Accenture secures another Gov contract as digital transformation costs balloon

The Department of Health and Aged Care’s digital transformation spending spree continues with IT service management company Accenture securing a $289 million contract, their third active contract with the Department. 

Key points

• The Government committed $1.2 billion in the 2024 Budget to improve digital aged care systems over the next five years
• An additional $174.5 million was allocated to developing the ICT infrastructure needed to implement the new Support at Home Program and Single Assessment System 
• Accenture Australia Pty Ltd secured an $18.1 million contract in 2022 to help build the new government provider management system (GPMS) which will be built on a Salesforce platform
• However, it has since ballooned to almost $157 million, joining a dozen other Department contracts that have rapidly risen in cost 

Accenture’s contract means they will be paid more than half a million dollars per day over the next two years as one of the Department’s key players in the digital transformation journey.

They will supply contractors to help prepare systems for the oncoming reform process which includes a new Aged Care Act and home care system, Support at Home. 

A spokesperson for the Department told InnovationAus.com that Accenture will “augment the department’s aged care digital transformation capacity.” 

“This workforce uplift supports the temporary demands of reform initiatives while ensuring the ongoing capability and capacity to maintain the future aged care digital eco-system is retained in the department’s permanent workforce,” they added.

Another contract recently awarded to the business will see them deliver “ICT specialist expertise, including business architecture, analysts, system testing and technical writing” alongside Scyne Advisory 

The Department of Health and Aged Care, and the Government as a whole, has been under fire for its reliance on external contractors in recent years. The costly process resulted in the Government announcing it would rely on fewer consultants and contractors, providing savings of up to $1 billion. 

However, it appears that Accenture has found a way to secure repeat business from the Government. InnovationAus.com previously reported that Accenture maps government officials, their relationships and social styles to help prepare bids for lucrative government contracts. 

With a noted history of poor performance – Accenture has been involved in other Federal tech projects such as My Health Record, a new visa processing app and a modernised business registrars program – expanding costs are nothing new to the IT management organisation. 

Aged care IT cost blowouts

The Department’s aged care spend is under the microscope after The Saturday Paper revealed the full extent of contract blowouts. 

They reported that one contract is already valued at more than eight times the original estimate while another is nearly five times initial expectations. 

This includes Accenture’s $18.1 million deal to assist with the design and rollout of the GPMS. Less than two years later the value of the contract sits at $156.9 million.

Even the contract with Salesforce for licensing and professional services to support the GPMS has more than doubled, rising from $13.5 million to $29.2 million. A separate software maintenance and support contract ballooned from $2.9 million to $23.7 million.

French consulting firm Capgemini has also benefited from several contract blowouts with seven separate deals initially valued at $48.6 million expanding to $98.9 million.

In total, just under a dozen separate contracts negotiated by the Department of Health and Aged Care to deliver and improve ICT infrastructure have gone from costing them less than $100 million to almost $330 million in a couple of years. 

Poor planning has been blamed for many cost blowouts with another Accenture contract – this one involving My Health Record – highlighted in the past. 

Acting Auditor-General Rona Mellor called out poor procurement planning and a “failure to observe core elements of the Commonwealth Procurement rules” as impacting the agency’s scoring in procurement and contract management. 

“Contract variations within the existing contract term have been made with insufficient assessment of risk, consideration of materiality and justification of value for money,” Ms Mellor said.

“The management of contract performance has not utilised all available levers under the contract.”