An ACT parliamentary committee has warned that problems with payments for the territory’s Digital Health Record could point to broader mismanagement of the project, calling for tighter oversight of contracts including the $140 million Epic deal.
The ACT Legislative Assembly’s Standing Committee on Public Accounts and Administration made three recommendations specifically relating to the Digital Health Record (DHR) in a report released last week, following an inquiry into an earlier Auditor-General investigation of payments to NTT Australia.
The committee said it was concerned that “the poor management surrounding the payment of NTT invoices could be indicative of a larger pattern of mismanagement within the DHR project”.
It recommended the ACT government implement and maintain internal controls for invoicing and procurement, including mandatory purchase orders and delegation checks.
It also called for DHR contracts, including those with NTT and Epic, to have clear milestones, deliverables and consumption tracking, and recommended the government conduct and publish value-for-money evaluations of major ICT projects.
The inquiry followed a December 2024 Auditor-General report into ACT Health’s management of payments to NTT for DHR hosting services.
The audit found multiple payments had been made without prescribed procedures being followed, including invoices with no associated work or purchase orders, orders without enough detail to identify services provided, invoices raised and paid more than three months after services were delivered and invoices relating to multiple work or purchase orders.
ACT Health used software tools to verify the availability and use of consumption-based services invoiced by NTT but had not retained records of those validations.
Payments for those services totalled $16.158 million between 2020-21 and 2023-24, representing a third of all invoices paid to NTT over the period.
While ACT Health’s chief financial officer verified that the expenditure had been accurately recorded in its financial statements, the Auditor-General found the control deficiencies meant it was not possible to provide reasonable assurance that the services paid for had actually been received or that the prices paid were correct.
The ACT government agreed to all six recommendations from the original audit. As of August this year, five were listed as complete on the Audit Office’s Performance Audit Recommendations Dashboard, with one still in progress.
However, then-Auditor-General Michael Harris told the parliamentary inquiry he could not provide assurance that the problems identified had been fixed.
“The government’s actions taken to date have gone a long way towards addressing the issues identified in this report,” Mr Harris said.
“But, at this point in time, I cannot give you an assurance that the problems that have been identified have been fixed.”
Mr Harris also told the committee the NTT payments audit was the first in a series examining the DHR project, with potentially more significant issues involving its broader governance.
“From the information that we have available to us so far, the more important issues go to the governance arrangements that apply to the overall project, the way in which it was put together and the way in which the information was provided to cabinet,” he said.
“I am not saying that this is not significant – it is significant, but there are more significant things to come.”
Other DHR contracts
The committee was told there are 10 contracts relating to the functionality and integration of the DHR across the ACT health system, including a $140 million, 10-year contract with Epic Systems for the DHR software.
It said the findings relating to NTT meant scrutiny should be applied to the other contracts to ensure deliverables and milestones were being met.
Assistant Auditor-General Brett Stanton told the inquiry there had been hundreds of work orders under the NTT arrangements, with the detail of what was to be delivered spread across them.
“There were hundreds of those, and not ideal arrangements in relation to the work orders, the purchase orders and the invoicing associated with that,” Mr Stanton said.
Digital Canberra chief information officer Holger Kaufmann said milestone payments had applied to project services involved in implementing the DHR infrastructure, while consumption-based services operated more like utility charges and required monitoring to check usage against invoices.
The committee said clearly defined milestones, deliverables and consumption tracking were needed to identify emerging risks, monitor delivery and verify that payments corresponded with services received.
Savings questioned
The committee also drew on subsequent reviews that raised wider questions about the governance and financial performance of the DHR program.
Michael Walsh’s Inquiry into ACT health system data, demand and processes found the DHR had modernised healthcare delivery, reduced reliance on paper processes and improved quality and safety, but identified challenges involving governance, program management, financial reporting, offsets and benefits realisation.
A separate DHR Program Assurance Review found expected annual savings of about $6 million, compared with $29.3 million reported in DHR Program Board papers.
The Auditor-General also found ACT Health had not exercised a contractual right to benchmark the cost and performance of NTT’s hosting services against prevailing market rates, undermining its ability to demonstrate value for money.
ACT Health told the inquiry it had monitored NTT costs against other vendors and found no indication of unusual price increases.
The government said it did not intend to exercise the benchmarking clause during the remaining term of the NTT contract and would instead undertake cost benchmarking through an open tender when the contract expires in December 2026.
The committee concluded that the evidence corroborated the Auditor-General’s findings that the DHR hosting contract had experienced problems with internal controls for invoicing and procurement, and demonstrated a need for improved financial management and oversight of major projects.
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