ATO gongs offshore development

Australian Taxation Office (ATO) officials have opted for home-grown software development to keep the Change Program on track, and have all but ruled out offshore labour.

The ATO has handed its vendor partner for the Change Program, Accenture, a AU$224 million contract to handle changes to superannuation introduced in last year's federal budget.

The ATO has been forced to implement the changes concurrently with its Change Program, which was already running on a tight schedule. ATO staff are currently working to replace legacy mainframes -- its integrated core processing (ICP) system -- as part of the Change Program.

ATO second commissioner Greg Farr had previously refused to rule out using offshore labour in the Change Program, but a Wollongong-based Accenture software development centre has just about cancelled that possibility.

"[That] will be devoted to the Change Program, at least initially," Farr told ZDNet Australia.

The centre will comprise 70 to 100 people, including some ATO project managers.

Farr said the ATO and Accenture discussed the idea of using offshore software development, but government restrictions meant it was not feasible.

"Under law there's only a certain amount of work we could send," said Farr. "For instance we can't send citizen's details like bank account numbers overseas.

"The development centre is an alternative to that.

"While I wouldn't ultimately rule [offshore labour] out for other programs, we're not looking at using offshore labour for this program."

More staff would be hired in Adelaide and Brisbane for the Change Program too, said Farr.

The cost of the superannuation changes is much higher than the previously stated AU$100 million due to a rethink of how the work will be done.

"[AU$100 million] was our initial thinking," said Farr.

"[But] to do that, we'd need 800 more staff. We just don't have that.

"So we looked at design and then at our options. Then we decided to do it as part of the Change Program."

The decision means instead of trying to do the superannuation changes in one hit, a high-risk option according to Farr, the ATO will instead stagger the work over three releases throughout next year.

The first part of the ICP system replacement, for income tax, HECS (Higher Education Contribution Scheme), fringe benefits tax, among others, will be implemented around Christmas. This will give the ATO about six months to before superannuation changes come into effect in June 2008. Next December will see the second part of the system upgrade -- for GST instalments and non-income tax.

The Change Program will conclude around June 2009 with another Siebel implementation.

However there will still be risk in the work regardless.

"Three releases will be more digestable," Farr said, "although there will be increased technical risk because we'll be running three parallel code streams.

"It'll keep us on our toes I'd expect."

Farr said the superannuation changes were a big body of work that were equal to the first two releases of the Change Program.

Spreading the work over a longer period also increased support costs included in the contract, he said.