Queensland government drops AU$1.2b IBM chase

The Queensland government says it will not be appealing the ruling handed down by the Supreme Court of Brisbane that left the state to front the tech giant's legal bill which could be as high as AU$3 million.
Written by Asha Barbaschow, Contributor

The Queensland government will not continue to pursue IBM Australia over its role in the state's troubled health payroll system, which cost taxpayers an estimated AU$1.2 billion.

"We think it's time to close the chapter and move on," acting Premier Jackie Trad said on Thursday when asked whether the government would appeal the court's rulings.

The Queensland government was ordered on Monday by the Supreme Court of Brisbane to pay IBM Australia's legal fees from the case. One legal industry source estimated the cost of the case to be as high as AU$3 million.

The tech giant was accused of misrepresenting its capability to deliver a new payroll system on time and on budget in legal action launched by the Newman government in 2013.

The state lost its battle last year, with Justice Glenn Martin ruling in favour of IBM, declaring that "on the proper construction" of the supplemental agreement, IBM was released from the State of Queensland's claims in its lawsuit.

That decision was made despite IBM having been granted an iron-clad agreement from the Bligh Labor government in 2010 that, upon the system's failure, the contract would not end and all rights to take legal action would be relinquished.

Martin said Monday that the state and IBM have agreed to resolve their dispute, without any admission of liability by either party, providing both parties adhere to the terms of an agreement laid out in court.

After the ruling was handed down, the state opposition was making no apologies for pursuing legal action against IBM, with acting Opposition Leader John-Paul Langbroek placing blame back at Labor's feet, saying the bungle was the hallmark of an appalling administration.

"We will not apologise for trying to recover the AU$1.2 billion in taxpayers' money lost under the Bligh Labor Government," he said.

IBM won the contract to design and deliver a whole-of-government payroll system in 2007 and the system for the health department was due by mid-2008, but, plagued by delays and cost blowouts, it did not go live until March 2010.

The bungled payroll system's failure resulted in 74,000 staff being underpaid, overpaid, or not paid at all.

The state government originally settled with IBM in early 2011 over the debacle, in exchange for IBM fixing the system; however, former Premier Campbell Newman announced in December 2014 that the state was taking legal action against the tech giant.

The move toward legal action came after a five-month inquiry, headed by former Supreme Court judge Richard Chesterman QC, which found that IBM solicited and received information during the tender process that gave it a distinct advantage over its competitors. IBM was also accused of understating the cost of building a new system in order to win the contract.

"IBM should never have won the contract in the first place," Chesterman concluded.

The company accepted some responsibility for the failure but also argued it had been hindered by "business process and data migration issues" outside its control.

With AAP

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