Department of Finance Procurement Policy Note: Novation of PwC contracts to Scyne Advisory

13 October 2023

Purpose

The purpose of this Procurement Policy Note is to advise Commonwealth procurers about the outcome of the Department of Finance’s (Finance) examination of Scyne Advisory Pty Ltd (Scyne), as it pertains to the novation of contracts from PricewaterhouseCoopers (PwC) to Scyne and the next steps to be undertaken by Commonwealth entities.

In July 2023, Allegro Funds Pty Ltd announced that PwC Australia’s public sector advisory business will become an independent government-specialist company, as Allegro Funds and PwC reached a binding term sheet on the sale of the business. Allegro announced that the new business will be fully independent of PwC and will be known as Scyne Advisory.

PwC approached the Commonwealth seeking to novate existing Commonwealth contracts from PwC to Scyne. This included novation of contracts related to the Whole of Australian Government Management Advisory Services Panel that Finance is responsible for.

To ensure a coordinated and efficient approach across the Commonwealth, Finance has taken responsibility for managing the Commonwealth’s response to the establishment of Scyne.

Finance has undertaken an examination of the ethical soundness of Scyne on behalf of all Commonwealth entities such that they do not need to undertake a similar assessment. This process sought to determine whether Scyne had the appropriate governance structure, ethics and culture to contract with the Commonwealth. The process and outcome of this examination is described below and Finance’s report is available on its website.

Examination

Finance’s examination has considered the governance structures, ethics and culture of Scyne as well as the policies and frameworks that support ethical behaviour. This examination has been supported by the advice of Dr Simon Longstaff AO, Executive Director of The Ethics Centre. Finance’s examination has also considered:

  • the probity review of PwC personnel transferring to Scyne that was undertaken by the Chair of Scyne’s Probity, Conflicts and Ethics Committee and former Federal Court of Australia Judge, the Hon Andrew Greenwood; and
  • the review led by Dr Ziggy Switkowski AO regarding PwC’s governance, culture and accountability, and Scyne’s response to that review.

Outcome

Finance concluded that Scyne has the appropriate governance, accountability and ethical frameworks in place to contract with the Commonwealth. Finance notes that, after his review, Mr Greenwood reported that no individuals involved in the tax practitioners board matter or the breach of confidence and the subsequent handling of that matter are transferring to Scyne.

Finance considers it will be important to monitor whether the implementation and operation of those arrangements deliver the intended outcomes. As such, Finance will be actively monitoring Scyne for at least 12 months. The following requirements will be aspects of Finance’s ongoing monitoring:

  • monthly engagement with Scyne and entities contracting with Scyne to ensure that Scyne’s actions and behaviour meet the high ethical standards expected by the Commonwealth;
  • the provision of a consolidated ethics framework of values, principles and purpose by Scyne within three months; and
  • the provision of bi-annual reports from Scyne on the progress of implementing its ethics and accountability frameworks.

Next Steps

Commonwealth entities can now consider contracting with Scyne in the same way they consider other tenderers, including considering novation of existing PwC contracts to Scyne.

Novation

Finance is currently finalising the novation requirements from PwC to Scyne under the Management Advisory Services Head Agreement. Following the execution of a deed of novation, Scyne will be listed as a supplier under the Management Advisory Services Panel and Commonwealth entities will be notified.

With Finance having completed its examination of the ethical soundness of Scyne, entities with existing contracts or panels involving PwC will need to consider whether such arrangements should be novated to Scyne.

Upon receipt of a request from PwC/Scyne to novate, entities will need to assess the capability and capacity of Scyne to deliver the specific contractual requirements, with consideration of any specific novation processes detailed in each contractual arrangement.

Entities may need to seek advice on the legal, financial and contract delivery implications of novating existing arrangements, particularly for more complex, operationally sensitive, high value or high risk arrangements.

Further guidance on novating contracts is available within the PricewaterhouseCoopers and Scyne Advisory contract novation guidance.