Merged council says it followed procurement rules over $9m IT contract

Inner West Council meeting. Pic: Facebook.

A NSW council has defended itself over criticism that it did not put a $9.4 million IT contract out to tender, saying it followed local government procurement rules and needs to urgently integrate its IT systems post-amalgamation.

Inner West Council in Sydney has hired TechnologyOne to consolidate its IT systems following the forced amalgamation between Ashfield, Leichhardt and Marrickville Councils in May last year.

Leichhardt and Marrickville Councils already used TechnologyOne but Ashfield used Civica International, TechnologyOne’s main industry rival.

A council spokesperson said the decision not to go to open tender complied with Section 55(3)(i) of the Local Government Act 1993, which states “… because of extenuating circumstances, remoteness of locality or the unavailability of competitive or reliable tenderers, a council decides by resolution (which states the reasons for the decision) that a satisfactory result would not be achieved by inviting tenders”.

Contracts over $150,000 normally go out to tender but the council is pleading ‘extenuating circumstances’, which it says includes: the council merger; the fact there are only two main industry service providers; the long-term benefits to the council and community and the urgency of integrating IT services across the new council after the merger, arguing that the tender process would ‘add a significant and unreasonable time delay’.

The spokesperson said:

“Two out of the three former councils already have Technology One licenses and use TechnologyOne products so we are simply continuing an existing relationship with this supplier. This decision was in the best financial and other interests of our residents.

“TechnologyOne is an Australian based company and their superior technology will allow council to take a quantum leap forward in how we do business.”

But Greens MP and Local Government spokesperson David Shoebridge isn’t buying it.

“They’ve rushed headlong into a five-year contract on the basis that there was a desperate urgency,” Mr Shoebridge said.

“It is remarkable that what started as a quick patch job has ended up with this almost permanent service provider.”

He said Civica provided similar solutions to local government around Australia and would have been ready to respond quickly to an invite to tender to ensure the council got the best IT solution.

“These assumptions are best tested through competitive tender process, that’s how you get value for money,” Mr Shoebridge said.

Meanwhile, Civica has asked why merged councils would sidestep the tender process without testing alternatives.

A Civica spokesperson said the company disputed that a single supplier was the best path for councils to go down and said this could push out other vendors. 

“We believe that councils want best-in-class solutions and sometimes that can be a mix of suppliers,” the spokesperson said.

“What was the harm in them going out to tender? We believe that they could have generated a better commercial outcome, even if they continued to go with that provider.”

Inner West Council’s $5 million IT contract includes integrating its IT and telephone network, external website and intranet and one-time ‘building costs’.

A further $4.4 million will cover annual software licencing fees of $1.6 million over five years. TechnologyOne licencing fees will replace existing annual fees.

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