The report by Auditor General Carol Bellringer, released on Wednesday, looked into why the Shock Trauma Air Rescue Service was brought to the province without the contract being tendered.
When Manitoba Health signed a 10-year services purchase agreement (SPA) with STARS in 2011, no one else was given a chance to submit bids.
As well, details of the contract were not made public, as required by law, the audit report stated.
- Read Manitoba's services purchase agreement with STARS (PDF)
"We concluded that the procurement of the helicopter ambulance program was not in compliance with provincial tendering principles, policies and legislation; and that Health conducts some oversight of the SPA, but not in all key areas," Bellringer stated in a news release.
Her audit found that the total contract costs $159 million over 10 years, which covers all costs including the construction of a helipad.
During negotiations with STARS, Manitoba Health was aware that it would likely be paying 231 to 618 per cent more per mission than what other provinces pay for similar services.
Bellringer said despite what she called "significant variances," Manitoba Health did not do enough to determine if it would get value for its money and instead "relied on STARS as the main source to define program delivery needs."
"They should have done more," she told reporters.
"Despite those differences, they really did not assess whether or not they would be obtaining value for money. Those variances are extreme, and most certainly it would warrant a much more detailed analysis."
But STARS spokesman Colin Fast says comparing costs between provinces is like comparing apples and oranges.
"We do know that as we continue to be dispatched more here in Manitoba and fly more missions that that per-mission cost is going to come down considerably," he told CBC News.
Patient care, operational concerns raised
Founded in Alberta in 1985, STARS operates a helicopter air ambulance service in Manitoba, Alberta and Saskatchewan.
STARS has had a rough track record in this province, as it's the only service of its kind to have been temporarily suspended because of safety concerns.
The air ambulance service's flights were grounded in December following a number of critical incidents, including one in which a young patient — two-year-old Morgan Moar Campbell — suffered brain damage.
The Manitoba government allowed STARS to resume flights earlier this month.
On Wednesday, Bellringer said Manitoba Health lacks a comprehensive quality assurance process over the patient care that STARS provides.
Her audit found that two associate medical directors with the province sent letters in April 2013, flagging six missions with which they had concerns regarding medical management.
The officials recommended that STARS flights be grounded in May 2013, following the mission involving Morgan Moar Campbell.
"The number of concerning cases that I am hearing about is growing daily," one letter stated in part.
"I recommend grounding the STARS vendor pending a complete review of all above cited cases. I believe there is enough evidence of serious patient concerns and infractions to justify such an action."
As a result of the letter, a meeting took place and a compromise was reached, allowing STARS to continue flying but requiring a doctor to be present on all inter-facility flights.
The audit also highlighted concerns about STARS operations, stating that flight manifests were incomplete or late, and there were four occasions in which STARS ignored directions to stand down.
As well, the audit team was told of four instances in which a STARS referral emergency physician could not be reached to consult on a patient-care issue, according to the report.
The responsibility for helicopter landing zones was not clear, according to the audit, which noted that a STARS aircraft has landed where it was not authorized to land.
The report also said performance reporting was inadequate, and the monitoring of STARS' financial matters was weak.
Audit report news release
Read the full news release on Auditor General Carol Bellringer's report, which includes a section on the STARS air ambulance service:- ON MOBILE? Read the document here.