back to article IBM committed 'ethical transgressions' to win botched project

IBM has found to have acted unethically during a bid to win work developing a new payroll application for the Australian state of Queensland's Department of Health, but has not been held directly or solely responsible for the $AUD1bn blowout in costs on the project. IBM's been under the microscope for its role in this project …


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  1. Bob Vistakin

    Surely not?

    Oh, wait...

    1. LarsG

      Re: Surely not?

      The UK Government is the master of botched ethically transgressed IT project failures that never apportion blame to anyone.

      You Aussies are just beginners at it.

      1. Denarius Silver badge

        Re: Surely not?

        @Lars, nah, Oz PHB levels don't realise they have been had. After all, our greatly admired corporate leadership is well trained to be grovelling colonial lickspittle toadies.

      2. Scob

        Re: Surely not?

        I seriously believe no big government project should ever be awarded to vendors of this size, and certainly not to one where the hardware and software is combined. It's a license to print money.

    2. asdf

      USA USA USA!

      My American pride is coming through and would also refer you to the billion dollar virtual border fence project pork Boeing took from the Dept of Homeland Security (worst part of our government by a long shot) and delivered virtually nothing in return. Plus the US has the trillion dollar F35 cockup on its resume. We win yes, oh wait the grandkids will be paying for that :(.

  2. Anonymous Coward
    Anonymous Coward

    That sounds familiar

    It's almost exactly the same as a project we currently have on the go with a largish company, of a bluey sort of colour.

  3. Sir Barry

    Why am I not surprised?

    My company has partnered with BB in the past and I was, how should I put it, somewhat surprised at their aggressive nature in pursuing the ££'s even at the detriment to the client.

    1. Pascal Monett Silver badge

      ".. to the detriment of ...", my good sir. One does something to the detriment of something else or someone.

      1. Sir Barry

        I stand corrected, my apologies, I am a little hard of thinking...

        Upvote for the correction

  4. Anonymous Coward
    Anonymous Coward

    this is news ?

    you mean outsourcing is not usually like this ? One merely has to work in IT long enough to observe any of the reported events happening. Rings bells about Desine contract stories. Nothing to see here, move on

  5. Mr C

    In some countries this is business as usual

    I'm glad this has been found out and now hopefully some justice will be delivered to those responsible.

    Regrettably this happens all the time in this country, i used to work in circles and i got to see alot of tenders being custom-designed to specific software so that only 1 company could ever be awarded the project.

    Or, there was money to be spend made and persons high up decided to distribute the wealth between themselves, and getting a system that was neither needed nor ever useful the method for spending and siphoning off money.

    I can name many more examples of how companies, big and small, were just the instrument of someone else's agenda and its a fine line to walk, because if you don't take the project someone else will.

    I would call any company that rejects a project on moral or ethical grounds incredibly remarkable and worthy of special mention.

    I just wish that this world was more perfect so that examples like these would not happen but alas, i fear that in my lifetime it will stay as it is.

    1. Anonymous Coward
      Anonymous Coward

      Re: In some countries this is business as usual

      You mean there are places where this is not the norm? Governmnents make lousey procurers, private sector knows this.

  6. John Smith 19 Gold badge

    I smell "covert reward" systems at work.

    Encouraged former employer to bid. OK.

    Shifting the bid criteria weighting to favor them. Not OK

    Like hiring Matt Bryant to do a server hardware evaluation.

    Then we place the order for the HP Itaniums.

    1. Destroy All Monsters Silver badge

      Re: I smell "covert reward" systems at work.

      It's all about Itaniums, baby!

      1. John Smith 19 Gold badge

        Re: I smell "covert reward" systems at work.

        "It's all about Itaniums, baby!"

        It is where Mattie is concerned.

        1. asdf

          Re: I smell "covert reward" systems at work.

          In Mattie's defense (yuck did I say that) even he has had to admit (silently but still) what a fail the Itaniums are (and HP-UX as well) and has for the past few years been sensibly pushing commodity x64 solutions on Linux.

          1. Matt Bryant Silver badge

            Re: asdf Re: I smell "covert reward" systems at work.

            "....he has had to admit (silently but still) what a fail the Itaniums are (and HP-UX as well) and has for the past few years....." Sorry to disappoint, but our payroll system, whilst not quite as large as Queensland's, actually bridges many different countries and therefore even more complex pay structures, yet works just fine for a lot less than $20m. And that's COTS (SAP and Oracle DB) on hp-ux on Itanium. Maybe the Ozberts should have called hp instead?

    2. Matt Bryant Silver badge

      Re: Johnnie Thicko Re: I smell "covert reward" systems at work.

      "....Like hiring Matt Bryant to do a server hardware evaluation. Then we place the order for the HP Itaniums." It looks like Johnnie's clumsy attempts to divert people's attention is just as lackadaisical in tech as in politics. Don't worry, Johnnie, I'm not going to accuse you of being a Big Blue drone - they were found to be incompetent and unethical, not stupid.

      Another amusing point to make about those insisting all government projects are doomed to failure and overruns is that, if that were true, nothing would work, hospitals would simply close, roads would never get built, and taxes never collected. A bit like Greece, I suppose.

      1. Destroy All Monsters Silver badge

        Re: Johnnie Thicko I smell "covert reward" systems at work.

        Another amusing point to make about those insisting all government projects are doomed to failure and overruns is that, if that were true, nothing would work, hospitals would simply close, roads would never get built, and taxes never collected. A bit like Greece, I suppose.

        Which rather proves the point, I suppose.

        The advantage of govnmt projects is that, if they need more money, they get more money instead of the ministry being wound up and its assets being distributed among the shareholders (in this case, the taxpayers). Economic calculation goes from impossible to irrelevant.

        Which means ~ 200% GDP debt craters and crumbling bridges. Oh and a 3 trillion dollar bill for a landwar in asia in the mail.

        The objectives of public administration cannot be measured in money terms and cannot be checked by accountancy methods. Take a nation-wide police system like the F.B.I. There is no yardstick available that could establish whether the expenses incurred by one of its regional or local branches were not excessive. The expenditures of a police station are not reimbursed by its successful management and do not vary in proportion to the success attained. If the head of the whole bureau were to leave his subordinate station chiefs a free hand with regard to money expenditure, the result would be a large increase in costs as every one of them would be zealous to improve the service of his branch as much as possible. It would become impossible for the top executive to keep the expenditures within the appropriations allocated by the representatives of the people or within any limits whatever. It is not because of punctiliousness that the administrative regulations fix how much can be spent by each local office for cleaning the premises, for furniture repairs, and for lighting and heating. Within a business concern such things can be left without hesitation to the discretion of the responsible local manager. He will not spend more than necessary because it is, as it were, his money; if he wastes the concern’s money, he jeopardizes the branch’s profit and thereby indirectly hurts his own interests. But it is another matter with the local chief of a government agency. In spending more money he can, very often at least, improve the result of his conduct of affairs. Thrift must be imposed on him by regimentation. (Bureaucracy by Ludwig von Mises, 1944)

        1. <shakes head>

          Re: Johnnie Thicko I smell "covert reward" systems at work.

          (Bureaucracy by Ludwig von Mises, 1944)

          now i know where pratchet got his von moist charater from.


  7. Anonymous Coward
    Anonymous Coward

    Shocked I tell you

    IBM looks great on a resume/CV.

    Vendor? Run away. Fast.

  8. A J Stiles

    Better way to do it

    There is a simple way to ensure that firms competing for tenders can't game the system. And it's already quite commonly done in private procurement:

    Instead of picking the cheapest, you pick the cheapest-but-one.

    Anybody can put in a low bid and be confident that it will be the cheapest (and know they will have to charge more later, once they already have the contract); but it's very hard to bid to be the cheapest-but-one.

  9. Anonymous Coward
    Anonymous Coward

    I'm truly sad; I'm reading my way through the document and (despite what Hon R Chesterman says) it's really fascinating reading; if a bit depressing and very long.

    The reason that I find it of such interest is because I've been involved in a project (non-government) with some of the same key players. Many of the things highlighted within the report resonate with things that I experienced as part of our project.

    Ultimately, our project was declared to be a success, despite not completing on time or budget. The product was installed and did work; and we could point to a number of cost savings and efficiency gains. Most of this was actually due to the hard work of our internal staff; and was despite the actions of the various consultants, not due to their efforts.

    Sadly, it seems that the project is now due to undergo another expensive "transformation", promoted by the same company that failed to deliver on the original project. As I'm no longer part of the project, I don't know the current status, but I've heard some interesting little snippets that seem to go against the publically promoted image of the current position.

    I wish them well, but I cannot help believe that anyone getting these people involved seriously needs to have their heads examined.

  10. Anonymous Coward 101

    What baffles me is how a relatively small project could balloon in size before someone said "wait a second, something is wrong." It's a disaster. Without joking, every civil servant and private sector contractor should be made to read the document.

    1. Anonymous Coward
      Anonymous Coward


      The commissioner did not investigate why it ballooned (or even if it did). He just accepted that it did. His brief was to look into other things. Now, I agree that the project was a complete debacle, but most of the $1 billion+ balloon was due to the manual payroll processing that goes into handling pay changes related to staff re-scheduling, claims for additional allowances, retrospective changes to leave, pay rates, etc, etc.

      There were over 1,000 new people in the payroll department doing this (now "reduced" to 800 odd). This cost was probably incurred with the old system, but was made apparent as they centralised this task with the roll out of the new system. Before, it had been done by supervisors, senior nurses, admin staff in every medical centre and hospital around the state.

      Here are some actual numbers

      - Original IBM bid: ~ $ 6 M

      - Total IBM charged (all approved variations) ~ $ 24 M

      - Total expected IT cost: ~ $ 110 M (i.e the government always expected to spend this much)

      - Total IT cost: don't know but less than $ 200 M

      - Total expected all up cost over 4 years: ~ $ 1 B - $1.5 B, most of which is for the payroll staff.

      So a total debacle, but just as much about the complexity of the pays and the business process changes as the IT project costs.

  11. Anonymous Coward
    Anonymous Coward

    Obvious slander!

    This simply cannot be true!

    For just before I was laid off from IBM so they could ship my job to India, I had to undergo my annual business and ethics conduct certification (BCG) in which we all had to read a Powerpoint presentation and listen to little audio snippets with scenarios where upright IBM employees spit in the eye of corruption and unethical business practices, and those who did not abide by this code of honor were mercilessly outed and brought to justice!

    <oh god I'm going to tear a facial muscle if I try to keep a straight face much longer>

    1. This post has been deleted by its author

    2. Anonymous Coward
      Anonymous Coward

      Re: Obvious slander!

      I did an accountancy ethics exam that was listed as needing 2 hours. On the day I was out in 15 minutes. While the first one out most of the rest of the class were not far behind me.

      Yes accountants do have an ethics exam to pass but yes it is a pretty recent thing to be tested on.

      Anon for fairly obvious reasons.

    3. Anonymous Coward
      Anonymous Coward

      Re: Obvious slander!

      I've done the ethics training and it's crystal clear that these guys were way beyond their BCGs, what they did is specifically mentioned in the BCG training. You may not have taken it seriously, but I can assure you that everyone I know take it very seriously indeed.

  12. David Lawrence

    Apostrophe crime sighted....

    And it's my favourite, which was explained to me when I was about 12 and somehow still remember 42 years later........

    " Here's how Commissioner Richard N Chesterman describes it's work: "

    The word "it's" is a contraction of "it is". In the context of the sentence above that makes no sense. Therefore it must be the word "its" which is the posessive - something belongin to "it" which I believe to be most apposite in this case.

    Simple rule really.

  13. Anonymous Coward
    Anonymous Coward

    I recall way back IBM sales staff had to have a manual defining their rules of ethical conduct. But of course, it was widely understood to be a set of the rules you had to quietly reverse to win business...

    1. Don Jefe

      They were more guidelines really.

  14. Anonymous Coward
    Anonymous Coward

    Meanwhile in Britain

    Recently Dell and HP whined about the low prices being paid for IT in the UK. They can't make a profit!

    This is a direct result of central contract negotiation, and a move to COTS solutions.

    The UK National Audit Office gives an example of a 75M pound deal that dropped to 2M when recast in COTS.

    A payroll system should cost less than $6M Aus. Probably an off the shelf SaaS app could have been used a the base (Even Queensland can't twist payroll rules THAT much!)

  15. JMiles


    this project's failure “may be the most spectacular example of all the unsuccessful attempts to impose a uniform solution on a highly complicated and individualised agency.”

    Does anyone else notice how organisations large and small almost proudly state how complex and unique they are? Maybe they could think about standardising and simplifying their processes and rules - then they could think about using off-the-shelf solutions with lower implementation risks!

    1. CBarn

      Re: Simplify?

      Spot on ... for crying out loud, it's payroll. How many different ways can there be to do it right? Every company and government agency in the free world manages to do this every couple of weeks, it really can't be _that_ hard to get it right, can it?

      1. Anonymous Coward
        Anonymous Coward

        Re: Simplify?

        Actually, the answer is 23,000 different ways, for a work force of 80,000 people. The system requirements were complex with multiple awards and multiple pay rates dependent on shift loadings, overtime, etc, etc, each of them with multiple allowances that could be claimed in advance and retrospectively. The process for staff scheduling was arcane.

        Simplify you say? This is beyond the capabilities of any single government department, or even the state government due to the structure of industrial relations in Australia.

        The issue (as the report makes clear) is the approach taken to address this complexity. The project was a complete debacle, but simplification wasn't a solution that was available.

  16. John Smith 19 Gold badge

    A little note on how that $Aus 1Bn came about.

    That's not all the contract cost.

    That's all the non-payments, over payments and under payments to staff (and anyone else) on the system

    Added together.

    Keep in mind in accountancy rules for this sort of thing unlike if the cash is mis-transferred (IE 1 account too big, one account too small) both transfers add to the total.

    When NASA rolled out SAP across their 11 sites they found the "discrepancies" across 11 sites and about 50 years came to $576Bn. No I have not missed a decimal point.

    So you could say that most of that $Aus 1Bn was "enabled" by the IBM software.

    But not in a good way.

  17. ArcibusArc

    I have looked on e-bay and determined a comptometer can be purchased for around $14 which is what payroll clerks used to use for calculating government department employees pay in the 1980s. I don't recall too many errors in them days.

    But seriously according to research more than 70% of IT project across the world fail to meet the business objectives. if your are not clear what you need from day one and you don't put in place the controls for ensuring it happens then this is not unusual as many have already pointed out.

    Which is why the business has to stop wasting time looking around for people to blame and start embracing business architecture - my ebook 'business architecture made easy'- is a good start even if I say it myself.

    Don't even think systems till you really know your problems and have a plan for fixing them, many of which no system can fix. I like others have seen so many examples of people throwing away the baby (and the bath) with the bath water.

  18. PeterM42


    aka I Bought a Minger

    1. Anonymous Coward
      Anonymous Coward

      Re: IBM

      International Billing Machine

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