Police to investigate CenITex contract


news Melbourne-based newspaper The Age reported this morning that police had been called in to investigate Victorian Government IT shared services agency CenITex, following an audit that had revealed public servants awarded themselves a contract eventually worth some $1.5 million.

According to the newspaper, which has an extensive article online about the issue, some six contractors and staff have been sacked, and an organisation-wide review ordered of the agency by the State Government. Neither CenITex’s spokesperson nor a spokesperson for the Government immediately returned calls seeking confirmation of The Age’s report. Enquiries to the office of the state’s technology minister and assistant treasurer, Gordon Rich-Phillips, were directed to an alternative contact believed to be within the State Government’s central media enquiries unit.

CenITex was set up in July 2008 from the merger of the previous Shared Services Centre and Information & Technology Services divisions under the Department of Treasury and Finance, and has since rolled in a number of major departments and agencies to use its services, such as the Departments of Human Services (health) and Justice.

However, as with a number of public sector IT shared services initiatives, its establishment has not been without its controversies — including a reported attempt to convert its large contractor base to permanent public sector roles. The organisation was also slapped on the wrist by the state’s auditor in December 2009 for failing to follow best practices in its agency contracts.

The organisation appointed a new chief executive in May this year, with the new appointee, Michael Vanderheide, having left a short-lived role leading the Victorian Police’s IT function to take up the CenITex role. Vanderheide was appointed to the Victoria Police role in 2009 after a lengthy career helping lead the ACT Government’s own shared services efforts.

At the time Vanderheide joined Victoria Police, the organisation was itself reeling from the resignation of his predecessor in November 2008. The executive left Victoria Police under a cloud, with an investigation into its IT department finding 12 months later that it had had a “disregard for proper procurement and contract management”.

There have also been a series of other contract improprieties revealed within the wider Victorian Government over the past several years when it comes to the area of technology. For example, a number of reports have also highlighted probity issues within the Government’s handling of contracts associated with its troubled myki public transport smartcard rollout.

There are few things that would surprise me about CenITex any more, but I do have a fair degree of confidence that Michael Vanderheide can eventually get things under control — he seemed quite capable and above board when I interviewed him last year.

Image credit: Dr. Keats, Creative Commons


  1. Hmmm … fair enough, but this is all just another beat up really isn’t it? Most agencies have similar procurement irregularities if anyone really looks hard enough (of course all procurement should be policy compliant, but this is seldom the case in reality when agencies are dealing with a large portfolio of contracts). One has to question the motives behind this sort of story. Sunlight, as they say, is the best disinfectant … but it shines on some places more than others.

    A cynic might suspect that this is all part of a campaign to persuade the Government to sell CenITex – to kick the unruly teenager out of the house?

    Standing back from it, shared services is a tough gig on a whole-of-government basis as the shared service provider has many enemies in politics, in the IT industry and in its customer agencies and few friends that rise to its defence when the going gets tough.

    Who are the main drivers and beneficiaries of shared services? The Government and the Department of Treasury & Finance. Who is standing up and defending the shared services strategy and the difficulties involved in its implementation? No one. Everyone is just forming a queue to throw rocks. Where is the Government’s vision? I think the Baillieu Government have had such a bad run of IT disasters since coming into office that they would gladly disband all IT operations and revert back to typewriters if they could!

    More seriously, does anyone really think that the right thing to do is to disband CenITex, as they appear to be doing in WA? I don’t think so. There is a need for some balance here. A shared IT infrastructure and desktop service is still a good thing for the Victorian Government, and will be better than a reversion to sub-scale, under-invested, agency-by-agency duplication – even if more money needs to be invested than planned to complete the full desktop rollout.

    Just suck it in guys, and carry on. Sure CenITex needs to lift its game, but they also need some support and encouragement from their owners – not just an endless litany of muddled messages, indecision and interference … No?.

    • hey Steve,

      good comments.

      I would make a few responses here.

      1. This is not a case of some surface-level procurement problems, even at the same depth as we saw in Victoria Police a while back. This is a case where the police have been (reportedly) been invited to investigate a case of public servants awarding $1.5 million in contracts to a shelf company they created a couple of days beforehand. If the reporting is correct, this appears to be a criminal matter.

      2. I have tracked CenITex closely ever since it was established. It has never responded to the most basic enquiries, and has consistently demonstrated an approach to its work which could only be described as secretive. For whatever reason, this is an organisation which does not want the light shone in.

      I have heard some very disturbing things from sources inside CenITex, and although I applaud its overall mission, I continue to be very skeptical about the extent to which the organisation can deliver on its objectives. Perhaps I might be less skeptical if the agency would return my calls.

      3. I want to agree with you about shared services. However, we’re seeing all over Australia — in Queensland, in WA and so on, that shared services initiatives are failing again and again. The root cause appears to be that they are simply not appropriate initiatives for the larger agencies, as they are not aligned closely enough to their businesses. However, they do appear to work relatively well for smaller agencies with less specialised needs.

      It’s interesting that NSW is going down the shared services path … however again, as with most state governments, it’s hard to know precisely what they’re doing there. The situation is very murky.

      • Look I think the reality is that you’d have to be nuts to advocate shared services these days if you were starting afresh. I’ve repeatedly expressed the view over the past few years that cloud computing models are overtaking shared services – primarily because of the ‘cloudy is as cloudy does’ effect (i.e. they are already existing, operating at scale and arms length … as opposed to trying make a silk purse out of a sow’s ear in an internal socialist economy).

        The trouble is that The Victorian Government has already committed to CenITex, and the model adopted can be made to work because it has stayed at the infrastructure/commodity app level (as oposed to trying to impose common finance and HR apps on agencies as was the case in WA and Qld). No agencies can really say that they have unique reqirements for data centres, application hosting and desktop services.

        So it all comes down to implementation, and I don’t think they really have any choice but to stay the course – with the support of the Government.

        Of course the procurement issues are inexcusable if the facts are as reported … and don’t help CenITex’s cause at all … but lets keep it in perspective.

    • Why do you say that? Consolidation, rationalisation and standardisation have been the core logic of IT strategy in most organisations throughout the last three decades, with shared services being a logical and preferred end point for most large and organisations.

      The problem is that sharing is largely an unantural act between non-consenting adults in organisations with a culture of business unit autonomy – such as the public sector – so it has always been hard work.

      This decade, however, we now have a better model in cloud computing – which enables economies of scale to come as a service attribute so that individual businesses can make indpendent choices to use SaaS apps and IaaS and yet still achieve the economies of scale that shared services sought to deliver. This, however, was not an option in the 80s from my recollection …

      • It makes it Cheaper and easier for IT , not for the business units trying to access IT. Especially as it creates a monopoly, with a lowest common denominator attitude

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