State Government deliberately delaying new RAH to ‘cover up’ EPAS medical records failings, builder claims in $800 million lawsuit
EXCLUSIVE: The State Government has deliberately delayed opening the new RAH to “cover up” failings in a troubled-plagued computer system crucial to its operation, its builder claims in an $800 million-plus lawsuit it is preparing.
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CLAIMS the State Government has deliberately delayed opening the new Royal Adelaide Hospital to “cover up” failings in a troubled-plagued computer system crucial to its operation are the basis of an $800 million-plus lawsuit its builder is preparing.
The Advertiser last week revealed the consortium that oversees delivery of the new RAH is gearing up for a $4 billion countersuit against the Government if its contract is torn up, and has now obtained new documents showing the builders are compiling a separate case.
The SA Health Partnership group delivering the $2.1 billion project comprises several companies, including the Hansen Yuncken Leighton Contractors Joint Venture, which is responsible for building the biggest infrastructure project in SA’s history.
In a legal document delivered to SAHP on November 8, the joint venture spells out grounds on which it plans to seek hundreds of millions of dollars in damages from a Government it says is making “ransom demands” and acting unlawfully.
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Opposition health spokesman Stephen Wade said the latest revelations showed the Government was engaged in a “high risk” legal strategy on the RAH that could cost taxpayers billions.
Health Minister Jack Snelling dismissed the builder’s IT claims as “rubbish”, saying they had already been considered and rejected outright by an independent assessor.
The new RAH was planned to run without paper records, replaced by the electronic Enterprise Patient Administration System. However, that program has been mired in delays and cost blowouts since it was conceived in 2007.
In the HYLC joint venture’s claim of entitlements, it states the Government has failed to meet a contractual requirement to have EPAS ready and installed at the hospital and deliberately “hidden from the builder and South Australians generally the true position of EPAS”.
“The state’s agenda appears to be driven by a desire to cover up issues that it has with respect to the timely delivery of EPAS,” the builders claim.
“The state has deployed multiple tactics by which to distract attention from the issues for which it is responsible.
“The state has ... failed to inform the builder of delays to, defects in and omissions from the state’s obligations as to EPAS. As a result, the builder has and will continue to be delayed in achieving technical completion ... and commercial acceptance.”
The builders claim these failures include the Government not having installed servers, monitors, applications and software at the hospital, which have made finishing the project impossible.
However, the Government has been publicly working on contingency plans to work around EPAS failings for months that include having paper records off-site but on-call as needed.
The HYLC joint venture specifies that compensation could include $184 million for payments it would have received if new RAH opening occurred as planned in April, “plus hundreds of millions in delay costs” and “damages for delay and disruption of at least $200 million”.
On top of that, it threatens to seek further compensation for reputational damage due to a Government “media campaign” that cost it other profitable jobs and harmed investor relations.
“The builder does intend to commence proceedings against the state in the very short term directly for a range of unlawful conduct,” the HYLC joint venture warns.
It says that unlawful conduct includes a letter sent by Government lawyers to project financiers, which the joint venture claims attempts to “induce” them to cancel the builder’s contract.
The new RAH was first slated to open in April this year. There is now no planned opening date, but a move from the old hospital to the new is expected next June at the earliest.
The HYLC joint venture and SAHP were unable to comment. Under the terms of the new RAH contract, they must seek Government permission to make any public statements.
Mr Snelling said an independent expert appointed to rule on project disputes had already thrown out the builder’s complaints about EPAS and he was confident a court would do the same.
“This is simply them trying to re-litigate an issue the independent certifier has already dealt with,” he said.
“It’s rubbish because, even it that was the case it doesn’t stop the hospital reaching technical completion. This claim is, I think, pretty far-fetched.”
Mr Snelling said EPAS was “ready”, but the Government planned to switch it on at the new hospital in a staged way to ensure that clinicians had time to adapt to a new system.
Mr Wade said EPAS had been a “rolling disaster of cost blowouts and delays, with doctors repeatedly warning that it is neither ready nor safe for a major hospital”.
“The document highlights that the Government’s high risk legal strategy means that SA taxpayers are not only facing legal claims of well over $4 billion but that termination is likely to delay completion of the hospital for SA patients as well,” Mr Wade said.
Your questions answered
What is the deal on this partnership?
In June 2011, the State Government signed a public-private partnership agreement with a consortium operating under the umbrella of SA Health Partnership. The consortium is financed by investors and banks to manage the project over 35 years. It subcontracts building, computer, cleaning and catering work.
What does it cost the taxpayer?
Taxpayers start paying about $400 million a year for three decades when the hospital is finished. This covers $2.1 billion construction cost repayments, and services and maintenance when the hospital is running. The Government has so far saved $100 million from the delays.
What are they arguing over?
The hospital was meant to open, and payments begin, in April. The Government claims builders have not kept to the timetable or delivered what it contracted for. It claims there are errors, including small loading docks and shallow ceiling cavities. The consortium offered a “cure plan”. The Government rejected this, insisting the hospital is not safe. Industry sources say the Government is trying to force the builders and consortium to drop the agreed price.
What’s going to happen?
The Supreme Court is hearing disputes over the cure plan and the best way in which the hospital can be declared “complete”. In the negotiations, the Government could agree that the hospital is “complete” if the consortium gives taxpayers a one-off compensation payment for delays, or a reduction in the long-term price. The Government could also try to terminate the contract and get a new builder to finish the job, likely leading to further delays and more lawsuits.
When will the new hospital open?
Best-case scenario appears to be a handover in June next year, but flu season could complicate this. Ongoing court action and disputes could push that back further. Some in the Government believe it remains an outside chance that the hospital will not open before the next state election in March, 2018.