Introduction

Commonwealth Home Support Programme

1.1 In 2015, the Australian Government introduced the Commonwealth Home Support Programme (CHSP), consolidating several home and community care programs operating in the aged care system. CHSP services include meals, cleaning, garden maintenance, transport and aids. The CHSP meals service category aims to ensure food security and nutritional and social benefits for older Australians. Support may include help with meal preparation and meal delivery services.

1.2 CHSP service providers receive funding through Australian Government grants and client contribution fees. National unit prices⁶ determine the amount of grant funding paid to providers for each CHSP service type. In 2023–24, CHSP grants totalled $3.1 billion, making CHSP one of the Australian Government’s largest grant programs. In 2023–24, the Australian Government funded 1,264 CHSP providers⁷, 71 per cent of which were not-for-profit organisations according to Department of Health, Disability and Ageing (Health) advice to the ANAO in April 2025. Health advised that the value of grant funding awarded for the CHSP meals service category totalled $114.3 million across 540 meal providers.

1.3 Health is responsible for administering CHSP.

1.4 The Royal Commission into Aged Care Quality and Safety (the Royal Commission) presented its report for tabling in the Parliament on 1 March 2021.⁸ The Royal Commission made several recommendations for in-home aged care. These included increasing funding and access to in-home aged care packages, grant program reforms, ensuring timely delivery of services, integrating social supports, and improving the quality and safety of care provided at home.⁹ The Australian Government responded to these recommendations through the 2021–22 Budget measure ‘Home Care – Future design and funding’, which funded the development of a new Support at Home program. The Budget measure provided $10.8 million to support program design.¹⁰

1.5 The new Support at Home program brings together three in-home aged care programs under a single program.

• The Home Care Package Program¹¹ and Short-Term Restorative Care Programme, which cater to higher support needs, will be replaced by the Support at Home program from 1 July 2025.
• CHSP is due to transition to the Support at Home program no earlier than 1 July 2027.

1.6 CHSP payments are generally made through a monthly grant payment in arrears.¹² In the 2021–22 Budget, the Australian Government announced that it intended to transition CHSP providers to new funding arrangements. Under the Support at Home program, providers will be required to invoice the Australian Government based on services provided and receive payment after services had been delivered (a fee-for-service model).

1.7 On 12 September 2024, the Australian Government introduced the Aged Care Bill 2024 to the Parliament and announced its plans to implement the Support at Home program. The Aged Care Bill passed the Parliament on 25 November 2024¹³ and will commence on 1 July 2025.

Meals on Wheels

1.8 Meals on Wheels (MoW) is a service that provides meals to people at home ‘who are unable to cook or shop for themselves’ or ‘living with an illness or disability’.¹⁴ The MoW network in Australia is a federated group of organisations, staffed predominantly with volunteers, comprising:

• a national organisation, Meals on Wheels Australia Ltd (MoWA), as the peak body that represents and advocates for independently-run MoW providers across Australia¹⁵;
• state-based MoW organisations that typically provide support or services to MoW providers in their respective state or territory, for example, Meals on Wheels NSW Limited (MoW NSW) and Queensland Meals on Wheels Limited (MoW Queensland)¹⁶; and
• individual MoW providers operating meal delivery services in the community.

1.9 MoW providers represent one type of CHSP meals provider. In 2023–24, 135 of 540 (25 per cent) of meal providers funded under CHSP were affiliated with the MoW brand and MoW providers received $45.4 million in CHSP grants. Aside from meal delivery, MoW providers support social connection through volunteers or paid staff engaging with CHSP clients when delivering a meal. The service model provided by MoW differs to that of some for-profit meal providers that provide meal services for a broader range of customers and may not provide the same opportunities for social connection.¹⁷

Origins of the Future Fit Program

1.10 On 27 April 2021, Health proposed to the Minister for Senior Australians and Aged Care Services (the minister) to increase the minimum meals unit price paid to CHSP providers from $4.90 to $7.50 per meal at an additional cost of $7 million per year. Health advised the minister that data analysis completed by Deloitte Access Economics in 2020 had estimated that ‘a reasonable price range for delivered meals (including government grant funding and consumer contributions combined) is between $6.20 and $11.50 per meal’. Health advised the minister that MoWA was seeking a higher minimum meals price. On 3 May 2021, the minister agreed to raise the CHSP minimum meals unit price to $7.50 and on 18 May 2021, the minister announced the increase.

1.11 At the time of the 2021–22 announcements about reforms to the CHSP, discussions occurred between MoWA, Health and the minister about MoW service pricing, viability in a contested market, and moving to a fee-for-service model under the new Support at Home program.

• On 19 March 2021, MoWA advised Health that it had ‘partnered’ with Miles Morgan Australia Pty Ltd (Miles Morgan Australia) to review its business operating model. Miles Morgan Australia was a consulting firm providing research and policy services to predominantly government organisations.
• Following the announcement of an increase of the minimum meals unit price to $7.50, on 19 May 2021 the minister received correspondence from MoWA requesting a higher minimum meals unit price of $10 per meal. On 28 May 2021, Health requested data from MoWA on its network’s cost structures and delivery models in order to review MoWA’s request.
• On 22 June 2021, Health met with MoWA to discuss business and funding models across the MoW network. Health identified MoW administrative efficiencies, financial sustainability, and transparency over MoW operating models and social support costs as areas that warranted further discussion.
• On 9 November 2021, Health recommended that the minister agree to a MoWA ‘business transformation’ funding proposal at a cost of $5 million (GST exclusive) across 2021–22 and 2022–23. Health noted the core elements of the proposal related to ‘improved governance arrangements and back of house infrastructure’ by deploying new technology and providing training to MoWA to help collect data on the number and type of meals delivered, as well as capturing service delivery costs and social outcomes achieved. Health advised the minister that, if the funding proposal was supported, it would ‘work to finalise administrative details, and initiate procurement processes in line with Commonwealth Procurement Guidelines’ and that it would contract Miles Morgan Australia to carry out the business transformation work on behalf of MoWA.
• On 12 November 2021, the minister met with representatives from MoWA, Miles Morgan Australia and Australian Public Affairs¹⁸ to discuss MoWA’s funding proposal and viability challenges facing MoW providers. Health officials were not present at the meeting. Following the meeting, the minister agreed to Health’s recommendation to fund MoWA’s business transformation proposal. No change to the minimum meal price of $7.50 was made.

1.12 The approved proposal led to a body of work in early 2022 that was branded as the ‘Future Fit Program’, and which was funded separately to the 2021–22 Budget measure ‘Home Care – Future design and funding’. The Future Fit Program was initially aimed at placing MoWA in a better position to support MoW state associations and MoW providers by: putting in place more effective governance arrangements for MoWA; identifying and implementing operational efficiencies to reduce costs; and modernising technology to adapt to the changing aged care regulatory environment. In October 2022, Health redirected the Future Fit Program to focus away from MoWA to MoW state associations and frontline meals providers (see from paragraph 2.14). Health did not advise the minister about the change (see paragraph 2.14).

Procurement for the Future Fit Program

1.13 Miles Morgan Australia was contracted to deliver the Future Fit Program across three procurements between December 2021 and January 2024. Throughout this report, these are referred to as the ‘2021 procurement’, ‘2022 procurement’ and ‘2024 procurement’. A fourth procurement for a feasibility study was initiated in 2023 but the contract was not entered into.

2021 procurement — Business transformation advice and services

1.14 On 23 December 2021, Health contracted Miles Morgan Australia to deliver ‘strategic business transformation advice and services’ aimed at ‘improving the capability and structure of MoWA and the MoW Network to bring their operations more in line with standard corporate arrangements’. The value of this contract was $5,487,191.¹⁹ The project was to be concluded with a final report on 18 January 2023.

2022 procurement — Customer relationship management software system

1.15 On 4 October 2022, the contract with Miles Morgan Australia was varied. The variation increased the 2021 contract value by $1,560,900, for a total cumulative value of $7,048,091.²⁰ The key elements of the variation were a customer relationship management (CRM) software system for the MoW network, updated project governance arrangements, a meal ordering client interface and an extension of the timeframe for delivery of the Future Fit Program final report to 1 November 2023.

2024 procurement — Whitehorse meals pilot

1.16 In October and November 2022, two MoW providers in Victoria (the Whitehorse City Council and the City of Ballarat) notified Health of their intent to stop providing CHSP meal services in their respective local government areas (LGA) from 1 July 2023. Health commenced a process to replace the Whitehorse City Council and the City of Ballarat with alternative CHSP providers. During 2023, Health funded Newcastle Meals on Wheels (MoW Newcastle) to deliver meal services in the Whitehorse LGA and MoW Queensland to deliver meal services in Ballarat. Meals provision by MoW Newcastle in the Whitehorse LGA was referred to as the ‘Whitehorse pilot’.

1.17 On 20 February 2023, Health requested Miles Morgan Australia work with MoW Newcastle to test initiatives being developed under the Future Fit Program (including the CRM system contracted from Miles Morgan Australia in the 2022 procurement) in the Whitehorse LGA. On 2 January 2024, Miles Morgan Australia advised Health that it would cease supporting MoW Newcastle, including providing access to the CRM system, in the Whitehorse LGA unless additional funding was provided by Health. On 19 January 2024, Health contracted Miles Morgan Australia to ‘transition’ meals operations to MoW Newcastle without disruption to services. The value of this contract was $1.69 million, for a total cumulative value of $8.74 million across all contracts to Miles Morgan Australia for the Future Fit Program.²¹ A final report was to be delivered on 8 March 2024, and the contract stated that all work was to be completed by 10 March 2024 (with a provision for unanticipated delays to 31 May 2024).

Negotiations for meals funding model feasibility study

1.18 As an extension of the Future Fit Program, in May 2023, Health received a ‘meals funding model feasibility study’ (the feasibility study) proposal from Miles Morgan Australia. The feasibility study would develop an agreed common definition of a ‘meal’ and test whether the value of social connections delivered by the MoW network could be quantified. Between July 2023 and January 2024, Health engaged in contract negotiations with Miles Morgan Australia to deliver the feasibility study. On 4 October 2023, Health sought the agreement of the Minister for Health and Aged Care (the minister) to use up to $16.7 million (GST exclusive) in CHSP appropriation over two years to deliver the feasibility study.²² The minister did not approve the proposal and asked to discuss it. On 31 January 2024, Miles Morgan Australia advised Health that it wished to withdraw its meals feasibility study proposal, citing reputational and workplace safety risks. The feasibility study did not proceed.

1.19 This audit covers procurement and contract management of the Future Fit Program between December 2021 and May 2024. Figure 1.1 shows an overview of Health’s activities in establishing and managing contracts with Miles Morgan Australia for the Future Fit Program.

Figure 1.1: Timeline of procurement activities supporting the Future Fit Program

Key: ■ 2021 contract ■ 2022 contract ■ 2024 contract.

Source: ANAO analysis of Health documentation.

Rationale for undertaking the audit

1.20 In 2023–24, the Australian Government provided $3.1 billion in funding to 1,264 CHSP providers, making it one of the Australian Government’s largest grants programs. Over 800,000 Australians used CHSP services in 2023–24.²³ CHSP is transitioning to the Support at Home program no earlier than 1 July 2027. The Future Fit Program involved $8.74 million in procurement payments to Miles Morgan Australia to support MoWA and the MoW network to prepare for the transition from CHSP to the Support at Home program.

1.21 This audit provides the Parliament with assurance on whether Health’s administration of the Future Fit Program was effective.²⁴

Audit approach

Audit objective, criteria and scope

1.22 The objective of the audit was to assess the effectiveness of Health’s administration of the Future Fit Program.

1.23 To form a conclusion against the audit objective, the ANAO adopted the following high-level criteria.

• Has Health established sound governance arrangements to support the delivery of the Future Fit Program?
• Has Health conducted procurements for the Future Fit Program effectively?
• Has Health managed the Future Fit Program contracts effectively?

1.24 Audit scope did not include assessment of CHSP grant administration, the transition of the CHSP to the Support at Home program, Miles Morgan Australia’s subcontracting arrangements under the Future Fit Program, systems assurance over the CRM technology, the merits of any intellectual property ownership claims over the CRM, the establishment of the Aged Care Policy Development Panel, and the Community Transport Pricing Pilot.

Audit methodology

1.25 The audit methodology included:

• reviewing departmental records and data;
• reviewing 186 submissions to the ANAO from organisations and community members, including 138 submissions from one individual; and
• meeting with Health officials, individuals representing Miles Morgan Australia and MoW network representatives.

1.26 Australian Government entities largely give the ANAO electronic access to records by consent, in a form useful for audit purposes. For the purposes of this audit, Health advised the ANAO that it would not voluntarily provide certain information requested by the ANAO due to concerns about its obligations under the Privacy Act 1988, secrecy provisions in Health and Aged Care portfolio legislation, confidentiality provisions in contracts and the Public Interest Disclosure Act 2013. Health advised that this type of information largely was not segregated in the department’s records management systems and it could not be certain, in providing documents through electronic means, that documents containing this type of information were excluded. To provide comfort to the Secretary regarding Health’s obligations under portfolio legislation, on 13 June 2024 the acting Auditor-General issued the Secretary of Health with a notice directing the Secretary to provide information and produce documents pursuant to section 32 of the Auditor-General Act 1997. Under this notice, Health provided the information and documents requested through electronic means.

1.27 The audit was conducted in accordance with ANAO Auditing Standards at a cost to the ANAO of approximately $570,000.

1.28 The team members for this audit were Lauren Dell, Kai Clark, Yoann Colin and Christine Chalmers.

2.1 Good project governance includes:

• appropriate oversight of project delivery, including through defined roles and responsibilities²⁵;
• proper risk management in accordance with the Commonwealth Risk Management Policy, which supports effective decision-making, helps prepare for unexpected events, and supports innovation²⁶;
• effective stakeholder engagement — involving clear and timely communication, inclusive and respectful participation and ongoing collaboration with key stakeholders — to ensure stakeholder input shapes policies and projects for better public outcomes²⁷; and
• appropriate arrangements to monitor and report on project implementation and provide assurance that program objectives are being achieved. Fit-for-purpose monitoring and evaluation activities should be planned before the start of any project.²⁸ The Commonwealth Evaluation Policy applies to all Commonwealth entities subject to the Public Governance, Performance and Accountability Act 2013 and aims to embed a culture of learning to support evidence-based policy development and service delivery.²⁹

2.2 Health has a project management framework that is intended to support the effective planning, monitoring and delivery of projects.

Did Health establish appropriate lines of accountability and responsibility for project delivery?

2.3 As described at paragraph 1.12, the Future Fit Program was, in part, aimed at placing MoWA in a better position to support MoW state associations and MoW providers by putting in place more effective governance arrangements for MoWA.

Establishment of governance arrangements for the Future Fit Program

2.4 Health’s project management framework outlines that the following characteristics are usually associated with a project subject to the framework: has start and end dates to deliver a defined scope of work; has a specific objective and delivers measurable benefits or outcomes; involves delivery of all or part of a budget measure, election commitment, ministerial announcement or business change; has a temporary structure with defined roles and responsibilities; and has a discreet budget. Projects within Health need to be assigned to one of three project tiers, based on budget, complexity, risk, and impact. Tier one represents the most complex, risky or impactful projects. Project tiers are determined by the project’s senior responsible officer and the tiering classification may change during a project’s lifecycle.³⁰

2.5 The Future Fit Program met many of the characteristics that are usually associated with a project subject to the framework: it had start and end dates to deliver a defined scope of work, a specific objectives and outcomes, a temporary structure with defined roles and responsibilities and a discrete budget. The initial project budget of approximately $5 million was consistent with criteria for a tier two project; and the ministerial interest and complex stakeholder and reputational risks for Health was consistent with criteria for a tier one project. Health advised the ANAO in January 2025 that at the time the project was established, it did not classify the Future Fit Program as a tier one, two or three project as it considered the work to be ‘business as usual’.

2.6 Health guidance provides that governance mechanisms and assurance activities should be designed to address the level of risk and project complexity associated with the project tiers. Regardless of tier, projects require: a stakeholder engagement register; benefits register; risk register workbook; business case; project management plan; project schedule; assurance plan; change control register; lessons learned register; and project closure report.

2.9 The December 2021 contract stated that the contractor (Miles Morgan Australia) was responsible for developing project documentation, including a project management framework, risk register and risk management plan. On 29 March 2022, Miles Morgan Australia submitted to Health a ‘Future Fit Portfolio Management Plan’ (project management plan), as well as a risk management plan and program risk register (see paragraph 2.24). Health approved the project management plan on 7 April 2022 (see paragraph 4.28).

Roles and responsibilities for the Future Fit Program

2.10 The project management plan described two interrelated programs of work: ‘network governance’ (improved service quality and operational transparency through better data capture and reporting capabilities) and ‘backbone infrastructure’ (tangible business transformation through network efficiencies and technology modernisation). To deliver this work, the project management plan provided ‘a portfolio management structure’. The MoWA Board was described as the ‘portfolio owner’ and Miles Morgan Australia as the ‘portfolio sponsor’. Five projects were set out under the two programs of work (network stability; service continuity; adoption strategy; business efficiencies; and technology modernisation), with each project supported by a sub-committee made up of MoWA Board members (legal, finance and risk sub-committee; strategy and stewardship sub-committee; process improvement sub-committee; and technology and data sub-committee). Miles Morgan Australia was the program manager for the two programs of work.

2.11 Health did not have a role on any sub-committees, or more generally in the governance structure. No senior responsible officer was assigned to the Future Fit Program.

2.12 Figure 2.1 sets out a simplified representation of the Future Fit Program governance arrangements, as designed by Miles Morgan Australia in March 2022. These arrangements were in place between March 2022 and October 2022.

Figure 2.1: Future Fit Program governance arrangements, March to October 2022

Source: ANAO analysis of Future Fit Program governance arrangements.

2.13 On 29 August 2022, Miles Morgan Australia provided a Future Fit Program ‘mid-point check report’ to Health (see paragraph 2.73). The report suggested that program governance structures be updated because:

In [Miles Morgan Australia]’s experience to-date MOWA does not have the required operational capability to engage directly with MOW services, to implement FUTURE FIT initiatives, nor manage operational software. Therefore MOWA is not well placed to guide the delivery of FUTURE FIT.

2.14 Miles Morgan Australia recommended Health agree to governance arrangements that would involve removing MoWA from the Future Fit Program governance arrangements and Miles Morgan Australia working directly with the MoW ‘active network’. Health did not consult MoWA on Miles Morgan Australia’s proposed change to the governance arrangements. The revised governance arrangements were not aligned to the initial aim of the Future Fit Program to place MoWA in a better position to support MoW state associations and MoW providers by putting in place more effective governance arrangements for MoWA (see paragraph 1.12). The minister was not advised of the change in direction.

2.15 The October 2022 variation to the Future Fit Program contract with Miles Morgan Australia stated that Miles Morgan Australia would implement the updated governance arrangements reflected in the mid-point check report (Figure 2.2).

Figure 2.2: Future Fit Program governance arrangements, October 2022 to mid-2023

Source: ANAO analysis of Future Fit Program governance arrangements.

2.16 The following governance arrangements applied from October 2022 to mid-2023.

• MoWA had no role in the new arrangements.
• Unlike in the March 2022 to October 2022 arrangements, Health was given a specific role as the ‘portfolio owner’. Health was to provide ’leadership and stewardship’ for the program and would be responsible for: providing strategic oversight; ensuring the portfolio’s scope aligns with the government’s strategic objectives; providing guidance on resolution of issues impacting delivery; and directing and monitoring activities measuring the effectiveness of the Future Fit Program.
• Health was to delegate ‘responsibility for the day-to-day guidance and advice on delivery’ to Miles Morgan Australia. Miles Morgan Australia remained the program manager for programs one (network governance) and two (backbone infrastructure).
• A new portfolio board was established to ‘ensure accountability for activities’, including managing risk, and scope and schedule changes. The portfolio board was to be chaired by the Miles Morgan Australia CEO and made up of CEOs of the active network, MoW state associations, MoW service providers (maximum two) and an ‘independent observer’ (who was the team leader, network operations team — a MoW provider representative).
• Miles Morgan Australia, as program manager, was to report progress through the portfolio board (chaired by Miles Morgan Australia), ‘with direction and guidance from the portfolio sponsor’ (also Miles Morgan Australia). Health did not have representation on the portfolio board.

2.17 The contract for the 2022 procurement reflected the focus on the MoW state associations in the active network (detailed at paragraph 1.15), but otherwise did not include updated program governance arrangements (see paragraph 2.16).

2.18 For the 2024 procurement, the contract required Miles Morgan Australia to have a dedicated project manager to engage weekly with Health, supported by a ‘comprehensive project plan.’ On 5 February 2024, Health received a draft project management plan. Health was the project owner, with Miles Morgan Australia assuming the roles of both project sponsor and project manager. The project management plan was not finalised.

2.19 In 2021, Health had established the Support at Home Program Board (the SaH Board), which provided executive oversight of home care projects established under the Support at Home program. The SaH Board met monthly and received project updates in report dashboards that identified risks and issues and assessed project progress against timeframes and budget. The dashboards did not include the Future Fit Program and Health advised the ANAO in November 2024 that the SaH Board did not have involvement in or oversight of the Future Fit Program.

2.20 In February 2024, Health established a forum with MoWA representatives (see paragraph 2.61). The forum chair is the First Assistant Secretary Home and Residential Division, a senior executive service (SES) Band 2 Health official.

Did Health identify and manage project risk?

2.21 Health’s risk management requirements comprise four elements.

• Accountable Authority Instruction for managing risk — sets out that it is the responsibility of all officials to actively manage risk.
• Finance Business Rule for managing risk — sets out rules issued by Health’s Chief Financial Officer regarding the assessment, oversight and management of risk.
• Risk management policy — sets out Health’s risk culture statement and outlines the key accountabilities, roles and responsibilities for managing risk.
• Risk management framework — sets out Health’s approach to managing risk at the enterprise, group, divisional and operational levels.

2.22 The risk management framework describes seven risk types: enterprise, program, project, operational, shared, emerging and specialist. Project risk is defined as follows:

Project risks refer to the risks that may impact on the delivery of our projects and the achievement of their key objectives. Addressing project risks helps determine the shape and scope of a project, as well as monitor the ongoing position of risk within the project lifecycle.

2.23 The project management framework states that: project risks must be captured in Health’s project management tool; risks should be accessible for review by the risk management function, internal audit teams, specialist risk areas and relevant senior governance committees; where risk ratings exceed the Health’s tolerance levels, treatments should be implemented to ensure controls are effective and risks are within tolerance; and controls must be monitored for effectiveness at least annually.

2.24 Under the project management framework, the senior responsible officer is accountable for risk oversight of the project. As no senior responsible officer was assigned to the Future Fit Program (see paragraph 2.11), no one held specific accountability for risk oversight. The 2021 contract required Miles Morgan Australia to develop a risk management plan and risk register for the project, which Miles Morgan Australia submitted to Health on 29 March 2022. The draft risk management plan identified risks, assigned risk owners (MoWA, MoW state associations, Miles Morgan Australia, sub-contractors, or Health), assessed the risk, and identified treatments. Twenty-two program risks were identified across seven risk themes. Of the 22 risks listed in the risk register:

• three risks were rated as extreme^31;
• 14 risks were rated as high;
• four were rated as medium; and
• one was rated as low.

2.25 Of the 22 risks, the risk owner considered the risk level for four risks as ‘acceptable’ (two high risks and two medium risks). The remaining 18 risks were assessed as ‘unacceptable’ and requiring further treatment. The post-treatment target risk ratings for these 18 risks were:

• medium for 12 risks (with a ‘current risk level’ of extreme for three risks and high for nine risks); and
• low for six risks (with a ‘current risk level’ of high for three risks, medium for two risks and low for one risk).

2.26 On 7 April 2022, Health approved the risk management plan and noted to Miles Morgan Australia that ‘some of the Risks have treatment dates that have passed. These may now be issues or should be reviewed and perhaps mitigations revised, if they are not issues’. There was no further follow-up by Health.

2.27 Health did not complete its own assessment of project or contract risk (see paragraphs 4.7 to 4.9).

2.28 Entities have a responsibility under the Commonwealth Risk Management Policy to implement arrangements to understand and contribute to the management of shared risks.³² Health’s risk management framework outlines the importance of collaborating with stakeholders to identify and manage shared risks; consider the need to share information; develop clear roles and responsibilities to manage risks, agree controls and treatments; and agree on expectations and outcomes.

2.29 The Miles Morgan Australia risk register identified six risks for which Health was assigned ‘shared’ ownership, with one of those risks rated as extreme.³³ For the shared risks identified by Miles Morgan Australia as requiring treatment, Health did not have ownership of any of the risk treatments. Health did not monitor the identified shared risks.

2.30 According to the project management plan, the risk register was to be updated weekly, or more frequently should risk tolerance levels be reached. Miles Morgan Australia advised Health in April 2022 that the risk register was routinely updated, however Health did not request updated risk registers or a revised risk management plan following the 2022 contract variation, which significantly altered the governance arrangements and included a customer relationship management (CRM) system as a new deliverable.

2.31 The 2021 contract required Miles Morgan Australia to provide monthly status reports. Between March 2022 and July 2023, Health was provided with monthly status reports that tracked: overall status, schedule, budget, scope, issues, key performance indicators and risks. All 15 status reports rated project status in the network governance and backbone infrastructure programs as red³⁴ or amber.³⁵ Besides this high-level risk assessment, the monthly project status reports did not provide any further information about the status of the 22 specific risks to project outcomes identified in the risk register.

2.32 For the 2024 contract, Miles Morgan Australia developed a risk and issues register, which was last updated on 1 March 2024. The register identified 34 risks, including 10 ‘shared’ with Health, and 22 issues relating to: client experience; delivery; financial; legal and contractual; operational; reputational; and scope. Health did not contribute to the register.

2.35 Health’s management of procurement and contract risk is discussed in Chapter 3.

Did Health effectively engage with stakeholders?

2.36 Stakeholder risk is one of Health’s eight enterprise risk categories.

2.37 The APS Framework for Engagement and Participation includes three principles for effective stakeholder engagement: listen, be genuine, and be open.³⁶ It notes that:

Aspiring to the principles will help ensure engagements go beyond seeking buy-in, and instead tap the public’s expertise and lead to better policy, programs and services. Too often, APS engagement emphasises managing stakeholders, rather than engaging to uncover useful expertise. That is, public servants often think of engagement as a way to get buy-in and minimise opposition.

2.38 The APS Framework for Engagement and Participation and Taskforce Toolkit include standards for engaging with external stakeholders, which include defining the engagement’s objectives and choosing the right engagement approach through an engagement plan.³⁷ Health’s Stakeholder Engagement Framework, which is published on its website³⁸, also emphasises the importance of planning the engagement.³⁹

Future Fit Program stakeholder engagement framework

2.39 Health was aware of complex stakeholder relationships that could impact the successful delivery of the Future Fit Program. Health briefed the minister in November 2021 that:

Any arrangement to support business transformation will require the Department to work very closely with MoWA. This type of working arrangement is incompatible with the type of engagement that MoWA has undertaken in the past. If you are inclined to support such a [business transformation] proposal, the Department would only finalise the arrangement if satisfied MoWA is genuinely committed to reform.

2.40 The Future Fit Program risk register, developed by Miles Morgan Australia in March 2022, identified that three of the 22 project risks were stakeholder risks.

2.41 The Future Fit Program project management plan developed by Miles Morgan Australia in March 2022 (see paragraph 2.9) included two paragraphs on stakeholder management, and stated that Miles Morgan Australia had engaged Australian Public Affairs to assist with the Future Fit Program, given the ‘sensitive and complex nature of stakeholder engagement’.⁴⁰ The project management plan described planned stakeholder management deliverables, which were to be provided by Australian Public Affairs. These comprised:

• a website;
• stakeholder mapping activities; and
• a communications and engagement plan.

2.42 The project management plan noted that individual projects under the Future Fit Program ‘may also develop and maintain more detailed stakeholder planning documentation’.

2.43 The three stakeholder management deliverables described in the project management plan were partially developed.

• Website — A website was referenced in the communications plan and developed. Miles Morgan Australia decommissioned Future Fit Program webpages in March 2024 (see paragraph 4.31). Miles Morgan Australia advised the ANAO in April 2025 that although referenced in the communications plan, a website was not a contractual requirement, Miles Morgan Australia continued its operation of the website until the end of the contract, and the website was decommissioned at the end of contract because ‘the website consisted of operational delivery arrangements that were no longer being delivered’.
• Stakeholder mapping — There was no stakeholder mapping.
• Communications and engagement plan — A communications plan (see paragraph 2.44) was developed. A stakeholder engagement plan (see paragraph 2.45) was not developed.

2.44 A draft ‘media and comms plan’ (communications plan), which had been approved by Miles Morgan Australia, was provided by Australian Public Affairs to Health in January 2022. Health approved the communications plan with no changes. The communications plan provided background information, described the intent of the business transformation work, stated that the project would be named the ‘Future Fit Program’, and provided branding imagery and ‘launch materials’, including media talking points and proposed responses to ‘frequently asked questions’. In relation to the naming of the project as the Future Fit Program, the communications plan stated that this was the best name, as:

It is not about process, it is about outcomes. It instils a sense of urgency but also optimism. It is not something that can be disagreed with in theory — meaning the onus would shift somewhat to those refusing to participate to justify their actions.

2.45 With regard to the stakeholder engagement plan, Health advised the ANAO in August 2024 that, while Miles Morgan Australia referenced a stakeholder engagement plan in its project management plan, a plan could not be located. Individual projects under the Future Fit Program did not develop stakeholder planning documentation. Health did not develop a stakeholder engagement plan.

2.46 Because a stakeholder engagement plan was not developed, key features of effective engagement identified in The APS Framework for Engagement and Participation were not set out. The engagement’s objectives were not defined. An engagement approach was not justified and selected. Roles and responsibilities for stakeholder engagement were not established. The communications plan’s focus on achieving ‘buy in’ was not balanced by a strategy to tap into stakeholders’ expertise.

2.47 A stakeholder engagement plan was included in a project management plan for the 2024 contract. This listed different stakeholders, the stakeholders’ influence level, the reason for engagement, the planned engagement level (leading, supporting, neutral, resistant, unaware), and the planned engagement mechanism and frequency. Listed stakeholders included Health, Meals on Wheels Newcastle (MoW Newcastle), Miles Morgan Australia staff, and Whitehorse MoW volunteers and clients. The identified stakeholders did not include MoWA or any other MoW state associations, including Meals on Wheels Victoria (MoW Victoria).

Future Fit Program stakeholder management

2.48 Health’s Stakeholder Engagement Framework states that the department has adopted five key principles to guide stakeholder engagement, which are: purposeful, inclusive, timely, transparent and respectful. The strategies for successful stakeholder engagement include⁴¹: getting the right stakeholders to the table; agreeing on the rules of engagement; acting with transparency and accountability; learning from others; using the information that is collected; listening and being respectful; and maintaining the right to disagree. Health’s Stakeholder Engagement Framework sets out a five-step stakeholder engagement model: think strategically; analyse and plan; resource and prepare; design and engage; and review and measure. The APS Framework for Engagement and Participation notes that it is important to record stakeholder feedback and interactions, ensure that stakeholder views are fairly considered at the decision-making stage, and provide feedback to stakeholders in a timely manner.⁴²

Stakeholder management related to the 2021 and 2022 procurements

2.49 As set out at paragraph 2.10, the March 2022 project management plan established the MoWA Board as the ‘portfolio owner’ and Miles Morgan Australia as the ‘portfolio sponsor’.

2.50 On 7 June 2022, Miles Morgan Australia sought Health’s review of a draft email to the MoWA Board outlining that the ‘primary objective of FUTURE FIT is to support viability of the active network’. Health agreed to the email and Miles Morgan Australia sent the correspondence to the MoWA Board on 9 June 2022. On 11 June 2022, Miles Morgan Australia wrote to Health stating that it had concerns about the governance of MoWA. Miles Morgan Australia recommended to Health that MoWA ‘no longer be directly involved in the portfolio of work funded by the government’ and that this work be redirected to ‘those able to directly represent MOW services’, namely Meals on Wheels NSW (MoW NSW), Meals on Wheels Queensland (MoW Queensland) and Meals on Wheels South Australia (MoW South Australia). A senior Health official responded to Miles Morgan Australia and Australian Public Affairs that they intended to meet with MoW NSW, MoW Queensland and MoW South Australia ‘to get their views/perspectives on what is going on’. Health did not keep records of these discussions with these MoW state associations.

2.51 On 17 June 2022, Miles Morgan Australia wrote to Health advising of a partnership between MoW Queensland and Lite n’ Easy, the goal of which was: ‘reimagin[ing] nutritious meals, connection and care for older Australians living at home’. The email stated that the partnership represented ‘a viable and scalable alternative’ as ‘the number of meal providers looking to exit the home care market increases’. Miles Morgan Australia provided the same information to the minister on 7 July 2022 and further stated that ‘the intention is to look at a green-fields jurisdiction (likely Victoria) where local councils are exiting, to prototype this collaboration’.

2.52 On 7 July 2022, Miles Morgan Australia wrote to Health proposing changes to the 2021 contract to redirect Future Fit Program activity to certain MoW state associations and frontline MoW providers (see paragraph 2.14). Health did not consult the MoWA Board prior to making the decision to remove MoWA from the governance structure and refocus the project on state associations and providers. This was not consistent with Health’s Stakeholder Engagement Framework, which emphasises the importance of identifying and enabling the participation of those people and organisations who contribute to, influence, or are affected by Health’s work and providing stakeholders with the information they need to participate in a meaningful way.⁴³

2.53 Towards the end of 2022, local councils in Ballarat and the Whitehorse Local Government Area (LGA) notified Health of their intention to withdraw as MoW CHSP meals providers (see paragraph 1.16). In December 2022, Health briefed the minister on risks to the viability of MoW providers due to strengthened in-home aged care regulatory settings. Health also informed the minister in December 2022 that:

• a nutrition stocktake was underway to gain a better understanding of the types of food delivered by MoW providers;
• a ‘meals marketplace’ (see paragraph 3.76) was being developed, whereby ‘Meals on Wheels providers can partner with ready to eat meals providers, such as Lite n’ Easy, to expand/diversify the number of offerings’, with the anticipated benefits being: increased consumer choice, economies of scale for MoW providers, and ‘ready to eat meals providers’ benefiting from the volunteer delivery network offered by MoW providers;
• MoW Queensland and MoW NSW were working with Miles Morgan Australia to design and deploy new technology; and
• that a formal partnership between MoW Newcastle and Lite n’ Easy would be announced in January 2023.⁴⁴

2.54 The minister requested to be kept informed about the viability of the MoW model, including in other jurisdictions. Health briefed the minister in January 2023 about the impact of local councils in Victoria (including those using MoW branding) electing to withdraw from CHSP in advance of in-home aged care reforms. Health advised the minister that it was seeking to retain the MoW model in Ballarat and the Whitehorse LGA, which would ‘involve an existing [MoW] outlet from another state taking on responsibility for delivering meals in these areas and leveraging the meal preparation infrastructure of Lite n’ Easy in at least the short term’. The minister noted the brief on 31 January 2023.

2.55 In January and February 2023, Health made arrangements for MoW Queensland and MoW Newcastle to take over meals service provision in Ballarat and the Whitehorse LGA.

• On 3 January 2023, Health met with Miles Morgan Australia, MoW Queensland and Lite n’ Easy representatives. Health did not retain meeting minutes.
• On 18 January 2023, Health advised MoW Queensland that it intended to offer it CHSP grants funding for meals delivery services in Ballarat, and that Health was considering the ‘merits of a second Victorian area as well’.
• On 23 January 2023, MoW Queensland advised Health that it would conditionally accept the offer.
• On 20 February 2023, Health advised MoW Queensland that ‘time was against us’ to have services operational by 1 July 2023 and that there was merit in bringing in another MoW provider to operate in Victoria, as there were ‘a couple of large MoW services in NSW that have expressed an interest in expanding their footprint’.
• On 20 February 2023, Health requested Miles Morgan Australia work with MoW Newcastle to test initiatives being developed under the Future Fit Program (including a CRM system contracted from Miles Morgan Australia in the 2022 procurement) in the Whitehorse LGA.
• On 21 February 2023, MoW Newcastle expressed its interest to Health to take on meals delivery services in the Whitehorse LGA as part of the Future Fit Program.
• On 22 February 2023, MoW Queensland agreed to undertake the Ballarat pilot at a minimum meals unit price of $13.⁴⁵
• On 6 March 2023, MoW Queensland was granted $837,941 in CHSP funding for meal services in Ballarat, reflective of $13 per meal.⁴⁶
• On 10 March 2023, MoW Newcastle was granted $1.13 million in CHSP funding for meal services in the Whitehorse LGA, which also incorporated a meals unit price of $13.⁴⁷
• On 28 March 2023, the minister announced the Ballarat and Whitehorse LGA pilots at a cost of $2.2 million to provide more than 150,000 meals through the MoW model.

2.56 Arrangements for meals service provision in Ballarat and Whitehorse LGA involved limited engagement with other stakeholders, including MoW network members operating where the services were to be provided. This was not consistent with the Stakeholder Engagement Framework principles of identifying and enabling the participation of those people and organisations who contribute to, influence, or are affected by Health’s work. Commitment approval minutes for the grants funding were executed on 22 and 23 February 2023. The minutes included a value for money assessment which stated:

The proposed direct selection process demonstrates value for money as it is likely to result in the timely selection of an appropriate provider (and the engagement of that provider at no additional cost to the department), without the need to undertake a more extensive selection process requiring more significant resourcing.

The value for money assessment was focused on achieving an expedient solution that minimised costs to the department. It did not consider the interests of other stakeholders. It did not consider the key principle of the Commonwealth Grants Rules and Principles of achieving value with relevant money⁴⁸, and whether value with relevant money was achieved through a non-competitive direct selection process. The value for money assessment did not address the increase in the meals unit price at Ballarat and Whitehorse LGA from $8.25 to $13 per meal.

2.57 Following the minister’s announcement in late March 2023, MoW NSW, MoW Victoria and other MoW stakeholders expressed concerns about the Ballarat and Whitehorse LGA pilots. Concerns included that: non-Victorian MoW providers had been brought in to deliver meal services in Victoria, undermining community-based services; MoW Victoria had not been consulted on the decision or invited to the Whitehorse LGA launch; and the selection of meals providers had lacked a competitive process. Health did not engage with stakeholders within the MoW network to address these concerns and did not request that Miles Morgan Australia amend the Future Fit Program communications plan. Health advised the ANAO in April 2025 that the department’s usual practice when selecting a replacement for a CHSP provider that relinquishes meal services does not involve consultation with peak associations, and that the replacement provider must be an existing CHSP provider under CHSP grant opportunity guidelines.

Stakeholder management related to the 2024 procurement

2.58 As outlined at paragraph 1.18, in May 2023, Health received a meals funding model feasibility study (feasibility study) proposal from Miles Morgan Australia. The proposal listed 31 specific MoW providers in NSW and Queensland as potential feasibility study participants, noting that the MoW services listed had already given in-principle commitment to participate in the study. The cover email for the proposal stated that Miles Morgan Australia and the Chief Executive Officer of MoW Queensland had ‘been speaking to a number of [NSW and Queensland] services (in the background) … they are primed …’. On 13 June 2023, Health wrote to 18 MoW providers who had agreed to participate in the feasibility study noting ‘the department is keen to engage directly with services through the development of a genuine partnership and co-design’ and its intent to bring participants to Canberra to help build relationships.

2.59 In July 2023, the chair of the MoWA Board wrote to Health asking for more information about the feasibility study and a contact at Miles Morgan Australia. Health arranged for Miles Morgan Australia to liaise with the MoWA Board chair. Subsequent correspondence between Health and Miles Morgan Australia discussed actions to delay engagement and an intention to ‘cut off’ stakeholders if they refused to agree to terms of the feasibility study. On 3 August 2023, Health wrote to participating MoW providers about the feasibility study. By September 2023, 33 participants had been confirmed. On 9 and 10 October 2023, Health and Miles Morgan Australia hosted a meeting of all feasibility study participants in Canberra. Other MoW providers and CHSP meals providers not affiliated with the MoW network were not provided with an opportunity to participate in the feasibility study.

2.60 In November 2023, the Health contract manager advised Miles Morgan Australia, MoWA, MoW Queensland, MoW Newcastle, MoW Victoria, MoW South Australia, MoW Western Australia (MoW WA), MoW NSW and Meals on Wheels Tasmania that it had become evident that there was sentiment across the MoW network that the feasibility study was not inclusive. The contract manager stated that the feasibility study would need a ‘slight pause’, noting ‘the challenge is that Government is unlikely to want to continue with the feasibility study until they have some assurances that engagement issues are addressed’ and that ‘every effort needs to be taken to ensure that the broader meals on wheels network are as linked in as possible’.

2.61 There is evidence that Health attempted to repair relationships and improve engagement practices in late 2023 and early 2024.

• In October 2023, Health advised the minister that MoWA had offered to work with Health to improve communications and to address ‘a sizeable degree of misinformation in some spaces’.
• In November 2023, Health wrote to MoWA, MoW NSW, MoW Queensland, MoW South Australia, MoW Victoria, MoW WA, and MoW Newcastle: ‘The overarching view is that if the reform piece is going to continue, and for Meals on Wheels to actually get an improved funding model, then every effort needs to be taken to ensure that the broader meals on wheels network are as linked in as possible’.
• In December 2023, Health met with the MoWA Board to discuss next steps for the Future Fit Program (see paragraph 2.62).
• In February 2024, Health established a forum with MoWA and MoW state associations to discuss challenges facing MoW providers in preparation for the reforms to in-home aged care and implementation of the new Support at Home Program. As at April 2025, Health has held four forum meetings with MoW representatives.

2.62 On 5 December 2023, Health met with the MoWA Board for a roundtable discussion on next steps for the Future Fit Program and the feasibility study. Options proposed by Health were:

• Option 1 — Continue current project with improved governance (including establishing a reference group);
• Option 2 — Reset approach (involving Health approaching the market for a supplier to deliver funding model reform); or
• Option 3 — Cease the program of work.

2.63 A presentation prepared for the roundtable discussion stated that Option 2 meant that ‘The project may start from scratch and may result in 2 years of lost investment’ and Option 3 meant that there would be ‘No change to funding model, and no market incentive to drive the provision of social support’. The presentation stated that Option 1 (continuation of current arrangements with improved governance) would require ‘A commitment from [MoWA] and state associations to support the project and work collaboratively with [Health and Miles Morgan Australia]’. On 6 December 2023, MoWA wrote to Health agreeing to support Option 1 subject to revised governance arrangements being put in place so that MoWA had a more active role and that Health and Miles Morgan Australia committed to open communication.

Stakeholder communications

2.66 As noted by the Joint Committee of Public Accounts and Audit, effective communication fosters transparency and trust.⁴⁹ During the course of the audit, the ANAO observed instances where stakeholder communication via email fell short of standards outlined in Health’s Stakeholder Engagement Framework, particularly in relation to the principle of ‘respect’.

2.67 Health’s 2021 complaints management policy stated that guiding principles for complaints management include that all complaints will be treated on their merits and investigated impartially and thoroughly, complainants will not be victimised as a result of their complaint, a complainant’s privacy will be respected, and the complaint will be handled discreetly. The NSW Ombudsman’s guide (which is linked in the Health’s complaints management policy) states: ‘It is also vital that complaint handlers show the same respect and courtesy to the people who make complaints, regardless of how those people may behave towards them’.⁵⁰

2.68 Health received a number of complaints from stakeholders about the Future Fit program. The ANAO examined the handling of one complaint relating to stakeholder engagement. On 25 July 2023, a MoW stakeholder emailed a complaint directly to the business area about the behaviour of a Health senior official. The complaint alleged that the official was refusing to engage with a MoW stakeholder and that they had not behaved in a manner consistent with the Australian Public Service Code of Conduct, among other matters. Health did not deal with the complaint in a manner that was consistent with its complaints management policy: Health officials did not triage and escalate the complaint appropriately; communication with the complainant was not always respectful and courteous; and the complainant’s privacy was not respected, as the complaint was shared with individuals outside of Health.

2.69 On 26 July 2023, the complainant made a second complaint to a more senior official about the manner in which their initial complaint about stakeholder engagement had been handled. Following a meeting between Health and the complainant, the complainant requested that their original and second complaint be dealt with independently of the department’s Aged Care Group. In September 2023, Health engaged Sparke Helmore Lawyers to investigate the two complaints. The investigation concluded that:

(a) the conduct, the subject of the Complaints, does not constitute a suspected breach of the APS Code of Conduct; and

(b) [the officials’] conduct falls below the standard of behaviour that would reasonably be expected in the circumstances, particularly when engaging with a stakeholder.

2.70 Sparke Helmore Lawyers relied in part on records provided by the official who was the subject of the initial complaint. The official’s records did not reveal that the complaint had been shared with external parties (see paragraph 2.68). The investigation report stated that Sparke Helmore Lawyers had been instructed that Health did not have a policy to deal with complaints made by third parties or stakeholders. This was incorrect. The 2021 complaints management policy applied to members of the general public, Health’s customers and clients, and other external stakeholders.

Did Health effectively monitor, report on and learn from project outcomes?

Implementation reporting and monitoring

Reporting

2.71 There were no established requirements within Health to report internally or to government on the implementation of the Future Fit Program (see paragraph 2.19). Between September 2022 and October 2023, Health provided five briefings to the minister on the Future Fit Program.

2021 and 2022 contract monitoring

2.72 The 2021 contract required Miles Morgan Australia to provide monthly progress reports for the duration of the Future Fit Program. Health received 15 progress reports from Miles Morgan Australia between March 2022 and September 2023 (see Appendix 3).⁵¹ The reports provided an overview of activity during the reporting period and information on budget, risk ratings, issues, next steps and overall project status. Reports were not provided for the period July to October 2022, or after July 2023 (as project status reports were not required from July 2023 onwards). Health was unable to monitor program delivery after February 2023, as six reports relevant to March 2023 to July 2023 were provided by Miles Morgan Australia to Health in bulk on 29 September 2023 and there were no further reports for the 2021 and 2022 contracts. Miles Morgan Australia reported in March and April 2023 that expanded scope to support the Whitehorse LGA pilot had resulted in increased spending and schedule slippage.

2.73 On 29 August 2022, Miles Morgan Australia submitted a ‘mid-point check’ report advising that the Future Fit Program was behind schedule but operating within budget. Health met with Miles Morgan Australia on 5 September 2022 to discuss a proposal to develop a CRM and Future Fit Program budget phasing. Health did not record outcomes of this meeting. On 6 September 2022, Health advised Miles Morgan Australia that it would provide formal feedback on its mid-point check report once a proposal on a CRM had been received by Health. On 9 September 2022, Miles Morgan Australia provided Health with the CRM proposal and an updated mid-point check report. Health advised the ANAO in January 2025 that although feedback on the report was not provided, it formed the basis of the 2022 contract with Miles Morgan Australia.

2024 contract

2.74 The 2024 contract required weekly progress reports. Health received six weekly status reports covering the period 2 February 2024 to 8 March 2024, as required by the contract. The weekly status reports summarised: activities undertaken; achievements; lessons learned; issues; changes to deliverables; stakeholder engagement; and mitigations. Each report described the overall project status as red (the project is experiencing significant issues and is currently off-track requiring urgent corrective action).

2.75 Health did not provide written acknowledgement of receipt of the 2024 status reports. Health advised the ANAO in October 2024 that it used the status reports and regular meetings with Miles Morgan Australia to monitor progress. Health did not keep records of these meetings.

Evaluation of the Future Fit Program

2.76 Fit-for-purpose program monitoring and reporting should be planned prior to the program commencing and can assist in defining the expected benefits of an activity.⁵² The 2021 contract required Miles Morgan Australia during the project initiation stage to develop an evaluation plan to track benefits realisation of the Future Fit Program. Miles Morgan Australia did not provide a Future Fit program evaluation plan and Health did not direct it to provide one.

2.77 Although the 2021 contract with Miles Morgan Australia required Miles Morgan Australia to develop an evaluation plan, the list of contract deliverables did not include an evaluation plan, and the contract did not state when or how an evaluation should be conducted. The contract manager pointed out this omission to the procurement delegate on 23 December 2021, however the delegate did not respond to the issue and the contract was executed with these omissions.

2.78 On 27 November 2023, Health received a draft evaluation framework from Miles Morgan Australia for the work in the Ballarat and Whitehorse LGA pilot sites. Miles Morgan Australia advised Health that a quote from a third party could be arranged to evaluate the Victorian pilot sites if required. Health did not provide further direction to Miles Morgan Australia on the matter.

2.79 As at April 2025, Health had not evaluated the Future Fit Program or the pilot services at the Ballarat and Whitehorse LGA sites.

Lessons learned

2.82 Gathering lessons learned when undertaking a procurement can help entities improve future procurement activities.⁵³ In October 2024, Health advised the ANAO that lessons learned had been identified in its procurement and contract management activities and it was ‘working to find capacity to formally write up lessons learnt … and feed back [sic] through corporate processes where relevant’.

3.1 An Australian Government entity subject to the Commonwealth Procurement Rules (CPRs) must conduct a competitive procurement at or above the relevant procurement threshold unless certain conditions or exemptions apply.⁵⁴ A procurement that is subject to these conditions, and which is conducted by limited tender, is not required to meet certain rules related to request documentation, minimum time limits and awarding contracts.⁵⁵ The procurement must otherwise meet the CPR requirements.

3.2 On 9 November 2021, Health advised the Minister for Senior Australians and Aged Care Services (the minister) that:

The Department understands that [Meals on Wheels Australia (MoWA)] is also concerned about its capacity to operate and compete under the proposed Support at Home program due to commence on 1 July 2023. … The Department notes many [Commonwealth Home Support Program] providers will face transitional challenges in moving to the new Support at Home Program and may require assistance to avoid market failure. Given the size of the MoWA network and its current organisation capability, the Department considers there is some merit in considering an investment in MoWA as a risk management strategy.

3.3 Health also advised the minister that MoWA had ‘foregone its campaign for an increase in funding per meal’ in favour of ‘a one-off injection of $5 million in funding (GST excl) to support business transformation activities’.

3.4 As discussed at paragraph 1.11, on 9 November 2021, Health recommended that the minister agree to a MoWA ‘business transformation’ funding proposal at a cost of $5 million (GST exclusive) across 2021–22 and 2022–23. Health noted the core elements of the proposal related to ‘improved governance arrangements and back of house infrastructure’ by deploying new technology and providing training to MoWA to help collect data on the number and type of meals delivered, as well as capturing service delivery costs and social outcomes achieved. Health advised the minister that, if the funding proposal was supported, it would ‘work to finalise administrative details, and initiate procurement processes in line with Commonwealth Procurement Guidelines’.

3.5 Health subsequently procured Miles Morgan Australia to conduct the business transformation work through contracts executed in 2021, 2022 and 2024.

Was there appropriate planning and approaches to market for procurements?

Procurement planning

3.6 Table 3.1 shows Health’s compliance with procurement planning requirements for all three Future Fit Program procurements (see paragraphs 1.13 to 1.17).

Table 3.1: Assessment of procurement planning

Key: ◆ Compliant ▲ Partly compliant ■ Non-compliant.

Source: CPRs and ANAO analysis of procurement documents.

Selecting an appropriate financial arrangement

3.7 Resource Management Guide 411 Grants, Procurements and other financial arrangements states that:

A range of financial arrangements can be used to address policy outcomes. At the outset, the decision to use a particular financial arrangement should be part of a considered process to assess whether a particular financial arrangement, such as a grant, is the most appropriate mechanism to address the Government’s policy outcomes. All decisions to use a particular financial arrangement should be underpinned by analysis and a strong policy rationale. In determining which financial arrangement to use to address the Government’s policy outcomes, officials should focus on the substantive purpose and characteristics of the arrangement. Officials should document the reasons for deciding to use a particular arrangement.⁵⁶

The CPRs state that when a business requirement arises, officials should consider whether a procurement will deliver the best value for money over other types of financial arrangements.⁵⁷ This includes taking into account obligations and opportunities under other existing arrangements. Health’s Finance Business Rules for procurements require that, as part of procurement planning, ‘identification of options is undertaken’.

3.8 To be eligible for Commonwealth Home Support Programme (CHSP) grants funding, providers must:

• offer a service type defined in chapter 3 of the CHSP Manual, across four sub-programs (community and home support; care relationships and carer support; assistance with care and housing; and sector support and development)⁵⁸; and
• be a listed organisation in Appendix A of the grant opportunity guidelines.⁵⁹

3.9 The objective of the sector support and development sub-program is ‘to increase CHSP provider capability and improve quality of service delivery through activities under a targeted range of primary focus areas’. These activities are focused ‘on supporting CHSP providers to uplift their capability ahead of reforms to the aged care system’. The 9 November 2021 advice to the minister did not present the option of using grants funding under the CHSP sub-program for the work.

3.10 In its 9 November 2021 advice to the minister about the ‘business transformation’ funding proposal, Health described the rationale for the program of work as follows.

The Departments notes many CHSP providers will face transitional challenges in moving to the new Support at Home program and may require assistance to avoid market failure.

The original proposal for the business transformation work came from MoWA. One ‘sensitivity’ highlighted in the advice to the minister was that ‘If funded, the Commonwealth is supporting business transformation to one aspect of the CHSP aged care sector, Meals, and only Meals on Wheels [MoW] affiliated CHSP providers’. The 9 November 2021 advice justified the focus on MoW, and not on non-MoW CHSP meals providers, on the basis of the ‘size of the MoWA network and its current organisational capability’. The advice considered the risk of setting ‘a precedent’ for the rest of sector but advised that the benefits exceeded the risks.

3.11 As MoWA was not an existing CHSP provider listed in Appendix A of the grant opportunity guidelines, it was ineligible for a CHSP grant. Health advised the minister that it was unable to provide grant funding to MoWA directly as it was not an approved CHSP service provider. The advice did not explain why other organisations that were part of the MoW network, and which were CHSP-funded providers, were not considered for a grant under the CHSP sector support and development sub-program. Health did not consider providing grants funding to other MoW network organisations or analyse this as an option.

3.12 In addition to MoWA’s ineligibility for a CHSP grant, in its advice to the minister on 9 November 2021, Health stated that ‘working closely’ with MoWA was ‘incompatible with the type of engagement that MoWA has undertaken in the past’. The advice stated that Health would instead contract Miles Morgan Australia to undertake the business transformation work under a procurement arrangement. On 17 December 2021, Health’s legal division advised officials involved in managing the 2021 procurement that a more suitable method for obtaining the services may either be a separate grant agreement to MoWA or a tripartite contract between Health, MoWA and Miles Morgan Australia, as either of these methods would provide the department with greater ability to administer the arrangement. This advice was not followed.

3.13 A commitment approval minute dated 21 December 2021 noted that Health was procuring Miles Morgan Australia to support MoWA and its network ‘to deliver a business transformation project to reform the governance and infrastructure of MoWA and prepare it and its network for the transition to the new Support at Home Program.’ The commitment approval minute did not present or assess any alternatives to the proposed financial arrangement and did not explain why a procurement was selected as the approach.

3.14 For the 2024 procurement, Health’s procurement documentation did not set out a rationale for procuring Miles Morgan Australia for ‘a bespoke short term transition project that is critical’ (see paragraph 3.46). Advice to the delegate on 19 January 2024 stated:

The Department contacted Miles Morgan Australia in early January 2024 seeking a proposal to transition the [Customer Relationship Management] software, oversight and support of Whitehorse pilot site to Newcastle Meals on Wheels. This will ensure services are not impacted at Whitehorse and clients continue to receive meals under the CHSP.

3.15 Health did not consider other financial arrangements to achieve this objective.

3.16 Health used CHSP annual appropriations to procure Miles Morgan Australia in 2021, 2022 and 2024. An October 2023 Health submission to the minister also requested to use CHSP underspends to fund the procurement of a meals funding model feasibility study, which the minister did not approve and which did not proceed (see paragraph 1.18). Expenditure that does not relate to the ordinary and well-recognised functions of government requires legislative authority in addition to an appropriation act.⁶⁰ If a procurement does not involve the ordinary and well-recognised functions of government, Health’s Accountable Authority Instructions (AAIs) for procurement require that officials ensure a procurement is authorised by Schedule 1AA or Schedule 1AB to the Financial Framework (Supplementary Powers) Regulation 1997 or other specific legislation.⁶¹ Finance’s Guide to Appropriations (RMG 100) states that entities should seek advice from the Australian Government Solicitor about the legislative authority and constitutional support for proposed spending.⁶² At the time of the procurement, Health did not seek Australian Government Solicitor (AGS) or any other legal advice as to the lawfulness of the expenditure. Health sought and received AGS advice in January 2025.

Developing procurement plans

3.17 The CPRs state that entities ‘must maintain on AusTender a current procurement plan containing a short strategic procurement outlook’ to ‘draw the market’s early attention to potential procurement opportunities’.⁶³ It should include any ‘significant planned procurement and the estimated publication date of the approach to market’.⁶⁴ Health published some planned procurements in its annual procurement plan between 2021 and 2024, but these did not include the Future Fit Program.

3.18 Health’s Finance Business Rules for procurements require that ‘the appropriate Health Procurement Templates’ and ‘appropriate planning techniques are used’, and that ‘an analysis of the market … is undertaken’. Health did not analyse the market or develop procurement plans for any of the three procurements, although some procurement templates were used for the 2024 procurement.

Defining goals and estimating value

3.19 The CPRs state that entities must estimate the expected value of a procurement before a decision on the procurement method is made. The expected value is the maximum value including GST of the proposed contract — including options, extensions, renewals or other mechanisms that may be executed over the life of the contract.⁶⁵ There was no estimation of procurement value undertaken before selecting the procurement method for any of the three procurements.

3.20 The CPRs state that a thorough consideration of value for money begins by officials clearly understanding and expressing the goals and purpose of the procurement.⁶⁶ Although there were no procurement plans, the procurement rationale was documented in the 2021 and 2024 commitment approval minutes provided to the delegate. There was no documentation of the procurement goals and purpose in 2022.

Managing procurement risk

3.21 The CPRs state that procurements should ‘encourage appropriate engagement with risk’, and that entities must establish processes to identify, analyse, allocate and treat risk when conducting a procurement.⁶⁷ Health’s AAIs for procurement state that officials involved in procurements must actively manage risks associated with a procurement. Health guidance on managing procurement risk states that all staff must document risk assessments as early as possible when planning for a procurement. Health’s Finance Business Rules for procurement require that ‘continual risk assessment is undertaken and documented’ during a procurement process.

3.22 Analysis of procurement risk was not undertaken or was understated.

• 2021 procurement — The procurement was rated by Health as medium risk in the commitment approval minute. Health did not complete a procurement risk assessment to support this risk rating. Health advised the ANAO in August 2024 that the rating was likely to have been derived from a previous risk rating of the CHSP as a whole.
• 2022 procurement — Health did not identify or assess any risks.
• 2024 procurement — Health assessed the overall risk as low in a departmental procurement risk profile template. The overall risk rating of low was not consistent with known stakeholder and delivery complexities associated with the 2021 and 2022 procurements. All 21 risk sources in the template were assessed as low (including probity, timeframes, cost, evaluation, delivery and contract). Health did not consider the lawful authority for the procurement expenditure or assess risks associated with including advance payments within the terms and conditions of the 2024 contract (see paragraph 3.65). Health’s procurement risk profile template does not require officials to consider potential risk sources related to the legislative authority for proposed spending. In line with Health risk template guidance, risks rated as low did not require treatment.

Approaching the market

3.25 For procurements at or above the relevant procurement threshold, limited tender can only be conducted in accordance with conditions listed at paragraph 10.3 or exemptions listed in Appendix A of the CPRs.⁶⁸ The relevant procurement threshold is $80,000 for non-construction contracts. Procurements may be sourced from an existing standing offer.⁶⁹

3.26 The 2021 and 2022 Future Fit Program procurements were sourced from an existing standing offer and the 2024 procurement was a limited tender justified on the basis of a paragraph 10.3 condition. Table 3.2 shows Health’s compliance with the CPRs related to its approach to market for the three Future Fit Program procurements.

Table 3.2: Assessment of approach to market processes

Key: ◆ Compliant ▲ Partly compliant ■ Non-compliant.

Note a: Paragraph 9.14 of the CPRs came into effect on 1 July 2022. The ANAO did not apply this requirement against the 2021 procurement.

Source: CPRs and ANAO analysis of procurement documents.

Approach to market requirements

2021 procurement

3.27 The selection of Miles Morgan Australia to deliver the services for the 2021 procurement followed meetings held between July and December 2021 by Health, the minister, Miles Morgan Australia, MoWA, and Australian Public Affairs — a lobbyist organisation.⁷⁰

• On 31 August 2021, Health received an unsolicited ‘funding proposal’ from Australian Public Affairs on behalf of MoWA requesting ‘additional operational and transformation funding of $32.51 million from 1 September 2021 to 30 June 2022’, with most of the funding proposed to go to MoW providers through existing CHSP grant agreements. The funding proposal noted that $2.49 million would be to ‘undertake extensive business transformation across the network’.
• On 31 August 2021, Health informed Australian Public Affairs that it could not support the entire funding proposal.
• On 21 September 2021, Health met with Australian Public Affairs and Miles Morgan Australia (the organisation which Health was to recommend to receive the funding) to discuss MoWA’s business transformation proposal. MoWA was not in attendance at this meeting and Health did not record meeting outcomes.
• On 28 October 2021, Health informed Australian Public Affairs that it was concerned about ‘the governance model and administrative capabilities of MoW providers’. Health requested MoWA submit a revised funding proposal that went to governance reform and solutions that focused on reducing overhead costs.
• On 3 November 2021, MoWA — through Australian Public Affairs — provided Health with an updated funding proposal, now requesting $5.49 million.
• On 9 November 2021, in advance of procuring Miles Morgan Australia, Health recommended the minister accept MoWA’s proposal and advised that, subject to the minister’s agreement, Miles Morgan Australia would be procured to undertake the business transformation work (see paragraphs 3.10 to 3.12). Health noted that ‘Miles Morgan Australia has been engaged by MoWA to provide advice on business transformation and are in a unique position to implement the proposal’.
• On 12 November 2021, MoWA, Australian Public Affairs and Miles Morgan Australia met with the minister to discuss MoWA’s business transformation proposal. Health was not in attendance at this meeting.
• On 12 November 2021, the minister agreed with Health’s recommendation to fund the business proposal at a cost of $5 million (GST exclusive).

3.28 On 18 November 2021, following the minister’s agreement, the Health procurement delegate instructed Health officials that ‘we can start the procurement process from the relevant panel’. This was determined to be the Aged Care Policy Development Panel. The Aged Care Policy Development Panel was reported to have been established through open tender processes as a standing offer arrangement administered by Health for ‘services to assist with research, development and analysis relating to consideration of policy issues in relation to aged care, including regulatory and financial impacts’.⁷¹

3.29 Procurement arrangements were finalised between 6 and 23 December 2021.

• On 6 December 2021, a draft contract under the Aged Care Policy Development Panel was provided to the delegate.
• On 6 December 2021, the draft work order was sent to Health’s Procurement Advisory Services for review, with a note stating that it was assumed that Procurement Advisory Services would ‘liaise with Legals’.
• On 7 December 2021, Procurement Advisory Services approved the work order with minor changes and advised that officials should approach the legal area directly.
• On 9 December 2021, the contract manager was advised by Procurement Advisory Services that ‘a commitment approval minute and value for money assessment for the delegate to commit funds and justify the chosen supplier’ would be required for endorsement.
• On 13 December 20221, Health officials met with Health’s legal division in relation to termination clauses in the draft contract.
• On 17 December 2021, the legal division questioned several aspects of the procurement and recommended advice be sought from the department’s Procurement Advisory Services. The CPRs provide that entities seeking to procure goods from an existing arrangement must ensure that: a. value for money is achieved; b. the goods and services being procured are the same as provided for within the panel contract; and c. the terms and conditions of the panel contract are not being materially altered.⁷² In addition to stating that a separate grant agreement to MoWA or a tripartite contract would provide the department with greater ability to administer the arrangement (see paragraph 3.12), legal services considered that the services in the contract appeared inconsistent with the scope of services under the Aged Care Policy Development Panel’s Deed of Standing Offer and questioned whether the work order was consistent with the CPRs. Health did not consider these matters in proceeding with the procurement.
• On 20 December 2021, the contract manager provided Procurement Advisory Services with the draft commitment approval minute. The contract manager did not raise with Procurement Advisory Services the legal division’s concerns.
• On 20 December 2021, Procurement Advisory Services responded to the Home Operations Support Branch: ‘Your Procurement is endorsed by PAS to proceed to approval from the delegate.’ No other advice was received.
• On 23 December 2021, the contract was signed by the delegate. When the delegate was provided with the commitment approval minute, they were advised that the contract should be reviewed in line with legal advice, which was appended to the minute. The delegate did not note consideration of the legal advice in approving the commitment.

3.30 Health’s procurement guidance does not outline that legal advice provided to support procurement processes should be shared Procurement Advisory Services prior to seeking their endorsement for a procurement.

2022 procurement

3.33 On 1 July 2022, section 9.14 of the CPRs came into effect, stating that ‘To maximize competition, officials should, where possible, approach multiple potential suppliers on a standing offer’. In its report on an inquiry into procurement practices, the Joint Committee of Public Accounts and Audit (JCPAA) stated that:

The inquiry raised a number of concerns about the use of panels for procurement. … Single-sourcing from panels, especially when it involves selecting an incumbent supplier, is poor procurement practice and should be avoided if at all possible. … entities should seek multiple offers from panel members whenever possible, so that they can more convincingly demonstrate that they have achieved value for money.⁷³

3.34 On 28 June 2022, Meals on Wheels Newcastle (MoW Newcastle), a CHSP meals provider, submitted an ad-hoc CHSP grant request for $1.1 million to develop an in-house Customer Relationship Management (CRM) software system. Health determined that the request would not meet eligibility and assessment criteria outlined in the grant opportunity guidelines for one-off CHSP funding. Health requested Miles Morgan Australia work with MoW Newcastle to review the CRM requirements in the context of delivering the Future Fit Program.

3.35 On 7 July 2022, Miles Morgan Australia sent Health a draft contract that extended the 2021 contract to give Miles Morgan Australia more time ‘to deploy the tech’ and excluded MoWA’s involvement in the Future Fit Program to focus the program on state-based MoW organisations (see paragraph 2.51). Other changes to the 2021 contract, as accepted by Health, included:

• revised governance arrangements for the Future Fit Program (see paragraphs 2.12 to 2.15);
• delivery of a client interface to support online meal ordering, provide a ‘greater client choice in meal suppliers’, deliver revenue diversity opportunities for the MoW network, and ‘point of ordering nutritional advice’; and
• replacement of the MoW network’s primary CRM to ‘to meet the Customer’s payments and reporting requirements now and into the future’ and to provide incident management functionality.

3.36 A new clause was inserted into the contract regarding the ownership of intellectual property and responsibility for future CRM hosting and maintenance costs (see Box 1).

3.37 On 12 July 2022, the Health delegate agreed to amend the 2021 contract to incorporate these terms. The minister was not advised.

3.38 In early August 2022, Miles Morgan Australia wrote to the Health delegate confirming that it would work with MoW Newcastle on integrating the MoW Newcastle bid into the Future Fit Program. On 9 September 2022, Miles Morgan Australia provided an unsolicited proposal to Health with a cost of $1.42 million for building the CRM software system. The new CRM was to replace an existing CRM used by approximately 120 CHSP meal providers, which Miles Morgan Australia advised Health was ‘nearing the very end of its lifecycle’ based on a review of the existing CRM provider’s financial viability that it shared with Health. In its CRM funding proposal, Miles Morgan Australia advised Health that it had ‘explored a number of commercial off-the-shelf products,’ and that while ‘customisation costs are likely to be lower than new build costs,’ ongoing licencing fees could be cost prohibitive for MoW providers. Miles Morgan Australia advised Health that ‘we strongly recommend (and have costed) the replacement CRM as a bespoke build, ultimately to be owned by the [MoW] network.’

3.39 On 26 September 2022, Health sent Miles Morgan Australia a draft contract under the Aged Care Policy Development Panel. The use of the panel to procure a CRM system was not appropriate, as the panel services were limited to providing ‘research, development and analysis relating to consideration of policy issues in relation to aged care’ and not for the provision of IT software. No other providers were considered. Health did not confirm that Miles Morgan Australia had the requisite skills to deliver a CRM system, which was a substantively different deliverable to the ‘business transformation’ services it had provided under the 2021 contract. Health did not seek legal or procurement advice in planning for the 2022 procurement or executing the 2022 contract.

3.40 The contract was signed on 4 October 2022 and the variation added $1,560,900 to the total value of the contract. The work was to be completed by 31 December 2023.

3.41 Under the 2022 contract, Miles Morgan Australia were required to:

• manage the build of technology products in co-design with the MoW network;
• establish agreements for the ‘long-term maintenance and management of the technology deployments’;
• create a disaster management plan;
• provide onboarding and support for users of the technology builds; and
• develop a provision so that additional CHSP meal providers could access and use the CRM through MoW state association membership.

2024 procurement

3.42 As set out at paragraphs 2.58 to 2.60, throughout the second half of 2023, Health was working with Miles Morgan Australia and MoW providers to establish a meals funding model feasibility study (the feasibility study). In October 2023, Health sought the minister’s approval to fund the feasibility study at a cost of up to $16.7 million excluding GST (see paragraph 1.18). The minister did not approve the proposal and asked to discuss it.

3.43 The department’s Procurement Advisory Services advised Health officials in October 2023 that the proposed feasibility study was outside the 2021 contract scope and that a ‘new competitive approach or limited tender (if you are able to provide strong justification) will need to be completed.’ Health did not conduct a new approach to market as recommended by Procurement Advisory Services and did not provide justification for a limited tender approach. On 10 November 2023, Health officials sent Miles Morgan Australia a draft contract incorporating the feasibility study costed at $18.34 million to 30 June 2025.

3.44 On 8 December 2023, Miles Morgan Australia submitted a revised feasibility study proposal to Health to extend the CRM build to 30 June 2024, as contracted work was due to expire on 31 December 2023. Miles Morgan Australia also proposed inserting updated intellectual property clauses into a new contract. A contract was not signed. On 22 December 2023, Health wrote to Miles Morgan Australia requesting a revised feasibility study proposal which clarified a number of elements, including fee estimates, deliverables terminology, and progress reporting, and which stated that ministerial approval would be sought in the first week of January. Miles Morgan Australia provided Health with an updated feasibility study proposal on 11 January 2024.

3.45 On 2 January 2024, Miles Morgan Australia wrote to Health stating:

As you know, we have acted in good faith to maintain the momentum of the Feasibility Study. We were assured of a contract pre-Christmas, but now looks like end-January at best, which makes it unsustainable for Miles Morgan Australia. At the department’s direct instructions, [Miles Morgan Australia] had incurred significant costs in commissioning and undertaking work … As previously mentioned, costs already incurred on the Feasibility Study at the department’s instruction need to be covered in early January … Additionally, from today [Miles Morgan Australia] will need to commence the process of stopping all work until such time as a contact [sic] is entered into … we have no option but to issue the department with an invoice for work undertaken on the Feasibility Study by the end of the week.

3.46 Throughout January 2024, Health developed procurement documentation to establish a new contract with Miles Morgan Australia with the stated aim of ‘closing out’ Future Fit Program activities and ‘transitioning’ meals service operations in the Whitehorse Local Government Area (LGA) to MoW Newcastle, as described at paragraphs 2.52 to 2.56.

• On 3 January 2024, Health received a quote from Miles Morgan Australia identifying outstanding deliverables needed to ‘transition’ Whitehorse meals service operations to MoW Newcastle and to provide secure access to the CRM by implementing software licencing agreements with MoW Newcastle.
• On 3 January 2024, Health briefed the minister that the CRM system ‘underpinning the pilot process in Whitehorse’ was not supported beyond 31 December 2023 (due to the 2022 contract with Miles Morgan Australia ending), and there was ‘insufficient funding available for [MoW Newcastle and Miles Morgan Australia] to continue the pilot operations’. Health proposed that a short-term contract with Miles Morgan Australia would ensure an orderly shutdown of the Future Fit Program or allow time for the minister to determine whether to continue with the feasibility study.
• On 3 January 2024, the minister responded that they did not object to a short-term extension to minimise service disruption.
• On 4 January 2024, Miles Morgan Australia finalised its quote for the work, which was $1.69 million.
• On 9 January 2024, Health officials sought Procurement Advisory Services review of procurement materials (including a ‘transition contract’ with Miles Morgan Australia, a procurement risk profile, a list of ‘close out deliverables’, a procurement checklist and a value for money assessment), noting that the proposed procurement was ‘a bespoke short term transition project that is critical’.
• On 15 January 2024, Procurement Advisory Services provided feedback on the materials and asked for further clarification over intellectual property and licencing of the CRM.
• On 16 January 2024, officials resubmitted procurement documents to Procurement Advisory Services.
• On 17 January 2024, Procurement Advisory Services responded:

There is a lot to work through on reviewing this pack and the [Procurement Advisory Services] team have concerns that the licencing and IP [intellectual property] provisions you have outlined below are not robust enough, nor do they cover off the requirements of the contract. Flagging with you now that this will not be able to be endorsed until you have sought advice from the Commercial Legal Team and provided a copy of that advice to PAS. [emphasis in original]

Health advised the ANAO in September 2024 that it did not seek legal advice in this instance.

• On 19 January 2024, an official met with Procurement Advisory Services to clarify licensing and IP details, advising in writing that ‘[MoW Newcastle] owns the data. The consultant is arranging a licencing agreement for [MoW Newcastle] to use the client record management (CRM) software so they can continue to use the new CRM at the Whitehorse site’. In a return email, Procurement Advisory Services stated ‘you are cleared to proceed’. Officials did not keep a record of the meeting.
• On 19 January 2024, the contract was executed by both parties. The delegate approved an upfront advance payment of $675,149 to ‘allow the consultant to undertake necessary recruitment and sub-contracting to assemble a team for the transition’.

3.47 The contract deliverables comprised: software sustainment and user onboarding; transition operations to business-as-usual through development and provision to MoW Newcastle of standard operating procedures; and transition overview report and document handover to MoW Newcastle.⁷⁴

3.48 Health recorded in the 2024 commitment approval minute that Miles Morgan Australia:

have been heavily involved in the business transformation and technology modernisation project from 2021. They own and hold deep knowledge of the [CRM], its development roadmap and functionality and have established strong working relationships with both [MoW Whitehorse] and [MoW Newcastle] stakeholders.

3.49 Miles Morgan Australia, which had been asked by Health in 2023 to provide support to MoW Newcastle, including testing the CRM in the Whitehorse LGA, had become involved in the day-to-day operations of meals service provision in the Whitehorse LGA, including meals ordering, volunteer coordination and delivery runs.

3.50 The 2021 and 2022 contracts with Miles Morgan Australia did not include meal delivery operations and Miles Morgan Australia was not an approved CHSP service provider. As outlined at paragraph 2.55, MoW Newcastle was awarded $1.13 million to deliver CHSP meals services in the Whitehorse LGA. Miles Morgan Australia was procured in 2024 to ‘transition’ meals services that it had not been contracted by Health to provide.⁷⁵ Under the 2024 contract it was also paid additional amounts for work related to the CRM, which at the time had not been delivered to the ‘go-live’ standard required under the 2022 contract. Health advised the ANAO in January 2025 that it considered the procurement as a ‘necessary step’ to reduce the risk that Miles Morgan Australia’s withdrawal from the Whitehorse LGA would impact service delivery and older people’s access to meals.

3.51 In February 2024, Miles Morgan Australia wrote to Health stating: ‘while the current [2024] contract is ostensibly to support [MoW Newcastle] transition into Whitehorse, we all know the majority of the contracted funds are actually back payment for work undertaken on the feasibility study …’. An issues register developed by Miles Morgan Australia for the Whitehorse transition, last updated on 1 March 2024 and provided to Health, also stated that ‘transition efforts represent 26% of the total [2024] contract value. The remained [sic] of the payments related to work commissioned by the Department in September–December 2023.’ Health’s value for money assessment for the 2024 procurement did not include reference to Commonwealth resources being used to pay for Miles Morgan Australia’s 2023 activities.

Reporting limited tender and standing offer conditions on AusTender

3.52 Entities procuring from standing offers must report the original procurement method used to establish the standing offer.⁷⁶ Entities must report the relevant exemption or limited tender condition on AusTender when undertaking a limited tender.⁷⁷ AusTender reporting was appropriate.

• The 2021 procurement and 2022 variation were reported on AusTender in line with the original method of procurement, which was open tender.⁷⁸
• The 2024 procurement was reported as a limited tender under the condition ‘10.3.d.iii. Supply by particular business: due to an absence of competition for technical reasons’.⁷⁹

Internal reporting justifying limited tender

3.53 Paragraph 10.5 of the CPRs states that for each contract awarded through limited tender, an official must prepare and appropriately file within the relevant entity’s records management system a written report that includes the value and type of goods and services procured; a statement indicating the circumstances and conditions that justified the use of limited tender; and a record demonstrating how the procurement represented value for money in the circumstances.⁸⁰ Health did not file such a report beyond the information in the commitment approval minute provided to the delegate.

Was the procurement conducted appropriately?

Tender processes

3.54 Limited tenders must comply with the rules in Division 1 of the CPRs.⁸¹ Officials must demonstrate how value for money was considered and achieved, undertake appropriate approval and contracting processes, and maintain a level of documentation commensurate with the scale, scope and risk of the procurement.⁸² Documentation should include the procurement requirement, the process followed, relevant approvals, and basis for decisions.⁸³ Table 3.3 shows Health’s level of compliance with key CPR requirements for tender processes.

Table 3.3: Assessment of tender processes

Key: ◆ Compliant ▲ Partly compliant ■ Non-compliant.

Source: CPRs, Australian Government Contract Management Guide and ANAO analysis of Health documents.

Demonstrate value for money

3.55 The CPRs recommend that entities use relevant evaluation criteria to enable the proper identification, assessment and comparison of submissions on a fair, common and appropriately transparent basis.⁸⁴ Health did not establish evaluation criteria for the 2021 and 2022 procurements. Health identified three evaluation criteria for the 2024 procurement: extent to which the supplier met request for quote requirements; suppliers’ capacity to provide the requirement; and total costs to be incurred by the Commonwealth.

3.56 For the 2021 and 2022 procurements, there was no evaluation process. For the 2024 procurement, Health completed an evaluation and rated the tender as good. Evaluation records for the 2024 procurement demonstrated how the process was run and how the rationale for the recommendation to the delegate was reached.

3.57 Division 1 of the CPRs states that ‘officials responsible for a procurement must be satisfied, after reasonable enquiries, that the procurement achieves a value for money outcome’.⁸⁵ At paragraph 4.5, the CPRs state that price is not the sole factor when assessing value for money, and that when conducting a procurement an official must consider the relevant financial and non-financial costs and benefits. Non-financial factors include but are not limited to the quality of goods and services, the fitness for purpose of the proposal, and the potential supplier’s relevant experience and performance history.⁸⁶ Value for money considerations were documented in 2021 and 2024. No value for money consideration was documented for the 2022 procurement.

3.58 The quality of the value for money assessments in 2021 and 2024 was uneven.

• 2021 procurement — Consideration of value for money was recorded in the commitment approval minute. The value for money assessment stated that:

Miles Morgan Australia has been selected for engagement as it has an existing deep understanding of MoWA, its network, and its transformational needs together with a strong working relationship with the Department. This puts Miles Morgan Australia in a unique position to deliver on the Department’s requirements.

The documented 2021 value for money assessment did not cover other elements of a value for money assessment outlined at paragraph 4.5 of the CPRs.87 Before deciding on the method of procurement in 2021, Health did not consider Miles Morgan Australia’s performance, contact referees for Miles Morgan Australia to ascertain its performance in previous work delivered for Health, or contact any alternate parties to support the decision.88 Health advised the ANAO in September 2024 that MoWA ‘essentially acted as a referee for [Miles Morgan Australia] through establishing that it was their preferred organisation’.

• 2024 procurement — Health completed a value for money assessment template for limited tenders. Health’s assessment noted Miles Morgan Australia’s good performance on the Future Fit Program since 2021, suitability to ‘transition’ meal services in the Whitehorse LGA to MoW Newcastle, and the urgent need for the transition. Health did not document whether Miles Morgan Australia’s quoted price was economical, or whether there were other options to achieve intended outcomes. The value for money assessment did not consider well-known stakeholder management issues (see paragraphs 2.48 to 2.65) that had attracted parliamentary attention; did not consider Miles Morgan Australia’s failure to deliver a CRM as required under the 2022 contract; and did not refer to statements from Miles Morgan Australia of their intent to abruptly withdraw from the Future Fit Program unless it received additional funding.

Conduct appropriate approval processes

Negotiation of price and payments

3.61 Negotiation over price was minimal for the 2021, 2022 and 2024 procurements. None of the procurements involved benchmarking of price, even where this was available as panel rates.

• 2021 procurement — Health did not compare Miles Morgan Australia’s quoted prices to rates listed under the Aged Care Policy Development Panel. ANAO analysis identified that the total value of the 2021 contract was equivalent to 3,204 days of Miles Morgan Australia CEO and Executive Director time, based on panel rates.
• 2022 procurement — Contract negotiations to vary the 2021 contract were initiated by Miles Morgan Australia in 2022 to include the CRM provisions (see paragraphs 4.16 to 4.17). The Health delegate accepted Miles Morgan Australia’s proposed cost without confirming whether the quoted price was reasonable (see paragraph 3.39). Health did not review panel rates or complete further market analysis.
• 2024 procurement — For the 2024 contract, Health negotiated contract terms and conditions with Miles Morgan Australia, with meeting discussions and outcomes documented against each provision in the contract schedule. Negotiations focused on specified deliverables in the contract and contractual terms, with no negotiation over the quoted price.

3.62 Entities can limit financial risks by structuring payments so that they become due after the completion of services, delivery of goods or completion of activities.⁸⁹ By contrast, advance payments are amounts paid before a good or service is provided or delivered. Advance payment increases financial risk. Health’s Finance Business Rule for approving commitments of relevant money and entering into arrangements outlines that a payment of relevant money in advance of satisfactory performance or delivery must only be approved when there is benefit to Health. The Finance Business Rule also states that a risk assessment should show that there is low risk and that Health’s legal services has approved Commonwealth contractual protection and recourse.

3.63 Approvals for advance payments made under the 2021 and 2024 contracts did not align with the Finance Business Rule.

• 2021 procurement — The draft contract proposed an advance payment of $2.68 million upon execution of the contract. Health’s legal division raised risks with the contract manager on 17 December 2021 associated with the amount of the upfront payment on contract execution. The advance payment for the 2021 contract was revised to $1.78 million. There was no risk assessment associated with the advance payment, no further approval was sought from the legal division regarding contractual protection for the Commonwealth, and the benefit to Health was unclear. On 24 December 2021, Miles Morgan Australia submitted an invoice on signing of the contract and Health made the advance payment on 9 January 2022. The delegate did not record their reasons for payment in advance of satisfactory delivery.
• 2024 procurement — The delegate approved payment of $675,149 on execution of the 2024 contract as ‘the prepayment will allow the consultant to undertake necessary recruitment and sub-contracting to assemble a team for the transition’. The delegate was advised in a commitment approval minute that approval of the advance payment was in line with the Finance Business Rule. The delegate did not consider the benefit for Health in agreeing to the advance payment and legal advice was not obtained. Overall procurement risk was rated low, however, the risk associated with the advance payment was not assessed. Health received Miles Morgan Australia’s invoice for the execution payment on 24 January 2024 and processed the invoice total of $675,149 the next day.

Approvals

3.64 Health’s Accountable Authority Instructions require that officials must have the appropriate delegation to approve proposed commitments of relevant money and must properly record approvals for proposed commitments of relevant money. The delegate for all three procurements was a senior executive service Band 1 official that held the relevant financial delegations to enter into procurement arrangements.

3.65 Approvals were appropriately recorded for two of the three procurements.

• 2021 procurement — The delegate recorded their decision and approval to proceed.
• 2022 procurement — The required internal procurement documents that recorded the delegate’s decision to proceed with the variation and authorisation to spend relevant money under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) were not prepared. Health recorded the approval to commit funds for the procurement in its financial management information system.
• 2024 procurement — Procurement documentation was in line with Health’s internal requirements and the delegate recorded their approval to proceed.

Maintain appropriate records

3.66 Sound public sector administration requires public officials to keep records and conduct information management activities in line with obligations set out in the Archives Act 1983.⁹⁰ The PGPA Act⁹¹ and the CPRs⁹² contain provisions relating to information management. Information created or received as part of Australian Government business are Commonwealth records, including SMS text and instant messaging on mobile devices.⁹³

3.67 Although some records were maintained as described throughout this report, information management practices for the Future Fit Program fell short of the requirements outlined at paragraph 3.66, reducing transparency over Health’s administration, procurement and contract management of the project, and creating probity risks.

• Many communications were conducted by text message between Health, Miles Morgan Australia and Australian Public Affairs. The senior Health official responsible for the Future Fit Program carried out procurement activities and contract negotiations on a personal mobile phone, which was used for work purposes in lieu of an official device. Health’s Corporate Business Rule for records management states that all information ‘created, sent and received in the course of performing work duties is a record’, and that records include text messages and instant messaging. Text messages sent and received by Health official regarding the Future Fit Program were not retained in Health systems. Health advised the ANAO in August 2024 that the records prior to January 2024 were deleted from the mobile phone and could not be retrieved.
• Many discussions were held in settings such as restaurants and cafes (see paragraph 3.80). Official records of discussions held in these and other meetings were not maintained.

Demonstrating probity and ethics

3.70 The CPRs state that ‘officials undertaking procurement must act ethically throughout the procurement’.⁹⁴ Ethical procurement includes: carefully considering the use of public resources; not making improper use of an individual’s position; dealing with conflicts of interest; complying with all directions in relation to gifts and hospitality; and handling complaints effectively.⁹⁵

3.71 Probity plans were not developed for any of the three procurements. Health did not have a probity adviser in place to support procurement activities. Health did not consider any probity risks in the 2021 and 2022 procurements. For the 2024 procurement, officials rated potential probity issues as a low risk.

Conflicts of interest

3.72 As described at paragraph 3.27, meetings to discuss the program of work held between July and December 2021 by Health, the minister, Miles Morgan Australia, MoWA, and Australian Public Affairs involved individuals with pre-existing workplace and commercial relationships. None of these interests were declared in the context of the procurement of Miles Morgan Australia to deliver the Future Fit Program.

3.73 Health’s Conflict of Interest Policy states that all tender evaluation team members must disclose any conflicts of interest to the chair of the tender evaluation team; and complete and sign a conflict-of-interest disclosure and confidentiality statement. Officials involved in the Future Fit Program procurements did not complete a conflict-of-interest declaration and did not make any disclosures for any of the three procurements, or complete confidentiality statements. The procurement delegate, a senior executive service officer, did not complete their 2022 annual declaration of interest, which is a requirement under section 13 of the Public Service Act 1999 (but did in 2021, 2023 and 2024). Health advised the ANAO in August 2024 that completing conflict-of-interest forms was now standard practice for all procurements.

3.74 Health’s conflict of interest policy states that consultants and contractors have responsibility to be aware of and comply with ‘relevant contractual obligations for disclosing and managing conflicts of interest’; to take ‘reasonable steps to avoid any conflict of interest, real or apparent’; and to ‘promptly disclos[e] details of any material personal interest as required by the terms of the contract.’ Health’s 2020 Deed of Standing Offer with Miles Morgan Australia under the Aged Care Policy Development Panel and the 2024 Future Fit Program contract provided that if a conflict arises, or appears likely to arise, regarding the contractor or contracted personnel, then Miles Morgan Australia must notify Health immediately in writing.

3.75 Health did not receive notification from Miles Morgan Australia of any conflicts of interest during 2021 and 2022 contract delivery. For the 2024 procurement, Health required conflict-of-interest declarations (including nil declarations) from Miles Morgan Australia and its subcontractor. These were received and did not identify any potential, perceived or actual conflicts of interests.

3.76 The mid-point check report provided to Health in October 2022 (see paragraph 2.73) stated: ‘[Miles Morgan Australia] through its subsidiary, The Meals Marketplace Pty Ltd will take responsibility for and manage the design and development of FUTURE FIT technology and will own the IP in FUTURE FIT technology.’ The Miles Morgan Australia CEO was a director of the Meals Marketplace Pty Ltd. In February 2023 and April 2023, Miles Morgan Australia applied to trademark the Meals Marketplace and terminology associated with meal services. These interests were not disclosed to Health as posing a potential conflict of interest. Health did not document any consideration of whether the interests disclosed to it in the mid-point check report constituted a potential conflict of interest in the context of the Future Fit Program.

Gifts, benefits and hospitality

3.77 Health’s Gifts and Benefits Policy 2019–2022 states that there are ‘limited circumstances in which an employee can accept a gift or benefit offered to them’ and that conflicts of interest ‘are more likely when’ a gift is offered to an employee in a decision-making role and the person or organisation offering the gift or benefit is in an existing or potential contractual relationship with Health. Health’s ‘Probity Principles – In Procurement’ guidance issued in July 2022 also notes that officials ‘must not accept hospitality, gifts or benefits from any potential suppliers’.

3.78 Health officials are to ensure no conflict of interest exists or could be perceived to exist from the acceptance of a gift or benefit and must report all gifts valued at $20 or more into Health’s internal gifts and benefits register, unless exempted. The policy notes that ‘incidental benefits’ do not need to be reported and that such benefits may be ‘inexpensive items provided on a one-off basis’ or ‘food and beverages consumed during the course of working lunches and dinners’. Health’s policy notes that employees must discuss the offer and/or acceptance of a gift or benefit, (other than those exempt) with their direct supervisor prior to acceptance where possible or after acceptance but prior to recording in Health’s register. Guidance states that if the gift or benefit is returned or declined it does not need to be recorded in the register.

3.79 Between April and November 2023, Health officials, including the senior official that was both the procurement delegate and contract manager, were offered or received gifts, benefits and hospitality from Miles Morgan Australia and CHSP grant recipients. For example, the senior official accepted transport; a basket of local products; and dinners from CHSP grant recipients at an estimated cost of at least $345. These gifts, benefits and hospitality were not reported on Health’s internal or public gifts and benefits register, as the senior Health official considered the items incidental and of ‘benefit to [the] taxpayer’. Correspondence between Miles Morgan Australia and the Health in July 2023 showed that benefits were offered to the procurement delegate during contract negotiations, including hospitality and a birthday gift. There is no record of these benefits being refused and they were not declared at the time. Health advised the ANAO in January 2025 that while Miles Morgan Australia offered a birthday gift, no gift was provided.

3.80 There were instances between July 2021 and April 2023 where the procurement delegate met with Miles Morgan Australia and Australian Public Affairs in cafes or restaurants to discuss procurements and contracts. Health officials did not retain records from these or other meetings. The conduct of negotiations by a single Health official, and the failure to maintain official records of meetings, including those held in informal settings, impedes transparency and creates a risk of actual or perceived conflicts of interest and special access.⁹⁶

Public reporting

3.82 AusTender is the Australian Government’s procurement information system. Health must report all contracts and amendments on AusTender within 42 days of entering into or amending a contract for any non-construction services valued at or above $10,000.⁹⁷ Table 3.4 shows that Health complied with AusTender reporting conditions.

Table 3.4: AusTender reporting of Future Fit Program contracts

Key: ◆ Compliant ▲ Partly compliant ■ Non-compliant.

Note a: Contract values are GST inclusive and rounded to two decimal places.

Source: CPRs and ANAO analysis of AusTender reporting and executed Future Fit Program contracts.

4.1 The Commonwealth Procurement Rules (CPRs) state that ongoing management of a contract is important in achieving the objectives of a procurement.⁹⁸ The Australian Government Contract Management Guide defines contract management as:

all the activities undertaken by an entity, after the contract has been signed or commenced, to manage the performance of the contract (including any corrective action) and to achieve the agreed outcomes.⁹⁹

4.2 Health advised the ANAO in October 2024 that it has aligned its contract management templates and procedures to the Australian Government Contract Management Guide.

Have contracts been administered effectively?

Contract management planning

4.3 Table 4.1 depicts Health’s alignment with the Australian Government Contract Management Guide for contract management planning for the Future Fit Program.

Table 4.1: Alignment with the Australian Government Contract Management Guide — contract planning

Key: ◆ Met ▲ Partly met ■ Did not meet.

Source: ANAO analysis of Health’s contract administration.

Developing contract management plans

4.4 Health instructs officials that a contract management plan is required if a procurement is over $10,000, the contract period will be greater than three months, or the contract will require performance measures to be managed. A contract management plan should contain information on how a contract will be managed to ensure value for money is achieved throughout the contract’s lifecycle. The Australian Government Contract Management Guide states that ‘more complex or higher risk contracts would usually require a detailed contract management plan’¹⁰⁰ and provides a contract categorisation framework.¹⁰¹

4.5 Health did not assess the risk or complexity of the 2021 or 2024 contracts in line with the Australian Government Contract Management Guide framework of contract complexity to determine how to manage the contract and whether a detailed contract management plan was required.¹⁰² ANAO analysis of the 2021 and 2024 contracts according to the criteria set out in the contract management guide identified that the contracts could reasonably be seen as complex. Health did not have a contract management plan for the 2021 or 2024 contract.

Conducting risk assessment and management

4.7 The Australian Government Contract Management Guide states that ‘managing risk is an essential part of procurement and contract management’ and that ‘risk management refers to the activities that you undertake to manage and control your contract with regard to risk’.¹⁰³

4.8 For the 2021 contract, Health did not identify or assess any contractual risks. Consequently, it did not develop controls or treatments to manage risks arising from the contract.

4.9 For the 2024 contract, Health identified potential contract risks as part of a procurement risk assessment, which were rated low (see paragraph 3.22), and as such did not have treatments developed. Health did not reconsider whether its identified risks ratings remained appropriate as issues arose during the contract lifecycle (see Table 4.2).

Table 4.2: Comparison of identified and realised contract risks

Note a: The following risks were identified by Health, rated low and in ANAO assessment, not realised during the course of the 2021 and 2024 contracts: potential for insufficient funding available; failure to have sufficiently skilled and experienced resources to effectively manage the contract; contract does not contain the required reference to Procurement Connected Policies (including Child Safety, Modern Slavery, Workplace Gender Equality, Indigenous Procurement Policy etc).

Source: ANAO analysis of Health’s 2024 contract documents.

Confirming contract management roles and responsibilities

4.10 The Australian Government Contract Management Guide notes that it is important for entities to ‘know who is responsible for key contract management activities’ and to ‘allocate appropriate resourcing to the contract’.¹⁰⁴ The assignment of roles and responsibilities can support segregation of duties, to manage the risk of contract mismanagement, fraud or corruption.¹⁰⁵ The Commonwealth Fraud Prevention Centre, in discussing fraud prevention countermeasures, emphasises the importance of segregation of duties.

Separate duties by allocating tasks and associated privileges for a business process to multiple staff. This is very important in areas such as payroll, finance, procurement, contract management and human resources … Allowing a single person to perform all or multiple tasks within some processes may lead to: fraudulent payments; unauthorised access, manipulation or disclosure of information; and poor management of decision-making and risk …¹⁰⁶

4.11 A senior executive service (SES) Band 1 official within Health was the delegate with authority to approve expenditure for the 2021, 2022 and 2024 procurements.

4.12 For the 2021 contract, 2022 contract variation, and 2024 contract, there were no documented roles and responsibilities for managing the contracts. Contract management roles as practised are described below.

• 2021 contract and 2022 contract variation — The commitment approval minute for the 2021 procurement listed an executive level official as the department’s contract manager. In early 2022, this official left Health and an SES Band 1 official (the delegate with approval to approve contract expenditure) took on the role of contract manager. For the remaining period of the 2021 contract and the 2022 variation, there was a lack of segregation of duties. The SES Band 1 official was the procurement delegate, the primary contract liaison with Miles Morgan Australia, the contract manager, and the approver of payments to Miles Morgan Australia.
• 2024 contract — An executive level employee in Health performed the duties of contract manager, creating some segregation of duties. This official was responsible for contract liaison and managing contract issues, and was sent to the Whitehorse Local Government Area in 2024 to mediate disputes between Miles Morgan Australia and Meals on Wheels Newcastle (MoW Newcastle).

4.14 The 2021 and 2024 contract required that Health provide approval in writing for the subcontracting of any services under the contract. Health advised the ANAO in September 2024 that despite being aware of subcontracting by Miles Morgan Australia, it did not provide approval in writing to Miles Morgan Australia. The 2024 contract included the details of subcontractors engaged by Miles Morgan Australia.

Contract administration

4.15 Table 4.3 depicts Health’s alignment with the Australian Government Contract Management Guide for contract administration.

Table 4.3: Alignment with the Australian Government Contract Management Guide — contract administration

Key: ◆ Met ▲ Partly met ■ Did not meet.

Source: ANAO analysis of Health’s contract administration.

Managing contract variations

4.16 The Australian Government Contract Management Guide states that:

An entity should not seek or allow a contract variation where it would amount to a significant change to the contract or significantly vary the scope of the contract if it could reasonably be determined that: a. other potential suppliers may have responded differently to the amended contract scope in the tendering process which may have produced a different value for money outcome, or b. the variation may compromise the original procurement’s value for money assessment. Entities may allow minor contract variations, where these do not negatively affect the achievement of value for money in the contract.¹⁰⁷

4.17 As set out at paragraph 1.15, in 2022 Health varied the 2021 contract with Miles Morgan Australia to, among other things, procure a CRM system for the Meals on Wheels (MoW) network. The variation to include the development of a CRM system was a significant change to the contract. Health did not assess whether the variation offered value for money, whether it affected the original procurement’s value for money assessment or whether the CRM could be provided by other potential suppliers.

4.18 Health’s Finance Business Rules for approving commitments of relevant money and entering into arrangements sets out that any proposed departures from standard contract terms and conditions must be discussed with Health’s legal division. The delegate for the 2022 contract accepted terms and conditions that carried risk (see Box 1) without seeking legal advice.

Performing contract administration tasks

4.19 The Australian Government Contract Management Guide states that there should be processes to verify that: suppliers have delivered the goods or services specified under the invoice and have fulfilled their obligations under the contract; invoices are correct and in line with the contract; payments are made correctly within the time frames required; expenditure is tracked to ensure it does not exceed the value of the contract; and that the appropriate delegate has approved expenditures and maintains this documentation.¹⁰⁸

4.20 When payment methods are included in the contract, like milestone, progress or start-up payments, entities must verify invoices according to the contract terms, which may include reviewing evidence of milestone achievement.¹⁰⁹

• 2021 contract and 2022 contract variation — The contract and variation specified that payments would be payable on execution of the contract and on customer acceptance of progress reports, a final report and a replacement CRM. Health did not record its verification of whether the correct goods or services were received prior to approving payments. All 15 progress reports provided by Miles Morgan Australia to Health between March 2022 and July 2023 noted issues with the implementation of the Future Fit Program, including scope and timeframe slippages (see Appendix 3). With regard to the CRM, two consecutive milestone payments were described in the work order as ‘build a replacement CRM’. Health made the three payments between June and November 2023 without recording whether CRM build progress had been to an acceptable standard.
• 2024 contract — Payments were to be made on the execution of the contract and the completion of two contract milestones. The two milestones, ‘Transition to [Business as Usual]’ and ‘Finalise transition and document handover’ listed specific deliverables. Health kept records verifying whether the correct goods or services were received as required by the 2024 contract. One set of deliverables was accepted after Health sought input from MoW Newcastle. The review and acceptance of the final set of deliverables were recorded in a draft ‘Vendor Performance Review’ template.

4.21 When administering a contract, officials are expected to set up records management systems that capture relevant information like approvals, decisions, budget, funding, invoicing, performance and contract variations.¹¹⁰ For the 2021 contract, Health did not record its tracking of the contract budget or contract performance. Health kept records of invoices received from Miles Morgan Australia for the 2021 contract. For the 2024 contract, Health kept records of its correspondence with Miles Morgan Australia, stakeholders, and third parties as well as actions it took to manage contract performance. Health did not monitor the budget for the 2024 contract.

Managing probity

4.22 The contract management guide notes that contract managers have a responsibility to behave ethically and that contract managers ‘should ensure all individuals materially involved with the management of a contract make a conflict-of-interest declaration and update it on a regular basis, particularly for longer term contracts’.¹¹¹ As set out at paragraph 3.73, officials responsible for the management of the 2021 and 2024 contracts did not make any declaration of whether they had an actual, potential or perceived conflict of interest.

Was there appropriate oversight over the achievement of contract deliverables and contract performance?

Achievement of contract deliverables

4.23 Contract management involves actions taken to ensure goods or services are delivered as required under the contract.¹¹² Table 4.4 sets out ANAO analysis of Health’s assurance over the delivery of 2021 and 2022 contract deliverables.

4.24 Table 4.5 sets out ANAO analysis of Health’s assurance over the delivery of 2024 contract deliverables. Both tables demonstrate that Health obtained partial assurance over the provision of contract deliverables, prior to making contract payments (see paragraph 4.20).

Table 4.4: Assurance of 2021 and 2022 contract deliverables

Key: ● Fully assured ◕ Largely assured ◑ Half assured ◔ Partly assured ◯ Not assured.

Note a: Although the requirement for a stocktake and evaluation plan as part of project initiation documentation were set out in detail in the contract, these specific requirements were not included in the list of project deliverables at the end of the contract.

Note b: Although the requirement for an adoption strategy was set out the contract, this specific requirement was not included in the list of project deliverables at the end of the contract.

Note c: Although the requirement for ‘business continuity plan’ was set out the contract, this specific requirement was not included in the list of project deliverables at the end of the contract.

Note d: Although the requirement for a bespoke online client interface for meal ordering was set out in detail in the contract, this specific deliverable was not included in the list of project deliverables at the end of the contract.

Source: ANAO analysis.

Table 4.5: Assurance of 2024 contract deliverables

Key: ● Fully assured ◕ Largely assured ◑ Half assured ◔ Partly assured ◯ Not assured.

Source: ANAO analysis.

Achievement of contract outcomes

4.25 Contract outcomes as defined in the 2021, 2022 and 2024 contracts are shown in Table 4.6.

Table 4.6: Contract outcomes for 2021, 2022 and 2024

Source: Contracts executed between Health and Miles Morgan Australia.

4.26 Miles Morgan Australia’s 2022 project plan identified Future Fit Program measures of success as:

• A greater emphasis on streamlined operations (contractual, procurement, financial, quality standards)
• Improved service delivery efficiency (fast-track reduction in overhead costs, improved issues management, increased transparency)
• Successful adoption of new structures, processes and technologies
• Strengthen viability, with clear pathways to either becoming self-sustaining or transitioning out.

4.27 The 2024 contract described the objective of Future Fit as:

To provide the Meals on Wheels network with support mechanisms designed to:

• Ensure future business decisions are evidence based.
• Benchmark financial viability.
• Stabilise the network’s backbone infrastructure (processes and technology).

4.28 Health did not develop or require Miles Morgan Australia to report against measurable performance indicators that would allow for evidence-based assessment of whether these or any other contract outcomes had been achieved. Health told Miles Morgan Australia that it was concerned that there were no targets or performance measures set out in the project documentation (such as the project management plan). Project documentation was not updated to address Health’s feedback. As discussed at paragraphs 2.76 to 2.79, Health undertook no project evaluation planning or activity.

Management of contract performance

4.29 Good performance management is key to delivering value for money.¹¹³ Both parties to a contract should agree on what aspects of performance will be measured, how they will be measured, how frequently they will be measured, and who will do the measurement.¹¹⁴ Performance standards should be specified in contracts. Performance management should take place throughout the life of the contract and be based on performance expectations established in the contract.¹¹⁵

4.30 Health did not specify performance standards in the 2021 contract or 2022 variation. The 2024 contract required Miles Morgan Australia to deliver services to a ‘satisfactory’ standard, with ‘due care and skill and in accordance with best practice’, and provide contract material that was ‘fit for the purpose for which they are provided’.

4.31 Health did not identify any performance issues that needed to be managed for the 2021 and 2022 contracts. For the 2024 contract, there is evidence of Health managing contract performance.

• On 2 February 2024, Miles Morgan Australia delivered to Health the first status report for the Whitehorse LGA ‘transition’. This noted that Miles Morgan Australia intended to ‘shut off’ the CRM it had developed and tested through the Whitehorse LGA ‘due to a lack of funds for sustainment and a lack of time to build or transition to a sustainable business model’.
• On 5 February 2024, MoW Newcastle contacted Health seeking urgent assistance with outstanding matters needed to facilitate the ‘transition’ from Miles Morgan Australia to MoW Newcastle in the Whitehorse LGA. This included: transfer of a website; full access to the ‘current’ CRM in use at the Whitehorse LGA site; reporting spreadsheets showing data to support day-to-day operations; training and relationship handover for the management of menus; and the payment of outstanding wages. MoW Newcastle also requested to be invited to Whitehorse LGA branch meetings.
• On 6 February 2024, Health instructed Miles Morgan Australia to, among other matters: maintain Whitehorse LGA website content; provide access to the CRM; provide operational reporting spreadsheets; provide standard operating procedures and training documentation; and work collaboratively with MoW Newcastle staff.
• On 14 February 2024, MoW Newcastle raised further concerns with Health about the transition, risks to MoW clients within the Whitehorse LGA, and Miles Morgan Australia’s performance, noting that Health officials had already intervened to mediate between the two parties.
• On 16 February 2024, Health informed Miles Morgan Australia and MoW Newcastle that it held ‘strong concerns about continuity of service risks in Whitehorse’ and that it would send a Health official to visit the Whitehorse LGA. Health officials attended the Whitehorse LGA from 19 to 21 February 2024, with officials recommending that ‘the Whitehorse site needs to be monitored closely for the next 3 months given the difficulties between the two parties’.
• Between February and March 2024, Health continued to mediate disputes between Miles Morgan Australia and MoW Newcastle regarding privacy concerns and data destruction.
• In February 2024, Health engaged legal representatives to assist with a dispute with Miles Morgan Australia over the final contract deliverables and CRM intellectual property ownership (see Box 1).
• On 10 April 2024, Health granted MoW Newcastle an additional one-off payment of $132,385 to cover costs associated with the Whitehorse LGA ‘transition’.

4.32 Miles Morgan Australia entered voluntary administration on 17 September 2024.

Appendix 1 Entity responses

Department of Health, Disability and Ageing

Representatives of Miles Morgan Australia

Meals on Wheels Newcastle

Appendix 2 Improvements observed by the ANAO

1. The existence of independent external audit, and the accompanying potential for scrutiny improves performance. Improvements in administrative and management practices usually occur: in anticipation of ANAO audit activity; during an audit engagement; as interim findings are made; and/or after the audit has been completed and formal findings are communicated.

2. The Joint Committee of Public Accounts and Audit (JCPAA) has encouraged the ANAO to consider ways in which the ANAO could capture and describe some of these impacts. The ANAO’s corporate plan states that the ANAO’s annual performance statements will provide a narrative that will consider, amongst other matters, analysis of key improvements made by entities during a performance audit process based on information included in tabled performance audit reports.

3. Performance audits involve close engagement between the ANAO and the audited entity as well as other stakeholders involved in the program or activity being audited. Throughout the audit engagement, the ANAO outlines to the entity the preliminary audit findings, conclusions and potential audit recommendations. This ensures that final recommendations are appropriately targeted and encourages entities to take early remedial action on any identified matters during the course of an audit. Remedial actions entities may take during the audit include:

• strengthening governance arrangements;
• introducing or revising policies, strategies, guidelines or administrative processes; and
• initiating reviews or investigations.

4. In this context, the below actions were observed by the ANAO during the course of the audit. It is not clear whether these actions and/or the timing of these actions were planned in response to proposed or actual audit activity. The ANAO has not sought to obtain assurance over the source of these actions or whether they have been appropriately implemented.

• On 16 August 2024, the Department of Health, Disability and Ageing (Health) advised the ANAO that conflict of interest forms for Health officials are now standard practice for all procurements and probity advisers are onboarded for tier 1 projects (see paragraph 3.72).
• On 4 October 2024, Health provided the ANAO with a list of lessons learned in administrating the Future Fit Program across the following themes: procurement and contract management; intellectual property; risk management; deliverables; and communications and relationships. Health advised the ANAO that it was working to establish capacity to formally capture lessons learned from administering the Future Fit Program and to reflect these lessons in its corporate processes. Key findings from the lessons learned exercise included:
  • governance arrangements for the Future Fit Program should have also included the department;
  • the department should have been directly involved in stakeholder management and managing contractor engagement with stakeholders;
  • procurement and contract management practices should have ensured value for money was achieved over the life of the procurement, including through: visibility of subcontracted entities; managing unsolicited funding proposals; not allowing consultants to influence the department’s decisions; ensuring there was sufficient time to undertake procurement processes; engaging early with Procurement Advisory Services; undertaking market research to ensure value for money; and approaching multiple suppliers on a panel;
  • the department should have ensured that a more thorough risk management strategy was documented upfront, and that there should have been regular monitoring of risks through meetings and reviewing status reports;
  • the department should have ensured meeting minutes are captured and filed appropriately; and
  • the department should have ensured contract deliverables were reviewed and accepted in a timely manner.
• In January 2025, Health requested and received advice from the Australian Government Solicitor about the scope of permissible expenditure under the Commonwealth Home Support Programme (CHSP) (see paragraph 3.16).

Appendix 3 Future Fit Program project status reports, 2022 to 2023

Key: ■ The program is experiencing significant issues and is currently off-track requiring urgent corrective action.
▲ One or more of the project’s performance measures is at risk, however action is being taken to resolve the issues.
◆ The program is performing to plan and within approved tolerance levels with no additional support required.

Source: ANAO analysis of program status reports.