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Taxpayers were beta testers for ATO IT project

Report tells government ‘avoid single-vendor big bang projects’

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A report by Australia’s Inspector-general of Taxation (IGT) has found that the Australian Tax Office extended testing into production for an IT systems upgrade which went live last year.

The result was wave after wave of delays and errors during 2010, resulting in slow processing of individuals’ and companies’ tax returns, the 240-page report has found. The cost of the system also blew out by A$300 million, in spite of the ATO awarding a fixed-price contract to Accenture.

While the IGT says “the ATO had little choice but to go live when it did”, it says the tax office knew there was “significant risk” of impact on the public which “could have been better communicated”.

The IGT also notes that in the project’s seven-year life, “it has been subject to constant change with components being removed [from] or added to the initial scope”.

The Accenture-managed project ran late at each stage of implementation: the first phase, planned for June 2005, arrived in April 2006; phase two ran about six months late to arrive in March 2007, while the final phase, due in 2008, arrived in 2010 with “warranty work” expected to finish this year.

Single-vendor projects are singled out by the report, which states: “An integrated system that takes around seven years to deliver by a single contractor increases the overall level of risk.”

In addition, the government’s enthusiasm for fixed price projects is criticized. Such projects over a long duration, the report says, “also increase the risk of non-delivery in part or whole in the event that the project becomes uneconomical for the contractor.” The IGT notes that the risk of non-delivery can make the government “captive” to the contractor.

The IGT also recommended that governments favour smaller, modular IT projects rather than big-bang upgrades. The ATO has responded that the recommendation “is a matter for government”. ®

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