Brisbane City Council's legal tussle with TechOne could cost up to $5M
- 22 August, 2017 05:00
The legal battle between the Brisbane City Council (BCC) and Software vendor, TechnologyOne (ASX:TNE), could cost up to $5 million dollars.
During a Brisbane City Council meeting on 8 August, the leader of the Labor opposition, Peter Cumming, put forward a motion for the independent report on the matter to be released.
“By the Council’s own admission, law firm Minter Ellison has been paid $1.6 million as part of the IT bungle that has seen TechnologyOne paid $21 million for an IT system your administration has abandoned,” Cumming said during the meeting.
He also asked how much has already been paid to both Deloitte and KJ Ross - a question left unanswered.
Lord Mayor, Graham Quirk, said he would need to check the actual figures regarding Minter Ellison and said he was convinced the engagement with Deloitte and other entities were worthwhile.
Cumming argued that if the council admits at least some of the blame, then the matter may be able to be settled at an early stage saving millions of dollars.
“In addition, if council decides to go ahead and abandon TechnologyOne and use [one] of the big multinational IT firms, the cost of the overall project is likely to blow out by several hundred million dollars,” Cumming said.
Cumming claimed that the costs could easily blow out to $4 million or $5 million.
“If this report was made public, then people could see what the situation really was, and I believe we’d get a resolution of the dispute much more cheaply, much quicker and much more cost‑effectively,” the opposition leader said.
Independent councillor Nicole Johnston said that the council acknowledged its fault by sacking two of its “most senior staff associated with this project”.
In a meeting on 1 August, Quirk said that TechOne’s systems was a product “very much in development”.
“For example, TechnologyOne has not satisfied council that its system will apply council’s rate capping framework which requires caps to be applied quarterly. Failure to apply council’s rate capping framework could result in residents being overcharged,” he said.
In June 2015, the Brisbane City Council awarded TechnologyOne a contract for the replacement of 13 IT systems that supports the council’s core business functions.
In January, the BCC revealed it would move to renegotiate a large local government systems (LGS) IT project with TechnologyOne after uncovering project delivery issues that could result in a cost blowout of $60 million.
TechnologyOne quickly returned fire, telling its shareholders that the majority of the project’s estimated costs blowout had been entirely at the hands of the council.
In May, the BCC issued TechnologyOne with a notice to show cause, effectively giving the company 28 days to prove why it should keep the contract.
In July, TechOne warned the BCC it would pursue legal action claiming damages worth $50 million or more over project “delays”.
At the time, TechnologyOne noted that a long and drawn out court case could expose Brisbane ratepayers to the multimillion-dollar damages claim.