NEC Australia takes ACIC to court over biometric identification project

The ACIC cancelled the delivery of the biometric identification services project in June 2018, after the system had been substantially built and testing was already underway.

NEC Australia has commenced legal proceedings against the Australian Criminal Intelligence Commission (ACIC) in an attempt to recoup costs and expenses after its contract to deliver the Biometric Identification Services (BIS) project was cancelled in June 2018.

In a statement, NEC Australia said since the termination of the contract, the company has attempted to recover an undisclosed amount of associated costs to the BIS project but has been unsuccessful, leaving it no choice other than to begin proceedings in the Supreme Court of Victoria.

"After careful deliberation, NEC Australia has decided to take legal action to recoup its costs directly related to the project by commencing legal proceedings in the Supreme Court of Victoria," the company said.

The AU$52 million BIS project, awarded to NEC Australia, kicked off before the July 2016 creation of the ACIC, which was formed following the merger of the CrimTrac agency, the Australian Crime Commission (ACC), and the Australian Institute of Criminology (AIC).

It was designed to upgrade the agencies' biometrics capabilities from a fingerprint-only solution to also include palm prints and facial recognition.

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According to NEC, by June 2018, the company had built a substantial BIS system that was undergoing testing by the ACIC, however the agency took the "curious decision" to terminate the project "for convenience", which effectively allowed the ACIC to terminate the contract, even if NEC was not in breach.

"NEC fully respects the right of the ACIC and its CEO to terminate a contract for reasons they see fit," the company said.

"Nevertheless a substantial investment in this project was made by NEC and the company is simply seeking to have the investment at the time the contract was terminated for convenience, returned."

Earlier this year, a report produced by the Australian National Audit Office (ANAO) blasted the execution of BIS project, labelling it deficient in almost every way.

In its report [PDF], ANAO said the NEC BIS project encountered difficulties at an early stage, blaming the ACIC for not effectively managing the BIS project.

According to the report, the ACIC's approach was characterised by: Poor risk management; not following at any point the mandated process in the contract for assessing progress against milestones and linking their achievement to payments; reporting arrangements not driving action; non-adherence to a detailed implementation plan; and inadequate financial management, including being unable to definitively advise how much they had spent on the project.

ANAO highlighted that ACIC had agreed to more than AU$12 million in additional work, some of which may have been unnecessary or already covered under the original contract.

Records were also not appropriately kept, with ANAO saying many staff did not use any of the government's electronic document and records management systems and instead kept records on their own computers, in uncurated network drives, or in email inboxes.

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Following the release of the ANAO report, the federal government's Joint Parliamentary Committee on Law Enforcement released a report as part of its examination of the ACIC's annual report 2016-17 that showed events surrounding the termination of the contract was questioned. 

The report [PDF] revealed that while the ACIC attempted to "keep the project alive" by working through some of the issues that were faced through workshops, the associated costs and timelines were impossible to meet.

The committee said ACIC chief executive Michael Phelan clarified that, had the project continued from June 2018, it would have cost an extra AU$47 million to build the program, and therefore termination for convenience was the best alternative to "look after government money going forward".

"It became quite clear after that date, as we were moving forward, that we were never going to meet the time lines within the existing scope of the budget. So, I made the decision that it was simply not worthwhile to continue," Phelan told the committee.

Phelan also stated that the BIS system would have been marginally better than the existing fingerprint system if it had been delivered, the report revealed.

The committee also questioned the ACIC over whether future biometric projects would be considered, and to that Phelan said, "we will explore opportunities again to determine how best to go forward with other biometrics, including facial recognition, to fuse them with the national fingerprint system."

"To be quite frank, we want to be able to walk before we can run, and also, in terms of law enforcement doctrine for facial recognition, it's important that we work out how we're going to use facial recognition before we go out and spend a whole heap of money on integrating it with other systems, so we're going through that process as well," Phelan said. 

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