Company 'breached' $100m maintenance contract

THE company that will provide maintenance for the new Royal Adelaide Hospital has breached its $100 million-a-year Government contract multiple times..

THE company that will provide maintenance for the new Royal Adelaide Hospital has breached its $100 million-a-year State Government contract multiple times..

Leaked department documents obtained by The Advertiser reveal numerous "non-compliances" by Spotless Services in relation to its Across Government Facilities Management contract.

They include:

FAILURE to prepare and maintain a plant and equipment register.

NON-COMPLIANCE with legionella requirements by failing to maintain cooling towers effectively.

FAILURE to ensure all financial claims to departments are accurate and valid, resulting in overcharging estimated at more than $500,000 a year.

"It is my opinion that Spotless has committed a fundamental breach of the contract," a senior Department of Planning, Transport and Infrastructure staff member documents in one internal report.

The failures prompted Judith Carr, the department's executive director of building management, to seek Crown Solicitor's advice about possible courses of action.

Spotless' contract, which runs until 2015, includes day-to-day and preventative maintenance of all Government departments except Health, Housing SA and SafeCom. The Advertiser understands the Spotless contract will soon extend to cover public hospital and health facilities.

Opposition spokesman Iain Evans said it was a concern the company had secured a "huge contract increase when there are serious allegations about Spotless' performance".

"Taxpayers will be extraordinarily concerned there is such a large number of alleged breaches," he said. "The fact the Government have gone in to negotiate without open tender, it is hard to imagine how they can possibly get value for money doing that."

Spotless is also a key consortium partner in the public-private partnership for the new Royal Adelaide Hospital.

Spotless Group managing director Josef Farnik recently said the contract, which includes maintenance of the $1.85 billion hospital, would generate sales of more than $60 million in its first full year.

It is understood Spotless' failure to maintain a plant and equipment register means its preventative maintenance system was lacking in detail.

In one document a senior DPTI staffer lists several serious "non-compliances", including job and trade audits that estimated Spotless was overcharging its clients more than $500,000 a year, and failed to ensure its claims were "accurate and valid".

In relation to cooling tower maintenance, the Crown Solicitor documents "various areas of non-compliance with the Legionella Regulations".."

The Crown Solicitor's advice, which was dated May 16, 2011, suggested the contract could be legally ended.

"If Spotless has indeed failed to keep an accurate list of plant and equipment, it is my view that Spotless is in breach of contract," it also says.

A spokesman said the department wrote to Spotless in September 2011 requiring:

A program for completing a plant and equipment register.

THAT Spotless shows it has improved its preventative maintenance process, and addressed the incorrect invoices.

In November Spotless responded "demonstrating that appropriate processes had been implemented".

"Spotless is not in breach of the Across Government Facilities Management Contract," the department spokesman said.

Transport and Infrastructure Minister Patrick Conlon said he was comfortable with departmental advice that Spotless was meeting its contractual obligations.

A company spokeswoman said Spotless took "its client contracts and service obligations "very seriously, in particular, statutory compliance".