Does Diggies and North Beach Cafe tender process pass the pub test, asks unsuccessful party

On Monday night Wollongong City Council finalised a new extended lease agreement for the popular Diggies and North Beach Cafe at North Wollongong but the complicated saga appears far from over.  

Three tenderers applied for what was to be a five-year lease with an additional five-year option.

One of the unsuccessful tenderers, Paul Anzani, a local businessman with decades of experience in hospitality, says the process has been flawed from the beginning. He plans to raise his concerns with the NSW Office of Local Government.  

Mr Anzani says a recommendation to Council at its 17 November meeting would have awarded the 10-year lease to the current operator, North Kiosk Pty Ltd, until he intervened at the 11th hour, pointing out errors in the process.

“At 2.30pm on the day of the council meeting I sent an email to all 12 Wollongong councillors, raising concerns about the lease term and a potential conflict of interest,” Mr Anzani said.

His email told councillors the 17 November business paper recommended delegating authority to the General Manager, Greg Doyle, to finalise the tender process, but the paper didn’t disclose that the GM had a business relationship outside of Wollongong with the successful tenderer, and as such should remove himself from the process.  

“Within two and a half hours of receiving my email, and less than an hour before the Council meeting was to begin, I received an email from a council manager in charge of commercial operations and property advising that an amendment would be made to the Council paper, and the new recommendation was to decline all tenders,” Mr Anzani said.

“The reason it gave as grounds to decline the offer were that there were difficulties and challenges experienced by the assessment panel making comparable assessments due to differing lease tender terms presented. The email made no reference to a conflict of interest. In fact, it reinforced that 'Council delegate to the General Manager the authority to undertake and finalise negotiations'.”

The correspondence from the council manager of commercial-operations said, “the reason for council so resolving to enter into negotiations with the tenderers and not inviting fresh tenders arises from the alternate tenders received, offering different lease terms, and ensuing difficulties in achieving appropriate comparisons…”

Later that day, at the 17 November council meeting, the issue of a conflict of interest was noted and the General Manager left the room when there was a brief discussion resulting in the decision for council to reopen the tender process, asking all three compliant tenderers to negotiate and resubmit their proposals but based on a longer five plus five plus five (15-year) basis.

“Where did that backflip to 15 years suddenly come from?” Mr Anzani asked.

In his email to councillors, Mr Anzani questioned whether a non-conforming tender had been selected based on a 15-year deal and he suggested “the financial details of all tender submissions warranted a thorough and transparent review”.

 He said the decision of Council on 17 November was to “enter into negotiations with the three initial tenderers with the objective of identifying a preferred party”.

“There was no negotiation about the commercial terms of the new lease. I would have expected to have a face-to-face meeting, providing an ideal opportunity to give feedback and to present a new offer. Instead, I was just sent a form to fill out, confirming rent, the cost of a fit-out and how much time I wanted rent-free. That’s not negotiation. That’s just ticking a box. It’s an audacious approach. It beggars belief that this is how council decided to run such an important process on behalf of the city.”  

Mr Anzani said the manner in which the retendering process was carried out was flawed.

“To protect the confidentiality and privacy of the individual tenderers it should have been reposted through Tenderlink rather than simply via emails to council staff. Seriously, does this pass the pub test in terms of due process, providing a level playing field and full transparency?”

Ahead of December 15's council meeting, Mr Anzani said he noted the latest business paper to Council – which recommended North Kiosk Pty Ltd be granted the lease – records that the General Manager has an “ongoing” declaration of a conflict of interest in relation to the operators “first lodged in 2018”.

“Despite this, recommendation 3 of Council agenda item 17 says, ‘Council delegate to the General Manager the authority to finalise and execute the Lease and any other documentation required to give effect to this resolution.’

“Later it says the General Manager has stepped away from any role or involvement in this matter, including prior to the tender and through the evaluation and reporting of the outcome. It seems the left hand isn’t talking to the right hand in council.”

Responding to questions after November 17’s council meeting, a Council spokesperson said: “The General Manager does not have any involvement in decision-making processes related to the property or tenderer at North Wollongong Beach Café and Kiosk. The existing lessee and the General Manager are both minor shareholders in a hospitality collective that operates outside the Wollongong Local Government Area. This is publicly noted and available in the General Manager's Annual Declaration.

“The General Manager voluntarily and appropriately removed himself from any involvement with the current tender process.”

Mr Anzani, whose 40-year experience in hospitality includes management roles with the Hilton Hotel group and operating the Illawarra and Scarborough hotels, says he has decided to speak out, not because he was unsuccessful in the tender process but in the hope that future tenders are managed more carefully.

“My complaint does not seek to hamstring anyone from being entrepreneurial or preclude anyone in public office from undertaking business endeavours. My complaint is about transparency, fairness and procedural process that best serve the interests of the community and tenderers alike.”

Mr Anzani said he also questioned “the rush” to get this tender finalised.

“Given the kiosk and cafe will close in February 2026 to allow the construction of the sea wall, council will get no rent for at least 12 months.

"Postponing the decision to allow for a review of the North Beach Kiosk and Cafe would allow councillors to be 100 percent satisfied that the best outcome for the community would be achieved whilst maintaining governance of the selection process.”

At Monday night's council meeting, both the Diggies and Lagoon agenda items were passed ‘on block’ with no discussion.

The Illawarra Flame gave the General Manager and Wollongong City Council an opportunity to respond to criticism over "transparency", "fairness" and a "flawed process", and to explain the confusing statements in December 15's business paper. Today, a Council spokesperson issued the following statement:

"Following the initial open tender process, Council resolved (November 17) that a more beneficial outcome would be achieved via direct commercial property negotiations with the three tender respondents given the alternative responses received and the difficulties in undertaking equitable comparisons via a traditional scored tender approach. This process was carried out in accordance with all relevant provisions of the Local Government Act.

"In addition, external and internal probity advisors were included in the negotiation process as non-scoring members of the evaluation panel. Their role was to review the assessment methodology, examine negotiation records, and ensure the process was satisfactory from a probity perspective.

"The General Manager has declared a conflict of interest in relation to a Director of North Beach Kiosk Pty Ltd which has been an ongoing declaration first lodged in 2018. Due to this declaration, the General Manager stepped away from any role or involvement in this matter, including prior to the tender and through the evaluation and reporting of the outcome.

"Under the Local Government Act, Council is not permitted to delegate powers to any staff member other than the General Manager. In circumstances where there is a disclosed conflict of interest, the General Manager can subsequently sub-delegate to an appropriate staff member. In this matter, authority was sub-delegated to the Director Community Services."