Simon Power
National Party Law & Order Spokesman

25 October 2006

Contract collusion at Corrections

The Corrections Department allowed two consultants among those responsible for overseeing the building of four regional prisons to write each other's job description and set each other's remuneration range, says National's Law & Order spokesman, Simon Power.

"This is just one very concerning aspect of the Regional Prisons Development Project (RPDP) unearthed by Audit NZ, and deepens the mire Corrections finds itself in over this whole project."

Mr Power is releasing an Audit NZ report into the project, which found that:

The Project Director and the Manager, Administration and Contracting, 'were involved in the renewal process for each other's contracts', including the remuneration range, the request for proposal and the evaluation plan. Three Steering Group members 'were involved in the ... renewal of the Project Director's contract but that the Steering Group as a whole was not.'

"There is something very wrong when consultants are able to write each other's pay rates and conditions, especially when one of them, two days after he resigned from Corrections, took up a contract for work that was not put out to tender.

"John Hamilton was originally paid $1,000 plus gst a day, increased to $1,764 in 2004, and up till February this year had been paid $2 million for overseeing a $490 million budget blowout.

"There is a smell about this and it is time Minister Damien O'Connor gave taxpayers an explanation.

"It says plenty that Audit NZ went to pains to recommend that future engagement of key consultant personnel 'should be managed by the Department alone, preferably through an independent consultant (if necessary) and its Steering Group'.

Mr Power is also releasing letters by Auditor-General Kevin Brady to Corrections and several complaints that confirm he was concerned about 'some peculiarities' in Corrections' relationship with John Hamilton and his company, Jagcon, saying 'the process for evaluating and deciding between the individual tenders was not documented as well as we would expect given the nature of the role, the remuneration involved and the responsibilities of the successful tenderer'.

"These reports merely thicken the murk surrounding the construction project, which has blown its budget by $490 million."

Audit NZ report, A-G letters: - http://www.national.org.nz/files/Power_Brady.pdf

ENDS

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