A damning report into the West Australian Department of Health's management of its computer systems has detailed a litany of mismanagement and waste, with the findings referred to the state's corruption watchdog.

Key findings: WA Health IT contract mismanagement so serious, CCC to review

WA Health IT contract mismanagement so serious, CCC to review No evidence of fraud

No evidence of fraud Lack of expertise with complex contracts blamed for failings

Lack of expertise with complex contracts blamed for failings Contract could rise to $175m from initial $44.9m

The auditor-general's report found the department's contract for its centralised computer system had blown out from $44.9 million in 2010 to $81 million, and will potentially rise to up to $175 million.

Acting auditor-general Glen Clarke said the scale of mismanagement was so serious that he had referred the whole matter to the Corruption and Crime Commission (CCC) for review.

"We found no evidence of fraud, but it's a routine matter than when we suspect there could be evidence of misconduct, we do refer to the CCC," he said.

"I can't say there was one specific matter, and I can't go into the details. We suspect it was primarily just a failure of good governance."

Starting in late 2010, the contract was supposed to deliver and support centralised computing services for the department through to 2020.

But the report found the cost of the contract had already escalated as a result of 79 contract variations.

Two variations alone cost $41.5 million, and according to the auditor-general, should have been put to a competitive public tender.

"Numerous weaknesses in the management of the contract were identified, including no dedicated contract manager, no clear policies and procedures for contract variations, ineffective financial management and limited asset tracking and management," a statement released with the report said.

"A number of the variations were approved by employees that did not have the appropriate authority, with no business case or assessment and resulted in significant purchases far exceeding Health's requirements."

Mr Clarke said the extent of the variations and scale of the waste reflected the department's lack of expertise in managing complex contracts.

"Certainly they had their own policies and procedures, but they stepped away from those policies and procedures too often," he said.

Facilities costing millions not being used: report

The report also found a $21 million expansion of the capacity of the department's data centre had been designed by the contractor without any independent assessment by the Health Department.

The department is using less than half of the 167 racks installed in the data centre.

The auditor-general placed the value of the unused computer racks at more than $2 million.

The department is spending $1 million a year renting the space for the unused racks.

The auditor-general found there was no business case to justify another contract variation which cost more than $3 million a year, or $265,000 a month.

Opposition health spokesman Roger Cook said the report was further evidence of the Government's failure to manage key areas of the health sector.

"What we saw at Fiona Stanley Hospital was a breathtaking disinterest from the Government in terms of runaway contracts around ICT," he said.

"This is another example of the fact that the Barnett Government isn't on top of the issues in the health portfolio."

'Incompetence' led to massive overspend

WA Health deputy director general Rebecca Brown today accepted the findings and six recommendations relating to contract management, governance and financial control.

"It is deeply disappointing, every taxpayer's dollar is valuable," she said.

"Unfortunately in this instance, the checks and balances with regards to our procurement and contract management practices failed."

She said individual staff were able to breach department policy.

Ms Brown said one officer, who was only authorised to spend up to $100,000 and instead authorised expenditure worth more than $40 million, has since left the department.

"In this instance an officer was able to purchase beyond [their] authorised limits and clearly was incompetent in that role.

"We've had significant changes in personnel and that officer has now left the employment of WA Health."

Ms Brown said other officers who made similar mistakes had also left the department but she would not be drawn on what consequences they faced.

The auditor-general's review was launched in 2014, after the then acting director general Bryant Stokes raised concerns about the centralised computing services contract.

Ms Brown said a raft of changes had been made since then, and she was confident it would not happen again.

She said the department was working to re-purpose some of the equipment that was wrongly purchased.

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