A leading IT company has hit back at Lord Mayor Graham Quirk over a cost blow-out it claimed was a result of the Brisbane City Council's "bureaucratic approach" to the $122 million project.
Last week, Cr Quirk said the council would renegotiate its contract with Brisbane-based TechnologyOne after a systems replacement program was delayed by 18 months, with a potential cost blow-out of $60 million.
![TechnologyOne chief executive Adrian Di Marco has blasted Brisbane City Council over its handling of a $50 million IT ...](/web/20170131094347im_/http://www.brisbanetimes.com.au/content/dam/images/g/t/8/s/g/4/image.related.articleLeadwide.620x349.gu1l05.png/1485761228772.jpg)
TechnologyOne, with its headquarters in Fortitude Valley, was awarded a $50 million contract in 2015 to replace 13 legacy systems and provide ongoing support and maintenance.
In a statement to the Australian Stock Exchange on Monday, TechnologyOne chief executive Adrian Di Marco, who founded the company in 1987, said Cr Quirk's decision to go public with his grievances had unnecessarily affected shareholders.
![Lord Mayor Graham Quirk has ordered a renegotiation of the TechnologyOne contract.](/web/20170131094347im_/http://www.brisbanetimes.com.au/content/dam/images/g/q/k/5/5/p/image.related.articleLeadwide.620x349.gu1l05.png/1485761228772.jpg)
On the day of Cr Quirk's media statement last Wednesday, TechnologyOne was trading at $5.52. By the next trading day last Friday, its stock price had fallen to $5.16.
Mr Di Marco said Cr Quirk had blindsided his company when he went public with the council's concerns.
"This event is being seen by the market as unique to BCC, because it has been made public by BCC without ever initiating the normal contracted remediation processes," he said.
"In my 30 years in business, I have never seen this before.
"We have had challenging and contentious projects in the past, but because there are dispute resolution and mediation processes built into all contracts that can be initiated by a client if necessary, including the ability to issue a breach notice, this has allowed for the orderly and professional resolution of disputes, without going public, which is normally in both parties' interest."
TechnologyOne's ASX statement by Brisbane Times on Scribd
Mr Di Marco said the council had not initiated any of those contract mechanisms.
"TechnologyOne was not aware of a contract dispute until the detrimental media statement made by the BCC," he said.
In the statement to the ASX, TechnologyOne said the project delays had been "fully documented and are due to the BCC".
It also claimed a briefing by the council's independent review committee on the morning of Cr Quirk's comments last Wednesday was inconsistent with what the Lord Mayor told the media.
"TechnologyOne has had challenging projects like the BCC in the past and they have been resolved to both parties' satisfaction," Mr Di Marco said.
"Unfortunately, BCC has taken this into the public arena without first following contractual protocol and allowing us the opportunity to resolve the matter.
"This has caused needless angst to our shareholders and impacted our share price, which is disappointing and totally unnecessary.
"Having said this, I am confident that this project can be resolved and have no impact on our strong earnings momentum."
The TechnologyOne ASX statement blasted what it described as "significant confusion and misunderstanding within the BCC executive" over the project and said the company remained confident of its legal position should litigation be instigated.
It also said the company was willing to work with the council to deliver the project "in good faith".
"Having said this, TechnologyOne has notified council that it cannot continue to frustrate our ability to complete the project," the company told the ASX.
"For bureaucratic reasons, council is not engaging with TechnologyOne during the time-critical configuration state by not providing the business input we require to configure their new business processes in our software.
"This bureaucratic approach will delay the project needlessly and contribute significantly to a blow-out in costs."
When approached for comment, a spokesman for Cr Quirk did not address the criticism directly.
"The Lord Mayor was made aware late last year that an IT systems replacement project was up to 18 months behind schedule with potential cost overruns, and in October halted payments to TechnologyOne and commissioned a review to get the project back on track," he said.
"Following a briefing from this review last week, the Lord Mayor directed council officers to renegotiate the contract, with a six-month deadline for TechnologyOne to provide an acceptable IT system to council."
Council opposition leader Peter Cumming said TechnologyOne's ASX statement took the dispute to a "whole new level".
"It shines a light on the fact that the council's handling of this contract has been incompetent from day one," he said.
"It's appalling that in council's haste to point the finger of blame at TechnologyOne, they have failed to follow the normal contractual process and attempt to resolve the problem."
Cr Cumming said Cr Quirk's Liberal National Party administration was more concerned about "shifting the blame for its own failures rather than ensuring ratepayers money is well spent".
Services Union secretary Neil Henderson noted the dispute came after the outsourcing of jobs in the council's IT department.
"Our members have their jobs on the line for significantly less than the money we are talking about here," he said.
"The loss of a huge number of IT jobs to India is also still fresh in our members' minds and for them this is another council IT stuff-up.
"This is an issue which will impact on the council for some time. The provider, TechnologyOne, has blamed the council.
"Our members want to know who is responsible and we want to see some accountability now."
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