Technology One and Brisbane council settle dispute despite nasty blame game

UPDATED: Brisbane council and local software developer Technology One declare peace in a testy $50m battle over a botched local government project.

A dispute between software outfit Technology One and Brisbane council has been settled, despite previous angry words between the two parties.

BRISBANE City Council and local software developer Technology One have declared peace in a testy $50 million battle over a botched local government project.

“In good faith, both parties have now resolved their differences on a without fault basis,” Brisbane-based Technology One told the stockmarket on Tuesday.

The dispute was settled confidentially — with council saying this secrecy was done “at Technology One’s requirement”.

Technology One also said the settlement would have “no impact” on the company’s earnings.

Finance industry sources said if Technology One ended out having to make any compensation, insurance might pick up the bill.

Technology One refused to answer queries, referring back to its stockmarket statement.

The settlement marks a massive backdown from the bitter stances taken by both sides since the problem erupted in a rare public dispute between contractor and government agency in January.

Technology One executive chairman Adrian Di Marco. Picture: Jono Searle

The thorny Brisbane project envisioned converting 13 local government service systems to one platform, but council in January said costs had blown out by $60 million. Technology One’s own contract with council was for $50 million, while another $72 million in the original contract was for council staff and other contractors.

A war of words erupted with Technology One accusing council of trying to engineer impossible problems with the contract. “BCC is engineering a situation where (Technology One) is unable to perform against the contract,” the software company’s executive chairman Adrian Di Marco said in June.

Council has since lobbed a $50 million damages claim against the company, with Technology One previously promising to file a counterclaim.

Sources with knowledge of the dispute said both sides had indicated they had good legal prospects if the fight continued. But one problem with continuing the fight was that litigation was complex, expensive and a distraction for top brass, plus a risk was a lack of a certain outcome.

COSTLY BILL

The dispute has cost Brisbane ratepayers at least $27 million, with $21 million of that going to Technology One before payments were cut off. The other $6 million was spent on lawyers and consultants.

Council chief information officer Sarma Rajaraman and organisational services divisional manager Greg Evans left the organisation as the dispute deepened.

Brisbane Lord Mayor Graham Quirk. Picture: Marc Robertson/AAP

On Technology One’s side, its latest accounts detailed a $4.3 million hit in profits, which ended the year at $44.5 million.

Brisbane Lord Mayor Graham Quirk told council on Tuesday afternoon he wanted to honour a previous commitment to release the terms of the settlement.

“That still remains my strong view — except Technology One would not agree to a settlement unless the terms remained confidential, Cr Quirk said.

However, he did pledge to release a review completed into the beleaguered program after resisting Technology One calls for it to be made public prior to the arbitration process.

“Now the settlement has been finalised, I have instructed council lawyers to ensure this occurs as soon as possible,” Cr Quirk said.

The project is undelivered and has been terminated, and Cr Quirk said the council had a plan to ensure any systems replaced by the troubled project could “continue operating for the foreseeable future”.

This plan would keep current systems operating until 2022, and potential future extensions were available.

Cr Quirk left the door open for council to continue working with Technology One to finish getting the system operational. If it was successfully completed, he said council “has the option to reconsider implementing that product”.

Nick Harris and James Barker, analysts at stockbroker Morgans, in a note to clients said the council dispute was among issues that had unexpectedly impacted on Technology One’s costs in 2017. But the company had been confident the council dispute’s costs were “isolated”, the analysts said.

Investors took Tuesday’s announcement in stride, with shares closing slightly down 5c at $5.05.