Inquiry into Govt Programs and Projects slams $4.3b Serco contract at Fiona Stanley Hospital

Fiona Stanley Hospital.
Fiona Stanley Hospital.

THE State’s newest metro hospitals were under the spotlight during the Inquiry into Government Programs and Projects, with a $4.3 billion Serco contract at Fiona Stanley Hospital slammed in the final report.

“The absence of a stand-alone business case to underpin the $4.3 billion Serco contract was the worst case of financial risk taking for the State to be reviewed,” special inquirer John Langoulant said.

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The inquiry’s report stated a market sounding exercise by the Health Department in mid-2009 led to the view there was a viable market for the private delivery of facilities management and support services at the hospital, including sterilisation and porter services.

However, there was no assessment of the impact on the Health Department, no cost benefit analysis and no assessment of clinical and other risks of the decision.

“It was unusual, particularly for a major initiative,” Mr Langoulant said.

Problems soon emerged with the sterilisation arrangements, with the Health Department taking over responsibility in 2015 because of risks to patient safety.

While the report said Serco staff integrated well with Health Department staff, some areas in the management of the contract remained problematic, including ineffective dispute resolution procedures.

Perth Children’s Hospital, which was originally set to be completed in 2014, revealed friction between key government agencies.

“The curiosity with this project compared with the construction component of the (Optus) Stadium and Fiona Stanley buildings is why did the Children’s Hospital encounter so many difficulties when these other two projects experienced so few?” he said.

The report’s recommendations included a formal committee of Cabinet be established to ensure consensus on major projects and intervention from the Department of Premier and Cabinet when relationship issues arise between departments at the project’s executive level.

In contrast, St John of God Midland Public Hospital was deemed well managed.

“The governance, procurement and decision-making process in appointing St John of God Healthcare… was well managed and provided value for money for the State,” Mr Langoulant said.

Mr Langoulant said the jury was still out on the Queen Elizabeth II Medical Centre carpark.

“It is questionable whether the project will deliver value for money,” he said.

The total cost of the project was $7.3 million, with more than $15 million paid up to August 2017 in subsidising staff parking.

One-hundred-and-seven whole-of-government recommendations were made in the inquiry’s report spanning 31 projects and programs.

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