An Australian National Audit Office (ANAO) report has found management of the $550 million Australian War Memorial renovation has been “largely effective”.
The report shows that concerns about the way contracts were awarded, improper record keeping, and conflicts of interest raise questions about the project, despite the fact it appears to be proceeding at pace.
Acting auditor-general Rona Mellor wrote the review should reassure parliament.
“This audit provides assurance to Parliament on the delivery of a nationally significant project, including procurement, contract management and project management,” she said.
“The Memorial remains open to the public throughout construction … with the project due for final completion in June 2028.”
The Australian War Memorial redevelopment was a pet project for the previous government, and has proven controversial with both Canberra residents, war historians, and former war memorial heads.
This has been largely based on concerns the development will shift the tone of the war memorial to highlight Australia’s military prowess instead of the horrors of war.
The development was allocated $498.7 million in 2018, a further $50 million in 2022 and $8.8 million unspent from the business case funding was redirected to the project.
This has formed the basis of other criticisms, that this money could be better spent directly supporting veterans, who are currently enduring an epidemic of suicides.
ANAO do not weigh in on the appropriateness of the project but says there have been issues determining whether the project has been good value for money.
Mellor said there was a lack of documentation demonstrating value for money in the project. She said ministers didn’t receive enough information to provide the project with the oversight it demanded.
“Policies and procedures for contract variations are documented, however, records of contract variations are not consistently supported by value-for-money assessments,” she said.
“Ministerial briefs lack transparency, accuracy and the rationale for statements about value for money assessments. One contract variation was executed for an amount higher than that approved by the minister and the ministerial brief relating to a subsequent variation contained the incorrect value of the executed variation.”
The audit highlights issues with the contract reporting arrangements.
Projects like the Australian War Memorial development rely heavily on expertise not readily found in government offices, like construction. As of October 2023, there were 221 contracts for project management, design, engineering, construction and specialist advice.
There appear to have been attempts by project managers to deliberately avoid reporting guidelines by revising contracts after they were awarded.
Only 73% of contracts awarded at this point had been reported on AusTender within the required 42 days. Others were varied without authority, raised to the maximum they could without ministerial approval.
The Australian War Memorial engaged Xact Project Management in March 2018 for project management services under an official order for a maximum value of $319,572.44. This was later varied in March 2019 to $999,999 — one dollar below the threshold for ministerial approval.
A later contract was awarded to Xact during the 2019 caretaker period at a value of $805,000, which was later extended twice by the minister under advice from the Memorial. The first contract variation increased the total value to $6,555,000. The second to $16,865,026 in June 2021.
The minister, at the time Nationals MP Darren Chester, was not supplied with evidence that would support changing the contract.
Adding weight to concern this may not have been the most meritorious selection proceeds, the audit says there was no rationale based on the project brief for finding Xact better value than its competitors.
“The evaluation panel noted that Xact’s ‘proposal delivers the best value for money through its demonstrated capability and deep understanding of the project requirements.’ The evaluation assessed that the time lost in bringing in new project management services would undermine potential savings from other suppliers,” Mellor said
“The rationale for this methodology was unclear and was not specified in the request for quotation (RFQ). Under this methodology Xact, which compared to other tenderers, had a higher-priced project manager and a lower-priced assistant project manager, ranked first. If the methodology assumed the project manager worked full-time, as outlined in the RFQ, Xact would have ranked third by cost.
“The delegate and evaluation team did not complete conflict of interest declarations. Each had an undeclared conflict from the working relationship with the incumbent project manager.”
No findings were made against Xact or any other contractor on the project.
Five recommendations were made to improve the project centred around improving probity across the process, and greater compliance with the intent of the government to demand higher ethical standards from lower-level staff and contractors.
The War Memorial has accepted all five, with the Department of Finance accepting in principle a recommendation they should report all contracts and variations above the $10,000 threshold.
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