Feeds

IBM Australia on the stand over $1bn blowout

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

The Power of One Infographic

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. ®

HP ProLiant Gen8: Integrated lifecycle automation

More from The Register

next story
Yorkshire cops fail to grasp principle behind BT Fon Wi-Fi network
'Prevent people that are passing by to hook up to your network', pleads plod
Major problems beset UK ISP filth filters: But it's OK, nobody uses them
It's almost as though pr0n was actually rather popular
UK government officially adopts Open Document Format
Microsoft insurgency fails, earns snarky remark from UK digital services head
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
MPs wave through Blighty's 'EMERGENCY' surveillance laws
Only 49 politcos voted against DRIP bill
EU's top data cops to meet Google, Microsoft et al over 'right to be forgotten'
Plan to hammer out 'coherent' guidelines. Good luck chaps!
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.