Premier Gladys Berejiklian may be hedging her bets on council amalgamations, but one player in local government is doing well out of the mergers.
Queensland-based company TechnologyOne appears set to win millions of dollars worth of contract extensions to standardise IT systems across newly-formed mega councils.
But Greens MP David Shoebridge has questioned the decision of multiple councils to negotiate directly with TechnologyOne rather than tender for contracts that can be worth up to a combined $10 million.
Three amalgamated councils – the Inner West Council, Georges River Council and Cumberland Council – each resolved late last year to negotiate directly with TechnologyOne.
Richard Pearson, administrator of the amalgamated Inner West Council. Credit: Wolter Peeters
TechnologyOne already provided IT systems for Leichhardt and Marrickville councils, but not Ashfield Council, the third entity of the merged Inner West Council. Council documents showed staff preferred the TechnologyOne systems over its main competitor.
But documents obtained by Mr Shoebridge also showed the NSW Department of Premier and Cabinet approached the council about partnering with Cumberland and Georges River on a joint framework for using TechnologyOne. The framework could then be used by other councils.
The cost of the contracts was likely to run well into the millions. Cumberland Council documents showed its contract could cost up to $3 million, while the Inner West Council had budgeted $5 million in spending on IT systems as a result of the merger. A spokeswoman for Georges River said the project was expected to cost $1 million, then $200,000 annually in maintenance.
State law requires councils to call for tenders for contracts costing more than $150,000 unless there are special reasons. The councils say the time delay in going to tender, combined with the fact that some of constituent councils already use TechnologyOne, provide those reasons. Georges River Council said it expected to save $160,000 a year under the contract.
The executive chairman of TechnologyOne, Adrian Di Marco, said it made sense for councils that already used the company's systems to upgrade them across larger entities.
"If you are an existing council and you add more users, it is just an upgrade," Mr Di Marco said.
"It's not like there's a lot of players in the local government market," he said. "We are by far the dominant player."
But Mr Shoebridge said it was "extraordinary" councils were agreeing to multi-million dollar contracts without going to tender.
"History proves that the public almost never benefits when viable competitors are frozen out in preference for one-on-one deals," he said.
"The biggest initial cost for long-suffering ratepayers in newly merged councils is almost always fixing the IT problems, but what is a cost for ratepayers is an opportunity for a well-connected business."
Mr Shoebridge drew attention to the company's history of political donations, largely to the Queensland Liberal National Party and not to the NSW Liberal Party. The company had not made donations since 2014-15. Mr Di Marco, who said the company had a policy of not making political donations, said suggesting previous Queensland donations would affect NSW contracting decisions was a "long bow".
Rik Hart, the general manager of Inner West Council, said TechnologyOne products were already in high use so it made "financial and operational sense to go with them".
"We are still negotiating over the final price, and are in talks with two other Sydney metro councils to band together to bulk purchase the suite, which would result in significant savings," Mr Hart said.
A spokesman for the Department of Premier and Cabinet said the government did not recommend technology suppliers to councils, and "to suggest otherwise is false".
"In this case, the Department of Premier and Cabinet made the three councils aware of opportunities to work together," the spokesman said.
Ms Berejiklian has not indicated if she will continue with her government's amalgamation program. Mr Shoebridge said she should halt any future amalgamations.