Victorian agency sued over cancelled $8.9m ERP project

Victoria’s Environment department is set to face legal action in the state's supreme court over its decision to cancel an $8.9 million ERP implementation.

The agency's former IT services partner ASG Group has begun legal proceedings against the department after it decided to adopt a new “whole of government” approach to implementing its new ERP platform.

The decision meant the ASG contract was terminated.

ASG claims the department had an obligation to indemnify ASG for its liabilities in the event the contract was cancelled.

But the pair have failed to agree on the amount of indemnity, ASG said, and it is now seeking full cost recovery in the courts.

The company told its investors it didn't expect to see any "material adverse impact on ASG’s profitability as a result of the proceeding”.

The agreement, available on the Tenders Victoria website, was signed on September 16 2013 and had an estimated total contract value of $8.9 million.

According to the contract, ASG was to maintain the new ERP system for a period of three years, with an option to extend for a further two.

Managed services were to be provisioned through two data centres outside Victoria, one in Sydney and a second in Perth.

A spokesperson for the department said it had acted within its legal rights.

“The department took the decision late in 2015 to pause its work on the replacement project to align with a whole of government direction around the use of shared services across departments,” the spokesperson said.