The Canberra Institute of Technology was offered a discount by a "complexity and systems thinker" if it paid him up front for a contract worth nearly $5 million, the Auditor-General has revealed.
This was despite the offer from Patrick Hollingworth's company being more than $2 million higher than any other offer.
CIT entered into a five-year contract with Mr Hollingworth's company, Think Garden, for $4.99 million for organisation transformation in early 2022.
The audit showed there were three suppliers who had applied for the tender. The value of the tenders were $805,183, $1,979,000 and $5,680,000.
CIT determined the proposal from Think Garden, the $5.6 million proposal, determined the "best value for money outcome for CIT". The institute was given a discount if they paid upfront.
"We are pleased to offer CIT a preferred client discount of 12 per cent should CIT agree to up front payment of our fees," the audit showed.
Following negotiations it was agreed payment would be provided on "five time-based milestones" and the first would occur on the execution of the contract.
Receipts from CIT show Mr Hollingworth was paid nearly $1.7 million in April 2022, shortly after the contract was signed. Mr Hollingworth was awarded more than $8.5 million in contracts over a five-year period for organisation transformation.
The information was revealed in an audit report into the ACT government's procurement board.
This report found the board was not "optimally effective" and was not assertive enough in its advice around the more than $8.5 million worth of contracts, which are being investigated by the Integrity Commission.
An Auditor-General report has found the board, responsible for providing advice on procurement processes, is compromised by a lack of clarity around its primary role.
It found the board was not efficient in fulfilling its functions and it should be focused on reviewing more higher-risk proposals.
The audit examined the board's review of more than 400 proposals over a five-year period and the controversial CIT contracts were used as a main case study in the report.
The audit said the board reviewed three procurement proposals from CIT around the work.
The board presented the same advice on each occasion, saying the proposals "lacked clarity, specificity, measurability and simplicity".
The audit said there were "missed opportunities" from the board for better procurement outcomes as the board "was not assertive in its advice".
It found the board was placed under pressure by CIT around a sense of urgency and this constrained the board's advice.
The advice was also "compromised by the omission of important information by the proponent".
"The board was insufficiently sceptical and probing," the report said.
"Although its advice was sound it was unassertive and equivocal."
The awarding of the contracts is being investigated by the Integrity Commission and the CIT chief executive Leanne Cover has been stood down for more than a year following the announcement of the investigation.
The audit also examined two other procurement proposals.
One related to Canberra Health Services' procurement of four machines for radiation treatment. Two machines were replaced in 2019 and the other two were replaced in 2021.
The audit said the board's review was incomplete and this was constrained due to the late referral of the proposal.
The other procurement related to Road ACT's procurement of asphalt in 2016 that was supposed to be for a maximum of three years. It found Road ACT sought to extend this proposal by another three years but this was deemed to be "an excessive use of variations that undermined the integrity of the original approach to market".
Another approach to market was made in 2021 but the audit found the board's advice was constrained again due to "last minute" variations by Roads ACT.
Auditor-General Michael Harris said the laws around procurement inhibited the board and he urged the government to implement changes to make the board more independent and give it greater power around giving advice.
"The Government Procurement Act 2001 and Government Procurement Regulation 2007 are unhelpful and inhibit the board from being more effective and more efficient," he said.
"Actions that will support greater efficiency and effectiveness of the board are: a more independent board; an express authority to advise and, if necessary, approve and give directions; and an ability to focus on specific proposals and matters for its review."
An ACT government spokesman said the government acknowledged the report and would consider the recommendations. A response will be provided within the required statutory time frame.
"The government notes the report acknowledges the substantial procurement reform program already underway, and legislation is proposed to be introduced to amend the Government Procurement Act later this year," the spokesman said.
"Implementing recommendations from the report as part of this legislative process will be considered."
Shadow assistant treasurer Peter Cain took aim at Special Minister of State Chris Steel, who oversees procurement, and said he was incompetent.
"The report tabled today examined three major procurement case studies and concluded that the board is 'not optimally effective or efficient in fulfilling its functions'," Mr Cain said.
"The minister, who directly appoints board members and writes the policy that informs the board's function, is wholly responsible for contracts that have egregiously wasted taxpayer money."
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