Tuesday , 17 July 2018
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​Brisbane City Council terminates TechnologyOne contract

Brisbane City Council (BCC) has terminated its contract with TechnologyOne, claiming the company failed to deliver an IT systems replacement program that it previously said blew-out in cost by some AU$60 million.

In a statement, BCC said it advised TechnologyOne it was pulling the pin as a result of the Brisbane-based company’s “persistent and ongoing contract breaches, significant and unacceptable delays in progressing the contract, and a complete loss of faith in the company’s ability to deliver a replacement system for council’s IT systems”.

As a result, BCC said it will be seeking damages and, in accordance with the contract, will be referring the matter to arbitration for determination.

TechnologyOne was awarded a AU$122 million contract to deliver the Local Government Systems (LGS) Program by BCC back in June 2015.

However, at the start of the year, Brisbane Lord Mayor Graham Quirk directed council officers to renegotiate the contract after learning of an 18-month delay in deployment and a potential AU$60 million cost blowout.

BCC had stopped making payments to TechnologyOne between October and May, after it was decided the company needed to deliver “significant” milestones first. However, the council paid AU$750,000 in June after being issued a breach notice by TechnologyOne in May for failure to pay invoices.

Quirk gave a six-month deadline for TechnologyOne to provide an acceptable IT system to council after it claimed the original proposed “go live” date was delayed by eight months and critical project milestones had failed to be delivered.

“This decision is about the effective use of ratepayers’ money and ensuring that council’s core services are not compromised,” Quirk said on Friday.

“In the past six months, council offered TechnologyOne the opportunity to reform the contract and met with their representatives on many occasions to assist the company to get the project back on track.

“TechnologyOne has for a number of months been making public claims that in council’s view are misleading and inaccurate.”

In June, the council slapped TechnologyOne with its second notice to show cause — the first was issued in May — as to why the council should not terminate the contract to deliver the LGS.

The latest notice detailed material breaches of the contract which the council alleges have been committed by TechnologyOne, with a council spokesperson telling ZDNet last month that it would reassess its position after the enterprise software firm responded.

In response to the second notice to show cause, published on Monday, TechnologyOne said it was preparing to slap BCC with a AU$50 million damages claim.

“Unfortunately, TechnologyOne did not take the opportunity to work constructively with council to reform the contract and instead has sought to blame council for its own failings, through the issue of misleading public statements,” BCC said in its statement on Friday.

“TechnologyOne has never worked with a city or local government the size and scale of Brisbane and has struggled with the complexity of council’s operations.

“Based on what we have seen of the TechnologyOne system, this is a product still very much in development.”

In a statement on Friday, TechnologyOne said BCC’s “wrongful termination” of the contract was expected.

“TechnologyOne sees this as a positive step forward for our business, as BCC was no longer genuinely pursuing a resolution to the dispute because of reasons outside TechnologyOne’s control,” the company said.

“Given the contract with BCC did not afford TechnologyOne an effective mechanism to terminate the contract, now that the contract has been terminated by BCC, TechnologyOne is able to pursue the matter in court, and at the same time redeploy our resources to constructive projects.”

Earlier this week, the Brisbane-based tech company held firm its claim that it is not in material breach of the customer contract as alleged by BCC, and rather the actions taken by BCC — such as serving TechnologyOne with 75 legal letters in the last six months — has prevented the LGS contract from being completed.

“Though the Lord Mayor has on many occasions publicly stated that the project needed to be reformed, and that he was committed to doing this, BCC has taken no steps to achieve this, and has hindered TechnologyOne from doing so,” executive chairman Adrian DiMarco said.

“TechnologyOne at all times remains ready, willing, and able to complete the BCC contract.”

BCC said the “continual slippage” from the IT firm was unacceptable and that it lacks confidence that the most recent deadline would be met.

Update at 16:56pm AEST, July 28: Added statement from Technology One.

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