How the Tax Office blew out a major IT contract through 24 amendments
It is a familiar pattern across the public service where an agency signs a major technology deal, only to quietly pour millions into the agreement through post-award variations to keep critical systems running.
The Australian Taxation Office (ATO) has taken this habit to extraordinary lengths, turning a single information technology contract into a moving target of scope expansions and price increases.
The Tax Office amended a single IT contract 24 times in 17 months. Picture Shutterstock
When the agency awarded its Enterprise Operations and Technical Enablement (EOTE) contract to tech consulting giant Accenture in June 2024, the initial deal was valued at $135.5 million.
Over the next 17 months, the Tax Office signed off on 24 separate variations, driving the total contract value up by nearly $30 million to reach $165.2 million by September 2026.
Despite scathing audits exposing probity breaches and weak procurement planning, the Tax Office and the Australian Digital Health Agency (ADHA) continue to rely on continual extensions to sustain multibillion-dollar dependencies on incumbent vendors.
A Canberra Times analysis of AusTender revealed Accenture accounted for about 7.7 per cent of the ATO's total procurement spending between 2022-23 and 2026-27, capturing $1.6 billion in contract value.
An audit of the agency's procurement of information technology managed services found the total value of ATO contracts awarded to Accenture between December 2003 and December 2024 had totalled $2.5 billion.
The audit also looked at the EOTE contract and while the open tender phase largely complied with government procurement rules, the finalisation of the deal suffered from administrative delays.
It took the Tax Office 748 days from the close of the request for tender to the formal execution of the contract.
During the negotiation window for the large contract, the procurement was paused after an independent probity review assessed an unmanaged conflict of interest.
The Auditor-General revealed that the ATO's former chief information officer (CIO), who served as procurement delegate, held shares in Accenture while the company was a shortlisted bidder. The CIO failed to declare the financial interest for the first year of the program.
An ATO spokesperson said the EOTE was a managed service agreement designed to be outcomes-based, "providing the flexibility required to respond to changing operational and technology requirements while maintaining agreed service outcomes".
The spokesperson said the approach granted the flexibility needed to respond to changing operational requirements, allowing additional project services to be delivered within the existing contract scope.
"The amendments include projects that relate to strengthening the security and resilience of the ATO's digital environment, and modernising the technology foundations to support our future needs," the spokesperson said.
However, the spokesperson said the documents were commercial-in-confidence in response to questions about the 24 contract amendments.
"The ATO takes integrity seriously and has strong probity practices, policies and controls in place to identify, manage and mitigate conflicts of interest throughout the procurement process," the spokesperson said.
The analysis also found a similar reliance on post-award variations of Accenture contracts at ADHA.
The consulting giant has a larger structural footprint at the agency. Between 2022-23 and 2026-27, Accenture captured about 31.2 per cent of the agency's total procurement spending, a total of $1.05 billion.
A large chunk of that expenditure was tied to the continuing management and maintenance of the My Health Record system.
Accenture was the original vendor for the system in 2012, when it first secured the contract with the health department.
An audit of the system found the original $47 million contract exploded to $746 million through successive extensions and amendments. It found the department's management of the contract was deficient and non-compliant with procurement rules.
Now, Accenture has three existing agreements with ADHA including two limited tender arrangements for the delivery of a new reformed operating model for the My Health Record system.
When the foundational infrastructure agreement expired in June 2025, the ADHA relied on a series of limited tender arrangements to maintain the health system.
The agency initially awarded Accenture a $51.7 million transition contract, which it later extended by $46.7 million without returning to the open market.
At the same time, a second limited tender contract was awarded to manage ongoing updates and operational support for the My Health Record system. It swelled by $41.5 million across three separate variations during the five-year analysis window.
An ADHA spokesperson said the increase represented value for money and was necessary to support government initiatives and system enhancements.
To replace the older agreements, the agency launched a public tender for a massive $161.6 million application support and maintenance contract. However, the open market process was won again by the incumbent provider, Accenture.
Despite retaining the tech giant, the spokesperson said the new agreement was fundamentally different.
The spokesperson said it operated under an "Agency-led Service Integration and Management (SIAM) model where the Agency retains accountability for end-to-end service governance, assurance, cross-vendor coordination and decision-making".
The ADHA accepted the audit's findings and fully implemented all recommendations to strengthen procurement and governance processes, the spokesperson said.
Ray Athwal
Data Journalist
Ray Athwal is a data journalist interested in data-driven stories. Got a tip or an idea to share? Email him at ray.athwal@austcommunitymedia.com.au or on Signal @rayathwal.10
