns’ fuller May review, Mr Bradley formed the opinion that a profound change to the manner in which CorpTech was going about implementing the SS Initiative was needed.
Page 37: There followed shortly after the RFI which took the form of undated letters sent on or about 6 July by Ms Blakeney to ten companies , known within CorpTech as “External Service Providers” which had provided various services in connection with the delivery of the SS Initiative.
Page 38: The next step was the RFP which was sent to the four companies which had responded to the RFI. The RFP was contained in emails sent by Mr Burns on 25 July 2007.
Page 41: Despite the extreme brevity of the RFP, the four companies which responded to it did so in considerable detail giving comprehensive proposals for the delivery, as Prime Contractor, of the SS Initiative.
Page 43: Despite the RFP not resulting in a contract, events which occurred in the course of the evaluation of the proposals have a distinct relevance to that part of the Inquiry’s Terms of Reference which required examination of the procurement of the contract between the State and IBM.
Page 44: The main criticism of Mr Burns in the course of the Inquiry relates to suggestions of partiality on his part to IBM’s interests. That partiality manifested itself in private encouragement of IBM by Mr Burns during the RFP process.
Page 45: The issue for consideration was whether IBM in the course of the RFP received or misused confidential information belonging to the State or Accenture, its main competitor in the bid process, which gave it a competitive advantage.
From Pages 47 to 53, the Commissioner looks at emails which show that IBM did receive confidential information belonging to Accenture.
From page 53 he looks at an email from an IBM employee at the time, which says “ I have been unable to locate any of the vendor proposals on the G drive. One of the government guys who told me he had looked through them all said that they have all been removed along with quite a few other directories that were with them. So looks like we were just a little bit too late.”
Page 53: The G drive was a public-access file in the CorpTech information systems network (or LAN) on which the vendor RFP proposals and scoring matrixes were stored for a period of time inadvertently. The confidential proposals should have been saved on a secure-access drive, but were stored on the G drive in error. The G drive was a common repository accessible to anyone with a CorpTech log-on.
The Commissioner notes dryly that: The proper response to a fear that the proposals were freely available on the G drive was to bring the concern immediately to the attention of CorpTech. That was not done.
From Page 57, the Commissioner looks at the ill-fated Invitation to Tender (ITO)
Page 59: The ITO … was issued on 12 September 2007 and responses were due on 1 October 2007, a period of just under three weeks which, at the request of one or more of the tenderers, was extended by a week to 8 October 2007.
Page 62: Ms Blakeney said that the RFP and ITO processes were “driven” by Mr Burns…. Mr Swinson agreed that Mr Burns could be properly described as the “Project Lead Advisor” whose role “entailed liaising closely with the people involved in the evaluation and conducting the scoring … having insight into their reason and process along the way before finalization (sic) … and providing such advice as they required”
Page 74: The omission to appoint a Probity Advisor was a serious one.
Page 75: Another oversight in the ITO and its evaluation was the lack of a Conflicts Register.
Page 78: The State, had it taken proper care for its own interests, ought to have known of the possibility that IBM’s pricing was unrealistically low. There was a wide variation between the pricing in IBM’s RFP and ITO responses, despite those estimates being provided only a few months apart.
Page 79: The clearest point to emerge from this aspect of the evidence is that there were serious shortcomings in the State’s scrutiny and assessment of price during its evaluation of the ITO responses.
Page 81: The State seemed to have treated price as the determining factor in the assessment of the ITO bids which meant that it was always going to be particularly attracted to the lowest price offered.
Page 85: The haste with which the appointment was made is as remarkable as the lack of consideration preceding the decision to appoint the Prime Contractor.
Page 86: It is significant that a year later, in October 2008, IBM proposed a price for the completion of the SS Initiative which was close to Accenture’s and almost twice what it had offered in the ITO.
Page 87: Indeed the whole ITO process was marked by extreme haste and a sense of urgency which was unnecessary and led to most unfortunate results.
A telling conclusion from the Commissioner comes in a later Summary.
Page 216: My inquiry has not shown any deficiencies in the then or present procurement policies or project management standards. What the inquiry has revealed is a depressing account of failure by many public servants engaged in the SS Initiative and the payroll replacement to adhere to established good practice. I did not discern a need to write new rules. If existing policies and standards are adhered to the failures I have described should not recur.