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Queensland Facing Multi-Million Payout Over Health Debacle

After a shattering defeat in its case against IBM Australia, the Queensland Government has been ordered to pay Big Blue’s costs which are likely to run into millions of dollars – and perhaps more than $1 billion.

After significant defects were said to have been found in the payroll system for Queensland Health, designed and installed by IBM, the Newman Government lodged a claim for damages against IBM in 2013 in the Brisbane Supreme Court.

The debacle was described by former Supreme Court Judge Richard Chesterman as possibly the worst failure ever in public administration in Australia.

The Government claimed IBM had misrepresented its capability to deliver on time and on budget a $6 million contract for a new payroll system covering 80,000 workers.

The defects saw thousands of Queensland Health employees being underpaid, overpaid or not paid at all, and the Government argued IBM had misrepresented its credentials for delivering the system.

In court it claimed that, if IBM hadn’t talked up its credentials to design, build and deliver the payroll system, it would have awarded the deal to archrival Accenture.

But the case was unsuccessful, with lawyers for IBM arguing failures with the scheme were because the Government was “not able to define and stick to a scope”.

Justice Glenn Martin yesterday ordered the current Government of Labor Premier Annastacia Palaszczuk to pay IBM’s costs on what’s described as an “indemnity basis”. The Government had argued – unsuccessfully – that costs should be assessed on a “standard basis”, resulting in a lower sum.

If the parties cannot agree on the amount, the costs will be evaluated by an independent assessor, which can result in substantial extra fees. Some estimates have put the ultimate cost to Queensland at $1.2 billion.

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