Tasmania’s Department of Health is facing scrutiny after figures tabled in the Legislative Council showed 742 external labour-hire contracts worth $61 million had been awarded without a tender process for the Bluegum Digital Health Transformation Program.
According to ABC News, each contract had an individual value of $99,999 or less.
The contracts were awarded to 65 companies, with 22 receiving at least 10 contracts, while Ignite Project Services alone received 86 contracts collectively worth $6.96 million. Of the $61 million contracted, $50.6 million had reportedly been spent.
Bluegum comprises a collection of projects intended to overhaul record-keeping and systems management across Tasmania’s health service.
Under Tasmania’s procurement rules, the accountable authority can determine the market approach for procurement valued below $100,000, which may include directly approaching a single supplier.
However, the instructions require an agency to calculate the total maximum value of a procurement, including any options to extend. They also prohibit dividing or valuing a procurement to avoid an applicable threshold.
Independent Member of the Legislative Council and member for Elwick Bec Thomas raised the issue after questioning the government about the program.
“My questions to the state government are simple. How was this allowed to occur, and who is responsible?” she said, according to the ABC.
“The issue isn’t simply whether each individual contract fell below the relevant procurement threshold. The issue is whether anyone was looking at the cumulative picture and ensuring this approach represented good procurement practice and value for taxpayers.”
Related concerns were raised in Audit Tasmania’s latest Annual Audit Update, tabled on 12 August.
Audit Tasmania examined 508 Department of Health ICT contracts valued at more than $50,000 but less than $100,000, awarded between 1 July 2023 and 30 April 2026.
Those contracts were collectively worth $42.76 million, with the majority relating to either the Digital Health Readiness Program or Bluegum Health Transformation.
The audit used a different scope, period and value band from the $61 million Bluegum disclosure, meaning the two totals are not cumulative.
For contracts below $100,000, the department was not required to conduct a competitive procurement process, apply a Tasmanian content weighting or refer the engagement to a procurement review committee.
The audit found the department’s contractor-request process contained no direction or evidence that internal or cross-agency sourcing options had been considered before external resources were engaged, despite this being required by the Treasurer’s Instructions.
Contract renewals were also subject to fewer controls than initial engagements, with two fewer control steps and no consideration of the revised duration or value of the renewed contract.
Management maintained that the initial value of each contract was calculated using the full duration of the engagement or project. However, only six of the 508 contracts included an extension value.
Based on the evidence available, the Auditor-General concluded that the department frequently reduced contract durations to keep values below $100,000, which bypassed the probity, competition and value-for-money requirements that apply above the threshold.
The audit also found that 80 of the 508 contracts had commencement dates preceding their formal award. Seventeen were awarded one day after work began, 33 between two and 10 days later and 30 more than 10 days after their commencement date.
Management initially said this occurred in a small number of cases because of administrative and operational factors, but Audit Tasmania concluded that the 80 instances represented breaches of the Treasurer’s Instructions.
One contract was not formally awarded until 122 days after it commenced.
“Compliance with established procurement requirements is not optional; it is fundamental to accountability, transparency and demonstrating value for money in the expenditure of public funds,” said Auditor-General Martin Thompson.
The Tasmanian Government has defended its reliance on labour hire, describing Bluegum as a uniquely large and complex undertaking that requires specialist resources not readily available locally.
“The scale, specialist skill requirements and pace of delivery associated with implementing a statewide digital health transformation necessitate access to highly specialised ICT resources that are not readily available through the local labour market,” said the government in its response.
Department of Health Secretary Dale Webster previously told Budget Estimates that the department used labour hire because it needed to direct the workers involved, distinguishing the arrangements from independent consultancy services.
“We’ve been really clear that we are using multiple small contracts to bring people in to do this work,” he said.
The Department of Health and the Department of Treasury and Finance have since agreed to revised procurement arrangements for ICT labour hire.
These include a structured quotation process for engagements below $250,000, open tenders for higher-value engagements and oversight by a procurement review committee.
