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NZ firms 'shut out' of big IRD project

Published: 10:58AM Tuesday October 08, 2013 Source: Fairfax

  • Screenshot of IRD website. (Source: ONE News)
    Screenshot of IRD website. - Source: ONE News

New Zealand firms appear to have been shut out of taking a lead role in what is likely to be the Government's biggest information technology project, industry groups say.

Inland Revenue has invited expressions of interest from companies able to assist with its "business transformation", which it warned last year could cost taxpayers up to $1.5 billion over 10 years.

A clause requires bidders to have "led or managed the overall design and implementation" of a $100 million-plus major transformation programme for a national tax authority, and to have designed and implemented a national-level social policy transformation programme.

Institute of Information Technology Professionals chief executive Paul Mathews and Paul Ramsay, who is co-chairman of local industry lobby group NZRise, said the clause appeared to preclude any New Zealand firms from responding.

The institute had raised its concerns with the department and they were in talks, Mathews said.

"The big question in our mind is whether limiting it to companies that have done $100m of tax-related work before is appropriate."

Ramsay said Inland Revenue appeared "not to have delivered" on promises it made to the local industry about their potential involvement in the project.

The initial contract would be to design the first stage of the transformation programme and to "validate its remaining stages".

But Inland Revenue said it reserved the right to award the winning bidder further work without going back to tender.

Mathews and Ramsay said French consulting firm Capgemini, which has been paid more than $10m for preparatory advice, would probably be one of the two or three multinationals to meet the criteria.

Ramsay said there was an "inconsistency" between the briefings Inland Revenue had given the industry and the intent of the tender document.

If Inland Revenue was genuinely looking for innovative solutions, it should have cast the net wider, at least at this stage where it was only seeking expressions of interest from prospective suppliers, he said.

"This is a large-scale project that will have its challenges; I just don't think this is the right way to start."

The overall transformation project will see Inland Revenue's 20-year-old First computer mainframe system gradually retired.

Inland Revenue acknowledged its ageing technology had boxed it into a corner, making its 2015 taxpayer compliance targets "difficult to meet". It reiterated that there was a risk of an "operational failure" that could severely affect its ability to collect taxes.

UnitedFuture leader Peter Dunne, who oversaw the development of the programme since it began in 2010 until his resignation as Revenue Minister in June, expressed concern that local firms had been shut out.

"All the work we did in terms of developing and strengthening Inland Revenue's relationships and working links with the local IT industry were about preparing for the role they could play in the business transformation programme.

"I was all for giving them the opportunity to show what they were capable of, and said so on many occasions. I also understood this was the view of the Prime Minister as well," he said.

Dunne said he was "instinctively wary of putting all the business transformation eggs in the basket of a large international provider", though he accepted there would be significant parts of the programme that would require international input.

"It is about striking the right balance, to ensure we are able to use domestic capability where we can, and my understanding is that has been Inland Revenue's view to date as well.

"I hope nothing has changed in the last four months, and that there has been no change of heart by either the Government or Inland Revenue.''