Tech firms have been warned over providing gifts and hospitality to government officials to court favour during and after procurement processes, with a parliamentary inquiry recommending further investigations into this practice.

The Department of Finance, Digital Transformation Agency, and Australian National Audit Office are set to investigate the extent to which “inappropriate cultivation” of government officials is occurring as a result of “hospitality and gifts by major ICT vendors”, following a recommendation by a parliamentary committee.

The recommendation was made by the Joint Committee of Public Accounts and Audit after revelations that Salesforce had provided nearly 50 gifts worth more than $100 each to officials from the National Disability Insurance Agency (NDIA) that were not declared by the agency, during a time the tech multinational was awarded a contract and extensions eventually worth $135 million.

Tech firms are now on notice that any gifts or hospitality provided to government officials must be entirely above board and declared, or they risk drawing the ire of powerful parliamentary inquiries and bodies.

The Committee said it was concerned that this practice of wining and dining public officials and providing them gifts, without adequate declarations, is more widespread in the public service.

“This episode raises further serious questions about how widespread this sort of practice and culture may be in other Commonwealth entities by Salesforce and other major ICT vendors,” the committee’s final report, tabled this week, said.

“Given concerns regarding potential systematic inappropriate cultivation of public servants by Salesforce over a long period of time, the Committee is requesting a further report on all hospitality Salesforce has provided to Commonwealth officials in all entities over the past three years.”

Dinners and golf outings

The NDIA awarded Salesforce a contract worth $27 million in April 2020 for a new customer relationship and management software platform, known as PACE.

Over the next three-and-a-half years, the value of this contract ballooned to $135 million, including an increase of $20 million for “professional services”.

According to the NDIA’s guidelines, any gifts or benefits worth more than $100 must be pre-approved and recorded in a compliance log.

Appearing before a public hearing as part of the inquiry, an NDIA official said that the agency’s staff “must not accept gifts or benefits which might be seen to compromise their integrity”.

The agency even said that “it would be hard to see how a contract manager could maintain their integrity whilst accepting gifts from a vendor”.

In response to a question on notice, the NDIA said that there were no gift or benefit disclosures for Salesforce.

But documents provided to the committee by Salesforce contradicted this and identified 118 line items for hospitality and gifts provided to the NDIA from March 2019 to December 2023, including for meals, drinks, taxi fares, golf outings and equipment.

Of these, 48 were worth more than $100 and should have been declared under the NDIA’s rules.

“The evidence does raise serious concerns about the behaviour of public officials and Salesforce,” the report said.

“The Committee accepts that once a contract is awarded, it may be necessary for public officials and contractors to build strong trusted relationships to effectively implement projects and services and does not express a blanket opposition to engagement with some social character.

“But probity demands that any such efforts require very careful handling to preserve the integrity of contract management processes and avoid the perception of ‘capture’ or bias.

“A failure to declare repeated hospitality and acceptance of lunches, dinners or golf days while variations continue to be struck is simply unacceptable to the Committee.”

In its final report, the Committee raised concerns that this practice is more widespread across the public service, particularly when it comes to tech firms.

It recommended that other major government tech vendors also be investigated, citing Data#3, SAP, Dell, Oracle and Amnesium.