Moreton Bay Regional Council handed an “extraordinary” $20 million contract to a financial backer of mayor Allan Sutherland in 2016, with no procurement process, and overruled managers who complained, a former staffer has claimed.
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The renewal of the contract this year is subject to an ongoing Crime and Corruption Commission investigation into the council.
The former staffer said managers had queried senior executives on why they had not sought advice from the council’s corporate procurement department before outsourcing events and tourism promotion activities to Moreton Bay Region Industry and Tourism, a company owned and run by wealthy local businessman Shane Newcombe.
But the managers were told “it’s a done deal, so just register it”, the staffer said.
The staffer, an expert on procurement and contract management, said the deal, awarded without a public tender, had been considered “extraordinary” when it emerged in May 2016 because the procurement department had previously been involved in evaluating every council contract worth more than $200,000 and many of its smaller deals.
“When something like that gets thrown in front of you and it’s already gone through council and been signed by the CEO and it hasn’t gone out through a public tender process, and they didn’t even seek advice on whether we would deem them as being a sole supplier, then that raises flags,” the former staffer said.
Councillors and council staff were told at the time of the deal that MBRIT was the only organisation that could provide the services required. Local government regulations provide an exception to normal procurement rules if this is the case.
The former staffer called this view into question and said an evaluation of MBRIT would normally have been carried out regardless.
“I’ve heard ... that they say that there’s no-one else out there that could have provided that service - I think there’s a very convenient exception that they’ve relied on there,” the former staffer said.
The staffer said the deal had been “very heavily pushed” by the office of council chief executive Daryl Hitzman.
“From a procurement point of view you don’t just have executives making a decision that there’s no other provider in the market,” the staffer said.
“How do you know that? You haven’t even tested the market. Any procurement process over $200,000, corporate procurement must be there, and must be chairing the evaluation meeting … to maintain the integrity of the process."
In a written response to Fairfax Media, the council said: “Council understands that the CCC is currently investigating a complaint from a ratepayer. With an investigation underway, it’s not appropriate for council to comment further.”
Staff across the council received an internal email in November 2015 reminding them of its procurement policies, indicating that public tender was the method to be used for any contract worth more than $200,000.
A list of supplier categories attached to the email included a section headed “Event Management & Services”, with subheadings that included “community events”, “event management and production services” and “conference management services”, all of which are activities carried out for the council by MBRIT.
"The people that went into that contract know the regulations inside out,” the former staffer said. “They've deliberately found a way to get round them."
Documents obtained by Fairfax Media show the service level agreement, which set the performance expectations of the MBRIT deal, was authored by Mr Newcombe.
The former staffer said he had read the agreement at the time and had regarded it as “a pretty sweet deal for MBRIT”.
“I wasn’t aware it was drafted by Shane (Newcombe). That’s actually extraordinary … that’s against anything I’ve ever heard of in terms of procurement and contract management,” the former staffer said.
Last month, the council removed details of the deal from its website, in spite of Queensland local government regulations requiring it to publicise all contracts worth more than $200,000.
“The regulation is very clear, if you form a contract over $200,000 it needs to be publicised,” the former staffer said.
The staffer said the council employed software that automatically published details of such contracts as soon as they were registered so a deliberate intervention would have been needed to remove the information.
“They would have to have had to manually made that contract either inactive in the contract register or pulled it out altogether,” the former staffer said.
Fairfax Media last month revealed that the council secretly helped Mr Newcombe win the contract by giving him unfettered access to confidential financial information and coaching him on how to persuade councillors to vote for the deal.
Former council staffers allege councillors voted for the initial deal in 2016 while at least some of them did not know Mr Newcombe had been coached for a key presentation to the full council by a small group of councillors, all of whom had received financial backing from Mr Newcombe's mother’s company Newcombes Holdings.
The company, which owns a string of local car dealerships under the Village Motors brand, donated $20,000 to the mayor’s election funding vehicle Moreton Futures Trust in the 2016 campaign and the same amount in 2012.
Moreton Futures Trust raised a total of $137,000 in 2016, most of which was spent promoting Cr Sutherland, but smaller amounts were also used to fund the campaigns of councillors Julie Greer, Peter Flannery and James Houghton.
Deputy mayor Mike Charlton was also a beneficiary of the trust in 2012.
The trust came under intense scrutiny during the Operation Belcarra hearings at the CCC last year, amid allegations the mayor and other councillors had operated as an undisclosed group and used the trust to obscure the original sources of the donations.
The CCC criticised the use of the trust in its report following the hearings, saying it reduced transparency.
The CCC is examining the circumstances surrounding the May 2018 council vote to renew and expand the MBRIT deal, increasing its value from $2.3 million a year to $3.8 million, or more than $20 million in total over five years.
Seven councillors declared conflicts of interest at the vote because of personal relationships with Mr Newcombe or his associates, meaning the vote had to be delegated to the chief executive, Mr Hitzman. None declared conflicts when the initial contract was awarded in 2016.
"You've got a bunch of councillors there with conflicts of interest that have resolved there is only one supplier,” the former staffer said.
“You can't have a group of councillors with a bunch of undeclared conflicts making a decision on a supplier with whom they have relationships that generate the conflict."
