The WA Corruption and Crime Commission has opted not to investigate the state health department's botched multi-million dollar IT contract with Fujitsu, but the state's premier has warned the department could still end up in front of the anti-corruption watchdog.
A damning report released last week by the WA auditor-general found the four-year, $45 million centralised computing contract had blown out by $81.4 million thanks to weaknesses in oversight and controls.
The audit office found the contract had been varied 79 times since its 2010 signing, with the department acquiring extra data centre equipment that it was unlikely to use.
Around half of the $81.4 million in contract extensions were made by staff that weren't authorised to make such decisions. The employees have since been sacked.
At the time of the report's release, WA health minister Kim Hames said the case had been referred to the Corruption and Crime Commission.
In the days following, the anti-corruption watchdog said it welcomed the audit report but would not undertake a separate investigation into the matter.
It said while the report highlighted "serious failings" in Health's systems, there was no evidence to suggest serious midconduct by individual employees had occurred.
However, on Friday premier Colin Barnett said the matter was now in the hands of the Public Sector Commissioner and warned it could be referred back to the CCC or the police if evidence of impropriety, criminality or corruption was uncovered.
"I'm appalled. It's unacceptable," he told the ABC.
"I think one of the things that is most disturbing is that some of those staff were authorised to make expenditure up to certain amounts. They exceeded that by a huge amount.
"It's been badly managed, badly handled, and the government agency ... has been sold equipment and services it didn't need."
The auditor also found that if the contract's two options to extend by two years were taken up, the total cost would blow out to $175 million.
The report said the contract's weaknesses could be traced back to the absence of a dedicated manager, no clear policies or procedures for contract variations, ineffective financial management and minimal asset tracking and management.
In parliament last week, the WA government admitted the health department suffered from "systemic" IT issues but argued the state was working proactively to address IT failings across the board.
Opposition MPs have called for health minister Kim Hames to resign over the affair.