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Great moments in public sector IT procurement

The public health system of the Australian state of Queensland required a new payroll system. In 2007, a contract was issued to IBM to provide a new system for $6.19 million Australian dollars.

The resulting system did not work, and went over budget by $1.1 billion. Yes, read that again.

In 2013, the Queensland government was “considering” sacking the bureaucrats responsible for mismanaging the contract. Since then, there has been no publicity concerning any actual sackings. Read that how you will.

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29 comments to Great moments in public sector IT procurement

  • Patrick Crozier

    How on earth…?

  • Michael Jennings (London)

    Government was involved?

  • They probably couldn’t sack the bureaucrats because either they were protected by union contracts or they had already left to become “consultants” for IBM at ten times the pay.

  • Alsadius

    Reminds me of the Canadian gun registry – original estimated cost $2M, actual cost $1B.

  • bobby b

    When government hires ideologues over technicians, contracts get violated.

    Good for IBM. They paid attention to the contract terms.

  • Fred Z

    Read Dilbert and all will be clear.

  • David

    Queensland has one thing going for it. The climate. Its governments, conservative and labour, have been absolutely hopeless. When they did elect one that set about reform it lasted one term. Stood on too many toes and upset too many scams.

    They are not alone however. Here in the Peoples Socialist Caliphate of Victoria a socialist “gummint” decided to implement a public transport ticketing system called Myki. Never mind adapting one of the already successful systems from elsewhere at minimum cost we, “the gummint”, know better. Estimates of what it has cost range around the 1.5 billion dollars [Aus] but many consider that an under-estimate.

    A smart [or dodgy] business type will run rings around any politician or bureaucrat any time.

    If it wasn’t our money it would be hilarious

  • James Hargrave

    Queensland public health – a disaster in every way, and somewhat prone to embezzlement to boot.

    Ah, Myki, the dumbest smart card on the planet (was it sponsored secretly by a group of taxi firms; it massively increased my use of taxis). There is an Australian tendency to re-invent the wheel, but not to make it quite round. And it would never do to adopt either a foreign system or one that was being used successfully elsewhere in Australia (even Queensland’s is better, though Sydney had a massively expensive stuff up on this front in the 2000s).

  • […] The public health system of the Australian state of Queensland required a new payroll system. In 2007, a contract was issued to IBM to provide a new system for $6.19 million Australian dollars. […]

  • PeterT

    This is what happens when you put a bunch of criminals on an island and let them breed.

  • Lee Moore

    I liked how the SMH article studiously managed to avoid mentioning who awarded the contract in 2007, and who then agreed to settle with IBM for buttons in 2010, but still managed to get in a dig at Newman for launching the (now failed) lawsuit to get some money back.

  • Andrew Duffin

    Sounds a lot like T. Blair’s visionary NHS IT system, which iirc sank without trace having soaked up £x million and never even gone live.

  • Watchman

    Andrew,

    Vaguely knew the guy behind the company that got that contract. Rather concerning (in my opinion) that anyone would think he was capable of arranging anything, never mind a complex IT system – it was a standing joke locally whilst the debacle was going on that he would never be a sane choice for running it (although that could be unfair – I have no evidence as to his ability to do complex IT other than that one debacle). Had a nice house and car though…

  • John Galt III

    PeterT,

    I don’t care who you are ….that’s funny.

  • Sounds a lot like T. Blair’s visionary NHS IT system, which iirc sank without trace having soaked up £x million and never even gone live.

    The NHS IT debacle cost in excess of £12 billion though, equivelent to about $21 Billion AUD.

  • Fraser Orr

    I’m confused. They wanted a payroll system? What was wrong with Quickbooks? It costs a couple of hundred bucks. That is less than a glass of wine at the dinner they had to celebrate the signing of the deal. These big organizations always need to reinvent everything from the ground up. The original cost of $6 million was already a dreadful rip off.

    However, what would you expect from a government agency? And what would you expect from a creaking behemoth like IBM?

    (BTW, I am being a little hyperbolic, not not a lot.)

  • Watchman

    Fraser,

    I fail to see how you are being hyperbolic at all. I’ve commissioned computer systems for a few thousand users a year, and our first thing was to consider whether we could build it in-house. Five seconds later we started to look at the commercial systems, since they had all the features we would need to consider already built in…

    The best idea I have seen (from a non-expert point of view) for government commissioning of computer systems, should it be necessary, is the suggestion that rather than a monolothic system they should commission modular systems, which lets small players bid and limits dangers of overexposure (because you can cut the contract and replace it for much smaller costs).

  • Chris C.

    This reminds me of an anecdote of my fathers from the early 90’s. He was working for a large oil company as the project lead on a multi-hundered million dollar bid. The contractor which was awarded the work by the procurement steering committee (because they were the cheapest) was Lockheed Martin who were trying to branch out into the private sector with government defense contracts drying up.

    After the project eventually completed he said they were the worst contractor he had worked with in 20+ years. They had no concept of a fixed price contract, were excessively bureaucratic even in comparison to other multinations, and never bothered to read a specification because they went into every project meeting with the expectation of being able to negotiate deviations or get more money for contract variations.

    In almost every respect they had no concept of how to work on a contract that wasn’t managed by an equally incompetent and bureaucratic government department. You could say their organization had “evolved” to match that of their usual customers, warts and all.

  • Lee Moore

    The best idea I have seen (from a non-expert point of view) for government commissioning of computer systems, should it be necessary, is the suggestion that rather than a monolothic system they should commission modular systems

    This completely misses the point. No self respecting megalomaniac will accept any design spec less comprehensive than “one ring to rule them all” or in modern tech-speak, one button that I can press to control everything down to the tiniest detail, without having to rely on incompetent, lazy, treacherous flunkeys. You do not go into government for “modular” solutions. That’s like declaring war to exercise your horse. You go into government so that, from your desk, you can RULE THE WORLD !

    If you are contracting with the government you must promise the moon, not a Sputnik sized orbiter. You don’t need to worry about getting sued when it doesn’t work because (a) you are dealing with muppets and (b) they will change the spec from moon, to Mars to Jupiter so many times that your change fees will buy you a private island.

  • In almost every respect they had no concept of how to work on a contract that wasn’t managed by an equally incompetent and bureaucratic government department. You could say their organization had “evolved” to match that of their usual customers, warts and all.

    Having worked on major projects for 3 major oil companies, I have reached the conclusion that contractors are a bit like kids: their behaviour is dependent on the client/parent. I have very little sympathy with companies when they complain about their contractors, most of the time the client is to blame because they lack the balls and personnel to manage them properly. Last major project I worked on, the client personnel had no relevant experience and acted like frightened mice.

  • Fraser Orr

    @Tim Newman
    > I have very little sympathy with companies when they complain about their contractors, most of the time the client is to blame because they lack the balls and personnel to manage them properly.

    I have to say I really disagree with you Tim. If I hire a contractor I am hiring in expertise I do not have. It is pathetic and self defeating if I have to manage the jokers with kid gloves. They are supposed to be the experts, they are supposed to help me to lead them to an effective solution. It is a fact that I often don’t know exactly what I want. A good contractor works with me to solidify this. A bad contractor takes advantage of my lack of expertise to rip me off for every penny I am worth.

  • It is pathetic and self defeating if I have to manage the jokers with kid gloves

    Far from kid gloves, I think Tim is suggesting they need to be managed with a bullwhip and a willingness to waterboard the fuckers 😉

    Many moons ago I was a consultant and the things my company got up to if the client was essentially disengaged and just waiting with childlike trust for their report… well… it was not pretty.

  • Far from kid gloves, I think Tim is suggesting they need to be managed with a bullwhip and a willingness to waterboard the fuckers 😉

    Exactly! The very second they start with the non-performance and the bullshit, haul in the project manager and tell him his ass is gone if this is repeated. Call the project director and tell him if the replacement PM is as bad, the contract will be pulled and fuck the schedule: that’s blown anyway if your contractor is incompetent.

  • Rob

    Are we sure Queensland’s legislators didn’t load the spec with millions of useless features after the contract was signed?

  • Fraser Orr

    @Perry de Havilland (London)
    > Far from kid gloves, I think Tim is suggesting they need to be managed with a bullwhip and a willingness to waterboard the fuckers 😉

    I’m sure, I think my point, however inarticulately made, was that if you have to do that you have a very bad subcontractor. You are paying big bucks for expertise and professionalism, not a difficult, complainy pain in the ass.

  • Regional

    Politicians in general are the dregs of society.

  • Eric

    Contractors are like mechanics. If you don’t know what you’re doing, and they realize you don’t know what you’re doing, whatever you’ve contracted them to do will be managed for maximum revenue to the contractor. You’d think bad reputation would kill them in the end, but it doesn’t seem to happen. I’ve spent much of my career cleaning up messes created by software consultants.

    Large organizations are far better off developing expertise in-house.

  • Chris C.

    Having worked on major projects for 3 major oil companies, I have reached the conclusion that contractors are a bit like kids: their behaviour is dependent on the client/parent. I have very little sympathy with companies when they complain about their contractors, most of the time the client is to blame because they lack the balls and personnel to manage them properly. Last major project I worked on, the client personnel had no relevant experience and acted like frightened mice.

    That was the problem. Getting a private sector contract seemed to be the first time they had ever been held accountable.

  • Paul Marks

    This is all perfectly normal for a government “Information Technology” project – similar stories could be told from many places in the world. Especially Britain and the United States.

    However, Michael is correct – it is an outrage.

    We just live in a world where such outrages are normal.