Poor contracting means Housing is not getting full value from its contracts
Good program management requires robust contracts that include:
- clear responsibilities and authorities for each party to the contract
- clear reporting lines
- clear performance expectations or minimum standards.
Housing’s Program contracts did not meet these criteria, making it more difficult to manage the Program and reducing accountability for outcomes. A lack of clear performance expectations has made it hard for Housing to monitor Program performance and reduced opportunities to improve its efficiency and effectiveness. As a result, Housing is not getting full value from its Program Manager and communities are potentially not getting the most benefits from the Program. All contracts are due for renewal over the next 12 months and Housing informed us that it has begun to review them.
The Program Manager’s contract makes it responsible for managing the Program but the way Housing has implemented the contract has made it more a technical advisor and consultant than a manager. Because Service Providers often dealt directly with Housing, the Program Manager was not always aware of issues they faced. Housing has also made cost-based choices that limit what it asks from the Project Manager, and the Program Manager has limited its activities to what is directly specified in its contract. As a result, the Program Manager no longer visits or directly oversees work in remote communities.
Housing’s contracts with Service Providers are also deficient. KPIs have not been finalised since the signing of the contracts in 2012 and 2013. This limits the oversight of activity by Housing or the Program Manager. While there are draft KPIs, these are broad and lack detail. For example, as mentioned above, outages are only reported as more than or less than 24 hours and there are no performance indicators for asset condition or operational performance. The contracts contain no penalty clauses or incentives.
Housing was aware of these deficiencies before the contract was signed, but did not correct them because they were not considered a high priority.
Poor oversight means Housing may have overpaid for some services
The Program Manager is required to approve Service Provider invoices but it has not inspected work in communities for the past two years and cannot verify that invoices are accurate. Instead, it relies on Service Providers self-reporting that their own work met contract needs and standards. Both Housing and the Program Manager advised that this is because these inspections are outside the contract scope and would involve extra cost and have therefore not been approved by Housing.
Inadequate oversight of Service Providers may mean that Housing has paid twice for some work. We reviewed 361 job orders on wastewater systems of which 90, at a value of $339 004, were approved and paid as preventative maintenance. However, the information on the job orders and invoices did not make it clear why they were preventative rather than regular planned maintenance for which Service Providers are paid a monthly fixed price. This created a risk that Housing paid more than it should, but we found no evidence that this occurred. In 2013-14 the combined preventative and emergency invoices across the Program totalled $14.7 million. Housing identified similar examples in August 2014 but has not yet resolved the matter.
Housing does not know if the right communities are in the Program
Government is currently considering a wide range of issues affecting remote Aboriginal communities, in part driven by changes to Commonwealth funding. Whatever the outcomes of these considerations, there will always be a need to provide services to larger permanent communities. Since its inception, the Program has had specific criteria to identify which communities are eligible for its services.
However, since 2008 there has been no review of the eligibility of communities to be included in the Program. Our analysis suggests that some communities that are currently not in the Program would qualify for inclusion while others may no longer qualify. This means some communities may be missing out on services while others may be over-serviced.
Cabinet approves which communities are included in the Program. The criteria which determine eligibility for inclusion are:
- a permanent population of more than 50
- the number of houses
- standard of infrastructure
- ownership of the land
- incorporated group status
- special circumstances (Appendix 2).
Since 2007, Housing has suspended services to seven of the 91 communities approved by Cabinet for inclusion in the Program. The reasons include being abandoned, demolished or being connected to services provided to nearby towns. Housing believes, and we agree, that these were ‘common-sense operational decisions’. However, there is no approved process to remove communities from the Program, and Housing could not produce evidence of any records to support its decisions.
We found 24 communities receiving services did not meet the minimum population criterion of 50. Housing has advised that many of these have never met the population criterion but were included because they were expected to grow. Housing can make exceptions if there is good reason to include a community, but we found no documented evidence to show application of the special circumstances criterion in any of these cases.
Housing does not consider itself responsible for assessing eligibility for the Program. However, it is uniquely placed, as the sole government administrator of the Program to inform Cabinet on the status of communities against the criteria.
Asset information systems are inadequate, but Housing is addressing this
Housing does not have an up-to-date view of the condition of Program assets which have an estimated value of $765 million. Until recently, Housing did not receive the Program asset data that Service Providers collected for their own operational reasons. This means that Housing could not readily assess if Program assets meet current or future needs.
In March 2014, the Essential Services Asset Management System (ESAMS) was launched to collect and store consistent asset data in one place. The Program Manager developed the system under its contract to allow Housing and the contractors to better understand asset performance. The expected commencement date was delayed because the Program Manager had difficulties obtaining the originally proposed system. Service Providers also had concerns about who owned the information and giving Housing access to it.
At 9 January 2015, Service Providers had collected asset data on 28 per cent of the 7 635 assets listed as held in communities. If power poles and wires are included, the figure is only 11 per cent of 20 411 assets. The Program Manager expects all available data to be in ESAMS by the middle of 2015. From then, the Service Providers will update the data as they maintain the assets. When the data is complete and the system is used to its full capacity ESAMS should provide a strong management tool, including the capability to report in real time on outages.
Services to communities are not coordinated, increasing cost
Service delivery in remote communities is complex and challenging. The Commonwealth and the State have ministerial, policy, operational and financial roles, and the private sector also plays a part. While coordination is usually not a highly visible issue, the Program Manager and many communities raised the issue with us.
Government has long recognised the challenges to good coordination of this area. In 1972 the Aboriginal Affairs Coordinating Committee (AACC) was established by legislation to address this need. It includes the heads of 13 State agencies with direct interests in Aboriginal communities, including Housing, and it meets four times a year.
In April 2013, Government recognised that more needed to be done and established the Aboriginal Affairs Cabinet Sub-Committee. Its members are the Ministers for Aboriginal Affairs, Health, Mental Health, Police and Regional Development. Housing is not represented.
Beyond these high level responses, we saw practical examples of how unplanned or uncoordinated activity adversely affects communities. We saw a complete solar powered system funded by the Commonwealth that had been installed but could never be connected because it was incompatible with the existing power system. At another community, a mining company built and connected a facility to power, without any prior consultation with Housing.
Other state agencies such as Health (clinics), the Department of Education (school buildings) and WA Police (police stations) carry out capital works in remote communities but Housing reports that it is rarely informed in time to properly plan essential services to support them.
In some communities and regions Housing has awarded separate contracts for home maintenance and Program services. At times these limit which maintenance issues tradespeople can address at any time, depending on whether they are inside or outside property boundaries. We were told in numerous communities that this had led to delays, multiple trips by tradespeople, and extra costs. As with most things in this space, the more remote a community is, the more such complications increase costs and delays, which increases the risk to community members.