​Queensland govt to pay IBM's court fees in health payroll stoush

The Queensland government has been ordered to pay the legal fees of technology giant IBM after it lost its attempt to sue the technology giant over the state's failed health payroll system.
Written by Asha Barbaschow, Contributor

The Queensland opposition is making no apologies for pursuing legal action against IBM after a court ordered the government to pay costs in a failed case.

The Queensland government was ordered on Monday by the Supreme Court of Brisbane to pay IBM Australia's legal fees stemming from the legal proceedings over the state's troubled health payroll system, which cost taxpayers an estimated AU$1.2 billion.

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.

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.

The Queensland government, however, is liable for IBM's legal fees. One legal industry source estimated the cost of the case to be as high as $3 million.

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.

"Queenslanders were wronged, we believe, in the pay affair, and we intend to recover money for them -- the taxpayers -- the men and women of Queensland," Newman said at the time.

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.

The government-commissioned inquiry added a further AU$5 million to the damage bill.

Despite legal action underway, former Queensland Premier Anna Bligh admitted last May that the state government was at fault for malfunction of the health payroll system and it was not the failure of hardware or software.

Calling it a "catastrophic disaster", Bligh said the single biggest failure of the project was failure around managing the program and the governance of it, saying the state simply bought the wrong one.

Acting Opposition Leader John-Paul Langbroek placed 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 $1.2 billion in taxpayers' money lost under the Bligh Labor Government," he said.

The state's Department of Education and Training has also been in the spotlight recently, after an update to its OneSchool system in January last year failed.

The OneSchool System was designed as a mechanism to allow school principals to report on suspected child abuse directly and simultaneously to Child Safety Services and the Queensland Police Service (QPS). However, when reports were filed by principals intended to be delivered to the QPS only, an "IT error" prevented the reports from ever being delivered to the agency. It is believed that some 644 suspected child abuse cases were not reported to police.

The federal government also recently signed a five-year AU$484 million IT contract with IBM.

"The innovative agreement will see the delivery of next generation technology that will deliver access to new products, services, and expertise," Minister for Human Services Alan Tudge said at the time. "The contract will enable the government to realign hardware, software, and services to critical areas of need."

According to Tudge, the spending of nearly half a million dollars would ultimately achieve savings for the taxpayer whilst apparently delivering better outcomes for Centrelink, Medicare, and Child Support recipients.

With AAP

Updated 5:02pm AEST 4 April 2016: Additional content from AAP.

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