Almost 80 contract variations worth more than $81 million tripled the cost of a Department of Health central computing services contract, with issues including more than 60 per cent of data racks going unused, the auditor general revealed today.
Almost 80 contract variations worth more than $81 million tripled the cost of a Department of Health central computing services contract, with issues including more than 60 per cent of data racks going unused, the auditor general revealed today.
The audit followed a letter from the acting director general of health, Bryant Stokes, in late 2014 where he expressed concerns about the structure and performance of the contract, which was signed in November 2010.
The report was tabled in parliament today.
Business News understands international technology company Fujitsu was the contractor involved.
The biggest two contract variations were worth $41.5 million, with the report finding they were arguably inconsistent with the purpose of the original contract and should’ve been procured under a competitive tender process.
A further issue was in excess capacity, with the report finding Fujitsu had undertaken the majority of scoping work for a data centre expansion and that the Department of Health had failed to get an independent valuation.
There are now more than 100 unused data centre racks out of a total of 167, with the cost of the unused racks at more than $2 million and an additional leasing cost of more than $1 million annually.
A further unnecessary cost came in the purchase of five network switches, for $1.25 million, all of which are currently unused, while another variation purchased excess capacity for $3.1 million annually, which is mostly unused.
One major failure within the department was that the officer who authorised the two largest contract variations had significantly exceeded his authorisation level of $100,000.
An additional problem was that the Department of Finance was not consulted, despite that being required for all procurements over $150,000.
Other problems included a lack of work to assess the contractor's performance, inaction in addressing issues raised by a consultant who reviewed the contract and poor documentation.
Responding to the report, the Department of Health said it accepted all findings and had already completed work to adopt two recommendations.
It additionally noted that it anticipated it would complete work on the remaining four recommendations ahead of the timelines anticipated by the report.
Recommendations included that Health commence negotiations with Fujitsu and with the government's new Chief Information Officer to allow other government agencies to lease the unused data space.
The report release follows a concerted effort within the state government to rein in IT spending, with chief information officer Giles Nunis telling Business News late last year of his plans to consolidate the government's existing data server contracts.
