IBM threatened to "walk" on QLD payroll project

An IBM executive threatened the tech giant would walk off the job if Queensland Health “went legal” over alleged contract breaches, the inquiry investigating the failed project has heard.

The inquiry yesterday heard of a meeting called to discuss disputes about the project’s scope and the withholding of payments for work already undertaken by IBM.

“It was a tense relationship at this stage, the 
state (had) withheld money, IBM was wanting that money to be paid, there was disputes about scope, things weren't going particularly well,” Mallesons lawyer John Swinson told the inquiry.

Mallesons was one of the law firms on the Queensland Treasury legal panel at the time the payroll project ran into trouble.

Swinson yesterday testified the meeting became quite hostile, and IBM executive Bill Doak suggested IBM could shift its focus to resolving legal disputes, rather than working on the project.

“It was a veiled threat that IBM would stop work if it didn’t get its way,” Swinson told the inquiry.

Despite the threat, Swinson said he advised the government that it would be very unlikely for IBM to walk out on the project.

“It's not uncommon for contractors to make similar threats such as
 this in these circumstances,” he said.

“It's not uncommon but it would be very uncommon for a contractor such as IBM to actually carry through with that threat.”

Swinson later testified, however, that the state looked pessimistically on its own position when it came to enforcing the contract.

“I don’t think sufficient weight was given…to some of the provisions that existed [that would have] protected the customer from IBM's assertions or claims,” Swinson testified.

“The state didn't actually
 have to provide resources or assist IBM unless it was explicitly agreed in the contract or the statement of work.
 So IBM couldn't come back and say, ‘You should have 
provided all this assistance to us, or provided this information to us,’ unless IBM explicitly asked for that,” he told the inquiry.

The inquiry continues.