QLD Health blocked on IBM dispute

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QLD Health blocked on IBM dispute

Minister pushes for legal action.

Queensland's Liberal National Government has accused its predecessor of hindering attempts to recover costs of a failed payroll implementation from the project's integrator IBM.

The government is considering suing IBM over a failed SAP implementation that has resulted in more than 35,000 payroll anomalies since the system went live in March 2010.

Health minister Lawrence Springborg pointed to an $18 million settlement between a US school district and its technology partner Deloitte in 2008 as an example of the cost recovery possible through legal action.

According to the LA Times, the district’s SAP payroll system cost $95 million and “was a disaster from the moment it went online” in January 2007, resulting in $53 million in overpayments to employees.

Deloitte agreed to pay damages of $8.25 million and forgo unpaid invoices of $10 million when the case was settled in November 2008.

However, parliamentary discussions on taking similar cost recovery action against IBM stalled last week, after Labor refused to publicly release 2010 advice received from law firm Mallesons Stephen Jaques.

Springborg told parliament that the Crown Solicitor was unable to provide fresh advice on whether or not a lawsuit against IBM would be successful without that information.

“IBM has written to the minister and said they believe that they met all obligations against their contract,” a spokesman for the minister told iTnews, pointing to a letter tabled in parliament last week (pdf).

“That seems like an incredible thing to claim … [but] without those [Mallesons] documents, we’ve got an incomplete record. We’d be fools to go into a court case with an incomplete record.”

When Queensland Health sought legal advice under the previous government in 2010, it reserved its legal right to withhold final payment of $3.3 million and seek damages.

IBM had been paid a total of $21 million as of March 2010. A KPMG audit later revealed that the bungled implementation would cost a total of $1.25 billion to fix in the seven years to 2017.

Queensland Health shed a total of 2754 full-time jobs last month, of which 1537 cuts were blamed on costs of the failed payroll implementation.

The department lost a further $342 million of Commonwealth funding this week.

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