Greg Combet: The Chandler McLeod Defence Procurement debacle re-visited


On 7 May 2008 the then newly appointed  Parliamentary Secretary for Defence Procurement The Hon. Greg Combet MP announced " a review of Defence procurement and sustainment", to  be conducted by Mr David Mortimer AO.In making that announcement Combet said that he " would like the review to examine how DMO can continue to develop its commercial orientation and become more business-like in its operations."

On 2  July 2008 the  Minister for Defence Science and Personnel, Warren Snowdon MP, witnessed the signing of the new Australian Defence Force (ADF) Recruiting Services Contract with the ASX listed Chandler Macleod. The contract was  valued at up to $405 million over a period of five years.Mr Snowdon said that Chandler Macleod was selected by Defence following an extensive and competitive tender process conducted in accordance with Government Procurement Guidelines. Chandler replaced the much larger and better established Manpower Services Australia 

What was not disclosed then, and ever , was that Chandler was suffering cash flow and cash balance deficits. These problems were well known.

 In September 2008 , just 2 months after Snowdon's glowing endorsement, Samrtmoney described Chandler McLeod as a “struggling recruitment firm” that had been "thrown a rope" by investment bankers Mark Carnegie and John Wylie who had offered to buy a 19.9% share of the business


On 16 September 2009, the newly appointed Minister for Defence Materiel and Science, The Hon. Greg Combet MP,announced:

“Chandler Macleod Group (CMG) has announced it will seek, for commercial reasons, to terminate its contract with Defence for the provision of Australian Defence Force (ADF) recruiting services,” said Mr Combet. “Defence will, subject to a number of conditions being satisfied, agree to the termination of its contract with CMG.  Such conditions are, among other things, to ensure the continuity of ADF recruiting services.”

Despite his earlier stated objective of seeking a more "business like" approach in defence procurement practises, Combet has never provided any accounting for the failure in  choosing Chandler, despite its obvious financial problems.
That the company's financial problems were overlooked despite " an extensive and competitive tender process conducted in accordance with Government Procurement Guidelines" suggests that the Guidelines were either willfully or negligently ignored. 
Indeed  the Guidelines may have been  used to justify a poor decision That certainly seems to be the case in a contract that Combet now oversees in his new role as Minister For Climate Change, Industry And Innovation.

More To Come 

Thursday, June 11, 2009

Australian Defence Recruitment contract awarded to company with cash flow , cash balance deficit.

On 2 July 2008 The Minister for Defence Science and Personnel, Warren Snowdon MP, witnessed the signing of the new Australian Defence Force (ADF) Recruiting Services Contract with the ASX listed Chandler Macleod. The contract is valued at up to $405 million over the next five years.
Mr Snowdon said that Chandler Macleod was selected by Defence following an extensive and competitive tender process conducted in accordance with Government Procurement Guidelines.
Chandler replaced the much larger and better established Manpower Services Australia (http://www.manpower.com.au/about-manpower/about-manpower.aspx).


Mr Snowdon’s assertion that “Chandler Macleod was selected by Defence following an extensive and competitive tender process conducted in accordance with Government Procurement Guidelines” needs to be seen in light of the following:

In March this year Chandler announced that it had suffered a pre-tax loss of AUD 2,731,000 but a profit after tax of AUD 267,000 for the half-year ended December 31 2008.
For the same period in 2007 it reported a pre-tax profit of AUD 6,994,000 but loss after tax of AUD 2,291,000 .


For the year ended 31 December 2008 the company reported a consolidated profit of AUD 2,744,000 but negative operating cash flow of AUD 99,000. Cash and cash equivalents at the end of the 2008 financial year were in deficit to the sum of AUD 1,408,000.


(see http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ric=CMG.AX)


Not surprising then that in September 2008 , just 2 months after Snowdon's glowing endorsement, Samrtmoney described Chandler McLeod as a “struggling recruitment firm” that had been "thrown a rope" by investment bankers Mark Carnegie and John Wylie who had offered to buy a 19.9% share of the business.
http://www.smartcompany.com.au/leadership/chandler-macleod-gets-10.9-million-from-lazard-carnegie-wylie.html
posted by ganesh sahathevan @ 5:39 PM 0 comments

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