Dept of Health’s Covid contracts ‘out of control’

Denham Sadler
National Affairs Editor

The federal government’s reliance on contractors and consultants for key COVID-19 response work is “out of control” and is not building capability for the next major crisis, the public sector union says.

The Department of Health has entered into contracts with private companies covering significant elements of its response to the ongoing COVID-19 pandemic, including for the vaccine rollout, aged care services, work around the country’s medical stockpiles and the supply and delivery of personal protective equipment.

A number of multinational consultancy firms saw the value of their contracts with the federal Department of Health nearly triple, with the use of labour hire also increasing, and a particular focus on tech-related work.

Big dollars, big contracts

This reliance on outsourcing will mean that important capability to respond to the next health crisis is not being built within the department, according to Community and Public Sector Union (CPSU) assistant secretary Michael Tull.

“It is history repeating. There’s always a place for specialist advice, the CPSU does not say there shouldn’t be any contractors or consultants, but the scale of the consultant spending is just out of control, it’s really ballooning,” Mr Tull told InnovationAus.

“One of the things we are not doing during this crisis is building the internal public service capability and capacity to make sure we’re ready for the next one. There’s so much reliance on the externals and no process for skills transfer or knowledge transfer and no clear program to plug those capability gaps.”

As of the end of 2020, more than 15 per cent of the Department of Health’s workforce was made up of labour hire staff, while 22 per cent of its salary budget was spent on contractors and consultants.

This makes Health second only to the Department of Defence on this spending, Mr Tull said.

“There’s always a need in Health for specialist services and advice, but this is a place that seems to spend a fair chunk every year on stuff that should be in-house,” he said.

The Department has now paid Ireland-domiciled firm Accenture $20 million for work around vaccine rollout data and management of supplies after the company was appointed as the government’s digital and data lead for the rollout late last year.

Consulting giant KPMG enjoyed a 261 per cent increase in contracts it won through the Department of Health in the 2020 calendar year, while PwC’s work with the Department jumped by more than 110 per cent.

EY tripled its work with Health in the same timeframe, working on key projects around aged care services, medical and vaccine stockpile and financial modelling, and advice on onshore manufacturing of vaccines.

The department’s reliance on contractors and consultants is the result of it being “run way too thin” before the pandemic, he said, and a lack of any existing crisis capability or preparedness.

“It’s the same problem for Centrelink or the tax office or any of the key agencies that have had to step up in the pandemic. All of them, as they’ve gone about doing that, have had to rely on big spends on external consultants and the use of labour hire, and that really points to a lack of depth, capability and capacity,” Mr Tull said.

“They’ve spent up big on consultants and there are issues with what they have actually bought, how much they have reported and what we get for the money.”

There was also an existing tendency in the agency to go to the consultants as a first option, Mr Tull said.

“The tendency of the Department, faced with any challenge is to cut a cheque for consultants. This means there is capability and talent among the existing staff that’s not being tapped, and where there are capability gaps the Department uses consultants over and over again for the same things when it should be building those skills in-house,” he said.

“The Department of Health is incredibly reliant on external consultants and labour hire providers, and this shows that the Department needs more permanent staff to build its internal capability and capacity.”

Mr Tull said the Department is doing “next to nothing” to ensure some of the expertise and skills from the external workforce is being passed on to the public service to assist with future crises.

“Ideally if you’ve got a capability or knowledge gap that is important to your department you bring in someone from the outside to plug that gap in the short term and while there you make sure some skills development and transfer happens,” he said.

“You try to leave yourself in a stronger position capability wise. Health don’t do that. Year after year they use the same consultants for the same basic capabilities time and time again. That is absolutely what is happening at the moment.”

Do you know more? Contact James Riley via Email.

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