The Canberra Institute of Technology has suspended work on a nearly $5 million contract to a company owned by "complexity and systems thinker" Patrick Hollingworth and is seeking advice about potentially tearing up the contracts.
Skills Minister Chris Steel has lambasted the Canberra Institute of Technology's board, saying the institute's reputation had been "seriously damaged" over more than $8.5 million worth of contracts awarded to Mr Hollingworth.
He has also told the board he expects it will review CIT chief executive officer Leanne Cover's involvement in the arrangements, and he would also issue a ministerial direction to the board to improve governance processes around procurements.
The response came after CIT board chair Craig Sloan wrote to Mr Steel earlier this week saying the board could not guarantee that the latest $4.99 million contract to Mr Hollingworth was value for money and would commission an independent audit into the matter. However, Mr Steel was highly critical of the board.
"Overall, I am underwhelmed by your response and disappointed that CIT's governance arrangements have resulted in a situation where a series of procurements have, in my view, seriously damaged CIT's reputation," he said.
"This is very unfortunate for the hundreds of CIT staff members who work hard every day to deliver high-quality education, and who take considerable pride in the contribution CIT makes to training Canberrans.
"I am disappointed the CIT board, by its own admission, was apparently unaware of such a significant contract and the financial implications, particularly given I, and my office, had raised concerns about how the previous contracts had contributed to the efficient and effective delivery of CIT's mission.
"My primary, and ongoing, concerns with this series of contracts, and particularly the latest contract, are the quantum of funding provided, what this will deliver and how it will provide value for money for the CIT and ACT taxpayers."
Mr Sloan said in a statement to The Canberra Times late on Friday that the board shared the concerns of Mr Steel and that the independent audit would review Ms Cover's management of the issue. He said the contract had also been stopped.
"The work on the contract has been suspended pending consideration of legal advice for options including cessation," Mr Sloan said.
"The board is equally disappointed that the contract was signed without board scrutiny and welcomes the minister's support for a review of governance arrangements, including financial delegations."
But Opposition Leader Elizabeth Lee has doubled down on her calls for Mr Steel to stand down, saying as the responsible minister he had "absolutely dropped the ball" and had a lot to answer for.
Mr Steel has come under fire after he revealed he had first raised concerns about the contracts in March last year. He wrote to the board seeking an explanation for more than $3.2 million worth of contracts awarded to Mr Hollingworth's company.
The Skills Minister has stood by his actions in relation to the contracts, telling The Canberra Times he has limited powers in relation to CIT and can only offer broad directions to the board. He said he had repeatedly raised concerns and asked questions of the board after he became aware of earlier contracts awarded to Mr Hollingworth.
THE STORY SO FAR:
- CIT board cannot provide assurance that $4.99m contract is value for money
- CIT given deadline to justify $4.99m contract
- ACT govt warned three years ago of concerns with CIT consulting contracts
Mr Steel said on Friday he was never satisfied with the response from Mr Sloan, who responded last year by saying he was confident that contracts represented value for money.
"I have very limited powers in relation to CIT but what I did do is ask questions, and I acted and told them on repeated occasions that based on the information they provided in response to my letter ... I didn't think that their earlier contracts were in line with community expectations," he said.
Ms Lee has criticised Mr Steel for not taking further action, especially as two further contracts totalling $5.5 million were awarded to Mr Hollingworth after his intervention.
"He clearly should have done more, you know - to see that there were at least two other contracts signed with the same contractor after he expressed concerns just goes to show there is a breakdown in the relationship between the CIT board and the minister," Ms Lee said.
Mr Steel said a new board chair would be appointed in the coming weeks along with new members, and he expected they would help to "reset the situation" and repair the reputational damage that had been inflicted upon the institute.
Current deputy chair Kate Lundy, a former ACT senator, will take over as chair in July. Mr Steel said he would issue a new statement of expectations to the board and also issue a ministerial direction requiring governance issues around procurements to be addressed.
Mr Steel also said he expected the board to look into Ms Cover's management of the contracts.
"Further, while the employment of the chief executive officer is a matter for the CIT Board, I expect the board will ensure the chief executive officer's management of these contractual matters is appropriately reviewed, given the matters that have been raised," Mr Steel said.
"Careful stewardship of an organisation's financial, human and reputational resources is both a core responsibility and an important performance indicator for any senior executive."
Contracts to Mr Hollingworth have been criticised for having unclear requirements. CIT did not respond to questions directed to the institute's executive. Mr Hollingworth has also not responded to requests for comment.
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