A 'thinker's' journey from one CIT contract molehill to consulting mountain

But when Canberra Institute of Technology staff lined up to hear the insights of "complexity and systems thinker" Patrick Hollingworth in early 2017, little did they know they were at the basecamp of his next - financial - expedition.

This speech would be the start of a long relationship between Mr Hollingworth and the CIT. Over the next five years, he would be awarded more than $8.5 million in contracts by the institute.

The contracts started small but grew into a significant peak. The sixth and final, Everest-like, contract was worth nearly $5 million.

These contracts would ultimately result in the demise of CIT's chief executive Leanne Cover after the ACT Integrity Commission found this week she had engaged in "serious corrupt conduct" as part of her efforts to award them.

The CIT had been working on changes to its structure for three years to 2016, with a new strategic plan and a raft of consultants' reviews.

This strategic plan was the platform for the contracts with Mr Hollingworth, the integrity report said.

After Mr Hollingworth addressed staff, he submitted a proposal to Ms Cover outlining how he could guide the transformation of CIT over the next 18 months.

He was awarded a $198,000 contract, paid in $30,000 three-monthly installments, signed off by the former chief executive in August 2017.

The contract was supposed to run for 18 months but it was varied in April 2018 to end it nine months early. Although the period was halved, the money paid to Mr Hollingworth remained the same.

CIT was quick to enter into a second contract with Mr Hollingworth.

The institute entered into a three-month contract for $151,000 in July 2018. This contract entailed "coaching and mentoring the CEO, the executive team... and leadership group" and delivering workshops to the group.

While this contract was current, the CIT was attempting to start another longer, more expensive contract with Mr Hollingworth, which would ultimately become the third contract.

Prior to the start of the second contract, the commission's report showed CIT had attempted to engage in a single-select tender process with Mr Hollingworth, which was expected to be worth $750,000 over three years.

But Mr Hollingworth ended up putting forward a price of $1.2 million for two years, covering 15 hours work a month.

"There was no apparent pricing justification, other than a figure of $302,500 per year as a 'retainer' allowing for a minimum of 15 hours per month work, and a further $302,500 per year for workshops, being a minimum of 10 workshops per year," the Integrity Commission said.

This process was considered by the government's procurement board, with one member expressing "grave concerns about the process".

The commission said it was unclear whether these concerns were conveyed to anyone at CIT, although it was likely they were.

The single-select process did not happen but CIT ended up going out to an open tender. Ten organisations submitted tenders with Mr Hollingworth being determined as the best tender in an evaluation. He offered a price of $1.2 million, with the agreement eventually being for $825,000 for the first year and $395,000 for an optional one-year extension.

The contract for $825,000 was entered into in November 2018. The following year the option to take up the extension was pursued, however, the contract came to an end in April 2020.

CIT started work to procure a new contract with Mr Hollingworth in December 2019. Ms Cover presented a proposal to the government procurement board in January 2020 and CIT went to the open market the following month.

The contract was estimated to cost $1.375 million and take 20 months. Twelve organisations presented proposals, including Mr Hollingworth's company, Think Garden. This proposal was $1.705 million and was the second-highest. Mr Hollingworth said the cost reflected a return on investment for the long term.

"We set our fee to reflect the potential for an order of magnitude return on the investment over a 10-year timeframe (ie, a longer temporal scale)," Mr Hollingworth's bid said.

"Amortising our fee across a decade gives you an annual cost of $170,501. We think this is ridiculously good value."

ACT Integrity Commissioner Michael Adams KC did not hold back in the report.

"This statement is meaningless," Mr Adams' report said.

"It gives no information at all about whether the price is reasonable, let alone whether it represents value for money. The last sentence is mere puffery."

The new contract was entered into in April 2020. The report said the contract agreed much of the work would be paid in advance with $852,000 to be paid on July 1 2020 and the remainder on July 1 2021. Mr Hollingworth provided the option to extend the contract by $1 for six months. This was taken up by CIT. It finished in December 2021.

While the fourth contract was ongoing, CIT entered into another contract with Mr Hollingworth.

The procurement for this went to the open market for a six-month contract valued at about $500,000 but only Mr Hollingworth submitted a bid. The commission is further investigating as to why this was the case.

"The language used in the [request for tender] and the imposition of the requirement regarding complexity theory may well have constituted a barrier to bidders other than Mr Hollingworth," the commission's report said.

This contract ran for four months from September 2021 to January 2022.

The commission seems particularly interested in this contract and has said it is exploring this further in its investigation.

This contract was the most controversial of them all and ultimately resulted in Ms Cover being found to have engaged in serious corrupt conduct.

Work started on this in October 2021, while CIT was engaged in two simultaneous contracts with Mr Hollingworth.

Information was provided to the board about this contract in the early stages but there was nothing to suggest its value would be higher than the other contracts.

The commission said Ms Cover should have consulted the board as "the financial and reputational risks of proceeding as she proposed were substantial and should have been self-evident".

CIT approached the government procurement board about this contract in November 2021. The budget for the project was $4 million. It was expected to run for two years with the option for an extension of one year. Ms Cover wanted this to be a single-select procurement but it was ultimately opened to the market.

Mr Hollingworth's tender did not provide a pricing breakdown but did provide an explanation saying it did not believe in a time and cost structure.

"ThinkGarden operates on a value-add pricing structure, rather than a time and cost structure," the tender response said.

"We believe that time and cost pricing structures for strategic services are not in the best interests for procuring organisations, as it naturally encourages suppliers to take more time to deliver the same value."

Mr Hollingworth's bid was $5.68 million but he offered a 12 per cent discount to CIT if they provided an upfront payment. The commission noted 12 per cent was $4,998,400 not $4,999,990.

The commission's report said the tender evaluation team seemed to have been working on the assumption Mr Hollingworth would receive the contract no matter what.

"What appears to have occurred, however, is that Mr Hollingworth's (nebulous) scoping was accepted without any comparison made against the expectation that controlled the budget," the report said.

"This strongly suggests that the evaluation's working assumption was that Mr Hollingworth would have his contract at almost any price."

Concerns were raised about the upfront payment and CIT instead proposed to provide payments in fourth quarterly instalments. Mr Hollingworth instead proposed 50 per cent to be paid at the start of the contract and the remainder paid half way through.

There were a series of negotiations around this, with Mr Hollingworth arguing there was a "hidden risk" of reputational damage in accepting the contract as the ABC had previously sought documents under freedom of information laws about the contracts.

An agreed fee structure, the commission noted, would have meant 99 per cent of the contract was to be paid with less than 80 per cent of the work completed.

This contract would ultimately be suspended in June 2022. Mr Hollingworth received $9000 from CIT for the work completed.

Think Garden is currently suing CIT for $3.4 million, which is the outstanding amount on the contract.