TechnologyOne accuses Brisbane council of trying to wriggle out of contract

Council has rejected arbitration, software company says

TechnologyOne believes Brisbane City Council may be seeking a way to terminate its contract with the ASX-listed software provider.

In a statement released today, TechnologyOne executive chairperson Adrian Di Marco said the council is “no longer genuinely committed to working with TechnologyOne” on the project to replace 13 customer service systems.

The contract for the project was awarded to TechnologyOne in June 2015. The total cost was expected to be $122 million over 10 years.

In January, Brisbane Lord Mayor Graham Quirk said that the TechnologyOne rollout could end up being delivered 18 months behind schedule and $60 million more expensive than anticipated.

Quirk announced that he would seek to have the contract renegotiated.

Since then the parties have issued each other a series of show cause notices, the software company said today.

In early May the council issued the company with a notice to show cause, which TechnologyOne responded to on 29 May. The council then told TechnologyOne in June that it would not terminate the contract on the basis of the May show cause notice.

On 30 May, TechnologyOne said it issued the council with a notice to show cause after it allegedly breached the contract by failing to pay $750,000 after two project milestones were met.

TechnologyOne earlier this week received a second notice to show cause from the council.

“The June Notice to Show Cause covers many of the same issues in the May Notice to Show Cause that BCC did not act upon,” TechnologyOne said. “This Notice also ignores TechnologyOne’s bona fide requests for extensions of time under the Contract due to BCC’s conduct.”

The company said it has pushed for expedited arbitration, but the council has not accepted the proposal.

TechnologyOne has blamed the council for the delays in the rollout

Existing council business processes were not well-defined before the project begin, and a consequent review by the council led to a 100 per cent increase in the number of identified processes, the company has previously said.

“Our attempts to resolve this dispute and reach a pragmatic and mutually beneficial arrangement with BCC continue,” Di Marco said. “However, BCC appears to be committed to resolution by way of legal proceedings rather than commercial negotiation.  

 “As a legal tactic, BCC is now insisting that TechnologyOne configure a system for BCC strictly in accordance with the 2015 contract that does not meet BCC’s current business requirements.  BCC’s business processes have changed since 2015.”

The council in October last year expanded the scope of the project, Di Marco said.

“BCC have refused to issue a contract amendment and TechnologyOne is being asked to now configure a system for BCC that does not reflect BCC’s current business processes,” he said.

 “This demonstrates that BCC is no longer genuinely committed to working with TechnologyOne to deliver this project.  BCC is engineering a situation where TechnologyOne is unable to perform against the contract.”

The software company has indicated that the dispute has cost it $2 million.

The council in a statement said:

Brisbane City Council has issued a notice to IT company TechnologyOne to show cause why Council should not terminate the contract to deliver the Local Government Systems (LGS) Program.
The notice detailed material breaches of the contract which Council alleges have been committed by TechnologyOne.
Technology One has until 17 July to respond to why Council should not terminate the contract.   Council will then re-assess its legal position. In the interim, Council will continue to perform its obligations in accordance with the contract in a bid to get the contract back on track.  
Council is committed to ensuring the best outcome for Brisbane ratepayers. 
As this is a legal matter between the two parties, no further details can be provided at this stage.


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