Feeds

IBM Australia on the stand over $1bn blowout

Inquiry asks why ex-IBMer wanted Big Blue in the race for payroll system

Combat fraud and increase customer satisfaction

In 2007 the Australian State of Queensland decided it needed shared services arrangements to streamline its affairs and reduce costs.

One shared service was a new payroll system that would be used, in part, by the State's health department. IBM won a deal to do the job for an initial payment of $AUD6.19m. But by the time the system went live, had received $37m and by 2012 a review by KPMG found the system's costs had reached at least $400m.

And still the system wasn't working. Staff were overpaid, underpaid and sometimes not paid at all. Queensland's State government even docked workers to recoup overpayments, which went down predictably well with unions.

All sorts of stakeholders are livid about the affair, more so when it was revealed another $836m is needed to get the SAP-based system working.

When Queensland's government changed in 2013 it therefore called an inquiry into the matter, and hearings this week got interesting as IBMers past and present took the stand.

What's emerged is a situation in which two companies – Accenture and Logica – had deep engagements with the agency seeking the payroll system. Both were therefore natural bidders for the work.

This week's hearings explored whether a consultant on the procurement process before the project, Terence Burns, gave IBM the inside running for the gig by suggesting the company bid and later by arranging a “dry run” at which IBMers could test their pitch. Burns is said to have felt that more competition for the deal would be a good thing.

There's nothing wrong with that, but Burns is a former IBM employee, having headed its operations in a South African province. He has has also filled numerous consulting roles around the world, including a stint running his own project turnaround consultancy. He had also once hired IBM for work in New Zealand.

Burns has denied having any conflict of interest that would have made his decisions on the project contentious. His statement can be read here (PDF). He's also said, during hearings, that he doesn't recall if he offered dry runs to other bidders, or conducted such sessions.

Before Burns, current IBMer – indeed the commercial and public sector lead for IBM Global Services in Queensland – Lochlan James Bloomfield took the stand. His statement (PDF) revealed that some IBMers were working inside the parts of the Queensland government that assessed bids and that they passed information about the assessment process to him.

Some of that information included a strong suggestion that Accenture had been able to read IBM's bid. Bloomfield's statement also says that in his opinion Burns dealt ethically with IBM throughout.

The inquiry will report at the end of April and The Reg will bring you news of its findings. If you'd like to tune in yourself, live video of hearings can be found here and transcripts here. ®

Top three mobile application threats

More from The Register

next story
Lavabit loses contempt of court appeal over protecting Snowden, customers
Judges rule complaints about government power are too little, too late
Don't let no-hire pact suit witnesses call Steve Jobs a bullyboy, plead Apple and Google
'Irrelevant' character evidence should be excluded – lawyers
EFF: Feds plan to put 52 MILLION FACES into recognition database
System would identify faces as part of biometrics collection
Record labels sue Pandora over vintage song royalties
Companies want payout on recordings made before 1972
Edward Snowden on his Putin TV appearance: 'Why all the criticism?'
Denies Q&A cameo was meant to slam US, big-up Russia
Ex-Tony Blair adviser is new top boss at UK spy-hive GCHQ
Robert Hannigan to replace Sir Iain Lobban in the autumn
Judge halts spread of zombie Nortel patents to Texas in Google trial
Epic Rockstar patent war to be waged in California
German space centre endures cyber attack
Chinese code retrieved but NSA hack not ruled out
APPLE FAILS to ditch class action suit over ebook PRICE-FIX fiasco
Do not pass go, do cough (up to) $840m in damages
Whoever you vote for, Google gets in
Report uncovers giant octopus squid of lobbying influence
prev story

Whitepapers

Mainstay ROI - Does application security pay?
In this whitepaper learn how you and your enterprise might benefit from better software security.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.