AHerald investigation has found scores of contracts to hire staff for Sydney Metro on more than $2000 per day. These and many other Metro contracts are conducted under where the agency approaches a supplier or suppliers directly for services.
Sydney Metro is charged with delivering the country’s largest public transport project.NSW government
Permitting companies whose directors are senior managers at Sydney Metro to provide staff known as “professional services contractors” raises a potential conflict of interest due to their access to commercially sensitive information and fails the “pub test”,experts claim.
The two senior Sydney Metro managers’ companies have won $20 million worth of contracts in total since 2021,tender documents show.
They are among more than half a dozen companies whose directors worked in senior roles at Sydney Metro and have been awarded contracts to provide staff.
A small company founded by Sydney Metro utilities director Paul Rogers in 2014 – a year before he started working on Metro projects – has won $13.3 million worth of work since August 2021 to provide staff with pay rates ranging from about $280 to $390 an hour.
Sydney Metro interface management director Barry McGrattan (left) and utilities director Paul Rogers.
Six “professional services contractors” hired through Rogers’ Pro Consultants reported directly to him at Sydney Metro’s interface division,which is overseeing the and rail lines.
Sydney Metro interface management director Barry McGrattan is also the managing director of Bellgrove Advisory,which has won $6.6 million worth of work to provide about 10 staff for the agency.
Rogers and McGrattan had no involvement in Sydney Metro’s decision to award contracts to those companies or setting the salaries for those roles,and they played no part in the project’s cost blowouts. TheHerald does not suggest any wrongdoing on the part of Rogers and McGrattan.
One of those hires,James Hayward,is Sydney Metro’s interface management acting director,contracted on more than $600,000 a year,almost as much as the agency’s chief executive. He is the partner of Amanda Hayward,publisher of the bestsellerFifty Shades of Grey.TheHerald also does not suggest any wrongdoing on the part of Hayward.
The construction site for the Parramatta metro station.Wolter Peeters
Quizzed about the arrangements concerning Rogers,McGrattan and Hayward during a NSW upper house inquiry into the government’s use of consultants,Sydney Metro chief finance and commercial officer Fiona Trussell said contractors and professional service providers were not in decision-making roles and did not have any delegated authority.
“They all report ultimately into government employees so their ability to hire and recruit people is not an authority that they have,” she said. “Those decision-making authorities sit with government employees within our delegation.”
The NSW Auditor-General raised concerns in a about government agencies hiring consultants,citing concerns about the way spending on contractors is reported publicly and how agencies engage in contracts with them.
The rules that require most agencies to estimate the value of a contract – including any potential extensions and renewals – do not apply to Sydney Metro.
The cost of the Metro City and Southwest rail line between Chatswood and Bankstown via the CBD is almost double the original forecast atNSW Premier Chris Minns has also on the future of the line under construction between the CBD and Parramatta.
Paul Rogers with his team from Pro Consultants.LinkedIn
Rogers and McGrattan did not respond to questions about potential conflicts of interest or how much their companies earn from contracts to provide staff. Hayward also did not respond to questions.
Sources close to Sydney Metro who spoke on the condition of anonymity because they are unauthorised to discuss the project with the media said companies providing staff to the agency can earn between 7.5 per and 12 per cent of the hourly rate of a contract’s value.
Critical accounting academic professor John Dumay said fees to provide contractors of about 10 to 12 per cent of the contract value was “about right”.
Dumay,who ran his own consultancy business and worked as a management consultant before moving to academia,said Sydney Metro allowing managers to bid via private companies to provide contracted staff did not pass the “pub test”.
“When you bring in these labour hire companies and/or consultants,we ultimately lose transparency because there’s no legal obligation for any of these companies to disclose anything publicly,” he said.
Centre for Public Integrity director Geoffrey Watson,SC,said Sydney Metro managers whose private companies were bidding for work from the agency might have access to information other bidders didn’t.
“I’m astonished that this would be allowed,” he said.
“It is just a minefield of ethical concerns in so far as there are obviously potential conflicts of interest.[They] aren’t measured by the outcome – they are measured by the potential.”
Former NSW auditor-general Tony Harris said the private companies of senior managers at Sydney Metro winning contracts with the agency raises potential conflict of interest issues. “It is so obviously not on that it doesn’t require much thought,” he said.
A spokeswoman for Transport Minister Jo Haylen said “procurement and delivery models for Sydney Metro overseen by the previous Liberal government” had caused cost overruns on metro projects.
“The engagement of contractors should be a short-term solution. The government is concerned about the long-term use of contractors,especially if they are being used for longer engagements better suited to public sector roles,” the spokesperson said.
Sydney Metro did not answer specific questions about why it allows senior managers to use their own companies to tender for contracts,how many professional services contractors it uses,their cost,or if it has investigated these arrangements,but said “the procurement of contractors and consultants was wholly managed by government employees”.
“Contractors have no authority (decision-making rights) to approve the engagement of other contractors or variations/extensions to contractors,” it said.
“Due to the size and complexity of our projects,there will always be a need for specialist input and contractors to supplement our workforce,including on a part-time basis.”
The agency said it required all consultants to complete a “statement of interests and associations” declaring professional and personal interests. They manage conflict of interest risk through governance structures and take appropriate action when required.
One for “project management services for Sydney Metro West” worth $639,540 runs for 12 months from May this year and was evaluated by the “tenderer’s candidate’s availability,capacity and capability”.
Another worth $1,288,320 over two years and three months for “project management services” was judged on the tenderer’s “candidate and price”.
Greens treasury spokeswoman Abigail Boyd said when key management roles were outsourced to consultants,who then benefit from critical information that they could use to win more work,potential conflicts of interest arise.
“Once you allow consultants to be embedded into a government agency,they become extraordinarily difficult to extract. The agency becomes so reliant on the individual that it drives up that individual’s bargaining powers,” Boyd,a former UBS investment banker,said.
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