Payroll a 'hospital pass', says health chief

FORMER director general of public works Mal Grierson says he viewed the task of implementing the failed Queensland Health payroll system as a "hospital pass" and knew "from day one" it was a "risky project".

The long-serving senior public servant has also told today's session of the Queensland Payroll Inquiry that canning IBM's contract was "not an option" even though others had made it clear they had "lost faith" in the IT giant's ability to deliver the system without major issues.

The inquiry on Tuesday heard that recurring problems dogged the development of the system throughout its lifespan, including constant disputes over the scope of the project, which left Mr Grierson "frustrated".

The payroll system left thousands of employees underpaid or overpaid after it went live in 2010, with the debacle estimated to cost the state as much as $1.2 billion.

Mr Grierson said it was evident that retaining the existing system and scrapping IBM's work was "the biggest risk" in the years before the go-live date.

He also admitted to having never actually read IBM's contract, saying it was "impossible" for him at the time to read and examine the countless contracts that involved his department.

He said he did not read the specific scope document and that he never definitively ordered a freeze on changes to the scope.

"There is a legitimate place for changes - if change happens, changes happen," he said, later adding: "I knew that you can never do that."

The inquiry heard that new changes would often emerge after a "lockdown" in scope.

"Certainly, I was frustrated," the former director general said.

Mr Grierson dismissed suggestions he should have done more to intervene directly during the process.

"I did take steps, I did take responsibility," he said.

By September 2009, a number of defects in the system had been detected, with advice provided to Mr Grierson claiming that it was "not uncommon".

He said those who did raise concerns about the defects were often not familiar with the process of developing an IT project.

"Nobody ever said to me that the code IBM were writing was of poor quality," he said.

Mr Grierson said terminating IBM's contract would have set back the system by "months, if not years", with its replacement likely to have to "start all over again".

He said he viewed the doomed project as a "hospital pass".

"I can recall that in a meeting with (former Queensland Health Director General Michael Reid) I referred to it as a 'hospital pass' - no pun intended - to get this thing," he said.

"It was a view that we hold... that we have... You get lots of jobs that you don't particularly want and I'm sure that Mick Reid didn't want this either. Payroll is not something that a director general normally regards as a key issue, it's a bread and butter issue in an agency."

Mr Grierson said he was concerned with "getting a new payroll in and getting on with life".

The inquiry continues.

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Payroll probe told of email to IBM staff

A former IBM employee was sent an email containing details of Queensland Health's needs just as the tech giant was negotiating to secure the health payroll contract.

The Health Payroll Inquiry has resumed this morning in Brisbane with former IBM executive Jason Cameron returning to the stand to give details of his role in the finalisation of the 2007 contract won by IBM.

The health payroll system imploded soon after installation in 2010 in a financial controversy now expected to cost the Queensland tax payer $2 billion.

The inquiry has heard Mr Cameron was with IBM until 2010 but was also seconded to the State Government in-house technical outfit CorpTech in 2005 while remaining with IBM.

Mr Cameron often communicated with Damon Atzeni, a member of the government's contract evaluation team which eventually selected IBM.

He has faced suggestions from Counsel Assisting Peter Flanagan, SC, that he helped IBM secure an advantage in the contract negotiations.

Mr Flanagan this morning returned the inquiry's attention to a crucial email sent by Mr Atzeni to Mr Cameron providing details of Queensland Health's needs regarding the contract.

The email, sent in April 2007, was not sent to other companies also competing for the contract and marked "for your eyes only."

"I don't remember opening the document," Mr Cameron said.

Mr Cameron said he did not request the email.

"You knew it was confidential didn't you?" Mr Flanagan said.

Mr Cameron said, relevant to his role in Queensland Health, he believed the email contained information which could be legitimately passed on to him.

"Based on my role I believe that was a document Damon could validly have passed on to me," he said.

The inquiry continues.

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Payroll inquiry leads to focus on one man

The Queensland Health payroll inquiry is investigating how a simple $6.19 million payroll contract, signed in 2007, led to a $1.2 billion bill for Queensland taxpayers.
  Source: The Courier-Mail

AFTER two weeks of evidence, the narrative emerging from the Queensland Health Payroll Inquiry has developed a strong focus on one man - Terry Burns.

The inquiry wrapped up its first two-week session at lunchtime yesterday, after 10 days poring over the lead-up to the worst deal Queensland ever negotiated.

The inquiry, led by retired Supreme Court Judge Richard Chesterman, QC, is investigating how a simple $6.19 million payroll contract, signed in 2007, led to a $1.2 billion bill for the Queensland taxpayer.

Mr Chesterman had described the accepted facts of the deal as "notorious", noting the payment to successful contractor IBM jumped to $37 million by the time the system was implemented, while government costs ballooned to $64 million.

Premier Campbell Newman has estimated the cost of the entire exercise which left thousands of Queensland Health workers under and over paid will cost the state $1.2 billion.

Counsel Assisting Peter Flanagan, SC, who has led the meticulous cross-examinations of most of the 18 witnesses, has broken the complex history of the deal into four components.

First is the government's initial request for a proposal; then specific tender invitation itself on September 12, 2007; then an analysis of the companies which responded and, last, the role of individuals involved.

The inquiry has heard strong evidence something needed to be done in 2007 as the state struggled to provide IT services via an agency inside the Queensland Treasury - CorpTech.

Several reviews were commissioned to determine the best path ahead, some of them partially authored by Mr Burns, who recommended the creation of positions he later came to fill.

In 2007, Mr Burns had only recently arrived in Brisbane and his role was the first work he had done in Australia, yet he was soon playing a key role in evaluating whether his old employer should win a multi-million dollar contract.

Mr Flanagan noted Mr Burns had an impressive CV, having worked in senior roles in IBM in South Africa as its top man, "as he describes it".

A key piece of evidence to emerge this week was an email written by an IBM executive, which revealed that Mr Burns was having off-the-record and on-the-record meetings with his old employer.

"Terry is almost at a stage that he is coaching us, and is already strongly recommending the position we should take in some areas," the executive says.

More revelations contained in 35 volumes of documents are expected to emerge on April 8 when the inquiry resumes with four more witnesses to be cross examined on the tender process.

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Health payroll woes had long history

THE Queensland Health payroll appeared to be in danger of constant collapse long before the IBM contract debacle began in 2010, the Payroll Inquiry has heard.

The old system would actually stop working as up to 500 public servants scrambled to meet pay deadlines for up to 90,000 employees.

The inquiry, headed by former Supreme Court Judge Richard Chesterman, QC, is examining why IBM got the payroll contract in 2007, and whether those involved acted with propriety.

The payroll system imploded when it was contracted out to IBM in 2007 and rolled out in 2010, underpaying and overpaying employees in a financial debacle set to cost the Queensland tax payer $1.2 billion.

Damon Anthony Atzeni, who was the Queensland Health client representative inside the government-run IT outfit CorpTech in 2007, said the old system run by government with the aid of contractors would simply stop working.

"What was the result in terms of peoples' salaries?" asked Mr Chesterman.

"They (the workers) were able to run a back-up process and work very hard to get the data that was lost back into the system."

Between 400 and 500 staff were constantly working in the system, he said.

Mr Atzeni said he had grown concerned about government payroll systems after watching the payroll for the Housing Department develop serious complications.

"Housing was a very small and uncomplicated agency compared to Queensland Health," Mr Atzeni said in statement provided to the inquiry.

"Given the problems in Housing, I expected much greater problems for the same type of solution in Queensland Health."

The inquiry continues.

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IBM sent email to payroll contract worker

A FORMER public servant who helped evaluate the Health payroll contract can't explain why he received an email from the successful applicant, the tech giant IBM.

Shaurin Ranjanikant Shah, who was employed as an Implementation Project Manager with the State Government outfit CorpTech, was shown the email while on the witness stand at the Payroll Inquiry on Friday.

The inquiry is examining why the former Labor Government granted IBM the contract which left the Health Department with a deeply flawed payroll system, expected to cost the Queensland tax payer $1.2 billion.

Counsel Assisting Peter Flanagan, SC, asked why IBM would have any need to email a person tasked with evaluating whether it should win the contract.

"Have you any explanation for why IBM would email you?'' Mr Flanagan asked.

"Absolutely not,'' Mr Shah replied.

Mr Shah said it was possible IBM obtained his government work email because it was a simple one based on his name.

The inquiry has been told Terry Burns, a former IBM employee who worked for the government during the contract negotiations, was a significant figure in the lead up to IBM's success.

"Did you participate with Mr Burns in discussions with IBM on the way they would structure their price?'' Mr Flanagan asked.

"Absolutely not,'' Mr Shah replied.

Mr Shah also told the commission that despite having input into the costings of the contract, he did not remember the ticket price of the IBM offer.

"Can you give the commission an estimate?" asked Mr Flanagan.

"I don't remember, honestly.''

Mr Shah said pricing was a complex process with some figures only referring to phase one of the project.

Pricing information was also quarantined from each evaluation team during the process so as not to bias their evaluations.

Mr Shah strongly disputed Mr Flanagan's suggestion that the evaluation teams had put IT firm Accenture slightly ahead of IBM during the evaluation process.

"No, I am sorry that is not my opinion,'' he said.

Mr Shah suggested there was some confusion about the evaluation process.

He said each team was sent off to do separate evaluations without knowledge of each other's progress.

The teams didn't get together and compare costing, Mr Shah said: "it was not like cricket scoring.''

He said he had no recollection of Mr Burns asking the teams to re-assess their evaluations.

Commissioner Richard Chesterman, QC, suggested Mr Shah would have been affronted if such a request had been made.

"Absolutely Mr Commisisoner, yes," Mr Shah replied.

"This is against probity.''

The inquiry continues.

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