FOI 300184 documents.pdf

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KEY POINTS
•
This brief provides you with the status of the compensation claims process, and other
matters, related to the Entrepreneurs’ Programme procurement.
•
In June 2022, the Australian National Audit Office (ANAO) finalised an audit of the 2019
Entrepreneurs’ Programme procurement for delivery partners (EP procurement), with findings
that the assessment of tenders of potential delivery partners had not complied with
Commonwealth Procurement Rules (CPRs).
•
In August 2022, the department invited and met with unsuccessful tenderers who responded
to the procurement and advised that if they wished to submit a claim for compensation under
the Government Procurement (Judicial Review) Act 2018 (GP(JR) Act) they could do so directly
to the department. External lawyers were engaged to manage the claims process (initially
Minter Ellison, subsequently Clayton Utz).
s 42, s 47E(d)
Complaints and Allegations of Fraud and Corruption

In August 2022 an unsuccessful tenderer raised allegations with the department, and later the
National Anti-Corruption Commission (NACC), of fraud and corruption in the procurement
including that:
–
commercialisation adviser/s provided unlawful access to confidential information to
prospective tenders during the procurement; and
–
a commercialisation adviser received a payment of $900,000 from the successful
tenderer.
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
A number of inquiries undertaken by the department (internal and external) failed to find
evidence to support the allegations. Due to the department having limited investigative
powers, the allegations were referred to the Australian Federal Police (AFP) and the NACC.

On the advice of the AFP (who had not accepted the referral on the grounds there was
insufficient evidence to support the allegation), the department contracted an independent
auditor, O’Connor Marsden & Associates (OCM), in November 2024 to undertake a
performance audit of i4Connect’s tender response.

The objective of the audit was to identify:
–
evidence of behaviour that would be inconsistent with the commitments made by
i4Connect in their tender response
–
whether i4Connect improperly obtained access to information not publicly available to
other potential tender Respondents, through engagement with (then) contractors to the
program; or
–
evidence of the payment of the alleged “success fee”.

The audit did not identify any fraudulent activity related to the financial records that
i4Connect provided to the audit. In summary, OCM found:
–
There is low risk that i4Connect did not comply with their obligations under the RFT in
developing their response or appear to have obtained an advantage over other
respondents to the RFT.
–
No evidence of any payments being made by i4Connect to nominated commercialisation
advisers, or the companies that were linked to these individuals, during February 2020 to
June 2023 based on the bank, accounts payable and payroll records provided.
–
No evidence of the individuals or companies identified, having been set up as a vendor/
supplier or employee in i4Connect’s financial system.

Statutory declarations were obtained from i4Connect to confirm the accuracy and
completeness of the financial records provided in support of the audit.
Approach to release of the i4Connect report

Early in the week beginning 21 July, the department will write to the Chair of the Senate
Economics Legislation Committee providing them with a copy of the report.

The published performance audit will not include the confidential appendices and will include
minor redactions to address privacy issues for individuals identified in the report (eg for
example, the audit report identifies the salary of the i4Connect’s Chief Operating Officer who
was not identified as a person of interest in this matter).

A copy of the unredacted report is at Attachment B.

The department is in the process of making parties identified in the report aware of its
intention to provide the Committee with a copy of the report.
Ministerial Submission | 3
Department of Industry, Science and Industry
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SENSITIVITIES
• The EP claims process, as well as the “success fee” allegation, have been raised in Senate
Economics Legislation Committee hearings and there has been media interest in the matter.
CONSULTATION
Public Law and Dispute Resolution Branch and Integrity Branch in Chief Counsel and Integrity
Division have been consulted in the preparation of the brief.
Clearance Officer
  Clearance Officer
Contact Officer
David Luchetti
Janean Richards
Rebecca Lannen
Head of Division
  Chief Legal Counsel & Head
General Manager
AusIndustry
  of Division
Industry Growth Program – Policy &
18 July 2025
  Chief Counsel & Integrity
Performance
  18 July 2025
Ph: s 47F
Mob: s 47F

ATTACHMENTS
A:  Summary of claims with reference to the Government Procurement (Judicial Review) Act 2018
and under the Scheme for Compensation for Detriment caused by Defective Administration
B:  Entrepreneurs’ Programme Performance Audit of i4Connect (Full Report including Appendices)
Ministerial Submission  |  4
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DOCUMENT 2
OFFICIAL: Sensitive//Legal-Privilege
Attachment A
s 47G, s 42, s 47E(d)
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s 42, s 47E(d), s 47G
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s 42, s 47E(d), s 47G
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s 42, s 47E(d), s 47G
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s 47G
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s 42, s 47E(d), s 47G
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Table of Contents
1  Executive Summary .......................................................................................................................... 3
2  Background ....................................................................................................................................... 5
3  Key Findings and Conclusion ............................................................................................................ 8
Appendix A:  Terms of Reference ...........................................................................................................14
Appendix B:  ANAO Report (No.42 2021-22) .........................................................................................18
Appendix C:  Detailed Assessment Findings Key Risk Area 1 .................................................................22
Appendix D:  Tender Response Analysis ................................................................................................28
Appendix E:  Email Correspondence s 47G
and i4Connect .............................................29
Appendix F:  Detailed Assessment Findings Key Risk Area 2..................................................................34
Appendix G:  i4Connect Management Representation .........................................................................38
Appendix H:  Signed Statutory Declaration i4Connect ...........................................................................39
Appendix I:  Consultation .......................................................................................................................40
Inherent Limitations & Restrictions on Use
This Internal Audit has been completed in accordance with the Institute of Internal Auditors (IIA) International Standards for the Professional Practice of Internal Auditing (the IIA
Standards).
The matters raised in our report came to our attention as a result of testing performed during the course of our internal audit. Testing is conducted on a sample basis, over a specific
period of time, and our report therefore provides assurance regarding the operating effectiveness of the actual controls tested. The possibility therefore exists that our report may not
have identified all weaknesses which relate to controls not tested as part of this internal audit.
Our internal audit is not a substitute for management’s responsibility to maintain adequate controls over all levels of operations and their responsibility to prevent and detect
irregularities. Management should therefore not rely solely on our report to identify all weaknesses that may exist.
Our comments should be read in the context of the scope of our work as detailed in the terms of reference. Where possible, management representations are independently verified,
though some findings in this report may have been prepared on the basis of management representations which have not been independently tested.
Suggestions for improvement should be assessed by management for their full commercial impact before they are implemented. This report has been prepared solely for the use of
management and should not be quoted in whole or in part without our prior written consent. No responsibility to any third party is accepted as the report has not been prepared, and is
not intended, for any other purpose.
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2  Background
Context
On 27 September 2019, the Department issued an open RFT for the engagement of delivery partners
to deliver expert business advisory and facilitation services for the Entrepreneurs’ Programme with
an estimated value of $182 million over the maximum 5-year contract term.

As a result of the RFT process, i4Connect were awarded a 5-year contract (initial term of three years
with two one-year extension options) for a value of $30,309,464.40 which commenced on 23 March
2020 and expired on 30 June 2023.

Due to the procurement being the Department’s largest value procurement in 2019–20 and
representing 37 per cent of the total value of contracts entered by the Department and reported on
AusTender for that year, the ANAO undertook a performance audit to provide assurance to the
Parliament about whether value for money was demonstrably achieved and whether services have
been provided under the contracts to date. The audit identified significant shortcomings in the
conduct of the procurement process and the subsequent management of the contracts.

Following the release of the report, the department contacted all unsuccessful tenderers inviting
them to a debrief with senior executives. Debriefs included next steps on how to submit
compensation claims. Since then, several complaints have been received and managed by the
Department relating to the conduct of the procurement. As part of this process, allegations have
been made that i4Connect obtained improper assistance from contractors engaged by the
Department who were involved in program activities (including potentially the program re-design
process) that may have provided an advantage over other Respondents to the RFT. Additionally, an
allegation has been made that a ‘success fee’ payment was made to a contractor following the award
of the contract to i4Connect.

Questions on the above matters have since been raised through Senate Estimate Committee
meetings and the Department is seeking to understand whether there is any evidence to support
these claims.

To inform the performance audit OCM developed a Test Plan which was approved by the
Department on 17 December 2024, provided at Appendix A.
Entrepreneurs’ Programme
As outlined in the issued RFT, the Entrepreneurs’ Programme is the Australian Government’s
initiative for business productivity and competitiveness at the firm level. The Program delivered
expert advice, networking and matched grants to help businesses grow, innovate and commercialise
nationally and globally. This helped to drive economic growth and jobs and improve broader
community outcomes.
The Program was designed to deliver the following outcomes:
•  Businesses grow by understanding their potential and how to reach it.
•  Businesses and researchers innovate by building productive and collaborative relationships.
•  Businesses with new-to-market opportunities commercialise successfully into global markets.
Support for the key outcomes of growth, innovation and commercialisation was delivered through
four aligned Program elements:
•  Business Management —helped small and medium businesses to grow by improving their
business practices and management capability so they are more competitive nationally and
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globally and can take advantage of growth and collaboration opportunities. Supporting
matched grants of up to $20,000 help businesses to implement recommendations.
•  Incubator Support — helped innovative start-ups to develop business capabilities to achieve
commercial success in international markets. Funding was provided to new and existing
incubators to support their development, boost their effectiveness and expand their services
through access to experts in residence.
•  Innovation Connections — helped businesses to innovate by collaborating with researchers
to develop new ideas with commercial potential. Research needs were reviewed, and
businesses were connected with the research sector. Advice and connections were
supported by matched grants of up to $50,000 to support research project collaborations.
•  Accelerating Commercialisation — helped businesses, entrepreneurs and researchers to
commercialise novel products, services and processes. Expert guidance and connections
were complemented by competitive matched grants of up to $1 million for
commercialisation.
ANAO Findings and Relevance to Audit
On 24 June 2022, the Auditor-General tabled a report1 (No.42 2021-22) following a performance
audit undertaken to provide assurance to the Parliament about whether value for money was
demonstrably achieved and whether services had been provided under the contracts to date in
relation to the Entrepreneurs’ Programme.
Whilst the ANAO Performance Audit undertaken on the procurement of delivery partners for the
Entrepreneurs’ Programme focussed on the process undertaken by the Department resulting in the
award of contracts to support the delivery of the Program, a review of the ANAO report was
undertaken to establish any findings and/or recommendations that would be pertinent to the scope
of this audit.
The ANAO report outlined the following key finding which is directly relevant to the scope of this
audit:
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Incumbency advantages were not transparently managed, in particular:
  there were no specific contractual or payment arrangements in place to govern the
department’s engagement of five of the ten existing industry partners to contribute to the
redesign and payment for this work;
  the department did not implement in full the probity risk management measures
recommended by its probity adviser (for example, a probity plan and protocols for the
redesign work was not in place at the commencement of work and the department did not
prohibit the industry partner personnel involved in the redesign from assisting in the
preparation of tender responses); and
  departmental records indicate that information about the redesign of the program was
revealed to incumbent tenderers involved in the redesign work providing them with a
competitive advantage (this disclosure of information to the incumbents involved with the
redesign work, and the seeking of urgent advice from the probity adviser about it, was not
recorded in the probity register).
The matter raised in bullet two point above is further considered in Section 3 of this report. A
summary of the key findings and specific references to i4Connect in the ANAO report are provided in
Appendix B to this report.

1 Australian National Audit Office, Procurement of Delivery Partners for the Entrepreneurs’ Programme,
https://www.anao.gov.au/work/performance-audit/procurement-delivery-partners-the-entrepreneurs-programme
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We note that the ANAO report, whilst raising concerns with the conduct of the procurement process
and the establishment of a value for money outcome, did not identify any specific areas of concern
or risk relating to the improper conduct of Tenderers in responding to the RFT.
We note this performance audit by OCM has not commented on and/or considered the outcomes of
the procurement process, including the evaluation outcomes.
Complaints and Claims
On 4 August 2022, a letter was sent to the Procurement Coordinator via email from an unsuccessful
tenderer to the RFT.
The letter was issued for the purposes of seeking restitution under the Scheme for Compensation for
Detriment caused by Defective Administration (CDDA Scheme) in connection with their tender for
delivery partner of the Accelerating Commercialisation (AC) element of the Entrepreneurs’
Programme. The letter referenced the findings of the ANAO report to support their claim.
In addition to seeking restitution concerns were also raised as follows:
s 47G
We understand that the Department requested additional evidence to support the claim associated
with the payment of a success fee but received no further correspondence or evidence to support
the claim.
Senate Estimates
Questions on the Entrepreneurs’ Programme have been raised during the sitting of the Economics
Legislation Committee as part of Senate Estimates over the period June 2023 to November 2024. The
two areas of focus during these hearings have been matters related to the ANAO report and findings
for the RFT process and the allegations of a ‘success fee’ payment made by i4Connect.
Specifically relevant to the scope of this audit are references made to the allegation, as outlined in
Section 2.4 above, of the alleged success fee paid to a then current contractor to the Department on
successful award of the contract to i4Connect.
Senator Barbara Pocock has raised a number of questions on the alleged success payment seeking
confirmation on the following matters:
1. Why the Department had not referred the matter to the Federal Police for investigation.
2. Whether the Department had gathered any relevant primary source information other than
calling the person accused of receiving the payment.
3. Clarification on whether the Department had inspected i4Connect's books to verify the
alleged payment.
This performance audit enables the Department to directly address questions 2 and 3 from Senator
Pocock and further details are provided in Section 3.2 of this report. Question 1 is outside of the
scope of this audit, but has been addressed by the Department in the November 2024 estimates
hearings.
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3  Key Findings and Conclusion
Risk 1 - Did i4Connect comply with all tenderer obligations and
responsibilities, as outlined in the RFT in the development and
submission of their response
In assessing Risk 1, OCM considered the following key elements to determine whether i4Connect had
complied with all tenderer obligations and responsibilities, as outlined in the RFT, in the
development and submission of their response:
 What were the specific obligations and responsibilities placed on i4Connect as a Tenderer in
the RFT process.
 Did the i4Connect response, when compared to other responses to the RFT, evidence access
to information that may not have been publicly available to all other Tenderers to the RFT.
 Was the interview process undertaken by i4Connect with existing commercial advisors
permissible under the RFT and did this activity provide an unfair advantage and/or access to
information not available to other Tenderers to the RFT.
The following sections outline the key findings and audit conclusion with further detailed analysis
provided in Appendix C.
3.1.1  Correctly signed and executed Tender Declarations
As part of the issued RFT, all Tenderers were required to provide a duly signed and witnessed
Tenderer Declaration provided, provided at Attachment 2 of the issued RFT. The declaration required
that the Tenderer warrants that neither the Tenderer or any of its officers, employees, agents, and
subcontractors has, in relation to the preparation, lodgement or assessment of the tender:
a) Improperly obtained confidential information;
b) Received improper assistance of employees or former employees of the Department or with
improperly obtained information;
c) Engaged in collusive tendering, anti-competitive conduct or other similar conduct with any
tenderer or other person; or
d) Attempted to improperly influence an officer of the Department or approached any Minister
or Commonwealth officer (other than as permitted by the RFT).
The RFT also made additional reference to Tenderer behaviour which included the requirement that
Tenderers not make false or misleading claims or statements.
In relation to the finding outlined in the ANAO report which noted “…the department did not prohibit
the industry partner personnel involved in the redesign from assisting in the preparation of tender
responses”, we noted that i4Connect undertook an interview process, further explored in Section
3.1.3, with then current commercial advisors and both successful and unsuccessful grant recipients
to the Program. However, we do not consider this conflicts with point b) of the Tenderer Declaration
as specific allowance was made under the signed Deed Polls of Confidentiality for participants to the
redesign process to assist in the writing and preparation of tender responses as noted in the ANAO
report.
s 47G
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Key Finding: A review of the tender responses, and specifically i4Connect, confirmed, with the
exception of two (2) Tenderers, all provided an appropriately signed and executed Tenderer
Declaration. We consider the two unsigned Tenderer Declarations appear to be administrative errors
and had no material impact on the RFT outcomes. Notwithstanding the two declaration issues there
is no evidence of any inappropriate behaviour by the Tenderers and the then current Commercial
Advisors, including those involved in the redesign process.
3.1.2 i4Connect access to information not publicly available to other Tenderers
In considering whether i4Connect had access to information not publicly available to other Tenderers
OCM undertook a detailed review of all tendered responses to the RFT (excluding pricing information
and cost model proposals). This review sought to establish whether there was any evidence of
additional insights to the Program in the i4Connect and/or references to the redesign process which
may have provided an advantage over other Tenderers. The review identified that all of the
responses were generally consistent in terms of the focus being on how they have previously
delivered similar programs of work to other Departments or jurisdictions. The approaches were
generally consistent and there was no indication from our review that the proposed service delivery
solution was based on insights inappropriately obtained.
We further noted that the i4Connect response did not make any specific mention and/or provide
insights on activities relating to the redesign process. This is consistent with all of the other
responses to the RFT, with the exception of one Tenderer who made a general reference to the
redesign process.
The full analysis of the Tendered responses is provided in Appendix D to this report.
OCM’s review of the tendered responses, identified that i4Connect were not the sole Tenderer who
included, as nominated key personnel, then existing commercial advisors. In addition to i4Connect,
four (4) other Tenderers included personnel in their proposals who as well as being current
commercial advisors at the time of the tender, were involved in the redesign process. Whilst we have
not engaged with Tenderers other than i4Connect it would be reasonable to assume that interactions
occurred between the relevant nominated personnel and the relevant Tenderers in the development
of their respective responses. As noted in Section 3.1.1 this approach was allowable both under the
RFT and the deed polls entered in to by the commercial advisors and would suggest that whilst
i4Connect may have obtained access to information not ‘publicly’ available this would be true for
other respondents to the RFT.
In addition to the review of the tendered responses, OCM also undertook a review of email
correspondence, betweens 47G, s 47F
who was the commercial advisor subject
to the claim relating to the alleged success fee payment, and i4Connect during the tender period.
Our review of this correspondence does not suggest any improper assistance. The correspondence
focused on approaching other, then, existing commercial advisors to seek their support for inclusion
as key personnel on the i4Connect tender response. Our review of this correspondence did not
identify evidence of any insights being provided on the current Program or the redesign process
which would have provided i4Connect an advantage over other Respondents to the RFT.
A chronological summary of the email correspondence is provided Appendix E to this report.
Key Finding: The involvement of existing commercial advisors and those individuals supporting the
Department’s redesign process do not appear, based on a review of the content of the i4Connect
tender submission and commercial advisor interview outputs, to have resulted in the disclosure of
confidential information to support the development of the tender response or provide an unfair
advantage over other Respondents to the RFT.
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3.1.3  Interview process undertaken by i4Connect
In developing their response to the RFT, i4Connect undertook an extensive research phase which
included undertaking interviews with the then current commercial advisors and successful and
unsuccessful applicants to the Entrepreneurs’ Programme.
We consider that the interview process with then current commercial advisors undertaken by
i4Connect undoubtedly provided insights into the Program workings and challenges, that may not
have been available directly to other respondents to the RFT. However, the approach adopted by
i4Connect was not precluded under the RFT and was allowable under the Deed Polls of
Confidentiality signed by commercial advisors involved in the redesign process. In discussion with the
Department we understand that the then current commercial advisor details and grant recipients
were publicly available knowledge, and we therefore consider it would have been open to other
Respondents to engage with existing commercial advisors in a similar manner.
Our review of the tendered response from i4Connect and the other respondents to the RFT notes
there is no specific mention and/or insights provided in the i4Connect response on activities relating
to the redesign process. This is consistent with the majority of other responses to the RFT which also
make no reference to this process. The exception to this was another Tenderer who noted in their
responses that they understood a redesign process was underway with no specific references made
to any outcomes or decisions.
Specifically relating to the findings made in the ANAO report “……..departmental records indicate that
information about the redesign of the program was revealed to incumbent tenderers involved in the
redesign work providing them with a competitive advantage”, we note that i4Connect were not an
incumbent provider of commercial advisory services at the time of the RFT and there doesn’t appear
to have been any insights provided on the redesign process during the interviews undertaken. This is
supported by records sighted of the interview process, where it is noted that in respect to a
commercial advisor who was involved in the redesign process, they have stated that the information
relating to the redesign process is under restraint. This would be considered consistent with the
Deed Poll of Confidentiality signed by the participants (including this commercial advisor) to the
redesign process.
Key Finding: The outputs from the interviews undertaken by i4Connect with the then current
commercial advisors do not evidence inappropriate insights being provided by the Commercial
Advisors. Additionally, explicit reference is made that insights to the redesign process were under
restraint.
Conclusion
Based on the audit findings there is no evidence that i4Connect did not comply with all tenderer
obligations and responsibilities, as outlined in the RFT in the development and submission of their
response. OCM note that the interview process undertaken by i4Connect undoubtedly provided
insights into the Program workings and challenges, that may not have been available directly to other
respondents to the RFT. However, the approach adopted by i4Connect was not precluded under the
RFT and allowable under the Deed Polls of Confidentiality signed by commercial advisors involved in
the redesign process. OCM consider it was open to other Respondents to engage with existing
commercial advisors (including those involved in the redesign process) in a similar manner to seek
insights and understanding of current operation and challenges.
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Risk Area 2 - Were financial payments/incentives made to
contractors or Departmental employees previously engaged in the
program and/or the re-design activity to support the development
of the i4Connect tender submission?
In assessing Risk 2, OCM considered the following key elements to determine whether i4Connect had
complied with all tenderer obligations and responsibilities, as outlined in the RFT, in the
development and submission of their response:
 Were any payments made to then existing commercial advisors during the period February
2020 to June 2023.
 Were there any accounts created, vendor or employee records, relating to the then current
commercial advisors.
 Is there any evidence of the payment of a $900,000 success fee as per claims made in the
complaint letter and subsequently raised at Senate Estimates.
 Was the data provided by i4Connect a true and valid extraction of financial data.
The following sections outline the key findings and audit conclusion with further detailed analysis
provided in Appendix F.
3.1.4  Payments to then existing commercial advisors
In assessing this risk OCM requested the following informafion from i4Connect for ﬁnancial years
2019/20, 2020/21, 2021/22 and 2022/23:
 List of all i4Connect Pty Ltd bank accounts.
 List of all i4Connect Pty Ltd credit cards issued.
 Bank statement and credit card statements for above.
s 47G
OCM requested the following informafion from i4Connect Pty Ltd Finance system, Xero, for ﬁnancial
years 2019/20, 2020/21, 2021/22 and 2022/23:
 Accounts payable master data and transacfion data.
 Payroll master data and transacfion data.
 General Ledger transacfion data.
There were no idenfiﬁable records through a review of the accounts payable records, payroll records
of any payments being made by i4Connect Pty Ltd to the then current commercial advisors, or the
companies that were linked to these individuals.
Key Finding:  There is no evidence based on the bank records, accounts payable records, payroll
records provided by i4Connect Pty Ltd of any payments being made by i4Connect Pty Ltd to the then
current commercial advisors, or the companies that were linked to these individuals, from February
2020 to June 2023.
3.1.5  Creation of supplier and employee records for then existing commercial advisors
A review of the data from the i4Connect financial system as outlined in Section 3.2.1 above did not
identify any of the then current commercial advisors, involved in the redesign process, as being set
up as a vendor/supplier or employee by i4Connect.
Key Finding:  There is no evidence of the then current commercial advisors, involved in the redesign
process, having been set up as a vendor/supplier or employee in i4Connect’s financial system.
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The interactions undertaken with i4Connect and the financial system (Xero) provide surety that there
is no evidence that financial data had been adapted or redacted in relafion to the ﬁnancial acfivifies
of i4Connect.
In respect of the allegafion made of a $900,000 success payment made tos 47F
s 47F
there are no financial transactions with the individual or company in the financial records.
Furthermore, we note that there are also no individual or cumulative payments made that total
$900,000 or a figure relative to this value.

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Appendix B:  ANAO Report (No.42 2021-22)
The following outlines the key elements of the Auditor-General Report No.42 2021–22 Performance
Audit Procurement of Delivery Partners for the Entrepreneurs’ Programme dated 24 June 2022.
Paragraph and Page references are as per the ANAO report.
Key Findings
1.  The design and conduct of the procurement did not comply with the Commonwealth
Procurement Rules, and the signed contracts are not being appropriately managed.
2.  In its conduct of the procurement, the Department did not demonstrate achievement of
value for money. There was not open and effective competition for the delivery partner roles
as competing tenders were not treated fairly or equitably.
3.  The delivery partner contracts are not being appropriately managed. The contract
management framework is inadequate, and the contracts do not include an effective
performance management framework.
Recommendations
Recommendation no. 1 Paragraph 2.13
When planning to employ a staged process to evaluating tenders, the Department of Industry,
Science, Energy and Resources clearly identify this in its approach to market along with the criteria
that will be used to shortlist potential suppliers, and if applicable, any expected limits on the number
of potential suppliers that will be shortlisted at each stage.
Department of Industry, Science, Energy and Resources response: Agreed.
Recommendation no. 2 Paragraph 2.68
When evaluating tender responses, the Department of Industry, Science, Energy and Resources fully
evaluate responses received consistent with the approach set out in the approach to the market,
with the results of this work relied upon to select the successful candidate(s).
Department of Industry, Science, Energy and Resources response: Agreed.
Recommendation no. 3 Paragraph 2.77
The Department of Industry, Science, Energy and Resources improve its procurement framework to
specifically address the engagement of probity advisers, including ensuring that advisers are
independent and objective by not engaging the same probity advisers on an ongoing or serial basis.
Department of Industry, Science, Energy and Resources response: Agreed.
Recommendation no. 4 Paragraph 2.98
The Department of Industry, Science, Energy and Resources improve its procurement framework to
specifically address how it will manage the risk of any incumbency advantages when conducting
procurement processes.
Department of Industry, Science, Energy and Resources response: Agreed.
Recommendation no. 5 Paragraph 2.103
The Department of Industry, Science, Energy and Resources improve its procurement record keeping
so that accurate and concise information exists on:
  the process that was followed;
  how value for money was considered and achieved;
  relevant approvals; and
  relevant decisions and basis of those decisions.
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Department of Industry, Science, Energy and Resources response: Agreed.
Recommendation no. 6 Paragraph 2.118
The Department of Industry, Science, Energy and Resources:
  not exercise the extension options in the awarded contracts;
  commences work to conduct a new procurement process that will be completed before the
existing contracts expire on 30 June 2023; and
  conducts the next procurement process in a manner that fully complies with the
Commonwealth Procurement Rules.
Department of Industry, Science, Energy and Resources response: Agreed in principle.
Recommendation no. 7 Paragraph 3.7
The Department of Industry, Science, Energy and Resources develop contract management plans for
each of the delivery partner contracts.
Department of Industry, Science, Energy and Resources response: Agreed.
Recommendation no. 8 Paragraph 3.17
The Department of Industry, Science, Energy and Resources adopt a proactive approach to managing
delivery partner conflicts of interest by:
  ensuring conflict of interest declarations are completed, updated regularly or their ongoing
currency otherwise confirmed; and
  regular review of delivery partner reporting of conflict of interest in order to monitor
compliance with contractual obligations.
Department of Industry, Science, Energy and Resources response: Agreed.
Recommendation no. 9 Paragraph 3.44
The Department of Industry, Science, Energy and Resources strengthen its management of the
Entrepreneur’s Programme delivery contracts, including by taking prompt action in circumstances
where delivery deadlines are not met and verifying that services have been provided before
payments are made.
Department of Industry, Science, Energy and Resources response: Agreed.
Recommendation no. 10 Paragraph 3.63
When contracting for the delivery of services, the Department of Industry, Science, Energy and
Resources apply competitive pressure when establishing performance expectations, and how these
will relate to contractual payments. This can be achieved by the department setting out its expected
performance management system and standards in the approach to the market documentation, or
by asking respondents to set out their proposals to inform a comparative evaluation.
Department of Industry, Science, Energy and Resources response: Agreed.

Specific i4 Connect References
Page 29
In March 2022, in response to the ANAO’s request for information regarding the mitigation
strategies, DISER advised the ANAO that: A bank guarantee was not obtained from the Paspalis
Family Trust as the TAP determined they were sufficiently assured of DiH’s financial position.
Evidence of i4Connect’s liquidity was obtained prior to contract signing. DISER emailed i4Connect on
11 February 2020 with a series of questions relating to pricing. This included questions on their
current financial position, ability to pay debts and whether there were bank guarantees or
alternative approaches to deal with the issues of there being few substantial assets. i4Connect’s
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responses were provided to the Pricing Analyst and the Probity Advisor. Both indicated the responses
were satisfactory and the TAP was satisfied with this additional information. 2.39 The DMV
Consulting report that proposed the mitigation strategies was prepared after receiving i4Connect’s
responses and was provided to the department on 17 February 2020. DMV Consulting’s report stated
that ‘whilst the Tenderer has indicated that they have negotiated loans to assist with short-term
liquidity, these would need to be sighted prior to contract signing.’
Page 35

2.57 While Respondent 53 was identified as the first ranking tenderer, the TAP identified i4Connect
as the recommended tenderer.
2.58 The analysis presented in the tender evaluation report in favour of selecting i4Connect did not
satisfactorily address the significant price difference and there was bias evident in the analysis to
support the decision to recommend i4Connect over Respondent 53.
  The TAP gave considerable weight to ‘inherent risks’ in Respondent 53’s bid regarding the
financial and corporate viability of a consortium with limited financial history, and
governance structure. While risks were acknowledged in the analysis of i4Connect, these
were outweighed by the TAP’s confidence in the management team.
  Notwithstanding that ‘price risk’ was not evaluated for any of the other outcomes, the TAP
gave considerable weight to the price risk associated with Respondent 53’s bid.
  The strengths of Respondent 53’s bid identified by the TAP in its value for money assessment
were not presented in the analysis in the tender evaluation report.
  The tender evaluation report included statements recycled from the 2014–15 procurement’s
tender evaluation report in regard to a different tenderer, which indicates it was not a
complete and genuine attempt to support the recommendation.
Key Learnings and Findings (relevant to audit)
Page 14
Entities should treat all tenderers, and potential tenderers, in a fair and non-discriminatory manner.
To assist, entities should ensure that their procurement frameworks specifically address how risks of
incumbency advantage are managed so that the procurement process is conducted with no bias or
favouritism, and to maximise the likelihood of maximising value for money to the Australian
Government through competitive selection processes. This requires that attention be given to
whether the incumbent has access to information that would provide an unfair advantage and how
to manage this and, when setting procurement timeframes, making sure that deadlines are not made
so short that the incumbent has an unfair advantage.

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Page 39
Incumbency advantages were not transparently managed, in particular:
− there were no speciﬁc contractual or payment arrangements in place to govern the department’s
engagement of five of the ten existing industry partners to contribute to the redesign and payment
for this work;
− the department did not implement in full the probity risk management measures recommended by
its probity adviser (for example, a probity plan and protocols for the redesign work was not in place
at the commencement of work and the department did not prohibit the industry partner personnel
involved in the redesign from assisting in the preparation of tender responses); and
− departmental records indicate that informafion about the redesign of the program was revealed to
incumbent tenderers involved in the redesign work providing them with a competitive advantage
(this disclosure of information to the incumbents involved with the redesign work, and the seeking of
urgent advice from the probity adviser about it, was not recorded in the probity register).
Page 52
2.117 The ANAO also observed inconsistent treatment of tenderers throughout the procurement
process, such as:
  providing only 14 tenderers of the 30 tender submissions rated as ‘acceptable’ or above to
the ‘internal panel experts’ for further technical evaluation (see paragraph 2.29);
  providing opportunities for select tenderers to improve or revise tender submissions (see
paragraph 2.67);
  meeting with one tenderer (i4 Connect) to discuss its response to the department’s request
for additional information (see paragraph 2.75) when this opportunity was not provided to
another tenderer that had been asked for additional information (and which was not
awarded a contract); and
  tailoring its approach to a particular tenderer (see paragraph 2.67).

Note: There is no detail contained in the ANAO report pertaining to the meeting held with i4
Connect.

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Additionally, due to the approach adopted by i4Connect to interview the existing
commercial advisors, including those involved in the redesign process, we reviewed and
considered the obligations and responsibilities imposed on those individuals as per the
executed Deed Polls of Conﬁdentiality. The key elements of this Deed Poll, relevant to
the audit are reproduced below:

s 45, s 47G
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s 45
Summary of ﬁndings and risk rating
 Establishing the information that was publicly available at the time of the Tender is
challenging, noting the dynamic nature of web based information. We understand,
through discussions with i4Connect and conﬁrmed by the Department, the core
Program objectives, the then current commercial advisor details were readily available
on-line to all respective Respondents. Additionally, the industry brieﬁngs undertaken by
the Department during the RFT open period included extensive Q&A sessions with
transcripts provided as a document release on AusTender and therefore available to all
potential Respondents.
s 45, s 47G, s 47F
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s 45
The audit also included an assessment of email correspondence that was undertaken between s 47F
and i4Connect during the tender open period as provided by the
Department through their internal email records.

Summary of ﬁndings and risk rafing
s 45, s 47G
 Whilst conﬁrmafion has been provided by i4Connect that exisfing commercial advisors
assisted in the preparafion of the tender response, this was not precluded under the RFT and
allowable under the Deed Polls of Conﬁdenfiality signed by commercial advisors involved in
the redesign process and entered into by the Department as addressed under secfion 4.1.1
and 4.1.2.
 The involvement of exisfing commercial advisors and those individuals supporfing the
redesign process do not appear, based on a review of the content of the i4Connect tender
submission and commercial advisor interview outputs, to have resulted in the disclosure of
conﬁdenfial informafion to support the development of the tender response or provided an
unfair advantage over other Respondents to the RFT.
s 45, s 47G
Risk No.3 Rafing: Low

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Appendix D: Tender Response Analysis
Refer to file entitled ‘Tender Response Analysis_Consolidated’ for a detailed summary of the review
of the responses to the Engagement of Delivery Partners for the Entrepreneurs’ Programme.

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s 45, s 47G, s 47F
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s 45, s 47G, s 47F
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s 45, s 47F, s 47G

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s 45, s 47F, s 47G
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s 45, s 47G, s 47F
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s 45, s 47G
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s 45, s 47G
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s 45, s 47G

s 45, s 47F
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s 45, s 47G
s 45, s 47G
s 45, s 47G
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s 45, s 47G

Risk No.4 Rafing: Low

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Appendix G: i4Connect Management Representation
Refer to file entitled ‘Appendix H_i4Connect Management representation’.

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