Australian War Memorial kept ministers in the dark on contracts for $550m redevelopment, audit finds

<span>Australian War Memorial briefs to the veterans’ affairs minister ‘were insufficiently detailed’ to let the minister meet their obligations, the ANAO says.</span><span>Photograph: Rohan Thomson/Getty Images</span>
Australian War Memorial briefs to the veterans’ affairs minister ‘were insufficiently detailed’ to let the minister meet their obligations, the ANAO says.Photograph: Rohan Thomson/Getty Images

The Australian War Memorial kept ministers in the dark on key details of its controversial $550m redevelopment and failed to manage conflicts of interest, a new audit report has found.

The Australian National Audit Office said the AWM’s advice to ministers lacked “transparency [and] accuracy”, while “in two instances contracts were split” to avoid triggering the $1m threshold for ministerial approval.

In a report scrutinising the long-running Canberra project, the ANAO also found that two unnamed officials had prior employment relationships with tenderers that they did not declare.

Related: Former war memorial heads join call to redirect $500m for ‘grandiose’ expansion to veterans

The report, tabled in parliament on Thursday, said a delegate responsible for a car park project “did not complete a conflict of interest declaration before approving the procurement outcome on 14 October 2019, six months after leaving employment with the successful tenderer, Lendlease”.

Because this delegate was not a senior executive, they were “not required to complete an annual declaration of interests”, the report said.

The AWM hired the law firm Sparke Helmore as a probity adviser in April 2019, but did not end up seeking its advice before it published its probity guidance five months later.

“Engagement with the external probity adviser was insufficient for the scale and risk of the procurements,” the report said.

“Conflicts of interest were not adequately documented and declared or known conflicts were not adequately managed.”

The ANAO report largely spans a period in which the Coalition was in government, although Labor took office in the latter stages.

The development project was first announced in 2018 by the Coalition, which argued it would allow the AWM to “proudly tell the stories from recent years in Afghanistan, Iraq, the Solomon Islands and East Timor”.

But the project’s detractors – including former AWM heads – have long argued that the money allocated to the “grandiose” expansion would be better spent supporting veterans’ welfare.

Under public governance laws, a minister must not approve public spending unless they are “satisfied, after making reasonable inquiries, that the expenditure would be a proper use of relevant money”.

But the new ANAO report said briefs provided by the AWM to the minister for veterans’ affairs “were insufficiently detailed” to allow the minister to meet those legal obligations.

The minister must sign off on any individual contracts worth $1m or more, but the ANAO found two contracts “where the memorial took steps that resulted in ministerial approval not being required”.

It said Xact Project Management was hired in March 2018 for work up to $319,572 and this “was later varied in March 2019 to $999,999, one dollar below the threshold for ministerial approval”.

The ANAO also said a 2018 contract with Imagination (Australia) for stakeholder engagement was drafted to a value of $1.05m, before being “split into two contracts with the same supplier”.

These contracts for $841,875 and $207,659 were “signed on the same day” and did not require ministerial approval because they were each below the $1m threshold.

The report did not make any findings against any of the firms mentioned in this article, including Lendlease, Sparke Helmore, Xact Project Management or Imagination (Australia).

The ANAO made five recommendations to the AWM, including to maintain appropriate records on value for money and ensure “all officials, contractors and advisors involved in procurement activities” declare conflicts of interest.

Responding to the ANAO report, the AWM said it accepted the recommendations and had “addressed many of these issues already and is working to close out final recommendations”.

“As the Report itself highlights the Memorial’s Development Project is a project of national significance,” the AWM said in its formal response to the findings.

“The Report also notes project delivery has faced the unique challenge of keeping the Memorial open as the centre of national commemoration and that it has had to adapt to the simultaneous impacts of COVID-19 and record high construction inflation.”

The project, first announced in 2018 with a price tag of about $500m, has since required another $50m in funding. It is due to be completed by 2028.