A $122 million Brisbane City Council IT contract will be renegotiated after a systems replacement program was delayed by 18 months, with a potential cost blow-out of up to $60 million.
Lord Mayor Graham Quirk said the council would renegotiate its $122 million, 10-year contract with Technology One, which was to replace 13 existing systems with a new "local government systems program" by the middle of this year.
"More realistically, based on the information the panel has provided to me and civic cabinet, that is going to be more like late 2018," Cr Quirk said on Wednesday.
Technology One, meanwhile, has laid the blame at the feet of the council, which it said had changed the scope of the work after the contract was signed.
Cr Quirk said the IT systems in question dealt with compliance and regulatory services, such as rates and development applications.
"These systems currently have around 2.2 million transactions a year, so they are important systems and with legislative change there are new requirements on systems," he said.
"The new integrated system was to cope for the future."
The Lord Mayor had ordered a review into the program in November, when it became clear the project had run into trouble.
As a result, Cr Quirk said the independent panel had discovered a potential cost blow-out of $60 million.
"Obviously, I'm not happy," he said.
"I mean, this is a significant overrun. It's not something that I want and it's not something the people of Brisbane want, but we have to get this back on track.
"That's my focus now, to make sure that we continue to deliver this project."
Technology One was one of 17 companies to respond to the council's call for expressions of interest and was awarded the contract on June 9, 2015.
So far, Cr Quirk said, the company had been paid $20 million.
In a statement, a company spokesman said the scope of the work changed after Technology One was awarded the contract, as the council's existing business processes were not well defined.
"As such, BCC took the opportunity to document them clearly while the software build was completed," he said.
"This review has led to substantially more business processes being identified (500-plus, approximately 100 per cent more business processes) than was originally contracted.
"As such the scope has increased substantially and that has also impacted the project timeline."
The company spokesman said it submitted "detailed documentation" to the council on January 9 that identified each additional business process.
He said the council selected Technology One's new generation product, which was built to "support the digital economy using mobile devices and the cloud" so as to support future council initiatives.
"It was agreed that BCC would be development partners with Technology One on the award of the tender, but as the project progressed it became clear that BCC struggled with this strategy," he said.
"At the request of BCC, the decision was made that Technology One would complete the build of the new product before the project implementation continued.
"This change in strategy has introduced delays to the project."
The Technology One spokesman also said the council had requested "substantially more functionality" in its new generation product than was originally tendered.
"This additional software functionality has been provided by Technology One at no additional cost to BCC," it said.
Cr Quirk said the council would stick with the Technology One to find a solution.
"This company has delivered projects for 110 local authorities in Australia and in New Zealand," he said.
"They are a Brisbane company with 900 employees; a very significant and very successful company."
In the meantime, Cr Quirk said a $20 million saving in the council's contract to widen the Inner City Bypass would provide a buffer the 2016-17 budget, but conceded future budgets could be impacted.
"We will have to, in our future financial years, look towards some ways in which we can cover this costs, to make sure we can minimise this cost but also cover it so that ratepayers aren't impacted," he said.
Council opposition leader Peter Cumming said the blow-out pointed to bad management and the ratepayers of Brisbane should not bear the costs.
"This massive contract blowout has all the hallmarks of being Graham Quirk's next CityCycle disaster, but on a grander scale," he said.
"Here we have a $122 million contract over 20 years, blowing out by $60 million – that's a 50 per cent cost over-run in less than 18 months.
"It's a 10-year contract, barely a year in, and it's fallen in a heap."
Cr Cumming said the Labor opposition had often expressed concern over the council's contract tendering process, which was part of the Liberal National Party administration's secretive establishment and co-ordination committee, informally known as civic cabinet.
"The committee is made up entirely of LNP councillors, so there is no scrutiny of the decisions they made," he said.
"It takes four years for the minutes to be released publicly and 10 years before detailed information regarding decisions is published."
The contract was approved at a full council meeting in June 2015, following a briefing to all councillors.
Labor councillors voted against the awarding of the contract.
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