❓ Opposition questions the Minister for Health regarding a significant cost blowout within the Department of Health's ICT section, revealed in an Auditor General's report. The Minister details the timeline of events, actions taken, and the extent of the financial mismanagement, including unauthorized contract extensions and unused resources.
AnsweredQoN 18Legislative Assembly
QuestionView source ↗
DEPARTMENT
OF HEALTH — INFORMATION AND COMMUNICATIONS TECHNOLOGY — COST
BLOWOUTS
18. Mr R.H. COOK to the Minister for
Health:
I refer to the Auditor General's
disturbing report today into serious governance failures and a multi-million
dollar cost blowout in the health department's central computer system
contract.
(1) When was the minister first advised
of the problem?
(2) What action
did he specifically take to address these serious failures in accountability
and financial management?
(3) When was the
minister last advised of the full extent of the cost blowouts associated with
the contract?
(4) What is the full extent of the
blowouts?
OF HEALTH — INFORMATION AND COMMUNICATIONS TECHNOLOGY — COST
BLOWOUTS
18. Mr R.H. COOK to the Minister for
Health:
I refer to the Auditor General's
disturbing report today into serious governance failures and a multi-million
dollar cost blowout in the health department's central computer system
contract.
(1) When was the minister first advised
of the problem?
(2) What action
did he specifically take to address these serious failures in accountability
and financial management?
(3) When was the
minister last advised of the full extent of the cost blowouts associated with
the contract?
(4) What is the full extent of the
blowouts?
AnswerView source ↗
(1)–(4) I
was first advised of the issues within the information and communications
technology section of the Department of Health when former Acting Director
General Bryant Stokes—I do not know the exact date, but the member will
be able to work it out—came to me to say that he had been advised by
the procurement officer of concerns with the contract management within that
section of the Department of Health. He subsequently looked at her evidence and
came to tell me about it. At that time, we agreed that it should immediately be
referred to the Auditor General for review. Whatever date the Auditor General
was informed—I think those dates are in the report—I was
informed in the time leading up to that when the letter from the Auditor
General was received. That was the first that I heard of it. Subsequently of
course, the Auditor General did his investigation. He came to brief me late
last year to tell me what the potential findings were. It was due to be
released late last year, but because there were further discussions with
Fujitsu, it was agreed that it would be released this year instead. That is the
time line. It is a very unfortunate affair whereby staff within the ICT section
had legitimate contracts that were signed with Fujitsu—a four-year
contract with potentially two two-year extensions, so a potential eight-year
contract altogether, worth a value of about $93 million. The staff who were
working within that department extended components of that contract by making
79 variations to the contract that added another $81.4 million to the contract
and $44 million worth of those extensions were not authorised in the proper
manner, as required by the terms of their employment. Subsequently, those staff
are no longer employed within the Department of Health, otherwise action would
have been taken. Also, as a result of that investigation, those matters were
referred to the Corruption and Crime Commission for investigation. That was the
course of events. It is extremely disturbing and the period over which it
occurred covered about three different directors general; in fact, four if we
include acting directors general during that time, with people on leave. To my
knowledge, none of those directors general —
Mr
M. McGowan : What's the full extent?
Dr
K.D. HAMES : The full extent of the loss, if you like, although that is not
possible to work out, I think was 7.9—an amount over $7 million with
which things were purchased that have not been used. Part of that was in shelf
space and part was in capacity to use computer services that were not, in fact,
required in the end. The current manager of ICT services is making use of
components of that, so some of it is being onsold, and they are seeking to use
some of it elsewhere. That is the full extent of what the Auditor General
refers to as ''the loss.'' However, $44 million worth of
unauthorised extension of contract was made within that. Those contractor
services were subsequently used, so the vast majority of those components that
were purchased were used by the Department of Health, apart from that
seven-point-whatever million dollars. Nevertheless, it was purchased in a way
that was not authorised or approved, and was not appropriate. It should have
gone out for tender for further extensions to those contracts to buy those
additional services.
Mr
M. McGowan : Could the blowout be higher?
Dr
K.D. HAMES : No.
was first advised of the issues within the information and communications
technology section of the Department of Health when former Acting Director
General Bryant Stokes—I do not know the exact date, but the member will
be able to work it out—came to me to say that he had been advised by
the procurement officer of concerns with the contract management within that
section of the Department of Health. He subsequently looked at her evidence and
came to tell me about it. At that time, we agreed that it should immediately be
referred to the Auditor General for review. Whatever date the Auditor General
was informed—I think those dates are in the report—I was
informed in the time leading up to that when the letter from the Auditor
General was received. That was the first that I heard of it. Subsequently of
course, the Auditor General did his investigation. He came to brief me late
last year to tell me what the potential findings were. It was due to be
released late last year, but because there were further discussions with
Fujitsu, it was agreed that it would be released this year instead. That is the
time line. It is a very unfortunate affair whereby staff within the ICT section
had legitimate contracts that were signed with Fujitsu—a four-year
contract with potentially two two-year extensions, so a potential eight-year
contract altogether, worth a value of about $93 million. The staff who were
working within that department extended components of that contract by making
79 variations to the contract that added another $81.4 million to the contract
and $44 million worth of those extensions were not authorised in the proper
manner, as required by the terms of their employment. Subsequently, those staff
are no longer employed within the Department of Health, otherwise action would
have been taken. Also, as a result of that investigation, those matters were
referred to the Corruption and Crime Commission for investigation. That was the
course of events. It is extremely disturbing and the period over which it
occurred covered about three different directors general; in fact, four if we
include acting directors general during that time, with people on leave. To my
knowledge, none of those directors general —
Mr
M. McGowan : What's the full extent?
Dr
K.D. HAMES : The full extent of the loss, if you like, although that is not
possible to work out, I think was 7.9—an amount over $7 million with
which things were purchased that have not been used. Part of that was in shelf
space and part was in capacity to use computer services that were not, in fact,
required in the end. The current manager of ICT services is making use of
components of that, so some of it is being onsold, and they are seeking to use
some of it elsewhere. That is the full extent of what the Auditor General
refers to as ''the loss.'' However, $44 million worth of
unauthorised extension of contract was made within that. Those contractor
services were subsequently used, so the vast majority of those components that
were purchased were used by the Department of Health, apart from that
seven-point-whatever million dollars. Nevertheless, it was purchased in a way
that was not authorised or approved, and was not appropriate. It should have
gone out for tender for further extensions to those contracts to buy those
additional services.
Mr
M. McGowan : Could the blowout be higher?
Dr
K.D. HAMES : No.
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