Taxpayers forced to bail-out failing $400 million Labor government computer contract
Friday, 21 September 2018
A $400 million contract awarded to a global technology company for the supply of computers and ICT support, signed-off by the former Labor government which was meant to save taxpayers $11 million a year, has already cost taxpayers an extra $48 million.
Even more concerning for taxpayers is that an independent report has warned the project has a ‘high chance of failure’ and might actually cost taxpayers another $40 million to $80 million.
In a 7-year contract (with a further 3-year option) spruiked last year by then Premier Jay Weatherill as a “win-win-win for taxpayers, the government, and the economy” – the DXC Technology-run South Australian Government End User Computing (EUC) Project had promised to create 400 jobs.
Instead, Treasurer Rob Lucas said that DXC Technology had unexpectedly offshored most of its Adelaide workforce associated with other contracts – resulting in only 27 net jobs being created in the State.
“This project has been an abject failure from the outset – over-budget, behind schedule and yet another shining example of the gross financial incompetence and mismanagement of the former Labor government that we’ve been left to clean up,’’ said Treasurer Lucas.
Under the contract – signed on February 8, 2017 – ICT devices (desktop PCs, laptops and tablets) were purchased by DXC and intended to be leased to all government agencies. To date though, only SA Health and the Department of Premier and Cabinet are being serviced by the agreement.
Among the major concerns were:
• A more complicated and costly level of service being needed than originally anticipated
• Incompatibility of the system with SA Health’s ICT application such as EPAS and EPLIS
• A lower proportion of devices being Windows 10 ready
The independent review conducted in August last year, found the root cause of the problem was that ‘the project was considered too important to follow standard project practices’ because the government wanted to save time.
“This is a damning indictment of the former Labor government and has left taxpayers exposed to this massive blowout in costs,’’ said Treasurer Lucas.
“The review concluded that because the government had deliberately ignored the usual rules, the contract had bypassed ‘much of the procurement methodology, discipline and rigour needed to properly manage the contract’.”
“The State now finds itself in a position where it has a project that is not set up for success and has a high chance of failure, has a contract in place with DXC that would be costly to terminate,” the review states.
“Sadly, this is yet another example of the financial mess left by the former Labor government,” Mr Lucas said.
“The Marshall Liberal Government is now looking to review its options on this project to minimise the extent of additional costs to taxpayers.”