The Department of Health has revealed it is unlikely to axe Telstra’s $220 million contract for the late-running national cancer register due to the significant “costs and impact” that would be associated with doing so.
Last October the department was directed by a joint parliamentary committee to consider terminating its contract with the telco over underperformance on the build of single national record for the screening of cervical and bowel cancers.
The Parliamentary Joint Committee of Public Accounts and Audit asked to know whether it was “in the Commonwealth’s interests to terminate the contract and pursue other options for either of both registers”.
It also suggested Health could consider pursuing damages against the telco “given the significant extra costs incurred” as a result of delays.
But ahead of responding to the joint parliamentary committee before April, the department has cast doubt on any chance the contract would be prematurely terminated.
A spokesperson told iTnews that while the department’s consideration of the report was ongoing, ending the contract would be a major blow to the federal government and its stakeholders.
“The costs and impact to the Commonwealth and to stakeholders, including the pathology sector, as a result of terminating the contract would be significant and not warranted given the remediation and progress achieved last financial year and to date by Telstra Health,” the spokesperson said.
The register, which when complete will replace eight separate state-based cervical cancer screening registers and the paper-based national bowel screening register, has been plagued by numerous setbacks since Telstra won the $220 million contract In May 2016.
It was first intended to be ready in time to support both the national bowel and cervical cancer screening program in March and May 2017.
Two years on and only the cervical cancer register – which went live in December 2017, nine months later than originally planned – is operational.
The second major component of the register, which will replace the existing bowel cancer register, remains without a firm go-live date.
The delays have led the department to withhold payments to Telstra so that it is only paid once work is complete, with pay for full operations expected to commence once the cervical screening register is delivered.
Last June, two years into its contract, the telco had been paid $11 million or less than five percent of the $220 million for its work on the national register.
That figure has now climbed by just over $7 million to $18.3 million for more than two-and-a-half years of work, the department said.
“The nature of the contract and the consumption-based payments framework, plus the non-achievement of milestones, provides significant financial impacts on Telstra Health,” the spokesperson said.
“The Department has not seen the need to seek further damages on the Service Provider at this point in time.”