‘Dumbfounding’ failures at heart of WA health IT bungle

Inquiry doesn’t mince words over Department of Health centralised computing services contract

An inquiry by a committee of the WA Legislative Assembly has called for the state’s health minister to report to parliament on why the Department of Health failed to utilise the government’s Gateway review process, in the wake of a major contract bungle.

The Department of Health has been inconsistent in its use of the Gateway review
process for major ICT procurement projects, which reflects a disregard for the value of the process in improving project delivery performance,” the report by the Legislative Assembly’s Education and Health Standing Committee said.

The committee's inquiry focused on a damning audit of the department’s management of its centralised computing services contract.

Fujitsu Australia was awarded the contract, which included managed data centre and network services, in November 2010. Concerns sparked by internal reviews led to the referral in late 2014 of the contract to the auditor general.

The WA Auditor General’s report on the procurement and management of the contract was published in February 2016.

“Governance and leadership over the contract was poor resulting in the procurement of additional and unnecessary IT services worth millions of dollars,” the audit report stated.

“In addition, Health had not properly planned and implemented critical data centre facilities costing millions of dollars that ultimately failed to meet service expectations.”

The audit report said that since the contract had come into operation, 79 contract variations worth $81.4 million had been made, with the total value of the contract potentially exceeding $175 million — it was initially valued at $44.9 million.

Some $44 million worth of variations were not authorised and “should have been procured through an open tender process as they were arguably inconsistent with the scope of the initial contract,” the report stated.

Basic organisational controls, such as internal audits, had failed dismally, the state’s auditor general told the inquiry.

The inquiry’s report, released yesterday, states that despite the level of risk involved in the contract and its complexity, the department did not implement a contract management plan. The lack of such a plan was “dumbfounding” and a “fundamental breach of the most basic principles of contract management”.

The report called on the health minister to outline to the Legislative Assembly “disciplinary proceedings or performance improvement action undertaken” arising from the actions of two employees labelled ‘Employee A’ and ‘Employee B’ in the audit.

‘Employee A’ had at various times been the director of infrastructure, director of applications and director of operations at the department and exceeded their delegated procurement limit by up to 20,990 per cent. Employee B, a director of applications, exceeded their limit by 101 per cent.

Although the committee said it was “encouraged” by comments from the auditor general that he hopes the establishment of the WA Office of the Government Chief Information Officer will lead to improved ICT outcomes across government, it remains concerned that other significant Department of Health ICT contracts “have the potential to spiral out of control”.

A separate inquiry focused on WA government procurement has recommended the government boost the resources available to its chief information officer.

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