• The Frustrated State: How terrible tech policy is deterring digital Australia

    Written by Delimiter's Renai LeMay, The Frustrated State will be the first in-depth book examining of how Australia’s political sector is systematically mismanaging technological change. Click here to help fund it on Kickstarter.

  • No Brother: Science fiction, martial arts & Australia's darkest city

    Set in Australia's darkest city, No Brother is a vision of a future where martial arts discipline intersects with power, youth and radical technological change. It is the first novel by Delimiter's Renai LeMay. Click here to help fund it on Kickstarter.

  • Enterprise IT, Featured, News - Written by on Wednesday, August 7, 2013 16:56 - 17 Comments

    BANNED: Qld Govt outlaws new IBM contracts


    news The Queensland Government has explicitly banned its departments and agencies from entering into any new contracts with diversified IT products and services company IBM until the company demonstrates that it has improved its governance and contracting practices, in an extraordinary move taking place in the wake of the Queensland Health payroll disaster which IBM held a key role in.

    Queensland Health’s payroll systems upgrade project was first kicked off in late 2007, when the department determined there was a need to look at a new payroll platform to replace the previous platform, based on Lattice and ESP software, which had been progressively implemented from 1996. Partially as a result of the fact that the state had decided to standardise on SAP’s ECC5 and Infor’s Workbrain software across its whole of government operations, those same platforms were picked for the Queensland Health implementation.

    However, the project, implemented by prime contractor IBM, Queensland Health itself and government shared services provider Corptech — quickly went off the rails as poor governance and the complexity of Queensland Health’s award system kicked in, with the result that many of Queensland Health’s 85,000 workers went without pay for a period, or were overpaid, at various periods from early 2010, when the system went live. The LNP administration in Queensland recently announced additional funding of the project of $384 million, taking total project costs to an estimated $1.25 billion.

    A series of audits and inquiries into the project, the latest being a Commission of Inquiry Investigation conducted by a former Supreme Court Justice and published yesterday, has found that the the project’s difficulties were caused by woeful project scope definition at the project’s commencements, as well as poor governance throughout, with all three key parties involved — Queensland Health, Corptech and IBM — significantly underestimating the scope of the work required.

    The Commission of Inquiry report delivered new findings specifically dealing with IBM’s role in the debacle. Specifically, it found that IBM received favourable information during the contract procurement process that helped it win the initial contract unfairly, that the company may have low-balled its bid based on that information, that the company’s executives breached its own ethics policy in the bid, and that the Government should never have settled the case in a legal sense with IBM. IBM was paid just $25.7 million for its role.

    IBM issued a statement this afternoon pushing back on the findings, and putting most of the blame for the situation on the Queensland Government. However, in his own statement, Queensland Premier Campbell Newman announced dramatic action that appears set to severely impact on IBM’s operations in the state.

    “IBM will not be allowed to enter any new contracts with the State Government until it improves its governance and contracting practices,” the statement read. Newman said the company must prove it has dealt with past misconduct and will prevent future misconduct.

    “It appears that IBM took the state of Queensland for a ride,” Newman said. “The Commission of Inquiry found ‘The replacement of the Queensland Health payroll system must take place in the front rank of failures in public administration in this country. It may be the worst’.”

    “The Labor Government was the other party to this major bungle. Labor may be comfortable with the Health Payroll failure, but we are determined that something similar doesn’t happen in Queensland again.” Newman said that as well as not allowing contracts with IBM he expected the company to deal with employees adversely named in the report. As Queensland has already settled in a legal sense with IBM over the issue, the Commission of Inquiry report found no further legal action could be taken against IBM to obtain damages to help compensate Queensland for the payroll disaster.

    Queensland will also take a number of other actions as a result of the delivery of the Commission of Inquiry report.

    The CEO of the state’s Public Service Commission will consider any action that may be taken against public sector employees who are adversely named. The state’s Crown Law division will provide advice on what actions could and should be taken in relation to former public servants named. The CEO of the Public Service Commission will review the Public Service Code of Conduct and provide recommendations for its amendment.

    In addition, the state’s Integrity Commissioner will review the absence of a probity adviser or a conflicts register on the payroll project; Unions active in the state public sector will be asked for information about the oversight of representatives who failed to act to protect rank and file members; and the Government would detail its response to the report’s recommendations at the next session of parliament.

    “I again call on the Labor [opposition] leader to apologise on behalf of the former Government for the actions that directly affected 80,000 Queenslanders and cost taxpayers $1.2 billion,” said Newman. “That is the least Annastacia Palaszczuk can do for the lack of interest shown by her and the unions and for months of covering up the true extent of the disaster.”

    The ban is not the first time Big Blue has been blocked from signing new contracts with a major government. In April 2008, for example, the entire US Government blocked new contracts with IBM, after an investigation by the Environmental Protection Agency found IBM had violated procurement laws while negotiating a contract with the agency. However, the ban lasted only a little over a week, after a settlement was made between the two sides.

    The case had remarkable similarities with the situation with Queensland Health, in that in the EPA case, several IBM employees involved in the procurement process reportedly obtained information from EPA employees which other competing firms did not have, that would have given IBM an advantage during the procurement process.

    Any medium to long-term ban on IBM competing for work with the Queensland Government is likely to have a major impact on the company’s operations in the state, given that the state government is the state’s major consumer of enterprise IT products services. IBM is the largest supplier of such products and services in Australia, with major rivals including HP, Fujitsu, CSC and others.

    submit to reddit


    You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

    1. Daniel
      Posted 07/08/2013 at 5:24 pm | Permalink | Reply

      I doubt the Qld Government has many contracts with IBM of any value, so this is water off a ducks back. This one was only worth $27m to IBM, despite the Il-informed QLD premier throwing around numbers like $1.2b.

      Newman better hope IBM doesn’t take its bat and ball and pull out of QLD entirely, there would be a lot of job losses and R&D investment go walking if they did, on the back of all the public servant job losses the QLD government has recently caused, wouldn’t be popular.

      • Michael B
        Posted 07/08/2013 at 7:04 pm | Permalink | Reply

        To the contrary IBM are knee deep in big contracts with the queensland governmment, as they are with basically every government. Some big education ones for starters along with the normal expensive bandaids littered throughout government systems.

        This could potentially be a good move but no idea who the competition is. Accenture is just as bad (probably worse) and they are the Big 2 in this area.

    2. Ian
      Posted 07/08/2013 at 6:48 pm | Permalink | Reply

      Well that’s that then – Queensland won’t have any troubles with IT projects ever again!

    3. S
      Posted 07/08/2013 at 7:42 pm | Permalink | Reply

      IBM has not done any significant project work with the QLD govt for a few years. They have already been penalised.

    4. Steve McCabe
      Posted 07/08/2013 at 10:08 pm | Permalink | Reply

      IBM won’t have to wait too long until LNP are voted out.

    5. Sam
      Posted 08/08/2013 at 6:00 am | Permalink | Reply

      After all that equates to a “free kick”, timed perfectly to lessen the blow of outsourcing with the punch line “Do you realise because of the previous Govts neglect we’re going to have to change the procurement process and give our mates 7 billion to fix their mess, 7 billion to private industry our lobbyists and constituents geez terrible that previous lot sheesh”.

    6. Tinman_au
      Posted 08/08/2013 at 1:19 pm | Permalink | Reply

      Hopefully this finally puts an end to the QLNP “It’s all Labors fault” blame game and they get on with doing something about the massive increase in unemployment in Qld…

      • Shayne O
        Posted 08/08/2013 at 9:19 pm | Permalink | Reply

        Oh too late for that Tinman_au. Newmans already blamed labor.

        Yeah I know. Maybe Labor used telepathy to cunningly sabotage it or something. God knows what sort of absurd nonsense runs through that crank Newmans mind.

    7. Heyo
      Posted 08/08/2013 at 8:04 pm | Permalink | Reply

      I’ve heard first hand from people at Qld health. They ran the project outside of IT, they kept changing scope/requirements constantly and would push things forward into production with little testing. Also heard a few other things about the bloated buearacrcy that is QLD health, whatever IBM did wrong they would not be the main ones at fault.

    8. Tel
      Posted 08/08/2013 at 10:41 pm | Permalink | Reply

      It’s not extraordinary, it’s the normal way they do things. Screw up a government contract and the leverage they hold over you is a black listing.

      I’m not pretending I know who was really at fault here (quite likely it doesn’t matter), but I’ve seen this approach used before.

      The ban is not the first time Big Blue has been blocked from signing new contracts with a major government. In April 2008, for example, the entire US Government blocked new contracts with IBM, after an investigation by the Environmental Protection Agency found IBM had violated procurement laws while negotiating a contract with the agency. However, the ban lasted only a little over a week, after a settlement was made between the two sides.

      Exactly, the big corporations are dependent on continuous government aid, and all parties know this, so generally they “settle” when some pressure is applied.

    9. Guy Lauten
      Posted 09/08/2013 at 3:30 am | Permalink | Reply

      I bet if the Contractor – not the public – had to pay the cost overruns the quotes would come in right on the money and management would kick ass to keep project costs down. But that would make too much sense for a government operation, huh?

    10. Matt
      Posted 09/08/2013 at 3:40 am | Permalink | Reply

      Unbelievable that IBM should blame QLD health for the failure. IBM should not allowed themselves to be part of a project that they were not able to control the management of the project. I am sure that IBM knew about the bloated out of control bureaucracy in QLD health and figured that they could cash in.

      • Tinman_au
        Posted 11/08/2013 at 2:33 am | Permalink | Reply

        You obviously don’t know QHealth, their IT complexity is legendary in Qld IT circles…

    11. M
      Posted 09/08/2013 at 10:14 am | Permalink | Reply

      Why is it that every time the Health Payroll bungle is brought up, they keep missing the root cause of this whole debacle, and that is that governments, and in this case the Queensland government keep running whatever IT systems they have (be it Win XP, SAP, and in this case Lattice) so far into the ground and beyond life support, before they do anything to upgrade or transition it?

      If the complexity and extreme urgency of replacing Lattice was not a driving factor in the first place, a better procurement process may have been put in place, the desperation to find a quick solution even though it may not be the best could have been avoided.

      If there is one lesson to be learnt, it is this. There is no point harping about poor implementation if a system implementation is already set up from the start to be a potential failure due to increased complexity and urgency by years of bad system maintenance and operations.

      SAP 4.6C in many government departments is going to lose support by 2015/2016. Is Newman and his government, and the IT minister going to get started on planning the transition? Last I heard, SAP consultants are already shaking their heads at the slow (possible non existent pace) of this transition.

    12. mrcheap
      Posted 09/08/2013 at 11:12 am | Permalink | Reply

      I think this is another prime example of why Project Management should be a regulated field. There are two many of these people with a 6 week course who have no ability to properly manage projects of this size and complexity yet even understand the technology implications. If an engineer did a job such as these projects managers their listing as a professional engineer would be struck of the list, why should project manager be exempt from having their incompetence exposed. I think this will happen under either political party as jobs for mates never examines qualifications and credentials.

      • M
        Posted 09/08/2013 at 11:42 am | Permalink | Reply

        But there is. Project managers within QLD Government should have professional qualifications such as PMP & PRINCE2 that provide a degree of quality control that you mentioned. However being qualified does not mean that it is a total guarantee. PMP and PRINCE2 provides you a project manager with credentials and experience to follow a methodology, but that methodology does not teach you how to solve complex problems that arise from such large scale implementations – that is down to how experienced your manager is with the specific implementation requirements of that particular project (how many previous implementation they have done on the same platform) and the business complexity of the business you’re delivering to. Even if you follow a strict process that has been tried and tested, a project can still fail for a myriad of reasons. If you read the inquiry findings, it was stated that Health & IBM did not have past experience with this specific implementation of that system, let alone within a massive organisation like Qhealth which adds huge complexities into the work.

      • Sam
        Posted 11/08/2013 at 6:40 pm | Permalink | Reply

        Agree – if these people built bridges the bitumen would be on the water. When engineers make mistakes it’s blatantly obvious, when “I.T” makes mistakes throwing more money at it fixes it but it’s hard to not notice a billion dollars. There’s almost incentives to make some minor mistakes and don’t know how many projects I’ve seen run by contractors that never end.

    Leave a Comment


    Get our 'Best of the Week' newsletter on Fridays

    Just the most important stories, one email a week.

    Email address:

  • Enterprise IT stories

    • Super funds close to dumping $250m IT revamp facepalm2

      If you have even a skin deep awareness of the structure of Australia’s superannuation industry, you’ll be aware that much of the underlying infrastructure used by many of the nation’s major funds is provided by a centralised group, Superpartners. One of the group’s main projects in recent years has been to dramatically update and modernise its IT platform — its version of a core banking platform overhaul. Unfortunately, the $250 million project has not precisely been going well.

    • Qld’s Grant joins analyst firm IBRS peter-grant

      This week it emerged that Peter Grant, the two-time former Queensland Whole of Government CIO (pictured), has joined well-regarded analyst firm Intelligent Business Research Services (IBRS). We’ve long had a high regard for IBRS, and so it’s fantastic to see such an experienced executive join its ranks.

    • Westpac dumps desk phones for Samsung Android mobiles samsung-galaxy-ace-3

      The era of troublesome desk phones tied to physical locations is gradually coming to an end in many workplaces, with mobile phones becoming increasingly popular as organisations’ main method of voice telecommunications. But some groups are more advanced than others when it comes to adoption of the trend. One of those is Westpac.

    • Ministers’ cloud approval lasted just a year reverse

      Remember how twelve months ago, the Federal Government released a new cloud computing security and privacy directive which required departments and agencies to explicitly acquire the approval of the Attorney-General and the relevant portfolio minister before government data containing private information could be stored in offshore facilities? Remember how the policy was strongly criticised by Microsoft, Government CIOs and Delimiter? Well, it looks like the policy is about to be reversed.

    • WA Govt can’t fund school IT upgrades oops key

      In news from The Department of Disturbing Facts, iTNews revealed late last week that Western Australia’s Department of Education has run out of money halfway through the deployment of new fundamental IT infrastructure to the state’s schools.

    • Turnbull outlines Govt ICT vision turnbull-5

      Communications Minister Malcolm Turnbull has published an extensive article arguing that the Federal Government needed to do a better job of connecting with Australians via digital channels and that public sector IT projects needn’t cost the huge amounts that some have in the past.

    • NZ Govt pushes hard into cloud zealand

      New Zealand’s national Government announced a whole of government contract this morning for what it terms ‘Office Productivity as a Service’ services. This includes email and calendaring services, as well as file-sharing, mobility, instant messaging and collaboration services. The contract complements two existing contracts — Desktop as a Service and Enterprise Content Management as a Service.

    • CommBank reveals Harte’s replacement whiteing

      The Commonwealth Bank of Australia has promoted an internal executive who joined the bank in September after a lengthy career at petroleum giant VP and IT services group Accenture to replace its outgoing chief information officer Michael Harte, who announced in early May that he would leave the bank.

    • Jeff Smith quits Suncorp for IBM jeffsmith4

      Second-tier Australian bank and financial services group Suncorp today announced that its long-serving top technology executive Jeff Smith would leave to take up a senior role with IBM in the United States, in an announcement which marks the end of an era for the nation’s banking IT sector.

    • Small business missing the mobile, social, cloud revolution iphone-stock

      Most companies that live and breathe the online revolution are not tech startups, but smart smaller firms that use online tools to run their core business better: to cut costs, reach customers and suppliers, innovate and get more control. Many others, however, are falling behind, according to a new Grattan Institute discussion paper.

  • Blog, Enterprise IT - Jul 5, 2014 13:53 - 0 Comments

    Super funds close to dumping $250m IT revamp

    More In Enterprise IT

    Blog, Telecommunications - Jul 5, 2014 12:12 - 0 Comments

    What should the ACCC’s role be in guiding infrastructure spending?

    More In Telecommunications

    Analysis, Industry, Internet - Jun 23, 2014 10:33 - 0 Comments

    ‘Google Schmoogle’ – how Yellow Pages got it so wrong

    More In Industry

    Blog, Digital Rights - Jun 30, 2014 22:24 - 0 Comments

    Will Netflix launch in Australia, or not?

    More In Digital Rights