Audit Office's shocking findings raise new questions about DTA, the lost child of the APS

In this case, the official's testiness had good cause. They had seen a request to add $58,500 in value to a Digital Transformation Agency contract with a consultancy firm, Nous Group. Their assessment was scathing.

"The proposal is inconsistent with effective and ethical stewardship of public resources," the official wrote in December 2020.

"I am also concerned that in mid-January, we will be asked for another increase. And then another. Until mysteriously, the total is equal to the excess amounts we were first offered and rejected as being unacceptable."

What's important about this email is not the understandable sarcasm from the DTA official but this observation: "It is unclear from the proposal what value is being added by the consultant, or what the consultant is doing, combined with a complete lack of tangible deliverables."

There was a large number of public servants involved in the project - a review of the DTA's role and mandate - and the agency was paying higher than market rates for Nous Group's services, the official said.

"They had better be delivering something exceptional," the official wrote.

Let's hope they did. The Australian National Audit Office, which revealed the email in its excoriating report this week on the DTA's use of contractors, found the agency's then-chief executive Randall Brugeaud approved the variation for the additional spend, taking the total contract value to $201,400.

He later approved another change to the contract - requested in January 2021, as predicted - for another $58,685. A senior official had advised him Nous Group had exhausted the funding envelope.

This is only one of many episodes recounted in the audit report revealing shortcomings in the DTA's handling of contracts between 2019 and 2021. It is one of the most appalling, but it has tough competition.

There are the overpayments - still not recouped as of August - made to a contractor in 2020 and 2021 and totalling $380,600, blamed by the DTA on "human error".

Even more troubling is the failure to act on consultancy firm McGrath Nichol's advice in July 2021 to further investigate after the agency's procurement team raised concerns over conflicts of interest and the above-market rates being paid for a contract.

Then, there are the many contracts that resulted from direct approaches to suppliers, instead of the broader testing of the market that promotes competition and value for money.

Last, but not least, was the DTA's decision to vary another contract with Nous Group 10 times, expanding its scope and growing its value by 40 times to $4.94 million, rather than going back to the market for the additional work.

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The money involved in these kinds of contracts isn't small. The audit office looked at a sample of nine ranging in value from $127,334 to $28.1 million.

Such shocking reading confirms the worst fears the public has about the public service's interaction with consultancies and contractors - much of which is hidden from everyday view by reason of "commercial-in-confidence" considerations, and by obstructive freedom of information officials. It paints a terrible picture of how public servants have used public money.

The new government, and particularly the minister overseeing the DTA's new portfolio, Katy Gallagher, now have to deal with what is a new theme for a perennial question since the agency came into being seven years ago. What to do with the Digital Transformation Agency?

It's the lost child of the public service, having shunted from portfolio to portfolio, and between ministers and chief executives, since it was created in March 2015. Throughout the DTA's stints in Communications, Prime Minister and Cabinet, Social Services, Prime Minister Cabinet (again), and now in Finance, governments have been confused about its purpose and changed its remit.

If the DTA didn't exist, would the public or government be any worse off? The audit report only raises further questions about the purpose of the agency.

"Procurement is a core function of the DTA," the audit office observed, before finding the agency did not effectively manage any of the contracts it audited.

There have been seven years to figure out why the government needs a Digital Transformation Agency and how it should operate. This audit might be the thing that finally brings the question to a head.