Flat White

The Paladin contract non-conspiracy

19 February 2019

3:37 PM

19 February 2019

3:37 PM

Government tenders are fraught with risks that most citizens fail to grasp. On the face of it there are aspects to the Paladin tendering process that may require more scrutiny, but for anyone who has travelled the bidding process there’s “nothing to see here”.

The first thing to fathom is that tenders cost an awful lot of money to produce and deliver. That’s because of the regulations, oversight and governance that guides every step of the process in every stratum of government. The company that offers to supply goods or services must submit a compliant tender that meets all of the mandatory requirements.

For public servants, the most important deliverable is reducing government risk. In essence, what the government is doing is outsourcing this risk to a third party and paying a premium for the privilege. The government can’t outsource a public relations disaster, however, which is why due diligence plays such a big part in the respondent selection process.

First and foremost, financial strength and business references are validated. If organisations have jumped these hurdles in a previous tender they often go straight onto the tender shortlist. This saves money and time. A detailed tender takes an enormous amount of time: the more complexity the longer the process. Time is money, a lot of money when you consider a complex tender may need hundreds of people to prepare and respond to it. This is why reducing regulatory red tape provides immediate savings across the government and for those who submit tenders.

The second issue to understand is that there are two types of tenders: open and closed. Open tenders are widely circulated and used to gather information about which products or services are available to meet the tender requirement. These are known as “Requests for Information” — RFI’s or “Request for Quotation” — RFQ. Third parties are invited to submit responses and if they are successful, provide their goods to the government.

This approach means that most of the hard work is done by the tenderer and the government doesn’t have to allocate limited resources to the tender process. It’s an inexpensive and clever way for vendor sales staff to do the work for the public servants and save taxpayers’ lots of money.

The downside is that many organisations refuse to submit tenders for government contracts. It isn’t worth their time, effort and considerable expense.

It’s possible the best tender responses will be incorporated into a revised specification with all the best features of the open tender included within another tender. This will often lead to a “closed tender” where only pre-qualified suppliers with the best goods or services are invited to respond. Complex, isn’t it?

Those bidders that meet the basic requirements may then be asked to give a quotation and hopefully receive a purchase order, praying they have covered their costs based on the assumptions they made to bid the items or service.

Even after all that rigmarole, the tender may not be awarded. More typical is where the RFQ is awarded with an immediate sale through a qualified supplier. As a rule, the system works pretty well.

A Closed Tender is designed to cut costs and reduce the time needed to deliver and complete the contract or fast-track the fulfilment of the goods or services.

If Paladin had previous success in responding to government tenders then it’s likely they were shortlisted immediately. Sometimes if an urgent need arises a tender may be awarded without an onerous tender process on a cost-plus basis or similar fixed price arrangement from pre-qualified suppliers. This enables government agencies to achieve rapid outcomes in times of dire need or unexpected emergency.

The government depends on rigorous oversight and red tape that initiates checks and balances to ensure the system is not gamed too much. Government agencies have made an art form of skirting awarded tenders because their needs may be unique or the product selected not suitable. There is no skulduggery involved, just the need to achieve an outcome. The system works most of the time, but not all of the time.

Is the “Paladin Affair” the big rort that our Twitter certified lawyers, the ABC, Guardianistas and the Nine Entertainment mastheads are claiming it is? Given the sheer size of the contract, it’s unlikely.

If there’s something erroneous with the tender it’s more likely to be another government cock-up. Remember, we have 242,000 Federal public servants, many of whom actually care how taxpayer’s money is spent. That’s a lot of oversight. Chances are nobody else but Paladin was willing to bid because the project’s downside posed too much of a risk. In that situation, the government would accept the risk by doing the job itself, typically at a much higher cost to taxpayers.

The contract is being fulfilled in Papua New Guinea so there are sovereignty issues that complicate things, particularly on service delivery. Probably the worst aspect of the affair is the false claim by the Twitter judges and juries and their media dupes that a non-existent sister of Peter Dutton’s was somehow involved.

It’s ludicrous to accept that this type of contract could be subverted by familial ties, but yet another example of unfair Leftist bullying that we now expect as a matter of course.

The big question raised is whether the taxpayers are being ripped off by Paladin? Companies that provide these outsourcing services can lose a lot of money quickly if things go wrong. To offset this, outsourcers need to make a big profit margin if things go right. That’s called capitalism. And whether asylum seeker activists, their political pals and media mates like it, capitalism the system we operate under. Today, anyway.

Mike Ryan is a curmudgeonly technical copywriter who lives in the glorious Hunter Valley.

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