IT contract not checked for value: NSW A-G

There has been a cost blowout in IT contracts to two state government agencies because they failed to review whether taxpayers were getting value for money, Auditor-General Peter Achterstraat says.

Mr Achterstraat raised concerns about NSW Police and NSW Health in his latest audit, which found the ongoing management and renewal of IT services was undertaken without an adequate cost-benefit analysis.

His report, released on Wednesday, found that police extended a contract without any review, despite costs increasing from an initial estimate of $450,000 to $1.3 million.

NSW Health also renewed one contract for an additional three years at the same rate, even though the demand for services had declined by 36 per cent.

"Agencies must demonstrate that they achieve value for money from IT services contracts, not just when signing a contract, but over the life of the arrangement," Achterstraat said in a statement.

"Unfortunately, agencies are putting all their effort into signing the contract, but not managing it for the long term."

Achterstraat said the guidance provided by the State Contracts Control Board and the Department of Finance and Services was not "detailed enough" and they needed to improve the advice and support they provided to agencies.

NSW Health and NSW Police should also develop plans and structures to better manage new and existing contracts, he said.

Comment was being sought from Finance Minister Greg Pearce.

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