Investigation finds WA Dept of Health botched Fujitsu core computing contract

news Western Australia’s Auditor General has released a damning report identifying weakness and inconsistencies in the management of the Centralised Computing Services contract at the Department of Health.

Acting Auditor General Glen Clarke said a contract of this value and complexity should have comprehensive governance arrangements in place to manage risk. “However, this was not the case,” he said.

Signed in 2010 with a value of $44.9 million, the contract has grown through 79 variations worth $81.4 million. If the options to extend are taken into account, the potential value of the contract is $175 million, Clarke explained in a statement. The name of the company which the Department signed the contract with was not released in the auditor’s report, but reports have stated that the contract is held by Japanese IT giant Fujitsu.

“A number of the variations resulted in Health acquiring equipment, in particular computer mounting frames and network switches, that it is not using and may not even use before the guarantee period on them expires,” the Auditor General said.

He put the value of these purchases alone at $3.3 million, while an ongoing rental payment for floor space is costing the department $90,000 per month.

“Numerous weaknesses in the management of the contract were identified, including no dedicated contract manager, no clear policies and procedures for contract variations, ineffective financial management and limited asset tracking and management,” said Clarke.

Apparently, a number of the contract variations were approved by employees that did not have the appropriate authority, and without business case or assessment. This resulted in significant purchases far exceeding department’s requirements.

In some cases, the variations were “inconsistent” with the scope of the original contract. These should have led to a new competitive procurement process, not merely negotiation with the contractor.

“Of concern, is that a number of internal and external reviews were undertaken which identified issues, but limited corrective action was taken,” Clarke said.

While WA Health had made some progress towards addressing the issues identified in the report, it still has a “considerable amount of work to do”, he said.

According to ABC Online, Clarke has referred the matter to the Corruption and Crime Commission (CCC) for review. However, he said the investigation had found no evidence of fraud, and that it was a routine matter “when we suspect there could be evidence of misconduct”.

The report , titled Health Department’s Procurement and Management of its Centralised Computing Services Contract, offers a number of staged recommendations identifying areas for improvement that the Auditor General said will result in more effective contract management and governance.

In November 2014, the Acting Director General for the Department of Health, Professor Bryant Stokes, approached the Auditor General over concerns about the Centralised Computing Services contract and requested an independent review of the findings.