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The audit office has found the Department of Health failed to disclose conflicts of interest, did not keep records of entertainment and ignored legal advice when awarding a consultancy millions of dollars in a disastrous attempt to reform Meals on Wheels. By Rick Morton.
ANAO slams Meals on Wheels debacle
Senior government health officials ignored legal advice, deleted crucial text messages and misled investigators over the handling of a series of contracts worth $9 million, an audit office report has found. The contracts were given to a private consulting firm ostensibly to reform Meals on Wheels “governance” but ended in farce and with the firm in liquidation.
An Australian National Audit Office performance review of the Future Fit program – the name given to the work conducted by Miles Morgan Australia (MMA) on behalf of the Department of Health, Disability and Ageing – has revealed an astonishing collapse in governance and accountability among the most senior officials responsible for aged-care reform in the country.
The audit, released late on Tuesday, follows reporting by The Saturday Paper that uncovered an extensive plot to take over community-run Meals on Wheels services across Australia under the guise of “reform”.
A central issue in the contract debacle, which began with a December 2021 piece of work worth $5.5 million, is the nest of conflicts between key players across five organisations.
According to the audit report, Miles Morgan Australia engaged a lobbyist from Australian Public Affairs, who at the time also represented Meals on Wheels Australia (MoWA). The report said the company had meetings with then Coalition aged care minister Senator Richard Colbeck in November 2021, but without the department.
“The Australian Public Affairs lobbyist was previously employed in the minister’s office where they reported to the minister’s chief of staff – who was the First Assistant Secretary Home and Residential Division in the Department of Health and Aged Care at the time of contract negotiations,” the ANAO audit says.
“Miles Morgan Australia’s managing director had previously worked with a Health senior executive service officer who was in charge of the Home Support Operations Branch in May 2021.
“An individual identified as holding a ‘manager’ position listed in the Deed of Standing Offer under the Aged Care Policy Development Panel between Health and Miles Morgan Australia dated 17 June 2020 was also the Executive Director of MoWA at the time of the 2021 contract negotiations, and owned a consulting firm eventually subcontracted by Miles Morgan Australia as part of the Future Fit Program.”
None of these “pre-existing workplace and commercial relationships” were ever declared “in the context of the procurement of Miles Morgan Australia to deliver the Future Fit Program”.
Australian Public Affairs became H/Advisors APA and eventually took on another client featured in the lobbyist’s discussions with department officials: the private meals company Lite n’ Easy. Miles Morgan Australia would later tell the department it was partnering with Lite n’ Easy and Meals on Wheels Queensland to explore “innovative” meal delivery models.
If the problems began under the Coalition, they were not ameliorated by oversight from the Labor government that came to power in May 2022. In fact, the mismanagement of the Miles Morgan Australia contracts continued as officials handed even more money to them under circumstances where the department hadn’t bothered to check if the contracts were being delivered successfully.
“The draft contract proposed an advance payment of $2.68 million upon execution of the contract,” the audit says, referring to a contract from 2021.
“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.”
At the same time, lawyers for the department advised their colleagues that a direct procurement of Miles Morgan Australia posed risks, especially given the purpose of the work was to transform the “governance arrangements” at MoWA. The lawyers noted that the department would have more control if it entered into a direct grant with the peak body or in a tripartite model with MoWA and MMA.
“This advice was not followed,” the audit says.
“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 … 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 [Commonwealth procurement rules].
“Health did not consider these matters in proceeding with the procurement.”
The contract was extended by $1.56 million in October 2022 for the development of critical customer relationship management software to help Meals on Wheels services run their organisations. This tender included the same panel arrangement that earlier broke procurement rules and demonstrated a “lack of due diligence”.
“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,” the ANAO said.
“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.”
The building of this computer software descended into a serious legal fight over intellectual property rights – a battle that continues to this day – but didn’t stop the Department of Health from preparing another contract for $18 million, which it abandoned. Nor did it stop the department from entering a final agreement for $1.7 million in January last year to “transition” a Victorian meal delivery service from Whitehorse City Council to Newcastle Meals on Wheels, via Miles Morgan Australia.
At the time, Miles Morgan Australia was likely to have been trading insolvent, according to its liquidator.
Procurement advisory services told colleagues in the department 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”. In the document, the words “not be able to be endorsed” are underlined.
Despite this, the department sought no such advice.
Once again, the department approved an advance payment on the contract of almost $700,000. In official documents provided to the Department of Health, Miles Morgan Australia also claimed that this 2024 contract was actually “back pay” for services it had provided in 2023 in advance of an aborted feasibility study.
The audit report noted this, but said: “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.”
Crucially, the senior department official responsible for the Future Fit program conducted most of the work on his personal mobile phone “in lieu of an official device”. Despite policies recommending the retention of records, including text messages, created in the course of work, these were not kept by the official. They were deleted.
“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,” the audit says.
“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 [Commonwealth Home Support Programme] 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 taxpayer’. Correspondence between Miles Morgan Australia and the Department of 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.”
Further, the ANAO found “many discussions” between Miles Morgan Australia, the lobbyist and the department official were held in settings such as restaurants and cafes.
“Health officials did not retain records from these or other meetings,” the ANAO says.
“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.”
When one person involved with Meals on Wheels services formally complained to the Department of Health about the conduct of officials involved, accusing one of breaching the public service code of conduct, the complainant was belittled by bureaucrats and the complaint itself was shared outside the department in a breach of privacy.
The person complained a second time and the department engaged the legal firm Sparke Helmore Lawyers in September 2023 to conduct an “independent” investigation that found the official did not breach the code of conduct.
However, the law firm was misled about the circumstances in which the original complaint was handled.
“Sparke Helmore Lawyers relied in part on records provided by the official who was the subject of the initial complaint,” the ANAO found.
“The official’s records did not reveal that the complaint had been shared with external parties. 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.”
Despite contractual obligations on Miles Morgan Australia to produce an evaluation plan, these were never enforced. Future Fit has never been evaluated.
In the wake of this audit report, the department says it “will commission an evaluation of the Future Fit Program”.
This article was first published in the print edition of The Saturday Paper on May 31, 2025 as "ANAO damns Health contracts".
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