Australian War Memorial redevelopment contracts were split and varied to avoid having to seek ministerial approval, a report from the national audit office says.

The audit found “deficiencies … in the quality of advice to the minister” with regard to the controversial $540 million project. It also found shortcomings in record keeping, management of conflicts of interest and documentation of value for money assessments.

Management of ethical and probity risks was only partly effective, Acting Auditor General Rona Mellor concludes in her report released last week.

The audit found there was insufficient engagement with the external probity advisor for the ‘scale and risk’ of procurements for the project, and conflicts of interests weren’t adequately documented, declared or managed.

Two key contracts were also entered into without attempts to seek ministerial approval, and briefs to the minister were “insufficiently detailed to enable the minister to meet their obligations”.

The Australian War Memorial was allocated $498.7 million for the development and another $50m in 2022, plus $8.8 million that remained unspent for the business case.

In October 2023 there were 221 contracts for project management, design, engineering, construction and specialist advice.

Contracts fudged

In March 2018, the War Memorial engaged consultants Xact Project Management help develop a business under an official order of up to $319,572.

In March the following year the contract was varied to $999,999 – one dollar under the threshold for ministerial approval.

 The same company later won a $1.1 million tender for ongoing work, and that contract was reduced to a 12 month contract worth $805 million with an option to extend it for eight years.

The report also cites instances where contracts awarded to the same company but were split in order to dodge ministerial approval.

“In two instances contracts were split so as to not exceed the $1 million threshold requiring ministerial approval,” the report says.

Recommendations accepted

The War Memorial has accepted the five recommendations made in the report to improve record keeping, probity management and corporate policy.

Development of the Australian War Memorial, which opened in 1941 as a corporate Commonwealth entity, is due to be finished in June 2028.

The development project includes a new southern entrance and parade ground at the front of the existing main building, an extension to the CEW Bean Building, a new Anzac Hall and glazed link at the rear of the main building, refurbishment of the main building and gallery fit outs.

The controversial development has been the subject of scrutiny by a parliamentary committee, which in 2020 heard claims it was a waste of money.

However in a report released in 2021, the Parliamentary Standing Committee on Public Works found the proposed works were appropriate to meet the identified need, and should go ahead.