Updated: Qld Govt blames IBM for health payroll bungle

Whole-of-government ICT arrangements under fire as State Government reconsiders risk management and contingency requirements

The Queensland Government has threatened to terminate the troubled SAP payroll contract between IBM and Queensland Health, citing a "breach of duty of care and breach of contract".

The threat follows the release of report from the Auditor-General, which found the payroll system implemented for Queensland Health employees was not properly tested and did not provide contingency plans in case of failure when it was rolled out on 24 March, despite warnings from the testing company contracted. The fault left thousands of workers incorrectly paid.

The Queensland Government said in a statement that IBM should be held responsible for the bungle, as it was tasked with choosing appropriate software, as well as project management, design, development and implementation duties. The government issued a notice to the company to remedy breaches on 12 May, but a lack of action has caused the government to threaten to terminate the contract.

"We have sought Crown Law advice in relation to options for terminating the payroll contract with IBM and it's only fair that we seek to reserve our legal rights," Bligh said. "The Government has issued IBM a Show Cause Notice as to why the contract should not be terminated."

A spokesperson for IBM told Computerworld Australia that the company defended its actions throughout the process with Queensland Health.

"We were not responsible for many key aspects of the systems implementation as confirmed in the Auditor General's report released today," the spokesperson said in a written statement. "We delivered within the governance structure established by Queensland Health and outlined in the Auditor General's report.

"IBM has relentlessly and consistently delivered above and beyond the scope of the contract to assist Queensland Health identify and address concerns with its payroll process. Our commitment to supporting the Queensland Government in its mission to provide quality services to employees remains unchanged."

Whole-of-government IT provider, CorpTech, has also been held accountable for the problems, and will no longer be the exclusive provider of corporate services across the State Government. A review into the workings of the provider and the government's shared services business model is to be conducted by PWC partner, Roger McComiskie, with the results expected in September.

The review into CorpTech occurs as the government moves towards Gershon-inspired policies, which see further IT consolidation between departments.

In responding to the Auditor-General's report, the Queensland Government committed to implement each of the seven recommendations, including the introduction of a localised payroll model for Queensland Health.

"I apologise sincerely to every one of those Queensland Health employees and their families who have been affected by the recent payroll problems," State Premier, Anna Bligh, said in a statement.

The new payroll system is expected to be operational by the end of September and will see each hospital linked to a payroll "hub" which looks after employment, rostering and payroll services. Consultancy Ernst & Young has been contracted to find the most appropriate software system for use at these hubs by Queensland Health.

The Auditor-General's report recommendations include:

  • Technological changes to payroll systems that are rigorously tested for stability
  • Simplification of award structures and pay rules as part of a reconsideration of the Queensland Health business model
  • A review of the role of departmental officers involved in the state's shard service initiative, including CorpTech
  • Formal documentation and management of key methodologies to prevent confusion in roles and responsibilities
  • Implementation of IT governance frameworks, practices and processes to achieve transparency of projects
  • Reconsideration of governance structures to gauge impact of decisions made in whole-of-government arrangements on agencies
  • Risk assessment and mitigation strategies made a requirement at the agency level for IT projects

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Tags queensland healthgovernment

More about Ernst & YoungErnst & YoungIBM AustraliaIBM AustraliaOffice of the Auditor GeneralQueensland GovernmentQueensland HealthSAP Australia

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