Accenture Grants $1M in Service Credits to ADHA

The Australian Digital Health Agency (ADHA) has had a long-term and intricate relationship with Accenture, the firm responsible for managing the My Health Record system's infrastructure. This partnership, which commenced in 2012, has evolved through various amendments and extensions, culminating in a contract valued at $746 million that extends until the end of 2025. This makes it the most significant IT supplier contract related to the My Health Record system.

An audit of Accenture’s engagement provided detailed insights into the service level agreements (SLAs) that govern the operation, maintenance, support, and integration of the My Health Record infrastructure. A notable revelation from the audit is that ADHA has claimed $1.04 million in service credits from Accenture due to underperformance since January 2018. These service credits serve as a mechanism to enforce performance standards and can be claimed at the discretion of ADHA. The credits can amount to up to 12 percent of the monthly support charges, with 23 service level categories defining the performance metrics, although not all these categories are specified in the audit.

In 2016-17, the agreement between ADHA and Accenture was amended to include a pre-payment arrangement instead of payment in arrears. This change was made in exchange for reduced charges and a higher service level commitment, increasing system availability from 99.5 percent to 99.9 percent. However, the pre-payment arrangement raised concerns internally in 2023, primarily because it could weaken ADHA's leverage to enforce performance requirements. Despite these concerns, the arrangement was justified based on Accenture's commitment to higher system reliability.

The audit also highlighted a significant dispute that lasted three and a half years over the provision of updated system architecture documentation for the My Health Record. This documentation was critical as it would allow other potential suppliers to understand the system and submit competitive bids to operate it. The absence of updated documentation hindered the process of considering alternative suppliers, leading to payments to Accenture being withheld during the dispute period. Despite this, Accenture received a three-year contract extension through a "direct source limited tender" during this time. This method of awarding contracts has been scrutinized by auditors for lacking openness and competitiveness.

ADHA has “sole discretion” to claim service credits for underperformance, which is capped at up to 12 percent of monthly support charges. This system aims to ensure Accenture meets its performance obligations, but it also highlights the complexities involved in managing such a significant contract. The audit's findings suggest that ADHA has actively worked to hold Accenture accountable by claiming service credits on 25 occasions, totaling $1.04 million up to December 2023.

A crucial aspect of the audit was the risk associated with advance payments, which could potentially reduce ADHA's ability to enforce performance requirements. The pre-payment arrangement, justified on the basis of achieving higher system reliability, was seen as creating a risk of weakened leverage. This issue was addressed by detailing the remedies available for service misses by Accenture, with service credits being a primary tool for enforcing performance standards.

Moreover, the audit revealed ongoing challenges in procurement and contract management. For instance, insourcing or changing the outsourced partner was contemplated multiple times, but these efforts were impeded by the lack of updated IT documentation. This situation underscores the importance of maintaining comprehensive and up-to-date system documentation to facilitate competitive sourcing and ensure operational transparency.

The audit has called for an open market test of the Accenture agreement before its expiration to ensure a competitive sourcing process and potentially improve service provision. This recommendation reflects broader concerns about the use of non-open approaches to sourcing significant contracts, emphasizing the need for transparency and competitiveness in public procurement.

The complexities and challenges highlighted in the audit underscore the critical nature of managing such a substantial and essential IT contract. While ADHA's proactive stance in claiming service credits demonstrates an effort to ensure accountability, the prolonged dispute over IT documentation and reliance on pre-payment arrangements reveal underlying issues in contract management and performance enforcement. The goal remains to ensure the My Health Record system operates reliably and efficiently, thereby effectively serving the healthcare needs of Australians.

The audit's findings also shed light on the broader implications of contract management in public sector IT projects. Ensuring accountability, maintaining comprehensive documentation, and fostering competitive procurement processes are essential for achieving high performance and value for money. As ADHA moves forward, these principles will be critical in managing the My Health Record system and other significant IT initiatives, ultimately contributing to the broader goal of enhancing digital health services in Australia.