Auditor slams $4 billion state deal for overcharging and delays

SA’s Auditor-General has slammed the ASX-listed company Ventia over its $4 billion contract with the state government, saying it allows overcharging and is slow with repairs of buildings.

A company that holds a $4 billion contract with the state government to look after buildings such as schools, hospitals and office blocks has been slammed by the Auditor-General for allowing contractors to overcharge, for taking too long to carry out repairs, and being a cybersecurity threat.

Ventia has been slammed by the Auditor-General for allowing contractors to overcharge, for taking too long to carry out repairs, and being a cybersecurity threat.

The Auditor-General’s findings about the ASX-listed Ventia come after allegations that some regional schools are being forced to use the government-mandated company, rather than local tradies, costing them tens of thousands of extra dollars for simple jobs.

In one instance, a school in the state’s south east was quoted $65,000 to build a fence that a local contractor estimated would cost $2000.

The contract, known as the Across Government Facilities Management Arrangement, is overseen by the Department of Transport and Infrastructure and the Auditor’s report concluded “Ventia was engaging subcontractors who charge above the maximum trade ceiling rates established under the contract, with participating agencies charged at rates higher than those allowable for some work’’.

In the report, the auditor also said the department was still trying to “understand the potential magnitude of subcontractor overcharges’’.-

“Trade ceiling rates continue to be a point of discussion in ongoing commercial discussions, with DIT working with Ventia on its understanding of its trade ceiling rate obligations and the impact to agencies of the potential overcharges.’’

The contract was awarded by the previous Liberal government in 2021 and was for an initial period of five years and seven months with three optional extensions of two years each. The auditor says the contract had an estimated value of $4.2 billion and the government had paid Ventia $514 million in 2023-24.

Transport Minister Tom Koutsantonis said the Ventia contract was “one of the worst contracts the former government inflicted on South Australia’’.

“We are considering all our options to rectify it,’’ he said, but did not quantify how much the overcharges may have cost the taxpayer.

Tom Koutsantonis said the Ventia contract was “one of the worst contracts the former government inflicted on South Australia’’. Picture: Kelly Barnes

The government has issued three formal notices of breach to Ventia and a “review’’ is underway to determine if “workable’’ changes can be made to the contract.

Ventia is also one of the companies in the consortium chosen to build the South Rd tunnels.

In April, Mt Gambier MP Troy Bell told parliament one state school had wanted to build a permanent outdoor shelter over a basketball court and was quoted $100,000 by a local contractor. Ventia’s price was $300,000.

“Needless to say, that project is not going ahead,’’ Mr Bell told parliament.

In another example, Mr Bell said a local primary school had its gutter cleaned once a year in July by a local contractor who charged around $500. Another Ventia contractor was then sent unannounced in December and submitted a bill for $5000.

A Ventia spokesperson said it was “aware of the findings’’ and was “working collaboratively with the Department of Infrastructure and Transport to deliver ongoing improvements across the contract.”