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CPM REVIEWS

REPORT

TO:

Anthony Lean A!Chief Executive

Office of Finance and Services NSW Department of Finance, Services and Innovation

CONCERNING: PHASE 2

Review of Employment Decisions

PREPARED BY:

Sandy Nix Senior Reviewer, CPM Reviews Pty Ltd

Quality Assurance by Jeff Lamond

Executive Director, CPM Reviews Pty Ltd

Submitted 28 July 2015

STAFF-IN-CONFIDENCE

Providing Re1·ic'''s nf Dec is inns and Ac lions, Wnrhplace lnvc'stig,Hions

and Related Strategic Advice to lire Public Sector and Other Or)\anisaliuns

CPM Reviews Pty Ltd • ABN 93 151 SOB 374 • Address: 7 Lawry Place, MacquarieACT 2614 • PO Box 42, Jamison ACT 2614

Phone: 02 6175 4500 • Fax: 02 6175 4555 • Email: [email protected] • Website: www.cpmreviews.com.au

PROTECTED: Sensitive: Personal

INTRODUCTION

1. CPM Reviews Ply Ltd (CPM Reviews) was engaged by the NSW Department of Finance, Services and Innovation (DFSI) to provide a report in accordance with the specified contract.

2. That contract required that a review be undertaken of employment decisions within the WorkCover Independent Review Office (WIRO). The Terms of Reference addressed:

A. Employment Decisions

i. Were proper processes, as set out in legislation and NSW Government employment rules and guidelines, followed?

ii. Specifically, were rules or guidelines for advertising positions, merit based selection, disclosure of conflicts of interest (including personal relationships) and djsclosure of criminal convictions complied with?

iii. Were proper processes followed to determine remuneration and entitlements for roles?

3. The review was required to consider the overall method relating to all employee appointments and in particular consider the cases fqr Mr Gregory, Mr Jedlin and Ms Staff.

B. Contractors and Consultants

i. Were proper procurement processes, as set out in legislation and NSW procurement policies, scheme rules and guidelines, followed?

ii. Specifically, were rules concerning disclosure of conflicts of interest (including personal relationships) complied with?

iii. Does each engagement demonstrate value for money?

4. The review was required to consider all contract and consultant engagements and in particular Mr David Effeney, Mr Conrad Staff and Resolve Software.

5. The investigation was undertaken in two separate and independent phases.

6. This report addresses the initial phase of the investigation, a file review of employment decisions and contractors and consultants, in relation to procedures and standards.

7. Another phase of this investigation, which is the subject of a separate report, addresses specific issues related to the nominated persons and companies, listed above.

8. It is· noted that there is a possibility of duplication or cross-referencing of material in the two separate reports.

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ALLEGATIONS

9. The Minister has requested an independent review of employment decisions made on behalf of WIRO, and a review of certain decisions to engage contractors or consultants.

10. The request comes as a result of allegations made via media reporting, initially on 22 June 2015, alleging "Jobs for the Boys'' within WIRO. A further media report was made on 17 July 2015, which raised similar issues. The Terms of Reference make specific reference to persons and organisations named in those reports. ·

11. Background information to the allegations by way of media reports and an extract of the WIRO Annual Report 2013 is included as Attachment A.

BACKGROUND

12. The NSW Government established WIRO. in 2012 as part of the reform of the State's workers' compensation system. Its creation accorded with the Workers Compensation Legislation Amendment Act 2012 which inserted sections 24 to 27 into the Workplace Injury Manaflement and Workers Compensation Act 1998.

13. The functions of WIRO include dealing with complaints made by workers about any act or omission of an Insurer that affects the entitlements, rights or obligations of the worker under the related Workers Compensation Acts, reviewing work capacity decisions of insurers and inquiring into and reporting to the Minister on such matters arising in connection with the operation of those Acts.

14. WIRO commenced operations on 1 October 2012. The Government also established the Independent Legal Assistance Review Service (I LARS) to fund legal assistance for workers involved in a dispute with their insurer. This service· is managed by WIRO and jointly co·mmenced on 1 October 2012.

15. Governance support was provided by the Safety, Return to Work and Support Division (SRWSD) of the Department of Finance.

16. In providing the referral for this review, explanation was provided by DFSI that formal funding and organisational structure approvals were initially pending for WIRO, particularly as a result of the urgency with which the agency was established. As they were not immediately available at the time of their commencement, the circumstances warranted some preliminary recruitment action with the expectation to be operational within a very short timeframe.

17. A copy of the organisation chart forWIRO '1s included as Attachment B.

POLICIES AND RELATED REFERENCES

18. It is noted that all NSW government entities are subject to obligations prescribed in the Public Sector Employment and Management Act 2002 and in the later NSW Government Sector Employment Act 2013.

19. For the purpose of this review, the following SRWSD recruitment and employment reference sources were considered:

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PROTECTED: Sensitive:Personal

• . Recruitment and Selection Policy 2013 • Recruitment Business Case Preparation Guide • Hiring Manager (Convenor) Accountabilities • Selection Committee: Business Rules • Guide for Making Verbal Offers of Employment • Fact Sheet: Background Checks • Engaging Contingent Labour • Code of Conduct and Ethics Policy

20. Whilst the Recruitment and Selection Policy (the policy) was established in 2013, it was confirmed by DFS\ that former versions generally mirror expectations and procedures, particularly given the reference to requirements prescribed in the Public Sector Employment and Management Act 2002.

21. In the absence of formal mechanisms and appropriate policies exclusive to WIRO, and recognisipg the umbrella arrangements afforded by SRWSD to WIRO, SRWSD have confirmed that this policy and its supporting documents are relevant for this review.

Relevant policy requirements, processes and requirements·

Who is covered by the policy?

22. The policy covers all people (defined as 'workers') including temporary staff, casual staff, trainees/apprentices, agency temps, consultants, volunteers, professional services contractors/sub-contractors and their employees, and visitors to workplaces. Compliance with the policy is mandatory.

23. The policy refers to an online recruitment system (Ta\eo) which houses the complete recruitment function for NSW Government agencies. It makes further reference to Requisitions, as an online form completed via Taleorequesting approval to fill a vacancy and to initiate ongoing recording of relevant actions and outcomes.

Recruitment action and processes

24. Within the policy are established steps for recruitment action including a business case preparation guide, recruitment options for vacancy filling, advertising, application management, selection practices, selection committees· and their business rules, commencing salaries, Hiring Manager (Convenor) Accountabilities and instructions for new employees.

25. The policy also addresses requirements for contingent labour, defining opportunities to "ff/1 short-term vacancies where it is impractical to fill via other methods. Agency staff should only be .sought for periods of less than twelve months. If the vacancy is to extend beyond twelve months, at minimum an internal expression of interest (EO!) recruitment action is to proceed."

26. Provision is made for use of a recruitment service provider "in exceptional circumstances, bulk or specialised recruitment' however, should this option be exercised, "the Hiring Manager is responsible for ensuring NSW Government equity and merit selection principles are maintained."

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27. The policy defines conflict of interest (COl) as a "situation where an employee could be influenced, or perceived to be influenced by a personal interest in canying out their public duty, including in a recruitment action. A personal interest may include personal, professional or business interests of individuals or groups we associate with."

Background checks

28. The policy refers to Background Checks. stating that they will be "conducted in the majority of recruitment actions. A criminal record check for identified sensitive positions will also be conducted."

29. Reporting templates are available on the SRWSD Recruitment Intranet page and/or on Taleo. It is noted that "the Hiring Manager is responsible for ensuring that the relevant reports are completed and attached to the requisiUon prior to submitting for approval."

30. Hiring Manager (Convenor) Accountabilities are referenced within the policy and in a similarly titled separate document, outlining the obligations for selection procedures including in regard to tlmeframes, selection committee composition, COl declarations, application of the merit process, procedures for shortllsting, notifications to candidates, referee reporting, recommendations and post-selection feedback.

31. For the purpose of this review, the Recruitment and Selection Polley and supporting documents have been assessed as providing a comprehensive explanation of requirements for fair and meritorious recruitment.

Procurement

32. The NSW Government Procurement Policy Framework is available on-line via ProcurePoint. It is a comprehensive document addressing requirements to ensure that government procurement activities achieve best value for money in supporting the delivery of government services. The mandatory requirements set out in the policy framework describe the law and policy current as at 1 October 2014 and reflect key principles outlined in prior iterations.

33. For the purpose of this review, the SRWS Procurement Policy and Procurement Procedures Manual provided relevant references. Those documents reflect obligations outlined in the Public Sector Employment and Management Amendment (Procurement of Goods and Services) Act 2012 and emphasise that procurement activities are conducted in accordance with the overarching requirements set out in section 149 of the Public Sector Employment and Management Act 2002.

34. The policy covers all people (defined as 'workers') including temporary staff, casual staff. trainees/apprentices, agency temps, consultants, volunteers, professional services contractors/sub-contractors and their employees, and visitors to workplaces.

35. The policy links to the SRWSD Code of Conduct and Ethics, emphasising the obligation to the community to conduct business professionally, efficiently, impartially and with integrity. Those standards apply to all people defined by the policy.

36. Standards of probity outlined in the SRWSD Procurement Policy reflect essential requirements including:

• Fairness and impartiality • Accountability and transparency of decision making

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• Use of a competitive process • Consistency and fairness of process • Identification and resolution of conflicts of interest

37. The Policy determines that the Procurement Group must be the first point of contact for assistance in determining appropriate processes and delegations. All procurement requests are analysed to determine if a Whole-of-Government Panel Contract or Prequalification (Prequal) Scheme will encompass the procurement request. All requests for procurement should be logged on the Procurement Request database.

38. NSW Government Procurement outlines a six stage process for activities that is applicable to all categories of procurement and is based on best practice recommendations. The importance of the stages depends on the size, type and value of the activity and SRWS applies these stages for all procurement activities in excess of $30,000 incl. GST. A tender process is required for·any procurement request in excess of $250,000.

39. Specific instructions are contained within the SRWS Procurement Procedures Manual for engagement of Agency temps, contractors and consultants. "it is recognised that from time to time Agency temps will be engaged but that must be in accordance with the provisions of the NSW Government Contingent Workforce Pre-qualification Scheme". In commencing a process to engage Agency temps, contractors or consultants, the Manual stipulates that no action should be taken until the Taleo eRequisition has been approved and the Procurement Group staff have made contact to initiate the engagement process.

40. For the purpose of this review, the Procurement Framework, together with the SRWS Policy and Manual and their supporting documents have been assessed as providing a comprehensive explanation of requirements for value for money, fair and impartial procurement within Government.

41. Relevant policy documents are included as Attachment C.

EVIDENCE AND OTHER MATERIAL

42. In the course of this review I considered the following evidence and material which are included as attachments to this report:

a. Background information to the allegations by way of media reports and an extract of the WIRO Annual Report 2013

b. Organisation chart for WIRO

c. Copies of relevant policies and references, as outlined above

d .. Data summary of all employee appointments since the formation ofWIRO, covering positions advertised extern<;~lly, by EOI, temporary employees engaged via Agency recruitment and extensions of employment ·

e. Analysis of that data summary:

i. ii. iii. iv. v.

For data relevant to "Advertised Externally" appointments For data relevant to "Advertised as EO I" For data relevant to "Agency Temp Engagements" For data relevant to "All Extensions" For data relevant to "Appointments for David Effeney"

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f. Copy of electronic recruitment file for Phillip Jedlin in the position of Director, Insurer and Employee Complaints, SES2.

g. Copy of electronic recruitment file for Paul Gregory in the position of Director !LARS, SES2

h. A spreadsheet detailing all temporary employees engaged by WIRO via Agency recruitment

i. A spreadsheet detailing all temporary employees engaged by WIRO via Agency recruitment, utilising headings with explanatory information including start and end date, cost, order dates, introduced by and supplier delegate details and clarifying notes, and including supporting explanatory material where available

j. A spreadsheet detailing all contractors/consultants engaged by WIRO, and including supporting explanatory material where available

k. A spreadsheet detailing procurement action for Resolve Software Group, including contractor description, contract period, cost and service details, and including supporting explanatory material where available

ANALYSIS

A. Employment Decisions:

43. A data summary was provided via Excel spreadsheet for files relating to all employee appointments since the formation of WIRO.

44. The spreadsheet reflected information provided by SRWSD and was noted as "information that SRWSD was aware of', with separate data reference in categories for positions which were 'advertised externally', all positions that were 'advertised as an EO I', all 'agency temp engagements' and 'all extensions'. An additional spreadsheet reflected 'appointments for David Effeney'.

45. Copies of the spreadsheets are included as Attachment D.

46. In submitting the data, SRWSD noted that not all information had been in the one place and cross-referencing and collation had been done for the material provided. The documents for each file were provided via USB, reflecting the material collected for this review process. No hard copy original documents were sighted (other than in files for Phillip Jed lin and Paul Gregory, referred to later in this report).

47. For the purpose of the file audit, a checklist of requirements was utilised, identifying expectations for content wtthin those files sufficient to meet policy obligations for the recruitment process. Those checklists are included as the data summary accompanying each spreadsheet.

48. For data in the spreadsheet relevant to "Advertised Externally" appointments, twenty two (22) files were provided.

49. The following discrepancies were identified from the audit in relation to findings in nine (9) files:

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Taleo Position Selected Hiring Identified discrepancies Requisition Candidate Manager! No. Delegate

1CP5 Director, Jdhn Pinnock Kim Garling The position was filled on contract for up to Complairits Lyn Doherty three years .

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A higher commencing salary was noted.

Background check~ were completed with two referee checks although the report noted that one reference was from a friend.

1CPO Difector Paul Gregory Kim Garling Kim Garling made a COl declaration in Note: a hard I LARS Julie relation to the applicant, acknowledging 40 copy of this Newman years acquaintance since Law School. file was also made Selection recommendation report did not available address selection criteria.

Report notated with reference that "CEO is not able to approve appointment of Paul Gregory to a SES position. Folfowing further consideration and consultation with DG DFS, it has been agreed to appoint Mr Gregory to a 12 month temporary role as WIRO Implementation Director Grade 11112 with no finanoiaf delegation.~

'1CP3 Manager, Kathryn Mitchell Kim Garling R""f"'rt:>nr.P. was made In an email frorr Complaints Recruitment Supervisor) tQ

'ecruitment Manager) date ···-· ·- _<pressing concerns with the concise referee comments particularly for an 11112 grade position and specific comment that Values are NJA.

Email states "but given who the hiring manager is, I'm giving you my thoughts only. If it were up to me, I wouldn't approve with the scarcity of detail."

1LME Principal Jeffery Gabriel Brooke Email correspondence from Lyn Doherty Lawyers Lynette Johnson Benson dated 8/7113 queried the Order of Merit (3) Rehema (OOM) in the recommendation.

Mwanyalu Email from Brooke Benson dated 10/7/13 to Karen Morrison highlights errors in OOM and refers to "Paul Gregory as technical advisor but not committee member given his grade is only 11112 which is below his staff."

1LML Principal Catherine Brooke Similar reference in emails as outlined for Lawyers Morrison Benson 1LME above, seeking clarity regarding offers (3) Penelope Hayes of permanent v temporary given status on

Emma the OOM. Lethbridoe-Gill

2JAJ Principal Ashley Rt!ssell Kim Garling Email from{ 1!ed 9.4.14 Lawvers Christine Brooke regardina COl decrarauons with comment

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(6) Ornelas Benson that Kim Garling and Paul Gregory have no Emma COl to declare because "in the legal Lethbridge-Gill profession everyone knows everyone". Penelope Hayes Tamera McManis Tracev Emanuel

2LUF Director, Phillip Jedlin Kim Garling Employee recommendation noted that Mr Note: a hard InSurer & Approved by Jed lin has been engaged by WIRO as copy of this Employer Julie agency contractor since November 2012. file was also Complaints Newman made and Noted that this was a merit process with available Operations satisfactory referee checks. One reference

was provided by a colleague.

No COl interest declarations completed.

36EG Communic Nicole Golding Phillip Jedlin Email dated 17/12/14 from Lyn Doherty ations stating that the panel's paperwork was Marketing "unclear and/or unreadable." Also referred to Officer lack of reference checks.

No COl declaration made by Phillip Jed lin.

COl declaration made by Linda Wilson in relation to being 'Facebook' friends with two candidates.

31PQ Principal Ning Dong Paul Email fro111 jated 2.6. t 5 Lawyer Gregory commenting on "reservations about the

q.U.i!!~ the panel report. Minimal "II·. ··~· i~ · tton. Not a quality document."•l ;oi.

~~·.: .. · .'~

50. The discrepancies suggest poor practices in relation to:

the quality and content of selection recommendation reports ("uncle.ar and unreadable"; "not a quality documenf'; "minimal information"), minimal commitment to COl reporting and fair and reasonable assessment of any declared circumstances; and the status and relevance of referees for candidates, where friends and colleagues provided reports, contrary to the expectation outlined in the Recruitment and Selection Policy that references will be provided by a "current or recent supervisor'.

51. Of notable concern is the inference in the statement from Karen Morrison (Recruitment Supervisor) to Lyn Doherty (Recruitment Manager) where she said "but given who the hiring manager is, I'm giving you my thoughts only. If it were up to me, I wouldn1 approve with the scarcity of detail', which suggests that persons with capacity to provide authoritative advice regarding fair and reasonable processes were disinclined.to dispute recommendations made by the CEO.

52. The file audit analysis for these flies Is Included as Attachment E (I).

53. For data in the spreadsheet relevant to "Advertised as EO!", six (6) files were provided.

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54. The following discrepancies·were identified from the audit in four (4) of those files:

Tal eo. Position Selected Hiring Identified Discrepancies Requisition Candidate Manager} No. Deleo ate 1LC4 Project Brooke Linda Wilson Requisitions created 27.3.13, 25.6.13, 2.12.13 1QP2 Manager Benson Requisition dated 2/12/13 was noted as "request 29ZN to extend Brooke Benson (nonwmerit selected

since 1.10.12) from 1.1.14 to 30.6.14" No other documents were containe.d on the USB file

3M DO Contact Linda Wilson Requisition created 29.4.15 noted as 'i:o advertise Officer EOI for 6 mths (8.5.15-7.11.15)

Requlsl!ion rejected- ato be handled by Procurement"

Current recruitment action, not yet finalised

55. The remaining two (2) audited files reflected c~rrent and ongoing action, with no identified . discrepancies.

56. Of notable concern is the reference to Ms Benson's extension of employment since 1.10.12 with proposed extension to 30.6.14. The Recruitment and Selection Policy suggests that "Agency staff may be engaged to fill short-term vacancies where it is impractical to fill via other methods. Agency staff should only be sought for periods of less than twelve (12) months. If the vacancy is to extend beyond twelve (12) months, at minimum an internal EO/ ·recruitment action is to proceed." It appears that this was not applied in the case of Ms Benson. No justification for such action is apparent in the provided file.

57. Within this aspect of the file audit, it is noteworthy that the extent of available information was very limited, suggesting that practices may not be absolutely compliant with expectations reflected in the Recruitment and Selection Policy and fore-recruitment information recording on Taleo.

58. ·The file audit analysis for these files is included as Attachment E (ii).

59.- For data in the spreadsheet relevant to "Agency Temp Engagements", thirty seven (37) files were provided.

60. The following discrepancies were identified from the audit in relation to findings in thirty one (31) files:

Taleo Position Selected Hiring Identified discrepancies Requisition Candidate Manager No. I

Delegate 1BGK Customer Kate Stevenson Linda Requisition dated 24.10.12 stating "Position

Service Commenced Wilson to be filled by Agency tern under Contract Officer 5.11.12 100 for the period 30.10.12 to 30.1.13."

Only two documents, the Requisition and Approval, were contained on 1he USB file.

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1D6U Principal Lyn Johnson Brooke Requisition dated 20.11.12 stating ''Position Lawyer 21.1.13-22.2.13 Benson to be filled by Agency tern under Contract

100 for the period 26.11. 12 to 22.2.13."

Only two documents, the Requisition and Approval, were contained on the USB file.

1HTQ Director, Phillip Jedlin Brooke Requisition dated 11.~.13 requesting "Urgent lnsurer/Empl 11.2.13-10.5.13 Benson approval to extend/re-engage Phillip Jedlin oyee as Ditector Insurer/Employee Complaints for Complaints a further three months." Approved by Karen

Morrison In email dated 12.2.13.


1LJS Principal Lyn Johnston Brooke Requisition dated 2.4.13 requesting approval Lawyer 8.10.12-8.10.13 Benson to extension of Lyn Johnston, Maria

Maria MacNamara MacNamara, and Anthony Johnston. 21.1.13-31.5.13 Approved by Karen Morrison on 12.4.13. Anthony Johnston 8.10.12-8.10.13 Only two documents, the Requisition and

Aooroval, were contained on the USB file. 1LC8 Investigation Graham Elder- Kathryn Only two documents, the Requisition and

& Dispute White Mitchell Approval, were contained on the USB file. Resolution 1.4.13-30.6.13 linda Officer Wilson

1LUC Business Christian Krieberg Brooke Only two documents, the Requisition and Analyst 22.4.13-8.10.13 Benson Approval, were contained on the USB file.

1LUG Contact Jane Madden Requisition dated 8.4.13 Officer 11.12.12-30.6.13 Reference on 26.4.13 stating "this is a

James retrospective approval to 'clean up· Stephenson contractor records for WJRO". Approved 17.1.13-30.6.13 26.4.13. Tanya Hamilton 30.1.13-30.6.13 Only two documents, the Requisition and Stephanie Burke Approval, were contained on the USB file. 25.3.13-14.5.13 Sophia Rojas 15.5.13-30.6.13

1NUM Researcher Camilla Staff Linda Only two documents, the Requisition and 15.5.13-30.8.13 Wilson Approval, were contained on the USB file. (PT 2 davs owl

1062 Director Phil Jedlin linda Only two documents, the Requisition and Insurer/ 11.5.13-30.9.13 Wilson Approval, were contained on the USB file. Employer Complaints

1QES Contact James Stevenson linda Only two documents, the Requisition and Officer 1.7.13-2.8.13 Wilson Approval, were contained on the USB file.

1QE4 Contact Graham Elder- Linda Only two documents, the Requisition and Officer White Wilson Approval, were contained on the USB file.

27.5.13-2.8.13 1QEY Contact Stephanie Bourke Linda Only two documents, the Requisition and

Officer 24.6.13-2.8.13 Wilson Approval, were contained ~n the USB file.

1024 Team Tanya Hamilton Linda Only two documents, the Requisition and Assistant 17/6/13-2.8.13 Wilson Approval, were contained on the USB file.

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1QHB Principal Lyn Johnston Linda Requisition dated 21 .6. 13 Lawyer 1.6.13-30.6.13 Wilson Noted as "there was no previous approval for

and to 2.6.13 extension of Lyn Johnson from 1.6. 13· 30.6.13".


1039 Medical David Effeney Linda Requisition dated 14.6.13 seeking "approval Review 18.6.13-2.8.13 Wilson to appoint Medical Review Consultant for 7

·consultant weeks to work with CEO". Approved 2.7.13.


101M Senior Admin Sophia Rojas Linda Only two documents, the Requisition and Support 18.6.13-2.8.13 Wilson Approval, were contained on the USB file.

1RUO Senior Admin Sally I' allan- Linda Only two documents, the Requisition and Support Thompson Wilson Approval, were contained on the USB file.

22.7.13-17.1.14 1862 Senior Admin Sophia Rojas Linda Only two documents, the Requisition and

Support 5.8. 13-30.8.13 Wilson Approval, were contained on the USB file.

2J44 Principal Penelope Hayes Linda Requisition dated 13.2.14 "to approve Lawyer Megan Cassidy- Wilson additional working days for Penelope Hayes

26.3.14 and to engage Agency temp .to cover additional day".


2KS9 Medical David Effeney Linda Requisition dated 25.2.14 "request tore-Review 10.3.14-11.4.14 Wilson engage David Effeney for 4 days pw for 4 Consultant weeks at $1000 per day".

Only two documents, the Requisition and Approval, were contained .on the USB file.

2MWE Principal Brian Hatch Linda Requisition dated 11.3.14 "request tore-Lawyer 15.3. 14-30.6.14 Wilson engage Agency temp Brian Hatch. Noted

that Mr Hatch has been employed as Agency temp since 17.12.13.".

Only two docuinents, the Requisition and Approval, were contained on the USB file.

2UR5 WIRO Kim Morris Linda Requisition dated 9.5.14 "request to extend 3 Officers (3) 5.6.14-1.6.15 Wilson x Agency temps for 12 months"

Leonie Hale Noted that permanent recruitment action 10.6.14-1.6.15 should occur. Andrew O'Loughlin Only two documents, the Requisition and 10.6.14-1 .6. 15 Approval, were contained on the USB file.

2YMQ Principal Brian Hatch Linda Requisition dated 5.6.14 "request to extend Lawyer 1.7.14-30.11.14 Wilson Agency Temp Brian Hatch".

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31HF Medical David Effeney Linda Requisition dated 3.7.14 nrequest tore-Review 14.7.14-31.12.14 Wilson engage David Effeney" Consultant


32L1 Principal Megan Cassidy Linda Only two documents, the Requisition and Lawyer 25.7.14-31.12.14 Wilson Approval, w~re contained on the USB file.

338K Medical David Effeney Linda Requisition dated 29.7.14 "retrospective Review Wilson requisition for the payment of work already Consultant undertaken from 17.6-10.7.14".

Noted as "Retrospective requisition for the payment of work already undertaken from 17.6.14 to 10. 7.14".

Requisition approved n

' \. 7 .8. 14 stating "this request is retrospective. Whilst I do not support seeking approval after the fact, in this case I endorse same as .the Individual has already completed the work and I would assume legally we would

I be required to honour payment.~

Only two document~, the Requisition and Approval, were contained on the USB fil~.

384H Senior Admin Cassandra Petith Kelly Requisition dated 12.8.14 "request to extend Support 1.9.14-28.8.15 Heddle Cassandra Petith for 12 months". Noted that

Ms Petith has been employed as an Agency temp since 10.9.13.

Only two documents, the Requisition and Approval, were contai~ed on the USB file. ·

34JH Contact Nerida Crawford Linda Requisition dated 15.8.14 "request to Officers (3) Ralph Togia- Wilson approve 3 x temps for 28-29.8.14 only'.

Molesi Lindsey Fogg Only two documents, the Requisition and 28-29.8.14 only Approval, were contained on the USB file.

35DH Admin Neil Bryant Linda Requisition dated 28.8.14 "request approval Assistant (2) Mandy Ross Wilson for two Agency temps 'to fix the Resolve

8.9.14-29.12.14 Database'."

Only two documents. the Requisition and Approval, were contained on the USB file.

3CUG Admin Mandy Ross Linda Requisition dated 2.12.14 "request approval Assistant (2) Neil Bryant Wilson for extension of 2 x Agency temps=. No1ed

25.12.14-26.3.15 that both have been currently employed since 22.9.14.

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3DNF Project Megan Cassidy linda Requisition dated 12.12.14 "request to re~ Director 1.1.15-1.1.16 Wilson engage Megan qassidy for further 12

months".



Retrospective approvals Retrospective requisition for the payment of work already undertaken Ongoing employment of Agency temps. The Recruitment and Selection Policy suggests that "Agency staff may be engaged to fill short-term vacancies where it is impractical to fill via other methods. Agency staff should only be sought for periods of less than twelve (12) months. If the vacancy is to extend beyond twelve (12) months, at minimum an internal EO/ recruitment action is to proceed." No justification for such action is apparent in the provided files.

62. Of notable concern is the comment made b . ;tating "this request is retrospective. Whilst I do not support seeking approval after the fact, in this case I endorse same as the individual has already completed the work and I would assume legally we would be required to honour payment." The comments related to payments to Mr Effeney.

63. Within this aspect of the file audit, it is noteworthy that the extent of available information was ·very limited, suggesting that practices may not be absolutely compliant with expectations reflected in the Recruitment and Selection Policy and for a-recruitment information recording on Taleo.

64. The file audit analysis for these files is included as Attachment E (iii).

65. For data in the spreadsheet relevant to "All Extensions", five (5) files were provided.

66. The following discrepancies were identified from the audit in relation to findings from those five (5) files: ·

Tal eo Position Selected Hiring Identified DiscrepancieS Requisition Candidate Manager/ No.

'Delegate 1LC4 Project Brooke Benson Linda Wilson Requisition dated 27.3.13 "requesting

Manager 1.4.13-30.6.13 extension of Brooke Benson".


1QPZ Director Brooke Benson Linda Wilson Requestion dated 25.6.13 "requesUng Policy & 1.7.13-31.12.13 approval to extend Brooke Benson". Strategy

On!v two documents, the Reauisition and

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Approval, were contained on the USB file.

29ZN Project Brooke Benson Linda Wilson Requestion dated 2.12.13 "requesting Manager 1.1.14-30.6.14 approval to extend Brooke Benson".


3GXM WIRO Paul Gregory Linda Wilson Requestian dated 5.2.15 ~requesting approval lmplemen 24.2.15-30.6.16 to re-engage Paul Gregory". tation Officer Notations indicate additional request to

"extend from 23.2.15-30.4. f5 under GSWAct."

Noted that DAn exemption up to max.imt,~m 30.6.16 under S22D of the GSE Act". "Approval under exemption by Commissioner PSC'.

Recruitment/employment beyond 30.6.16 will require open advertising and comparative assessment."

2J44 Principal Penelope Hayes Lin'da Wilson Requisitipn dated 13.2.14 "requesting to Lawyer Megan Cassidy increase Penelope Hayes from 3 to 4 days pw

and engage Agency temp to cover remaining dav·.

67. Within this aspect of the file audit, it is noteworthy that the extent of available information was very limited, suggesting that practices may not be absolutely compliant with expectations reflected in the Recruitment and Selection Policy and for a-recruitment information recording on Taleo.

68. The file audit analysis for these files is included as Attachment E (iv).

69. For data in the spreadsheet relevant to "Appointments for David Effeney", seven (7) files were provided. These covered his employment as a Medical Review Consultant.

70. The following discrepancies were identified from the audit In relation to findings from files relevant to David Effeney's engagement:

71. Taleo Start Date End Date Requisition Identified Discrepancies Requisition approval date No. 1039 18 June 2 August 26 June 2013 A requestian·was created on 14.6.13, noting a

2013 2013 proposal to engage an Agency temp. The request was endorsed on 19.6.13, with approval for 6 weeks only, subject to review.

No other documentatipn was available on this file.

1T7Y 4 29 3 September No documents were contained on the USB file September November 2013 2013 2013

28FO 2 6 26 November No documents were contained on the USB file December December 2013

15

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2013 2013

2KS9 11 March 11 April 5 March 2014 A requisition was created on 25.2.14 stating 2014 2014 "Please approve the temporary appointment of

David Effenay to complete the hearing project he commenced last yea(. Approval was provided by Julie Newman on 4.3.14.

No other documentation was available on this file.

338K 17 June 10 July 11 August A requisition was created on 29.7.14 st~ting 2014 2014 2014 "Retrospective requisition for the. payment of work

already undertaken fran ·-7.14".

Requisition approved.bj '" 7.8.14 stating "this request is retrospective. Whilst I do not support seeking approval after the fact, in this case I endorse same as the individual has a/re~dy completed the work and I would assume legally we would be required to honour payment."

31HF 14 July 31 11 July2014 A requisition was created on 29.7.14 stating 2014 December ~request to re~engage David Effeney up to

2014 31112114, previously approved up to 1114114, cost $1000 per day."

Approved provided on 11/7/14 stating "as procurement contractor request- however endorsed on the proviso that the CEO approves the engagement."

3H25 2 January 31 August 13 February No documents were contained on the USB file 2015 2015 2015


The lack of suitable documentation to support the temporary employment of Mr Effeney Inappropriate retrospective submission of requisitions and approval Advice of procurement for approval through inappropriate channels

73. The file audit analysis for these files is included as Attachment E (v).

74. Whilst the majority of files for the review were provided as extracts from Taleo on a USB, two files were provided which were copies of all electronically recorded information.

75. Those files related to Phillip Jedlin in the position of Director, Insurer and Employee Complaints SES2 and Paul Gregory in the position of Director !LARS SE.S2.

76. These files were provided in hard copy format, most probably in relation to the specific mention of those employees initially in the media reports and therefore in the Terms of Reference. The files provide comprehensive information including the initial approval to recruit, job advertising content including information pack, role description and selection criteria, candidate list and resumes, Hiring Manager Accountabilities form, interview notes, reference checks, recommendation report and shortlisting worksheet and the employment contract, with a copy of the approval.

16

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PROTECTED: Sensftfve: Personal

77. A copy of the electronic recruitment file for Phillip Jedlin in the position of Director, Insurer and Employee Complaints SES2 is included as Attachment F.

78. A copy of the electronic recruitment file for Paul Gregory in the position of Director I LARS SES2 is included as Attachment G.

ANALYSIS

B. Contractors and Consultants:

79. Separate spreadsheets were provided by the SRWSD Procurement Group, reflecting material collected for the purpose of this review. Supporting material, where available, was provided in hard copy.

80. An initial spreadsheet provided raw data as at 7 July 2015, relevant to the engagement of Agency temps dating from WIRO's inception.

81. Data within the spreadsheet indicates comprehensive Agency temp recruitment from the time when WIRO was established, all of which is via Small & Associates Ply Ltd (Smalls), up until July 2013 when the Procurement Group identified that standard procurement procedures had not been applied. At that time, the Procurement Group established a more controlling, governance role in relation to WIRO's Contingent Workforce.

82. The procurement procedures for Agency temps requires that no action be initiated until the Taleo eRequisition has been approved and the Procurement Group has been contacted to initiate the engagement process. "Agency temps must only be engaged to fill short-term business needs (not greater than 6 months). Where it is known up front that the vacancy or need for services is greater than six (6) months, or over time it becomes clear that it will extend beyond 6 months, alternative recruitment action must proceed. Agency temps must

. be engaged under the Contingent Workforce Prequa/ification Scheme."

83. A copy of the spreadsheet is included as Attachment H.

84. A more detailed spreadsheet relevant to Agency temp recruitment was also provided. The spreadsheet Identified the Recruitment Agency, Agency temo name and role. start and end

·date, rate of payment order dates and supplier delegate and Introduction details. Comprehensive notes were also provided regarding the circumstances of each engagement.

85. This spreadsheet provides critical data of the Agency temp recruitment activities for WI RO from its inception and highlights major discrepancies in the application of established procurement protocols.

86. A key element was the consistent use of Smalls as the Recruitment Agency. Until approximately July 2013, no other agency provider was used, despite procurement expectations for a balanced ar;-"--"-- -• ----• ---viders. In addition, Smalls' Supplier Delegate in each contract was. . Whilst there is no evidence to suggest any impropriety in relation to th~ rAnlll~mv OT us1ng this recruitment agency and the consistent r.nntact ooint asc necdotal commentary implies a possible COl link between• j VVIKU's contact point and regular Hiring Manager The SCOf:n::::: u. u ••v p••c.."'"' vf the review does not enable further consideration U1 u u;:, c:~;:,pt::'-'t, other than highlighting it as a possible issue.

17

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87.

88.

89.


A further element of concern was the consistent introduction of selected candidates by WIRO to Smalls, which is contradictory to the established procedures for Agency temp recruitment. Established procedures require prior notice to the Procurement Group after a requisition for approval has been made to the People & Culture (P&C) Group. P&C provides advice of approval to the Taleo request and the Procurement Group makes preliminary arrangements to forward RFQ details to approved Recruitment Agencies under the Prequalification Scheme for the category/role to be filled. The Procurement Group will liaise with the Hiring Manager on steps to be followed to finalise the recruitment. Once an appropriate candidate has been identified, the Procurement Group will assist in the completion of the Prequalification Order Form and will generate the official Purchase Order to be sent to the recruitment agency for signatory. An Official Order form is signed and copied to the Procurement group to be attached to the Purchase Order for future reference.

In general, the expectation is that the recruitment agencies will identify and recommend suitable candidates for consideration, however in the majority of cases highlighted in this spreadsheet, the candidate was brought to the attention of Smalls by WIRO and the procedures outlined above were bypassed.

The following notes were Included on the spreadsheet provided by Procurement in relation to findings for each of the identified links between Smalls and WIRO together with relevant information under the listed headings:

Agency Temp Start/End Date Notes (as prepared by SRWSD Procurement Group) Name and Role {including

extensions)

John Pinnock 19.9.12 10.3.13 Engagements had been confirmed between WIRO and Smalls prior Director, to procurement involvement. Complaints

No Agency Temp approval from P&C for initial engagement.

Retrospective approval for extensions following Procurement alert to Recruitment.

CHRO approved additional hours following his official end date as Agency Temp to permanent WIRO (29.2.13·1 0.3.13).

Paul Gregory 2.10.12-30.4.13 Engagements had been confirmed between WIRO and Smalls prior Director !LARS to Procurement involvement.

No Agency Temp approval from P&C for initial engagement. Retrospective approval given for extensions following Procurement alert to Recruitment.

CHRO approved up to 30.4.13 pending recruitment action.

Maria 22.10.12 22.2.13 Engagements had been confirmed between WlRO and Smalls prior MacNamara to Procurement involvement. Communication & Stakeholder No Agency Temp approval from P&C for initial engagement. Manager& Retrospective approval given for extensions following Procurement Director alert to Recruitment. Communications Position title chanqed on 25.2.13 from Communications &

18


Stakeholder Manager to ~Director~

Laurinda 22.1 0.12-22.2.13 Engagements had been confirmed between WlRO and Smalls prior We!lings to Procurement involvement. Principal Lawyer

Retrospective approval given for engagement following Procurement alert to Recruitment.

Lyn Johnston 21.1.13-26.4.13 Engagements had been confirmed between WIRO and Smalls prior Principal Lawyer 1.6.13 -2.8.13 to Procurement involvement.

Retrospective approval given for engagement and extensions rollowing Procurement alert to Recruitment.

Anthony 23.10.12 Engagements had been confirmed between WIRO and Smalls prior Johnston 8.10.2013 to Procurement involvement. Project Manager I No Agency Temp approval from P&C for initial engagement. Director IT Retrospective approval for extensions following Procurement alert to

Recruitment.

Position title changed from "Project Manager" to "Director IT" on 25.2.13

Kate Stevenson 5.11.12 31.1.13 Engagements had been confirmed between WIRO and Smalls prior Administration to Procurement involvement. Officer

No Agency Temp approval from P&C.

Phil Jedlin 12.11.12 Engagements had been confirmed between WIRO and Smalls prior Director 30.9.13 to Procurement involvement. Insurance/ Employer Phil Jed lin accepted payment from Smalls following his permanent Complaints placement with WIRO- Procurement highlighted the issue .and

escalated to NCFO and coordinated repayment to Smalls.

Note: Phil Jedlin had extensive overtime payments during Easter Show 2014.

Laura 20.10.12- Engagements had been confinned between WIRO and Smalls prior Thompson 22.2.13 to Procurement involvement. Director Linda Corrigan 10.12.12 Engagements had been confirmed between WIRO and Smalls prior Director 28.2.13 to Procurement involvement.

Jayne Madden 11.12.12- Engagements had been confirmed between WIRO and Smalls prior Customer 16.5.13 to Procurement involvement Service Officer RetrospeCtive approval for engagement and extensions following

Procurement alert to Recruitment. Note: Employee ceased her employment prior to the proposed end date and was replaced by Graham Elder-White

James 17.1.13 -2.8.13 Engagements had been confirmed between WIRO and Smalls prior Stevenson to Procurement involvement. Dala Enlry Clerk

Karla Perez 17.1.13 1.3.13 Engagements had been confirmed between WIRO and Smal!s prior Data Entry Clerk to Procurement involvement:

No AQency Temp approval from P&C.

19

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Rachel Johnston Contact Officer

Daniela Lorkovlc Contact Officer

Stephanie Bourke Contact Officer

Sophia Rojas Contact Officer

Cassandra Petith Contact Officer

Tanya Hamilton Team Assistant

Camilla Staff Researcher

Christian Kreiberg Business Analyst

Keith Brook Investigation & Dispute Resolution Officer

Graham Elder White


7.1.13-3.5.13 Engagements had been confirmed between WIRO and Smalls prior to Procurement lnvolvem~nt.

Retrospective approval for engagement and extensions following Procurement alert to Recruitment.

7.1.13-3.5.13 Ermagements had been confirmed between WIRO and Smalls prior to Procurement involvement.

Retrospective approval for extension beyond 3.5.13 following Procurement alert to Recruitment.

Note: Employee ceased her employment prior to the proposed end date and was replaced by Stephanie Bourke.

25.3.13-17.6.13 Engagements had been confirmed between WIRO and Smalls prior to Procurement involvement.

Retrospective approval for engagement and extensions following Procurement alert to Recruitment.

15.5.13-28.6.13 Initial engagement had been confirmed between WIRO and Smalls 1.7.13-2.8.13 prior to Procurement involvement. 5.8.13- 30.8.13

Extensions of engagements confirmed with Smalls prior to Tal eo being submitted.

Engagements had been confirmed between WIRO and Smalls prior to Procurement involvement.

30.1.13-30.6.13 Initial engagement had been confirmed between WIRO and Smalls 1.7.13-2.8.13 prior to Procurement involvement. 5.8.13-30.8.13

Extensions of engagements confirmed with Smalls prior to Tal eo being submitted.

16.5.13-30.8.13 Engagement had been confirmed between WIRO and Smalls prior to Procurement involvement.

Retrospective Taleo approval for engagement following Procurement alert to Recruitment.

22.4.13 - 7.4.13 Engagement had been confirmed between WIRO and Smalls prior to Procurement involvement.


1.4.13-7.4.13 Engagement had been confirmed between W!RO and Smalls prior to Procurement involvement.

Retrospective Ta!eo approval for engagement following Procurement alert to Recruitment.

8.4.13-30.6.13 Engagement had been confirmed between WIRO and Smalls prior 1.7.13 2.8.13 to Procurement involvement.

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Investigation & Dispute Retrospective Taleo approval for engagement following Resolution Procurement alert to Recruitment. Officer David Effeney 18.6.13- 2.8.13 Engagement had been confirmed between WIRO and Smalls prior Medical Review to Procurement involvement. Officer


Laura Fallon 22.7.13-17.1.14 Procurement proceeded with RFQ to several recruitment vendors-Senior Admin Linda Wilson advised that they had contacted Smalls to establish if Support Officer Laura Fallon was available and requested tha.t we include Smalls in

the request as Laura had previous knowledge/understanding of the tasks.

Team Leader Purchasing advised in the future Smalls would not be invited to provide resumes for future Agency Temp roles.

90. Based on information provided by DFSI, it is acknowledged that WIRO had an initial requirement to engage Agency temps for the purpose of quickly staffing positions to fulfil its obligations at start of business on 1 October 2012. In that case, an exen:tption from strict· application of procurement procedures might be warranted. Nonetheless, the listed engagements herein go well beyond the timeframe for the initial establishment. In doing so, there is an implication that deliberately or otherwise, WIRO bypassed established procurement policy requirements.

91. In any event, the expectation is that WIRO would comply with procurement procedures when recruiting for Agency temps. Those procedures indicate that no action can be initiated until the Taleo eRequisition has been approved and the Procurement Group has been contacted to initiate the engagement process. It is evident that in each of these cases, procurement proceeded without involving the Procurement Group and retrospective engagement and extension action was necessitated when the circumstances subsequently came to their attention and that of the Recruitment Team.

92. Further, the Procurement policies and manual require that "Agency temps must only be engaged to fill short-term business needs (not greater than 6 months). Where it is known up front that the vacancy or need for services is greater than six (6) months, or over time it becomes clear that it will extend.beyond 6 months, alternative recruitment action must proceed. The majority of these positions were key positions with an ongoing permanent role within WIRO .. On that basis, early action to formalise employment arrangements through meritorious recruitment procedures would have been appropriate. The information provides evidence to the contrary in relation to WIRO's practices.

93. It was noted that other data within this spreadsheet for ongoing engagement of Agency temps reflected a competitive process through the Procurement Group, with an RFQ invitation to several recruitment agencies. These procedures were applied after the Procurement Group became aware of the improper practices which WIRO had previously engaged in.

94. In relation to the Agency temps listed on this spreadsheet, it is unknown whether there is any COl link belweerl ·- Find Mr Anthony Johnston. The

21


scope of this phase of the review does not enable further consideration of this aspect, other than highlighting it as a possible issue.

95. A copy of that spreadsheet is included as Attachment I.

96. A separate spreadsheet provided data in relation to Contractors/Consultants.

97. Procurement requirements for the engagement of Consultants and/or Contractors specify that they must be engaged under the Performance & Management Prequalification Scheme or the NSW Procurements panel contracts. In either case, initial action is required to log a request on the Procurement Register which is reviewed by the Procurement Group, with specifications prepared for the scope of the consultancy and/or contractor works. Action is then taken to distribute the information to the service providers categorised for the capabilities nominated or otherwise advertised in the media. Responses are directed via the tender process for evaluation. An Evaluation Report must be completed, outlining recommendations/justifications for the outcome and submitted to the appropriate delegate for approval/endorsement.

98. The following notes were included on the spreadsheet provided by Procurement in relation to findings for each ·of the Consultant/Contractor agreements together with relevant information under the listed headings:

Service Contractor/ · Contract Period Service Description Notes (as prepared by Provider Consultant and Value SRWSO Procurement

& Service Group) Description

Access Catherine 29.9.14- Provide advice and Engagements had been Macquarie McMahon 31.10.14 Opinion on WIRO confirmed between WIRO and Limited model of hearing loss Access Macquarie prior to

audiological Procurement involvement. database

No competitive process or $14,400 + GST review of services could be

conducted under NSW Procurements government Contracts/PreQual Schemes.

Chris Tait & Chris Tait 11.6.13-30.8.13 Business Review of Engagements had been Associates WIRO operations confirmed between WIRO and

Chris Tail & Associates prior $64,000 + GST to Procurement involvement.

No competitive process or review of services could be conducted under NSW Procurements government Contracts/PreQual Schemes.

Dialogue Visual John 2013 WIRO express Initial engagement & Communication Frostell Various banner design & extensions had been

engagements branding and confirmed between WIRO and development of Dialogue Visual WIRO intra net Communication prior to

Procurement involvement. $126,760.37 Vendor Introduced bv Maria

zz


MacNamara (Agency temp-then contractor Portal Consulting)- information provided by SRWS Procurement to apply to join NSWP -ICT Prequal Scheme No competitive process or review of services could be conducted under NSW Procurements government Coritracts/PreQual Schemes.

Explainimate Unknown Various Creation of Initial engagement & engagements animation/Illustrations extensions had been

for Internet confinmed between WIRO and Explainimate prior to

$3g.ooo Procurement involvement.


Henderson~ Unknown Various Photography services Initial engagement & Kelly engagements ofWIRO staff for print extensions had been Photography and electronic media confirmed between WIRO and

Henderson-Kelly Photography $6,000 · prior to Procurement

involvement.

No competitive process or review of services could be · conducted under NSW Procurements government Contracts/PreQual Schemes.

Herbert Greer Unknown Single Legal review of Engagement had been engagement intellectual property confirmed between WIRO and

WIRObranch Herbert Greer prior to trademark & Procurement involvement. copyright

No competitive proceSs or $11,500 review of services could be

conducted under NSW Procurements government Contracts/PreQual Schemes.

Lisa Louise Usa 22.7.13-22.8.13 Writing, editing, Engagement had been MacNamara MacNamara proofreading and confirmed between WlRO and

media relations Usa MacNamara prior to advisory services for Procurement. involvement. the production of the 2013 Annual Report Introduced by Maria

MacNamara (records show no $39,760 relation).

No competitive process or review of services could be conducted under NSW

l I

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Procurements government Contracts/PreOuaJ Schemes.

Roshana May Roshana 1.12.14 30.6.15 Consultancy services Engagement initiated bJ:~tween May for the "Parkes WIRO and Roshana May prior.

Project~ to procurement involvement. Procurement drafted

$1250 per day for 93 agreement. WIR0/510212014 days= $116,250 in response.

No competitive process or review of services could be conducted under NSW Procurements government Contracts!PreQual Schemes.

Elizabeth-Anrie Elizabeth Single Copying, editing and Engagement initiated between Parbury Parbury engagement verification editing WIRO and Elizabeth Parbury

services for WIRO prior to procurement 13114 Annual Report . involvement.

$1,040 No competitive process or review of services could be conducted under NSW Procurements government Contracts/PreQual Schemes.

Porlal Maria 28.8.13 Contractor to provide Engagement initiated between Consulting MacNamara 30.11.13 marketing and WIRO and Maria MacNamara Services communication prior to procurement

services to WIRO involvement. Variation of contactor Maria MacNamara to Procurement drafted provide website agreement WIR0/510212014 content upgrade and in response to approval campaign to raise provided by SRWS CHRO-awareness among WIRO insisted to retain Maria injured workerS, for continuity- information employers I insurers provided to· Maria to apply to complaint program join NSWP P&M Prequal

Scheme. $48.000

No competitive process or review of service's could be conducted under NSW Procurements government Contracts/PreQual Schemes.

Salmon ? ? Development and Engagement Initiated between Neilson professional advice WIRO and Salmon Neilson

regarding prior to procurement communications for involvement- presented with WIRO an invoice to pay for services

already rendered. $3,625

No competitive orocess or

24


review of se!Vices could be Conducted under NSW Procurements government Contracts/PreQual Schemes.

The Unknown Various Contractor to provide Initial engagement had been Photography engagements photography services confirmed between WIRO and Business Aust on 29.8.14 and The Photography Business

20.2.15 prior to Procurement involvement.

$9, 145' No competitive process or review of services could be conducted under NSW Procurements government Contracts/PreQual Schemes.

Thomson Unknown Single Legal review of Initial engagement had been Greer engagement intellectual property confirmed between WIRO and

WIRO brand Thomson Geer prior to trademark & Procurement involvement. copyright as per agreement signed No competitive process or 25.9.13 review of services could be

conducted under NSW $11,500 Procurements government

Contracts/Pre'Qual Schemes.

Urface Melissa 22.4.14 Contractor to build Initial engagement & Teoh 31.12.14 and develop hearing extensions had been

loss audiometric confirmed between WIRO and database program Urface (aka Melissa Teo h)

prior to Procurement $24,240 involvement.


Yart ? 2013 WIRO intranet Initial engagement & developments extensions had been

confirmed between WIRO and 577,095 Yart prior to Procurement

involvement.


99. The data indicates engagement of Consultants and Contractors contrary to established procurement policy and guidelines. It is understood that in most cases, the Procurement Group had no knowledge or involvement in establishing the agreements with these parties until such time as invoices for payment were received.

100. Supporting material, where available, was submitted with the spreadsheet. Those documents include:

25

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• WIRO Agreement with Access Macquarle Limited on behalf of Catherine McMahon • Sample Agreement for WIRO with Usa MacNamara and signed Agreement of

same • WIRO Agreement with Roshana May • Email correspondence to Maria McNamara providing links to NSW Procurement

and Application Forms • Email correspondence regarding cessation of Maria MacNamara's Smalls

Contingent Workforce Prequalification Scheme temporary contract and placement onto a formal Contractual Agreement

• WIRO Business Review Proposal dated June 2013 from Chris Tail and Associates

101. A copy of the spreadsheet and supporting material, is included as Attachment J.

102. The final spreadsheet provided data in relation to Resolve Software Group.

103. The following notes were included on the spreadsheet provided by Procurement in relation to findings for Resolve Software Group together with relevant information under the listed headings:

Service Contractor Contract Service Description Provider Period

Value

Resolve Greg Kershaw 1.11.12 Resolve system imJ?Iementation and enhancements Software 21.8.15 Group $346,207.89

104. Explanatory supporting material was submitted in relation to this spreadsheet and includes:

• Email correspondence from Mr Garling dated 29 November 2012 to the AJCFO Finance and Services Division, requesting approval for the execution of the Resolve contract and payment of attached invoice

• CEO Briefing Note in relation to the WIRO Implementation Project, dated 12 December 2012

• Executed Deed dated 12 December 2012 • Customer Contract . • Authority to Commence Project, signed and dated by Mr Garling on 13 November

2012 • Resolve Implementation Project Proposal dated 9 November 2012 • Software Licence· Agreement between Beethoven·computer Services Pty Ltd and

WIRO • Resolve Installation Guide • Licenced software modules

105. The CEO Briefing Note indicates that Resolve were· considered to be industry leaders by a number of government authorities and in particular the NSW Ombudsman's Office. It further indicated that Mr Michael Coutts-Tretter, Director General of Finance and Services noted the need for WIRO to enter into direct negotiations with Resolve.

106. The Project Proposal for Resolve was dated 9 November 2012, the correspondence from Mr Garling to the AJCFO requesting approval was dated 29 November 2012 and the Executed

26


Deed was dated 12 December 2012. lt is noted that the contract period dated from 1 November 2012.

107 .. Approval was provided by Julie Newman, CEO SRWSD for funds of $484,485 plus GST for the purchase of Resolve software from Beethoven Computer Services Pty Ltd, with specified milestones in a payment schedule. ·

108. NSW Government Procurement ouUines a six stage process for activities that is applicable to all categories of procurement and is based on best practice recommendations. The stages address the needs analysis, funding approval, project procurement plan, service provider selection, contract management and procurement evaluation. The importance ofthe stages depends on the size, type and value of the activity and SRWS applies these stages for all procurement activities in excess of $30,000 incl. GST.

109. The procurement framework dictates that all goods and services costing more than $250,000 must be processed by means of a publicly advertised request for tender by the Procurement Group.

110. In relation to the contract with Resolve, there is no evidence that the six stage process was · applied for the purpose of contracting Resolve. There is no evidence that a tender process was conducted.

111. Contrary to these expectations, is the option for "direct negotiation which allows tor an exclusive arrangement between an Agency and a Supplier without first undergoing a genuine competitive process. Direct negotiations are sometimes referred to as directly sourced, single-invited or non-competed contracts". It is possible that the arrangements agreed with Resolve were intentionally or otherwise planned to fall within this category.

112. A copy of the spreadsheet and supporting material, is included as Attachment K.

CONCLUSION

113. The purpose of this review was to provide a report in accordance with the contractual agreement to conduct a review of employment decisions within WIRO. The Terms of Reference for the investigation aim to establish whether:

A. Employment Decisions

i. Were proper processes. as set out in legislation and NSW Government employment rules and guidelines, followed?

ii. Specifically, were rules or guidelines for advertising positions, merit based selection, disclosure of conflicts of interest (including personal relationships) and disclosure of criminal convictions complied with?

iii. Were proper processes followed to determine remuneration and entitlements for roles?

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114. The review was required to consider the overall method relating to all employee appointments and in particular consider the cases for Mr Gregory, Mr Jedlin and Ms Staff.

B. Contractors and Consultants

i. Were proper procurement processes, as set out in legislation and NSW procurement policies, scheme rules and guidelines, followed?

ii. Specifically, were rules concerning disclosure of conflicts of interest (including personal relationships) complied with?

iii. Does each engagement demonstrate value for money?

115. The review was required to consider all contract and consultant engagements and in particular Mr David Effeney, Mr Conrad Staff and Resolve Software.

116. This phase addressed a review of available files and information for employment decisions and contractors and. consultants, in relation to procedures and standards.

117. My conclusions in relation to these issues are:

A. Employment Decisions:

118. The Terms of Reference asked that the file review establish whether proper processes, as set out in legislation and NSW Government employment rules and guidelines, were followed?

o Given that the only information provided for the purpose of this review was via copies of material included on a USB, CPM Reviews could not determine what, if any other information is available and hence the conclusions In this report are based solely on the evidence available.

o It is acknowledged that the NSW Government recruitment system utilises an einformation tool, in the form of Taleo. However the information which was provided was at times incomplete, to the extent that it was not absolutely possible to determine whether additional material had previously been coilected but not recorded, which might otherwise confirm the application of required procedures.

o Those positions in the spreadsheet within the "Advertised Externally" category do indicate that there was a commitment to a full selection process. The material indicates that vacancies were appropriately advertised in external forums, shortlisting was undertaken, a recommendation was written and referee checks were made, with a formal offer made to the successful candidate and receipt of their acceptance.

o Nonetheless, a number of discrepancies have been highlighted which reflect less than best practice in some of those selection exercises. These include references to the quality and content of selection recommendation reports ("unclear and

28


unreadable'; "not a quality documenf'; "minimal information") and the status and relevance of referees for candidates (''friends and colleagues'), which is contrary to the expectation as outlined in the Recruitment and Selection Policy that references will be provided by a "current or recent supervisor'.

o Of notable concern is the inference made in an email fromt 1 her role a. . ···- e it

was srarea our gJVf:m who tne nmny '"""nager is, l'ru !:l'vni~ yvv my thoughts only. If it were up to me, I wouldn't approve with the scarcity of detail'. This suggests that persons with capacity to provide authoritative-advice regarding fair and reasonable processes were disinclined to dispute recommendations made by the CEO. This comment relates to the employment of Kathryn Mitchell as Manager Complaints. Mr Garling was the Hiring Manager. In this same recommendation, the quality of the referee report was also queried and inferences that the candidate's capacity to commit to public services values was not an applicable consideration were highlighted as a possible concern.

o For the spreadsheet information for positions in other categories including "Advertised as EO I", "Agency Temp Engagements" and "All Extensions", the available information was minimal, providing the investigator with no capacity to determine with any certainty that correct procedures were applied. In the majority of these files, the only material included was the requisition and the approval. If this is the only action that was initiated, it is probable that appropriate procedures were not applied.

o In one case relevant to "Agency Temp Engagements", which related to File 338K engaging Mr Effeney as Medical Review Consultant, where the only material available was the requisition and approval, specific reference was made to the "retrospective requisition for the payment of work already undertaken from 17.6.14-10.7.14". Such action is-strongly indicative of a lack of formal and appropriate procedures for engagement, which would include relevant activities to ensure approval of payment either via the salary system or via procurement practices.

o The Recruitment and Selection Policy makes reference to "Contingent Labour", indicating that "Agency staff may be engaged to fill short-term vacancies where it is impractical to fill via other methods. Agency staff should only be sought for periods of less than twelve (12) months. If the vacancy is to extend beyond twelve (12) months, at minimum an internal EO/ recruitment action is to proceed." In a number of the files reviewed in these categories, continuous re-engagement of temporary/Agency staff was identified beyond short term periods, without evidence of any attempt to conduct an internal EOI for merit assessment.

o In these categories, as in other matters, minimal information, generally in the form of the requisttion and approval, were the only documents provided on the USB and presumably therefore available on Taleo. If this is the only action that was initiated, it is probable that appropriate procedures were not applied.

o It is acknowledged from the information provided by DFSI that WIRO was established within a very short timeframe and some concession may have been

29

i.


provided for procurement of temporary Agency staff as an initial option pending more formal recruitment procedures. Whilst conceding this situation, it remains evident that recruitment practices which did not align with NSW Government expectations continued beyond the initial and urgent set-up phase.

o In terms of the material available to this file review there is evidence that relevant legislation and NSW Government employment rules and guidelines were nol followed in all cases in WIRO.

119. The Terms of Reference asked that the file review establish specifically whether rules or guidelines for advertising positions, merit based selection, disclosure of conflicts of interest (including personal relationships) and disclosure of criminal convictions complied with?

o As already outlined, there is evidence in the category of "Advertised Externally" that there was a commitment to a full selection process. The available material indicates that vacancies were appropriately advertised in external forums, with subsequent attempt to apply a merit based assessment. although discrepancies have been identified, as above.

o In this category, in the majority of cases the Taleo system includes a reference that COl declarations were made. Where a real or potential COl was declared, it appears that an assessment of the circumstances was made. However, the application of this process appears to have been applied loosely in some cases, with relevant examples below in support of this view.

o Mr Garling made a COl declaration for Paul Gregory, acknowledging him as an acquaintance for 40 years, dating from Law School. No assessment of that declaration to determine Mr Garling's capacity to act fairly and impartially, was evident.

o In a response provided b) >a COl declaration made by Mr Garling for employment of Principal Lawyers - ate that "Kim Garling and Paul Gregory have no CO/ to declare because in the legal profession everyone knows everyone'." Such assessment is flippant and lacking in relation to a full and appropriate assessment of their capacity to act fairly and impartially.

o In a recruitment exercise which resulted in the engagement of Mr Jedlin from 14 July 2014 on a three year fixed term contract, Mr Garling was the Hiring Manager. No COl interest declaration was completed by Mr Garling. At that time, Mr Jed lin had been an Agency contractor since November 2012. At minimum and in accordance with policy requirements, Mr Garling should have completed a COl declaration and in doing so, should have acknowledged the working relationship from 2012, together with a~y othe·r information pertaining to prior relationships that might be necessary.

o In a separate recruitment exercise resulting in the employment of Nicole Golding to the Communications Marketing Manager position, Mr Jedlin was involved as a panel member but did not submit a COl declaration, which is

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contrary to policy requirements. In that same matter, Linda Wilson made a declaration of being 'Facebook' friends with two candidates. No assessment of that circi,Jmstance was evident and no action was apparent to pursue a declaration from Mr Jedlin.

o In relation to criminal history checks, no such reports were identified on electronic recruitment files, relevant to selection of recommended candidates. As a result, Anita Andersen, A/Chief HR Officer for SRWSD, was asked to provide advice of whether such reports may be contained on personnel files. Her subsequent advice was that reports were not maintained on personnel files, for privacy reasons. She explained the process of obtaining the reports and paying the invoice for provision of the information and recording the registration number on the file to reflect that the information was obtained. She further explained that the registration number allowed for information to be retrieved at a later stage if required but ensured that the actual document could be destroyed to prevent any misuse of information or breach of confidentiality. It is unclear whether this is standard procedure within NSW Government, although it would be reasonable to expect that the confidentiality aspects of records management would provide suitable protection for information, to the extent that criminal history checks could be appropriately maintained and safeguarded on those files.

o The overall conclusion is that rules or guidelines for advertising positions, merit based selection, disclosure of conflicts of interest (including personal relationships) and disclosure of criminal convictions were not always or consistently applied and complied with.

120. The Terms of Reference asked that the file review establish whether proper processes were followed to determine remuneration and entitlements for roles?

o Given the minimal information available, there was limited opportunity to assess the process for determining remuneration and entitlements.

o In only one file, was reference made to a discussion of paying a higher level of remuneration. That file (1 CP5) related to the engagement of John Pinnock as Director Complaints. No justification was evident for the action.

o On the limited evidence available during the file review it is only possible to state that in relation to one determination relating to remuneration and entitlements that the actions adopted did not accord with the required policy and processes.

!h Employment Decisions:

121. The Terms of Reference asked that the file review establish whether proper procurement processes, as set out in legislation and NSW procurement policies, scheme rules and guidelines, were followed?

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o There is substantial evidence in the data presented to this investigation in the various spreadsheets which suggests that WIRO did not comply with NSW Procurement policies, scheme rules and guidelines.

o In the majority of cases, initial engagement was confirmed between WIRO and the Consultant or Contractor prior to Procurement involvement, contrary to the relevant steps outlined in the Procurement Policy. As a result, no competitive process or review of services was conducted under NSW Government contracts/preQual Schemes.

o In a significant number of arrangements for Agency temps, retrospective approval for engagement and extensions were required following alerts to Recruitment by the Procurement Group. In most instances, the Procurement Group became aware of arrangements only at the time of receipt of invoices for payment.

o Similarly, in a significant number of arrangements for Consultants and Contractors, retrospective approval for engagement and extensions were required following identified activities by the Procurement Group, generally at the time of receipt of invoices for payment. ·

o The overall conclusion Is that proper procurement processes. as set out In legislation and NSW procurement policies, scheme rules and guidelines, were not followed in all cases.

122. The Terms of Reference asked that the file review establish specifically whether rules concerning disclosures of conflicts of Interest (including personal relationships) were complied with?

o The NSW Government Framework does not provide specific strategies to declare conflicts of interest, although the SRWSD Procurement Policy does stipulate standards of probity reflecting essential requirements including the identification and resolution of conflicts of interest. The Framework also refers to the Code of Conduct and Ethics Polley which stipulate requirements for professionalism and integrity.

o No evidence was available to indicate that ariy COl was declared at any stage in each of the arrangements with Consultants and Contractors.

o A number of issues raised concern in relation to COI.including the relationship between WlRO and Smalls and their representatives and signatories, as well as in regard to the relationships which were highlighted in recruitment processes for Agency temps where those Agency temps had previously been employed as · consultants or contractors. Specific reference is made to arrangements for Paul Gregory, John Pinnock and. Phillip Jedlin.

o The overall conclusion is that whilst there are no specific strategies for the declaration or disclosures of conflicts of interest (including personal relationships), the standards of probity which reflect requirements for identification and resolution, were not always or consistently applied and complied with.

123. The Terms of Reference asked that the file review establish whether each engagement demonstrated value for money? •

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o A comprehensive forensic audit would be necessary to ultimately determine the legitimacy and cost effectiveness of the various engagements entered into by WIRO. There is evidence that proper processes have not been applied and this does raise an inference that without proper process there is no transparency and surety that value for money .was an outcome of the arrangement entered into.

o A possible concern is the contract between WIRO and Resolve. The Project Proposal for Resolve was dated 9 November 2012, the correspondence from Mr Garling to the NCFO requesting approval was dated 29 November 2012 and the Executed Deed was dated 12 December 2012. It is noted that the contract period dated from 1 November 2012.-Whilst the contract was approved, it is unclear whether WIRO could and did properly use the truncated direct negotiation process. If that is what occurred and was approved, proper process has been followed. · However, if that approach was not available and the due process was not followed in relation to standard procurement processes to demonstrate a competitive process, evidence does not establish that value for money had been demonstrated and the process Jacked accountability and transparency. Further review of the exact circumstances, which may possibly come via the separate phase of this process, might confirm which circumstance occurred. ·

SUMMARY

124. On advice from DFSI, it is understood that WIRO was established within a short timeframe, with some justification for exemption from standard procedures and the application of guidelines, for initial recruitment. Further review, via the separate phase of this review, may serve to confirm the specific arrangements and exact circumstances of any approved exemptions.

125. Beyond the immediate necessities of staffing up a statutory agency in a short time and consistent with the requirements of legislation, there is evidence that suggests that WIRO continued to utilise that approach for a period of time well beyond that which could be deemed to be reasonable. There is evidence within this file review of a number of employment decisions which did not reflect NSW Government expectations for fair and meritorious engagement.

126. Further, evidence within this file review indicates that WIRO established a number of relationships with Consultants and Contractors that were not, on the material available, consistent w"ith the procedures and processes of the Procurement Policy established to ensure that government procurement activities achieve best value for money in supporting the delivery of government services.

127. As an organisation within the NSW Public Service, WIRO has an obligation to the community to conduct business professionally, efficiently, impartially and with integrity. The Code of Conduct and Ethics Policy sets standards of behaviour, values and principles expected from all employees, contractors; consultants, agency and temporary staff. It is designed to assist employees to make ethical and responsible decisions and is the foundation upon which activities are conducted.

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128. · Given that this is only one phase of a two part process of review, an extended consideration of the findings in each phase will provide an overall view of the appropriateness or otherwise of WIRO's actions in relation to recruitment and procurement practices.

Sandy Nix Senior Reviewer CPM Reviews Pty Ltd 28 July 2015

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