Lobbyists and consultants dictated a government health scheme. It ended in disaster

A staggering auditor-general report has unveiled further unethical conduct by federal public servants, detailing the many and systematic failings of the Commonwealth Department of Health and its relationships with an insolvent consulting firm and sections of the Meals on Wheels network across Australia.

The labyrinthine story of the attempt by departmental officials, executives from consulting firm Miles Morgan Australia (MMA), and selected friends within Meals on Wheels organisations to effectively take control of what was perceived as an inefficient community service was first revealed by Rick Morton in The Saturday Paper last year.

Early this year, Morton revealed a remarkable admission of failure by the health official at the centre of the affair, the department’s assistant secretary Russell “Rusty” Herald, along with claims of senators being misled and the implosion of MMA’s grand plan to take control of Meals on Wheels.

MMA was first engaged by Health in late 2021 to advise on the “business transformation” of Meals on Wheels in what would become known as the “Future Fit” program. The relationship ended three years and nearly $9 million later, with dismayed officials freezing out MMA and the company entering administration — but not before a series of remarkable failures in procurement and contract management, including examples of what the auditor-general termed conduct falling short of ethical standards.

Where had MMA come from? The Australian National Audit Office (ANAO) report reveals the debacle’s startling origins: after an “unsolicited proposal” from lobbying firm Australian Public Affairs (now H/Advisors APA) on behalf of national peak body Meals on Wheels Australia (MoWA), “the selection of Miles Morgan Australia to deliver the services for the 2021 procurement followed meetings held between July and December 2021 by Health, the minister [then aged care minister Richard Colbeck], Miles Morgan Australia, MoWA, and Australian Public Affairs — a lobbyist organisation.”

ANAO is right to flag how disturbing it is that a lobbying firm was in the room making policy — including at one meeting where no departmental officials were present — along with a consulting firm that would go on to get a multi-million dollar contract that resulted from the meetings. That alone marks a staggering failure under Commonwealth Procurement Rules — indeed, virtually nothing about that engagement of MMA was compliant. And in fact, the department’s legal division warned the contracting area that there were significant issues that needed to be addressed in consultation with the department’s procurement area. But it simply went ahead and engaged MMA.

None of the two subsequent engagements of MMA were compliant, either. One major area of non-compliance was in relation to the acceptance of gifts:

Between April and November 2023, Health officials, including the senior official that was both the procurement delegate and contract manager, were offered or received gifts, benefits and hospitality from Miles Morgan Australia and Commonwealth Home Support Program grant recipients. For example, the senior official accepted transport; a basket of local products; and dinners from CHSP grant recipients at an estimated cost of at least $345. These gifts, benefits and hospitality were not reported … Correspondence between Miles Morgan Australia and Health in July 2023 showed that benefits were offered to the procurement delegate during contract negotiations, including hospitality and a birthday gift … the procurement delegate met with Miles Morgan Australia and Australian Public Affairs in cafes or restaurants to discuss procurements and contracts. Health officials did not retain records from these or other meetings.

Health’s management of the resulting contracts with MMA was similarly woeful: the ANAO reels off a long list of failures, including failure to deliver contracted services, no analysis of whether what was delivered was worthwhile, poor record-keeping, a lack of probity management, and a lack of any established performance measures.

The ANAO also criticised the department’s “stakeholder engagement”, particularly its hostility to and refusal to engage with the bulk of the Meals on Wheels network — composed of MoWA, state bodies and local services providers — and the systematic lack of basic features of public policy like performance monitoring, evaluation or conflict of interest management.

The latest report is only the most recent instance of Commonwealth officials engaging in conduct falling short of ethical standards. Officials within the Australian Passport Office in the Department of Foreign Affairs and Trade were found to have engaged in multiple instances of unethical conduct last year. Tourism Australia was found to have not conducted procurements to appropriate ethical standards in December. In circumstances that have yet to be properly investigated, the ANAO found evidence of unethical conduct in the relations between Defence officials and arms company Thales last June. In 2022, the Digital Transformation Agency was found to have repeatedly fallen well short of ethical requirements in its procurement of IT services.

But the audit also demonstrates just how poor the standard of public administration had become under the Morrison government, the official ethos of which was that the public service merely exists to implement what ministers want, not to advise on policy. In a tangled scheme conjured up by lobbyists, peak bodies, a consultant on the make and a disastrous minister, the Department of Health was reactive, compliant and suborned. No wonder it all ended in tears.