TechnologyOne threatens $50m damages claim against Brisbane council

Software company responds to council’s second ‘show cause’ notice

Brisbane City Council will be lumped with a $50+ million damages claim if it attempts to wriggle out of its contract with TechnologyOne, the software company has said.

The increasingly heated dispute between the two parties relates to a project to replace 13 customer service systems at the council.

TechnologyOne was awarded the contract in June 2015. The contract was expected to be worth $122 million over 10 years.

However, in January, Brisbane Lord Mayor Graham Quirk said that he would seek to renegotiate the contract. Quirk said that the rollout was behind schedule and over budget. The project could end up being delivered 18 months late and costing $60 million more than anticipated, the lord mayor claimed.

BCC has issued two show cause notices to TechnologyOne: One in May and a second in June.

Delays in the rollout are the fault of the council, TechnologyOne argued in its response to the council’s second notice.

“It is Council that is causing the project to proceed more slowly than planned and preventing a compliant system being implemented and operating by November 2017,” the software company stated, citing four reasons.

The council in October 2016 provided TechnologyOne with its process catalogue, which contained at least 40 per cent more process patterns and “many more processes” than were in the scope of the original contract between the two, according to TechnologyOne.

The change in scope was responsible for blowing out the project’s timeline by at least five months, the company said.

In December last year the council instructed the company to not proceed past a project milestone, TechnologyOne said. “This instruction was both unreasonable and uncommercial,” the company argued, and was responsible for a further five month extension to the rollout timeline.

Technology also cited “council’s failure to reform the project” and “unreasonable and bureaucratic conduct” for causing delays.

“Council publicly stated the project needed to be reformed, but took no material steps towards doing so,” TechnologyOne said.

“Because of the potential impact of reformation, Council and TechnologyOne agreed to defer planning and work that were contractually required to be performed and that were essential for subsequent points of the project. Because ultimately, Council did not undertake the reformation, these items of work have not been carried out. Council has refused to discuss this with TechnologyOne.”

The software company said it was open to ending the contract if the council paid all outstanding invoices.

“Though the lord mayor has on many occasions publicly stated that the project needed to be reformed, and that he was committed to doing this, BCC has taken no steps to achieve this, and has hindered TechnologyOne from doing so,” TechnologyOne executive chairperson Adrian Di Marco said.

“TechnologyOne at all times remains ready, willing and able to complete the BCC contract. TechnologyOne as the leading supplier to over 300 Councils in Australia, is uniquely placed to provide a compelling value proposition to the ratepayers of Brisbane.

“If BCC lawyers had not assumed control of this project after the Lord Mayor's inaccurate press conference in January, and common sense had prevailed, we would still be on track to meet the contracted ‘go live date.”

“Brisbane City Council issued a notice to IT company TechnologyOne on 26 June 2017 to show cause why Council should not terminate the contract to deliver the Local Government Systems (LGS) Program,” a council spokesperson said.

“The notice detailed material breaches of the contract which Council alleges have been committed by TechnologyOne.

“Council is reviewing and giving due consideration to a formal response received from Technology One on 17 July 2017.

“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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