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As hundreds of millions of dollars are spent on outsourced software, key provider Salesforce has built a reputation for the largesse of its hospitality. By Jason Koutsoukis.
Exclusive: FOI docs reveal courting of health officials
On January 24, 2023, a Salesforce official whose name was redacted emailed the chief digital information officer at the Department of Health and Aged Care, Fay Flevaras, and Amanda Smith, a member of the department’s digital transformation and delivery team with responsibility for aged care transformation and quality.
“Hi Fay, [name redacted] and Amanda, I hope you’re all having a great week so far!” says the email, obtained by The Saturday Paper under freedom of information laws.
“Extending this invite to you and your teams (please forward as appropriate) as I hope you can join me and our inspiring Trailblazer community for an unforgettable day at World Tour, Sydney! Learn about Salesforce Customer 360 and the latest technology solutions to deliver success now by lowering costs, increasing productivity, and enabling your technology modernisation programmes. Blaze your trail to success now.”
Salesforce promotional material at the time described “World Tour, Sydney” as the biggest such show yet, with a “record number of visitors including celebrity speakers, trailblazers, partners and customers”.
A week later, on February 1, a Salesforce executive sent a calendar invitation to two department officials and four executives from Salesforce for dinner at Woodcut, a high-end restaurant at Crown Sydney. The identities of the officials was not released with the documents.
The next day, a Salesforce executive emailed Amanda Smith asking whether she would be attending the Salesforce World Tour event.
The same day, the director of federal health at Salesforce’s Canberra office sent a follow-up email to Smith.
“Hi Amanda,” read the email. “Side note to the conversation earlier but I meant to ask, will you and any of your team be heading up to Sydney for World Tour? I haven’t had notification of your broader team, just thought I’d see with you.”
Smith replied an hour later, saying that, yes, she was keen to attend. “We’re going to send a bunch from the division, we’re collating nominations and will coordinate centrally,” Smith said.
On March 3, 2023, department officials inked a two-year contract with Salesforce for the provision of “licenses & professional services” to support the aged care Government Provider Management System originally valued at $13.5 million.
That contract has since been varied three times, on April 13 and May 4 last year, and February 9 this year, and is now valued at $29.2 million.
Last month, the Department of Health and Aged Care added another Salesforce contract worth $10 million to the growing pile sitting beneath the new Government Provider Management System to support the government’s response to the Royal Commission into Aged Care Quality and Safety. So far the software system has cost taxpayers $283 million, in what one government insider says has turned into “an old-fashioned feeding frenzy”.
In July, The Saturday Paper revealed that a Salesforce contract approved by the National Disability Insurance Agency in 2019 originally estimated to cost taxpayers $10 million blew out to $210 million within three years. That contract has been referred for investigation to the National Anti-Corruption Commission.
On March 22 this year, an unnamed “Senior Account Partner” from Salesforce emailed Smith at the department after meeting her at the 2024 “World Tour, Sydney” event.
“Amanda it was so lovely to meet you at World Tour at our cocktail hour along with your lovely team!” the email read. “I understand the Department has 2 new upcoimng [sic] programs: 1) Support at Home 2) New Aged Care Act.”
“Amanda, myself and [name redacted], Transformation Engagement Director would be very keen to speak with you and your team about these upcoming programs to understand where we can potentially assist you and the Department with these programs,” the email continued. “I look forward to hearing from you, and have a beautiful Autumn weekend.”
The Saturday Paper is not suggesting any of these contracts were signed improperly or that any of the people named in this piece were influenced by their interactions with Salesforce.
A spokesperson for the department said all procurement and commercial arrangements were conducted in line with Commonwealth rules and that there was an assessment made on value for money.
“Acceptance of offers of hospitality to department officials are evaluated for compliance with the department’s Conflict of Interest and Gifts and Benefits policies. The policies have a strong focus on managing potential and perceived conflicts of interest, but also recognise the importance of maintaining and developing effective relationships with vendor partners. Understanding existing and future technology directions assists the department in its technology investments.
“In this case, representatives from the Department of Health and Aged Care (the department) attended Salesforce World Tour Sydney 2023 to network with numerous vendors and learn from other organisations undertaking similar transformations. Active stakeholder engagement across the technical community is an important component to effectively deliver the digital transformation agenda.
“Salesforce World Tour Sydney 2023 was a free public event for all participants, and as such, tickets do not need to be recorded under the Gifts and Benefits Policy. The reception is considered an ‘incidental benefit’ which does not need to be recorded under the Gifts and Benefits Policy. All general travel, accommodation and meal expenses are provided by the Department under its travel policy.”
Following the “World Tour” event in Sydney, the department’s chief digital information officer, Fay Flevaras, travelled to Salesforce’s Dreamforce 2023 conference in San Francisco.
The conference is billed as the company’s premier international networking event, with speakers that year including Jane Goodall, OpenAI chief executive Sam Altman, actor Viola Davis, director Spike Lee, actor and Salesforce “spokesperson” Matthew McConaughey, and businesswoman Arianna Huffington.
“While we know everyone loves the learning and networking at the main event, it’s always Salesforce’s annual Dreamfest party that steals the show. It’s taking place today (Wednesday, September 13) at the Chase Center and being headlined by a Foo Fighters concert,” the Salesforce promotional material reads.
“The other key consideration when finalizing your Dreamforce agenda is Dreamforce parties. You don’t want to miss these, and this week in San Francisco you’ll find everything from free rooftop drinks (the Argano Sunset Social) to breakfast pickleball, boat parties, and a wine and cheese soiree.”
Salesforce liked Flevaras’s presentation at Dreamforce so much that the company turned it into a case study it posted to its website and is now using as a marketing tool.
In response to questions surrounding Salesforce’s use of Flevaras’s comments, a department spokesperson told The Saturday Paper “the comments were drawn from a government panel presentation at Dreamforce 2023 which included the Department of Health and Aged Care (the department) and other international government agencies including the United Kingdom’s National Health Service and the Michigan Department of Health and Human Services.
“The material is clearly marked: ‘The Australian Government does not endorse the products or services of any supplier. The article is not an endorsement, or a recommendation of the suitability of, any products or services offered by Salesforce or any other suppliers’.
“The department approved Ms Flevaras attending and presenting at Dreamforce 2023, with costs covered by the department. All communications with Salesforce went through required legal and probity processes. The department’s decision to introduce Salesforce was made prior to Ms Flevaras’ commencement with the agency.”
Catherine Thompson, a former chief procurement officer for technology at the Digital Transformation Agency, who has worked at the intersection of procurement technology and operations for close to 40 years, said events and hospitality can create issues with procurement processes.
Making a general observation about procurement, she said: “Officials should not accept hospitality from vendors in procurement situations that are ongoing, including where change requests and variations to live projects are being discussed. They should also avoid situations that result in the creation of reciprocal obligations, however slight.”
She continued: “They should avoid attendance at events that provide demo opportunities for one vendor’s solutions that other vendors do not have, so as not, unconsciously or otherwise, to influence the composition of future bidlists and promote in-house advocacy for that vendor.
“They should never meet with a vendor without a full brief of the vendor’s other bids and engagements and key messaging to convey. This is something government cannot do but is crucial for supplier performance management … By all means support initiatives to promote good working relationships within joint project teams actually doing the work, but declare and turn down anything else.”
Having Department of Health and Aged Care officials attend events such as “World Tour, Sydney” was great sales work by Salesforce, Thompson says, because it could enable the company to lay down relationships for the future.
“Salesforce gains a privileged position from the demonstration opportunities that other vendors have not had, putting them front of mind when new opportunities arise,” she says. “It also presents the spectrum of its subsidiaries and vendor alliances in demos that look effortlessly connected and whose aim is to show buyers that locking into their ecosystem can meet all buyer needs.”
Given Salesforce’s record of success, Thompson questioned whether its approach would ever really change. “Salesforce has a highly professionalised, well, sales force, that is great at nurturing relationships,” Thompson says.
Stephen Bartos, a former deputy secretary at the Department of Finance, who is now a professor at the University of Canberra specialising in public sector governance, said large IT firms were well known for their hospitality.
“I looked at Woodcut, speculated whether the public servants dined on $330 rib-eye steak, or exercised self-control and only went for the $190 sirloin,” says Bartos. “However, it is a very common practice. All the consulting firms, but especially the large IT and systems integration firms, have enormous hospitality budgets which they use to develop a positive relationship with government buyers.”
With the practice of accepting dinners with IT vendors so widespread in the public service, Bartos believes there is the bigger question of whether a department should be outsourcing this kind of work or doing their own systems development.
“The problem is that having lost almost all their internal IT capability over the past two decades it is doubtful whether any Australian government department could do a major system development,” Bartos says. “But unless they start somewhere and build up, they will never regain that capability.”
This article was first published in the print edition of The Saturday Paper on October 5, 2024 as "Exclusive: FOI docs reveal courting of health officials".
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