Berzins' blunders: Police ignored tender rules

Victoria Police's IT division under disgraced chief information officer Valda Berzins had a "disregard for proper procurement and contract management", a new report has revealed, which saw contracts fail to go to tender while their dollar values ballooned beyond approved amounts.

Victoria Police's IT division under disgraced chief information officer Valda Berzins had a "disregard for proper procurement and contract management", a new report has revealed, which saw contracts fail to go to tender while their dollar values ballooned beyond approved amounts.

... numerous instances of Ms Berzins, Mr Brown and others accepting hospitality from IT vendors including invitations to the Australian Open Tennis, AFK Grand Finals and the Melbourne Cup

Victorian Ombudsman

A report by the Victorian Ombudsman was tabled in parliament today describing multiple cases of questionable behaviour by former CIO Berzins and the Business Information and Technology Services (BITS) section of the police she was in charge of.

In one case, the division decided to redirect services formerly carried by IBM to Fujitsu, stating that IBM had no desire to provide those services, when communications from IBM belied that fact. There was also a renegotiation of service level agreements with IBM which occurred — perhaps to compensate it for the loss of the services to Fujitsu, although the ombudsman did not believe that. This redefinition of SLAs cost the police millions, according to the ombudsman.

The department achieved an exemption from asking for multiple quotes in the case of Fujitsu's taking over the services, since the money required would come out of the IBM services envelope. However, while the purchasing board approved $11 million, the final value of the contract came to $27.2 million — $15 million above expenditure. The remaining funds were taken from other approvals, with Berzins telling group manager of Business and Planning John Brown to "just do it" when asked where to find funding.

Berzins said that she in general didn't closely monitor the BITS budget, with the details being left to Brown. Brown's control, according to the ombudsman, was illustrated by the fact that information on the $27.2 million Fujitsu contract was largely to be found on "a handwritten note [Brown] provided to a BITS manager in a meeting several months after his resignation".

"I consider that record-keeping and file maintenance within BITS over the past three years at least, was largely inadequate. My investigation was hampered by gaps in documentation, records that were not dated, not signed or did not include author details, and a general lack of any apparent systematic record-keeping," the ombudsman said.

Another contract for $20.1 million for the provision of an enterprise services bus software licence by TIBCO was exempted from being taken to tender because Brown said that TIBCO would offer a 92.6 per cent discount if the government signed up before a certain date.

When questioned on the large discount, TIBCO's general counsel for Asia Pacific and Japan said that such discounts were worth it. "High discounts of this nature are not uncommon for TIBCO with government sector clients. TIBCO was prepared to offer this level of discount due to the increased presence the contract would give it in the Australian government market and the opportunity to leverage into other Victorian government departments," they said.

Indeed, Brown tried later to have the TIBCO contract made into a whole-of-government contract, which the procurement board refused. The market analysis for that contract was carried out by TIBCO, which the ombudsman found inappropriate.

Meanwhile, Berzins was getting perks from vendors. "My investigation identified numerous instances of Ms Berzins, Mr Brown and others accepting hospitality from IT vendors including invitations to the Australian Open Tennis, AFK Grand Finals and the Melbourne Cup," the ombudsman said.

The ombudsman said that there had been further breaches of government procurement policy by the division to the tune of $39.17 million. Internal audits also found 56 breaches by BITS employees in the engagement of contractors.

This behaviour was noticed at the end of last year, with the former Chief Commissioner Christine Nixon informing Berzins of the intention to terminate her, so Berzins took early leave and ceased to work for the police. Brown resigned before she did.

Instead of directly appointing another CIO, a board of management was appointed to rectify the issues within the department. Since that time an executive director, infrastructure, Michael Vanderheide, has been appointed from ACT shared services.