The Victorian Department of Education was repeatedly warned that the successful company behind the botched Ultranet project wasn't fit for the job, an inquiry has heard.
An independent consultant to the department described the tender process as "the closest thing to corrupt", the Independent Broad-Based Anti-Corruption Commission (IBAC) heard.
Lexton Gebert, the managing director of consulting firm Landell, told the department's project manager, Mark Bladon, that the Ultranet tender bid was "the closest thing he had seen to corrupt in 20 years of working in the Victorian government".
Mr Bladon testified that he raised concern with the department back in February 2009 that a little-known company in Darwin, CSG Limited, was not equipped to deliver the state-wide Ultranet project.
He warned an Education Department board meeting that the company did not have the experience needed to deliver the project, and was over-charging for the work.
Despite Mr Bladon's warnings, CSG won the contract to deliver the project in July. The $240 million botched IT project for Victorian state schools was dumped in 2013 because it was plagued with technical issues.
Mr Bladon testified that a team within the department that was responsible for evaluating the Ultranet tender bids had awarded CSG "unusually high" grades during the decision-making process.
He said he was suspicious about the marks, particularly given that the evaluation team appeared to have been hand-picked by the former deputy secretary, Darrell Fraser, and comprised two former staff members at the Glen Waverley Secondary College, where Mr Fraser was once principal.
When Mr Bladon suggested to the Education Department board meeting in early 2009 that they should consider an alternative bidder, RM Asia Pacific, Mr Fraser went "bright red in the face" and lost his temper.
He said Mr Fraser became "agitated" and started "shouting" and "swearing" at the board, accusing them of "stuffing up the evaluation".
"I have never seen a board member behave that way or been sent out of a room due to such a robust outburst. I was shocked and was quite angry."
IBAC is examining how contracts were awarded and tendered for Ultranet and whether Education Department officials bought shares in CSG and took jobs with the company.
Mr Bladon told the hearing on Monday that he understood that the independent consultant, Mr Gebert, had suggested that Mr Fraser was "propping up" a tender for CSG Limited.
"Lexton was concerned that the department was becoming an agent to get this Oracle tool and it was interfering with process to ensure CSG was getting the gig."
In a procurement probity presentation that Mr Gebert made to the department's Ultranet board, he warned that other companies competing for the contract may have grounds for legal action over the handling of the tender process.
Mr Gebert was shouted down by at least one executive after expressing his concerns, and the department went ahead with the contract, IBAC heard.
It was also heard that a letter was sent to the office of then-education minister Bronwyn Pike, alerting her office that a Perth IT company called ASG – which was an unsuccessful bidder for the Ultranet contract – intended to initiate legal action against CSG, around the time the contract was awarded.
ASG accused CSG of wrongfully transferring its intellectual property in relation to the Ultranet.
The case was settled out of court for more than $4 million.
There is no suggestion of any wrongdoing by Ms Pike.
The hearing continues.
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