Extent of CenITex's rotten core revealed in Ombudsman report

CenITex's full name, Centre for IT Excellence, seems to be dripping with irony after the state's Ombudsman unearthed "serious improper conduct" within the Victoria government's IT services agency.

Nepotism, corruption, and bad leadership from top-level management were just some of the findings from the Victorian Ombudsman's investigation into the state government's IT services provider Centre for IT Excellence (CenITex).

The beleaguered government IT agency has been under siege since late 2011, when the ombudsman heard allegations of "serious improper conduct" at CenITex through a whistleblower. Since then, its most problematic division, Efficient Technology Services (ETS), has been shut down, and the agency has slashed 200 jobs .

The ombudsman released a report (PDF) today, listing a number of breaches in the CenITex procurement process, particularly the flagrant disregard for following set policies and guidelines.

With deep-rooted nepotism and favouritism, up to AU$4 million worth of IT contracts were awarded without going through a competitive process, according to the report. Over 250 staff members are involved in procurement and recruitment decisions within the agency.

"Often, the companies or contractors were chosen because they were associates or friends of other contractors already working at CenITex," the ombudsman said in the report.

In one of the 19 case studies detailing the infractions that took place, a CenITex staffer, dubbed "Daniel", who worked at the agency between 2008 and 2012, was found to have been awarding work to a company registered under his wife's name. He also approved invoices from the company in question for work that was not performed, which CenITex ended up paying for.

During that time, Daniel received a number of perks from the company. He was dismissed from CenITex as a result of the ombudsman's investigation, and may be facing police action for his conduct.

CenITex's then-CEO Peter Blades has been blamed for approving exemptions from following procurement guidelines, which resulted in the rampant improper conduct within the agency.

"When such conduct occurs at the top of an organisation, there is a risk that poor practices will occur down the line," the ombudsman said.

Blades was replaced by Michael Vanderheide in July. The ombudsman recognised that Vanderheide is actively trying to improve CenITex.

The ombudsman has made a swathe of recommendations, which include more stringent control and monitoring of the procurement process, providing regular training to staff in relation to conflict-of-interest policies, and excluding certain companies from future tenders.

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