IBM barred from Australian state after presiding over 16,000 per cent overspend on payroll project

Nobody ever got fired for buying IBM? They might do: Queensland bars IBM from new contracts 'until it improves its governance and contracting practices' after £695m payroll debacle

The Australian state of Queensland has said that it will not allow IBM to enter any new contracts with the state government "until it improves its governance and contracting practices".

The ban was made in a statement today by Premier Campbell Newman.

IBM was blamed for presiding over an estimated 16,000 per cent overspend on a project that crippled the payroll system of Queensland Health for months. The implementation of the SAP/WorkBrain system had originally been expected to cost just over A$6m (£3.5m), but the final bill weighed in at a spectacular A$1.2bn (£695m) instead.

The new payroll system went live in March 2010, without adequate testing and despite warnings from both SAP and IBM.

The ban follows the conclusion of a Commission of Inquiry, which found evidence of "misconduct". It described the botched project as possibly the worst IT project failure in Australia.

"The replacement of the [Queensland Health] payroll system must take a place in the front rank of failures in public administration in this country. It may be the worst," concluded Commissioner Richard Chesterman, the judge hired to head the inquiry.

What is more, Chesterman's report claimed that a "supplemental agreement" had effectively released IBM of all liabilities arising from the costly disaster. "There are now no means by which the state may seek damages from IBM for breach of contract," wrote Chesterman in the report.

With a general election looming the State Premier Campbell Newman not only blamed IBM, but also the previous Labor-led administration for the debacle.

"It appears that IBM took the state of Queensland for a ride," said Newman. "The Commission of Inquiry found ‘The replacement of the Queensland Health payroll system must take place in the front rank of failures in public administration in this country. It may be the worst'," claimed Newman.

He added that the previous Labor government ought also take its share of the blame for contributing to, what he called, "this major bungle".

"I again call on the Labor leader to apologise on behalf of the former Government for the actions that directly affected 80,000 Queenslanders and cost taxpayers $1.2bn," said Newman in his statement.

"That is the least Annastacia Palaszczuk can do for the lack of interest shown by her and the unions and for months of covering up the true extent of the disaster."

Newman added that the state would now consider whether there was "any action that may be taken against public sector employees who are adversely named" in the inquiry report.