Waikato Times

IBM took $27m hit on Customs deal

- TOM PULLAR-STRECKER

Technology company IBM saw the value of a $118 million contract with Customs cut by $27m because it missed a project deadline on a new computer system in 2016, the department says.

The settlement was confidenti­al. However, Customs agreed to release details after Stuff complained to the Office of the Ombudsman, which ruled after a 19-month investigat­ion that disclosure was in the public interest.

IBM won a contract with Customs in 2011 to develop the Joint Border Management System (JBMS) and to provide support for the system until 2021.

The deal marked the end of a spell in wilderness for IBM with the Government, following the unravellin­g of the $110m Incis Police computer system in 2000.

The primary purpose of JBMS is to smooth trade and reduce red tape, and much of it has been successful­ly delivered.

But in 2016, IBM advised Customs that it would be late delivering a crime-fighting tool that Customs described as ‘‘the icing on the cake’’ of the project.

The intelligen­ce tool was intended to analyse up to about 150 pieces of informatio­n on each incoming shipment to New Zealand within a couple of minutes and give Customs a ‘‘percentage chance’’ of it involving an illegal activity.

Customs renegotiat­ed its contract with IBM and took back responsibi­lity for delivering the risk and intelligen­ce tool in July 2016 because of the delay and what it said was an opportunit­y created by new technology.

Chief informatio­n officer Murray Young said at the time that the department was disappoint­ed the project was significan­tly late, but refused to say whether it would pay IBM less money, citing a confidenti­ality clause.

JBMS became a political football under the last government, with Labour MP David Shearer saying in 2014 that the project was unfolding as ‘‘another Novopay’’.

Customs spokesman Helen Keyes said in the wake of the Ombudsman’s ruling that the ‘‘descoping’’ of the crime-fighting tool reduced the sum payable to IBM by $27.4m. ‘‘This includes a $15m reduction in capital costs and $12.4m reduction in ongoing operating maintenanc­e and support costs over the years remaining in the contract.’’

Keyes said the risk and intelligen­ce tools were still under developmen­t.

 ?? PHOTO: JOHN KIRK-ANDERSON/STUFF ?? Customs is still working on software that could assess border risks in ‘‘real time’’.
PHOTO: JOHN KIRK-ANDERSON/STUFF Customs is still working on software that could assess border risks in ‘‘real time’’.

Newspapers in English

Newspapers from New Zealand