Blown Floriade budget reveals problems with procurement

An audit of last year’s Floriade festival found ACT government bureaucrats flouted procurement laws by handing out more than $1.4 million worth of work without the proper processes, prompting calls for a system-wide probe into government spending.

Documents obtained by The Canberra Times under freedom of information laws reveal Events ACT staff signed $550,000 worth of contracts without the correct authority.

People come to take selfies in front of the flower beds at Floriade. Photo: Dion Georgopoulos

People come to take selfies in front of the flower beds at Floriade. Photo: Dion Georgopoulos

Staff also gave out nearly $700,000 of work without a contract and failed to get the minimum three quotes for around $160,000 worth of work.

The activity was uncovered during an audit of the 2017 Floriade festival, which also discovered the event blew its budget by a whopping $1.2 million. The 2016 Floriade also ran nearly $940,000 over budget.

The overspend sparked the creation of a new senior executive position to oversee events and more rigorous staff training in procurement and contract management.

But the revelations have prompted questions about whether the ACT government's procurement code is being ignored more broadly.

The Canberra Liberals' spokesman for tourism Andrew Wall described the breaches of the laws as "another outrageous abuse of authority in Chief Minister Andrew Barr’s portfolio".

He said it warranted a system-wide inquiry into the government’s procurement processes.

“This is not a one-off example of financial negligence under the Chief Minister’s purview. The Chief Minister has a history of relinquishing huge amounts of taxpayers’ money in ways that fail to achieve value for money, or that lack rigour, transparency or adequate documentation," Mr Wall said.

"We have seen this sort of behaviour in numerous multimillion dollar land deals and secret memorandums of understanding with fellow travellers, all under Andrew Barr’s watch. This is one more massive probity breach in his directorate."

However an ACT government spokeswoman said the territory's procurement division had not commissioned a review of procurement within each directorate.

"The ACT government is not aware of any similar cases elsewhere in the government, but we are considering how we can enhance audit and other compliance and education activities to ensure all ACT government procurement continues to comply with all existing legislative and operational requirements," she said.

As part of its audit, Protiviti found financial delegations within EventsACT were not adhered to, with contracts being "inappropriately" signed by staff without the proper authority.

  • September 3, 2013 - Gema Group for catering services for Floriade and Floriade Nightfest for $160,000 plus royalty payments
  • May 24, 2017 - Highwire Entertainment for program management for Floriade 2017 for $49,500
  • May 24, 2017 - Highwire Entertainment for Program management for Floriade and Nightfest 2017 for $70,950
  • May 26, 2017 - ShowPony Events for program management Floriade 2017 for $75,900 plus 75 per cent of ticket revenue for ticketed events
  • June 6, 2017 - Foodish for program management for $93,500 plus 75 per cent of ticket revenue for ticketed events
  • July 10, 2017 - Jason Preston First Aid Services for first aid services for Floriade and Nightfest 2017-19 for $66,000
  • August 3, 2017 - City Services Division Yarralumla Nursery for provision of plant material for Floriade 2017 for $130,568.61

A contract with Kaleja Pty Ltd trading as Waste Away was also extended without proper authority - the amount wasn't specified in the original contract but they were paid $98,000.

Government staff also acquired services for Floriade without actually entering into contracts, including from Ford Earthmoving  for  $127,050 and Out and About Landscapes for $520,907.

"Enquiries into contractual arrangements in relation to these suppliers noted that there do not appear to be contracts between TCCS and either supplier, CMTEDD and either supplier or EventsACT and either supplier," Protiviti said.

On top of this, procurement documentation was unable to be located for two contracts signed for Floriade 2017 - a $98,394 per year contract with Affinity Electrical Technologies and a $66,000 contract with Jason Preston First Aid Services.

Procurement laws state public servants must seek at least three written quotes from different suppliers if the work is worth between $25,000 and $200,000.

There is no suggestion any of the suppliers were aware of any procurement or authorisation problems.

"Protiviti has come to the conclusion through discussions with senior EventsACT staff that there has been limited procurement activity undertaken in relation to Floriade 2017 and that it is unlikely that evidence of appropriate procurement processes is available. Further testing was not undertaken due to budget and time constraints and probable lack of evidence," the audit firm said.

The territory government called in the auditors after anomalies between the paid invoices and the expected budget for Floriade 2017 were picked up weeks out from the 2017 festival.

While Protiviti said it did not have the scope to properly identify all of the deficiencies in the event's financial management, the firm found there was no contracts register, a lack of appropriate procurement activities and controls, inadequate contract managements and few contracts in place for significant expenditure.

They recommended the directorate conduct a specific review of procurement processes and controls given the serious deficiencies identified in their audit, re-assess the value-for-money of longstanding Floriade contracts and establish a suite of budget and financial reports for the event.

The government spokeswoman said they'd introduced stronger oversight of the budget and improvement governance around event and financial management in the wake of the audit.

They'd also restructured the Events ACT team and trained staff at all levels in procurement, contract management, delegations, project management and risk management policies and practices.

"The Economic Development Division of CMTEDD will also review the progress of Events ACT in addressing the matters raised in the Protiviti review of the financial management of Floriade 2017," she said.