New Zealand finance minister Bill Birch has confirmed to parliament that the government is suing IBM Corp over what he described as a bungled computer project. The INCIS project, which kicked off in 1994 with a NZ$98m ($58m) budget and a two-year timeframe, was supposed to be a document management project which would cut the number of administration staff in the New Zealand Police and provide more and faster information to frontline police.
But last week after five years of working on INCIS and a NZ$40m ($24m) cost overrun IBM pulled its staff off the project saying that since it started it has suffered from serious mission creep. Birch said that both the New Zealand branch of IBM and the parent company will be named in the suit that alleges breach of the 4,000 page contract. He said the government is also moving to legally terminate the contract and wants to complete the project but with another contractor.
IBM walked away from a legally binding contract. That is not what the government expects from a major multinational corporation, said Birch. He said the government was not claiming a specific amount but was asking the High Court to determine the damages it has suffered and to award the amount of damages.
IBM said the problems arose because police kept adding new tasks to INCIS. The government counters the contract was written to allow for such expansion. Local press reports say that IBM is almost certain to launch a counter-suit.
The government has been worried about the project for at least two years and 18 months ago the then Treasurer Winston Peters traveled to New York to voice concerns that IBM was not devoting sufficient resources to the project and to seek assurances from IBM management that it would be completed.
