TechnologyOne has taken a swing at the Brisbane City Council (BCC) after the city’s Lord Mayor revealed plans to review the IT systems replacement program contract with the company amid cost blowout claims.
The council revealed on January 25 it would move to renegotiate a large IT contract with TechnologyOne, aimed at delivering a local government systems replacement after uncovering project delivery issues that could result in a cost blowout of $60 million.
At the time, Brisbane Lord Mayor, Graham Quirk, indicated he had given the publicly-listed Australian software company six months to deliver its new $122 million regulatory system.
Now, TechnologyOne is returning fire, telling its shareholders that the majority of the project’s estimated costs blowout has been entirely at the hands of the council, and reassuring investors that it is ready for litigation if the current dispute it comes to a drawn-out legal battle.
“The press release by BCC…refers to a cost overrun of potentially $60 million,” TechnologyOne told shareholders in a statement. “These additional costs are not costs being charged by TechnologyOne, and are not part of the TechnologyOne contract; and are…costs associated with BCC staff and contractors.
“As such, the total contract value to technologyOne over 10 years is approximately $50 million substantially below the $182 million that has been inferred in the BCC press release,” it said.
As it stands, TechnologyOne said it has been notified that the council wants to continue working with it in order to deliver the project.
“Based on this statement, and acting in good faith, TechnologyOne is continuing to work on the successful completion of the project,” TechnologyOne said. “Having said this, TechnologyOne has notified the council that it cannot continue to frustrate our ability to complete the project.
“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.
“This bureaucratic approach will delay the project needlessly and contribute significantly to a blowout in costs,” it said.
While the company is still working to deliver the council’s systems replacement program, it indicated that it would be prepared for a legal challenge if the current dispute degraded into full-blown court case.
The company told shareholders that, in a “worst case scenario of litigation,” it remains “confident of its legal and commercial position”.
“TechnologyOne also has total and comprehensive insurance cover for all its projects,” the company said.
Meanwhile, the company suggested that it was blindsided by the council’s announcement to review its contract arrangements following the problems with the project.
“The delays in the project have been fully documented and are due to BCC,” the company said.
According to TechnologyOne, the project delays are due to a “well-documented” change in project strategy requested by BCC, and also a significant increase in the scope of its contracted work, with an additional 500 or more business processes requested.
Further, while technologyOne senior executives were briefed by members of the BCC independent review committee on the morning of the council’s announcement, the announcement itself was inconsistent with the statements made by the committee to its IT partner, TechnologyOne said.
“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,” it said.