A damning audit has found ACT Health bureaucrats may have wrongly paid a series of invoices to a company hosting the territory's digital health record.
Officials are scrambling to determine how many payments were incorrectly made after the directorate was billed for services inconsistent with the terms of an estimated $110 million contract.
The matter has been referred to the Auditor-General, and the ACT Integrity Commission has revealed there is an investigation into ACT Health executives involved with the delivery of the digital health record. Health Minister Rachel Stephen-Smith claimed she was kept in the dark over the full details of the audit.
But how did this happen?
What is the contract?
The ACT implemented its own digital health record in 2022. The system collated more than 40 systems used by the public health system into one.
The ACT Health directorate put out a tender in 2020 for a company to host, deliver and manage ICT services for the digital health record.
NTT Ltd Australia was the successful tenderer. The company is an IT consulting firm that provides digital services to large companies, including healthcare organisations.
It was a five-year contract initially estimated to be $60 million. This increased to $72 million in October 2021 as the government took an option to extend the contract by one year. But the estimated price then increased to $110 million in March 2022.
This rapid price increase was due to a migration of systems.
"[This] was recommended due to the need for migration of related systems and the establishment of core datacentre services, with costs revised to $110 million (excluding GST)," an ACT Health spokesman said.
The spokesman said $66 million had been spent as of June 30, 2024.
All the work undertaken by the company was to be done through work orders and payments were made through separate invoices for these orders.
As of September 2023, there had been 223 work orders worth $83 million. This was only halfway through a six-year contract. The government has paid $66 million as of June 30, 2024.
What sparked the alarm?
In June 2023 alone, ACT Health was issued with 118 invoices relating to the project with the invoices totalling $7.9 million.
There was $3.6 million paid and the remaining $4.3 million was accrued.
This prompted the directorate to conduct an audit of the invoices.
"With this significant number of invoices and the large value of these invoices falling payable in June 2023 (or at least to be accrued in June 2023), ACTHD finance became concerned about increasing financial risks relating to the invoicing and the acquittal of the NTT invoices," the audit report said.
What were the concerning payments?
The audit found there was a "significant risk" ACT Health had paid for products and services inconsistent with the terms and conditions of the deed.
Under the agreement with NTT, ACT Health does not have to pay for a monthly service where the invoice is issued more than three months after the delivery of the service.
The audit showed NTT billed for services in June 2023 as far back as November 2022. ACT Health paid $2.1 million for services that occurred more than three months before the invoices were issued.
The invoices also included accruals for services before the directorate had even signed off on the work. The directorate was billed for services from between January 1, 2023 to May 31, 2023 relating to a work order that was not signed until August 2023.
"The implication for ACTHD is that it is being billed and paying for services outside of the terms of the deed," the audit report said.
Why didn't staff pick this up at the time?
The audit found staff did not have the "time, skills and systems to adequately acquit the products and services specified in NTT invoices before those invoices were paid".
ACT Health uses the territory government's Accounts Payable Invoice Automation Solution (APIAS) to process invoices. However NTT invoices are too complicated to be processed by the APIAS system.
This means staff need to manually go through the invoices and link invoice line items to work orders.
This included several line items for additional disk space.
There were invoices for 17 cents for disk space 57 times through to a single line item for $55,367 for 325,691 units of additional disk space priced at 17 cents a unit. The audit found ACT Health had no established mechanism to obtain assurance it had received all the additional disk space.
"Due to the large number of line items contained within the detailed line reports attached to NTT invoices; the technical nature of the products and services listed in these invoices; and the listing of multiple purchase orders against single invoices, there is a significant risk that staff do not have the time and skills to adequately acquit the NTT's invoices and obtain adequate assurances that ACTHD is obtaining value for money from the goods and services provided," the audit report said.
