ACS costs scrutinised

The cost of a federal government IT outsourcing contract with EDS has risen by $50 million since its inception, according to senate estimate committee hearings held last month.

Speaking before the senate's Legal and Constitutional Legislation committee, the Australian Customs Service (ACS) said the five-year contract has increased from $200 million to $250 million as a result of changes in workload principally related to the GST.

ACS information technology consultant Ian McNeil said the tender evaluation figure with EDS was $200 million, which is a fixed price contract.

However, a range of factors including tax reform and Y2K led to additional costs and IT services.

"If you take into account tax reform, year 2000 work and other changes, the projected payment over five years is about $250 million," McNeil said.

Scrutinising cost variations to the contract, Opposition IT spokeswoman Senator Kate Lundy requested details on what penalties or sanctions exist within the contract and if service level agreements are being met.

ACS chief executive officer Lionel Woodward explained the term ‘penalty' did not apply but ‘loss of performance credits' is used as a form of sanction.

He said this results in money being taken away from EDS and an estimated loss of $2.5 million in performance credits had been applied during the life of the contract.

Asked if the loss of performance credits can be attributed to the failed implementation of the Passenger Analysis Clearance and Evaluation system (Pace) to meet the GST deadline, Woodward said this was a separate EDS contract. As peviously reported in Computerworld (CW May 22, p1), Pace will not be ready for the ACS to process some 8000 GST claims until after July 1. Following the delays to Pace implementation Woodward said, the ACS was forced to pay an additional $800,000 to cover the costs of a variation to the EDS contract. He added that the money was paid because it was part of the initial agreement when developing Pace for ACS to cover the costs of the contract.

Asked why ACS is paying $800,000 in legal costs for the Pace delay, Woodward said the government was slow to provide the necessary information EDS needed to develop the system.