The controversy surrounding the contracting practices at eHealth Ontario escalated this week and is now the subject of two separate investigations.

The agency was established last September to oversee a $2.2 billion, three-year strategy to create information technology systems for the province’s health system building up to the creation of an electronic health record for all Ontarians by 2015.

However, it has been hit with accusations of questionable contractual dealings that plagued its predecessor, Smart Systems for Health. The latter has been criticized for spending $647 million in taxpayer money with, some suggest, little to show for it.

The issues at eHealth Ontario are not really on the same scale but have raised eyebrows nonetheless. In the first few months of its existence, the agency awarded $5 million in untendered contracts. This week, CBC News revealed that there are personal ties between eHealth Ontario CEO Susan Kramer and the principles of two consulting companies that received over $3 million in contracts which had not been put out for competitive bids.

The fact that another consultant, earning $2,700 a day, billed the agency $1.65 for a Tim Horton’s tea and $3.19 for a dessert square, garnered front-page coverage in the Toronto Star.

The issue has been a hot topic during question period in the Ontario legislature, with the Opposition saying what has gone on represents a flagrant abuse of taxpayers’ dollars.

Health and Long-Term Care Minister David Caplan has defended the agency saying “the leadership of eHealth has already yielded, in a few short months, some very good results,” but has also admitted he is concerned about the issues which have been raised.

He met with Ms. Kramer and the eHealth Ontario Chair Alan Hudson this past weekend, and, in a subsequent letter to Dr. Hudson, said as a taxpayer he is “troubled by inadequate reassurances” about the agency’s spending practices.

He has directed the agency to launch a third-party review of management and financial practices. It is being conducted by Pricewaterhouse, but the choice of this firm has also been controversial. It recently did a review giving the agency passing grades for its internal controls.

Ontario Auditor General James McCarter is conducting his own audit of eHealth Ontario. He had planned to include this in his December 2009 report to the legislature, but has since been asked to fast-track his work. HE