WA Health locked into paying dubious data centre invoices

WA government lawyers have told the state it has no choice but continue paying data centre operator Fujitsu for $44 million worth of additions to its contract that were signed by uncertified health officials without proper approval.

In February, WA’s auditor general Colin Murphy revealed the systematic abuse of procurement processes behind an $81.4 million blowout in the Health department's centralised computing contract with Fujitsu, which was originally signed for $45 million.

Many of the purchases, which have been traced back to just a handful of IT staff working well beyond their financial delegations, were for services and equipment that were never needed and remain unused by WA Health.

The case was referred to the WA Crime and Corruption Commission, but the CCC decided it did not warrant a full inquiry.

Since then, senior health officials have been in talks with the State Solicitor’s Office about whether they still need to pay for the goods and services that were improperly added to the contract, components of which will remain until 2020.

In a parliamentary hearing into IT procurement last week, Health director general Dr David Russell-Weisz told the public accounts committee the lawyers had advised that the contractual obligations still stand.

He said Fujitsu would not have necessarily known that the officials finalising the $44 million in unauthorised deals were not authorised to sign off on that level of expenditure.

“From my perspective at the time, I think they would have felt they had a valid contract that was signed off by a public servant,” he said.

“We got a service for what we procured.”

Dr Russell-Weisz acknowledged that the series of procurement shortfalls, which took place between 2010 and 2014, were “clearly unacceptable”.

He pointed out, however, that his predecessor in the DG role referred the concerns to the auditor general personally in November 2014.

Russell-Weisz and his deputy Rebecca Brown were at pains to insist to the committee that serious changes had been implemented to WA Health’s delegation structure since the incident came to light.

It has restructured the procurement hierarchy and established a three-tiered delegation system for signing off on purchases, they said.

Staff involved in technical engagement with vendors have been separated from those who deal with finance and risk, the pair said, and the department is in the process of implementing a procurement tracking system for every dollar spent by WA Health.