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Human Services IT subcontractor fraud investigation raises political ire

Human Services IT subcontractor fraud investigation raises political ire

Reports indicate more than 50 IT subcontractors have been suspended

The suspension of dozens of IT subcontractors working for the Department of Human Services and a subsequent investigation into fraud allegations has fanned Australia’s political flame.

A joint statement by Labor’s Shadow Minister for the Digital Economy, Ed Husic, and Shadow Minister for Human Services, Linda Burney, has called out the Federal Government over the alleged fraud.  

“Reports today that Department of Human Services IT sub-contractors are under investigation for fraud are extremely concerning,” Husic and Burney said in the statement.

“Over 50 IT sub-contractors are accused of rorting the Australian taxpayer by submitting false invoices and securing government IT contracts by using fake resumes.

“With a public service employee also reportedly under suspicion, the Australian Federal Police (AFP) have been called in to investigate,” they said.

Burney and Husic noted that the Government recently made moves to improve its IT procurement process, making changes to the way it manages its contracts with IT suppliers.

Indeed, the Federal Government’s Assistant Minister for Cities and Digital Transformation, Angus Taylor, revealed on 23 August new procurement reforms that see IT contracts capped at $100 million.

The procurement changes also see a pledge by the Government to inject an additional $650 million annually into local tech companies that fall into the small to medium-sized enterprise (SME) category.

The new reforms came about as a result of recommendations from the ICT Procurement Taskforce report, aimed at helping to overhaul the way the country spends its $9 billion-plus annual IT investment dollars.

“Now, it’s clear this is a bigger problem than first imagined – today’s revelations are further proof the…Government has lost a grip on managing its ICT projects,” Husic and Burney said.

The Department of Human Services has confirmed it is currently conducting an internal investigation into allegations of potential fraudulent behaviour involving a “small number of former contractors and an APS [Australian Public Sector] employee”.

“The department is being provided support and assistance by the Australian Federal Police [AFP],” a spokesperson for the Department told ARN, noting that Human Services takes a zero tolerance approach to fraud.

At least some of the subcontractors that have been suspended were hired by a third-party firm used by Fujitsu to engage subcontractors. Fujitsu is among the Department of Human Services’ long list of external IT partners, as is DXC Technology, IBM, Hewlett Packard Enterprise (HPE), Capgemini, Accenture and IBM.

“We have been contacted by DHS to advise that a small number of contractors engaged by a third-party contracting firm utilised by Fujitsu have been removed from the DHS contract,” a spokesperson for Fujitsu told ARN. “We can confirm that these contractors are no longer engaged on any contract managed by Fujitsu.”

According to a report by the The Canberra Times, the lawyer representing 10 of the suspended subcontractors, Rory Markham, suggested that the Department should be focusing on the companies at the centre of the allegations rather than the employees themselves.

"A series of secondary subcontracting companies are at the middle of what has gone on," Markham told The Canberra Times.

"These companies engaged between 50 to 100 employees as subcontractors for large IT projects at the Department of Human Services,” he said.

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Tags FujitsuDepartment of Human ServicesDXC Technology

More about AFPARNAustraliaAustralian Federal PoliceCapgeminiDepartment of Human ServicesDXC TechnologyFederal GovernmentFederal PoliceFujitsuHewlett PackardHewlett Packard EnterpriseHPEIBMTechnology

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