Passport office blew $135,000 on cancelled Port Douglas conference

Australia’s passport office mishandled hundreds of millions of dollars’ worth of contracts, according to a damning audit. Among 18 people under investigation are staff who set out to hold an official conference in tropical Port Douglas, cancelling it at a cost to taxpayers of more than $100,000.

In one case identified by the Australian National Audit Office, a coffee catch-up between a passport official and contractor with Deloitte ended up in a contract for an accountant that blew out by 1000 per cent.

Port Douglas: The perfect place for a passport conference.Credit:

The auditor-general found breaches of Australia’s finance laws, cases of officials holding effectively sham tenders for vital contracts and a Foreign Affairs official overseeing elements of a contract that directly employed their spouse.

In one of the independent agency’s most critical reports in years, the auditor-general said the Department of Foreign Affairs and Trade, through the actions of the Australian Passport Office, had not complied with federal procurement rules and its own contract rules while failing to achieve value for money on behalf of taxpayers.

“Procurement decision-making was not sufficiently accountable and was not transparent,” it found.

“Procurement practices have fallen short of ethical standards, with DFAT [investigating] at least 18 individuals, both employees and contractors, in relation to Australian Passport Office procurement activities.

“The department advised the ANAO that it considers there are clear indications of misconduct involving a number of current or former DFAT officials and contractors as well as clear cultural issues.”

Between mid-2019 and late 2023, the passport office managed 331 contracts worth $1.6 billion. In that period, it entered into 243 new contracts worth $476.5 million. The auditor-general examined 73 of those contracts, finding just 29 per cent were offered in a genuinely competitive manner.

In a $42.5 million contract for incorporating radio technology into the nation’s passports, the auditor-general found cases where approval for spending was made before an official order was signed, incidents where no order was ever signed and problems with currency conversion.

“The contract management issues extended beyond a failure to convert euros to Australian dollars for reporting purposes. The ANAO identified multiple breaches of the finance law,” it found.

In late 2022 and in February 2023, four passport officials spent $31,422 on two separate trips to Port Douglas to plan for a special passport conference. They went ahead with plans for the conference, which included complimentary tickets to a local tourist attraction.

It was abandoned, with cancellation fees costing taxpayers $104,196 in cancellation fees. The conference was held in Canberra, at a cost of $20,000.

“The procurement of a resort in Port Douglas did not comply with the requirements of the DFAT procurement policy and did not represent value for money,” the auditor-general found.

The auditor-general said such was the extent of problems in the contracts it examined, Foreign Affairs should investigate its practices more broadly.

The ANAO found just 29 per cent of contracts entered into by the passport office were let via “genuine competitive approach to market”.Credit: Getty Images/iStockphoto

The ANAO reported a passport official had a “coffee catch-up” with a contractor from Deloitte and later sent an email asking Deloitte to forward a proposal and quote “if you feel Deloitte [sic] has the capacity to assist us in this space”.

“The [DFAT] approval record inaccurately stated that Deloitte had ‘provided an unsolicited proposal’,” the ANAO found.

Deloitte responded with a quote to the DFAT procurement team, which later responded with an official request. Deloitte provided a contract for an accountant for 12 months costing $330,000, which blew out by 989 per cent over 30 months to be more than $3.5 million.

Officials are in breach of the Commonwealth Procurement Rules if they agree to a tender through a direct source if the amount exceeds $80,000.

Deloitte responded to the auditor-general in a letter, stating the cumulative impact of the contract blowout was more than $1.1 million, not $3.5 million.

Assistant Foreign Affairs Minister Tim Watts said since the 2022 election, the government had supported the Passport Office to undertake “long-overdue improvements to its internal systems and processes”. The auditor-general’s report was being examined.

“The Albanese government takes these issues very seriously and is investigating further. The government will consider any further actions that may need to be taken in response,” he said.

Get to the heart of what’s happening with climate change and the environment. Sign up for our fortnightly Environment newsletter.