As correctly reported in today's West Australian, I expressed to Government my firm opinion (letter of 16^th April) that this contract should be market-tested rather than novated directly from AIMS to GSL. After losing the Acacia Prison contract to SERCO and following its well-documented difficulties with the Prisoner Transport and Court Security contract, it had been an open secret from late 2006 that AIMS was seeking to find a way out of the latter contract. The Department should have taken the lead rather than waited to see what AIMS came up with. As I stated in my advice to Government, "State Departments and instrumentalities have not been set up to facilitate the commercial interests of a failing operator."

Once it became apparent that market testing would not take place and novation was the Government's preferred option, my concern became that the new contract with GSL should be long enough to encourage the incoming operator to invest resources and thus achieve continuity and stability. Novation for the remaining twelve months of the contract, with the possibility of then losing the contract a year later through market-testing, would have got the State the worst of all worlds. In that context, I expressed my support for a contract extension.

Meanwhile, in early June, I wrote to GSL setting out six matters of concern that I expected to be addressed as they took on the contractual responsibility. These were:

• the question of GSL's capacity to cope with the logistical challenge of running a transport service across such huge distances as are involved in Western Australia;
• the parlous state of the Government-owned vehicle fleet upon which GSL would have to rely and the disgraceful condition of some of the Government-managed stop-off points for long journeys;
• the importance of improving the system for medical escorts;
• the need for an absolute assurance that GSL would not attempt to cherrypick the most profitable parts of the multi-faceted contract;
• the need for GSL to review directly responses to earlier Reports of my office about the contractual problems; and
• generally, the need for GSL to discuss with my office the means by which the overall standard of services could be improved.

In subsequent meetings and correspondence, GSL has responded positively to each of these matters. At this early stage in the new contract, one can tentatively say that there have been some improvements and a greater sense of commitment and planning than with the previous operator. Aspects of the service will be formally inspected some time in 2008.

Two related Inspection Reports were tabled in Parliament during 2007 as the future contractual arrangements were being negotiated. In Report 40 (tabled 20 March 2007), I stated:

"The question posed at the outset – 'Can this arrangement work?' – has now been displaced by the question – 'Where do we go next?' The related question is: 'When will the State put additional resources into these activities?' The services are still somewhat thin and there is very little margin, and each of these points is more cogent for the regions than for the metropolitan area. For all that, we do seem broadly to be on the right track."

The performance of GSL and the effectiveness of Government's partnership with the Contractor will continue to be evaluated in this context.

Richard W Harding
Inspector of Custodial Services