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Cost fears could kill two-year tender process for major ACT government contract

A two-year-long tender process for a major ACT government-wide facilities management contract could be killed off amid fears the contract will cost too much.

The lengthy tender process for a whole-of-government 'total facilities management' contract began in November 2015, to maintain all territory-owned assets, including preventative maintenance and management services.

It was originally proposed to help centralise the territory government's asset management efforts across all directorates to save money, including on the major $48 million a year public housing maintenance contract currently held by Spotless.

But after more than two years spent on the tender, and assessing five proposals, an internal Treasury briefing to Chief Minister Andrew Barr shows the government is now considering "terminating" the procurement.

While the government has narrowed the field down to three potential offers, the briefing to Mr Barr's office in November has revealed the government is unlikely to be able to afford any of the offers.

It shows that late last year, "a concern regarding the affordability of the proposed new [total facilities management] model and the commercial offers received from suppliers has been identified".

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The briefing, released under Freedom of Information laws, showed Treasury officers were "uncertain whether the territory would be able to afford the new arrangement".

Public servants were also concerned whether the "resultant costs would be comparable" to the current numerous maintenance and repair contracts, under what were five tenders being considered at the time.

It said that the "possible management fee" under the offers submitted, transition costs and "charges for scaling the service represent significant expense".

But it is unclear what the specific fees, or total cost of the contract would be, if it went ahead, as the government will not release such information the tender process is still active, with a spokesman saying the total cost was "subject to negotiation".

While the proposal was meant to cover the entire government, procurement has been looking for other directorates to sign up to help cut costs to ensure it remains "viable", but none have so far signed up.

The briefing says that without most, if not all directorates signing up, "the arrangement would likely be unviable, and the territory may choose to terminate the contract".

A government spokesman said that the contract was "intended to be implemented in a staggered fashion across the territory", understood to have originally started with the Emergency Services Agency and ACT property group.

But he said that it was "unlikely that other territory directorates will be included ... arrangement at a later stage".

The spokesman said the tender evaluation phase was complete and the territory had "issued an invitation to three tenderers deemed capable to deliver the required services to participate in structured negotiations".

He said the government was "currently finalising the parameters, processes and timeframes of the structured negotiations".