The WA Department of Health is facing a potential corruption investigation after the state's auditor-general referred the department's mammoth centralised computing contract with Fujitsu to the WA anti-corruption body.
In a damning report released earlier this week, acting auditor-general Glen Clarke found the four-year contract - signed in 2010 for four years and for $45 million - had blown out by $81.4 million thanks to numerous weaknesses in oversight and controls.
The audit office had been alerted to the problem in late 2014 by the then-head of the Health department Bryant Stokes following his concerns about the contract.
The Fujitsu deal was signed to provide primary and secondary data centres as well as ongoing management and support of the infrastructure in the facilities.
As a result of its investigation, the audit office found the contract had been varied 79 times so far, and if its two two-year options to extend were taken up, the value of the contract would likely blow out to $175 million.
The department had acquired extra equipment - like mounting frames and network switches - that it is not currently using and may not even use before the guarantee period expires, the report stated.
It currently has 167 racks and is only using 65, the auditor found.
"The value of these purchases alone is $3.3 million as well as an ongoing rental payment, for floor space, of $90,000 per month," Clarke said in a statement.
"In some cases, the variations were inconsistent with the scope of the original contract and should have led to a new competitive procurement process rather than sole negotiation with the contractor."
Around half of the $81.4 million in contract extensions were made by staff that weren't authorised to make such decisions, and those employees had since been sacked, WA health minister Kim Hames revealed.
He said the case had been referred to the Corruption and Crime Commission for investigation.
"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," Hames told parliament earlier this week.
The auditor found the contract had no dedicated manager, no clear policies or procedures for contract variations, ineffective financial management and barely any asset tracking and management.
The department did undertake a number of both internal and external reviews that identified issues with the contract, but only made limited efforts to address the problems, the report found.
Clarke said Health had made some progress towards addressing the issues but still had a "considerable amount of work" to do.
The audit office recommended Health clearly separate contract management roles from contract oversight roles, ensure proper assessment and review of the contract's performance, develop a contract management plan and a comprehensive risk assessment framework, hire a dedicated contract manager, and work out how to make use of the extra resources such as through sharing with other agencies.