TechnologyOne hits back at Brisbane City Council

TechnologyOne has intensified its public defence in the growing Brisbane City Council stoush over a $122m project.

TechnologyOne founder and CEO Adrian Di Marco has strongly criticised the very public course of action taken by the Brisbane City Council.

TechnologyOne has ramped up its defence in the ongoing stoush between the ASX-listed enterprise solutions provider and the Brisbane City Council, over a botched project to upgrade 13 outdated customer service IT systems used by the council with a new local government systems (LGS) program.

With lord mayor of Brisbane Graham Quirk giving the company six months deliver on the contract or lose the deal altogether, TechnologyOne asserts that it has been hung out to dry.

According to TechnologyOne, the total value of the project is approximately $50 million over ten years, with the additional $72m in costs attributable to BCC council staff and contractors.

The contract, awarded to TechnologyOne in June 2015, has been beset with problems, with an implementation delay of up to 18 months and potential cost overrun of up to $60m, according to the council.

With the total projected costs to council set to rise above the original $122m mark, TechnologyOne has clarified that the $60m blowout has nothing to do with the company.

“These additional costs are not costs being charged by TechnologyOne and are once again costs associated with BCC council staff and council contractors,” the company said in a statement.

The council has acknowledged that the projected extra costs aren’t solely attributable to TechnologyOne.

“The potential cost overrun includes the additional costs to council from the 18-month delay as well as the engagement of external service providers to implement the recommendations including the contract renegotiations, systems integration and a viable alternate option to ensure existing IT systems remain available where necessary,” a council spokesman told The Australian.

Scheduled to be completed by the middle of this year, the council says it’s unlikely to be finished by the end of 2018 at its current state of progress.

With a review underway, Mr Quirk said that “decisive and immediate” action was needed to get the project “back on track.”

However, TechnologyOne founder and CEO Adrian Di Marco has strongly criticised the very public course of action taken by Mr Quirk and the council.

According to Mr Di Marco, the council has failed to engage in a normal contracted remediation process.

“We have had challenging and contentious projects in the past, but because there are dispute resolution and mediation processes built into all contracts that can be initiated by a client if necessary, including the ability to issue a breach notice, this has allowed for the orderly and professional resolution of disputes, without going public, which is normally in both party’s interest,” Mr Di Marco said in a statement.

“To date BCC has not initiated any of these contractual mechanisms so TechnologyOne was not aware of a contract dispute until the detrimental media statement made by BCC.”

“In my 30 years in business I have never seen this before,” he added.

Mr Quirk said last Wednesday that the decision to direct council officers to renegotiate the contract was based on information provided in a briefing provided by an independent review committee.

“On Monday Civic Cabinet received a briefing about progress of an independent review of the Local Government Systems Program that is being conducted prior to any further investment, to gain assurance that appropriate due diligence has been undertaken to ensure a successful outcome,” Mr Quirk said at the time.

However, TechnologyOne has told the market that the independent review committee had not conducted a formal interview with the vendor as part of the ongoing review.

TechnologyOne senior executives were briefed by members of the committee prior to last week’s announcement and the company asserts that most of the deficiencies highlighted by the review stemmed from the council’s internal management processes.

“It is a major concern that the report of the committee will not be made public; and that TechnologyOne has never been interviewed by the committee,” the company said.

“Having said this, the briefing given by the committee was not negative about TechnologyOne’s role in the project, and critical of BCC, which we believe will be an important consideration in the resolution of the matter.”

TechnologyOne is continuing to work on the project, which it said is not material to its full year earnings target, however, the company has warned that the council’s current relationship with the company is less than ideal.

“For bureaucratic reasons council is not engaging with TechnologyOne during the time critical Configuration Stage by not providing the business input we require to configure their new business processes in our software,” TechnologyOne said in the statement.

Brisbane City Council is the largest local government organisation in the Asia-Pacific region, with an annual budget of $3.4 billion. It manages more than 2.2 million transactions each year for activities such as rates payments, infringements and waste collection, that it is seeking to roll into the one program.