Tech services firm TechnologyOne says it will strongly defend itself against an ambit claim from Brisbane City Council for loss and damage in excess of $50 million, following the Council's decision to call off a 10-year contract to replace 13 outdated customer service systems.
Earlier in the day, the Council said it was ending the contract, claiming that TechnologyOne had not delivered on the deal which was signed in 2015.
Last month, the Council issued a second show-cause notice to TechnologyOne over the delay in the contract.
In a statement this evening, TechnologyOne said it would be making a counter-claim in excess of $50 million for what it said was wrongful termination of the contract.
{loadposition sam08}"TechnologyOne remains confident of its legal position," the company said. "TechnologyOne reiterates it has total and comprehensive insurance cover for all its projects. TechnologyOne does not expect an impact on its full-year guidance of profit growth of 10% to 15%."
In an ASX statement earlier in the day, TechnologyOne said it had expected the "wrongful termination" of the contract.
TechnologyOne executive chairman Adrian Di Marco said he personally found the Council's behaviour disingenuous and unprofessional.
He said the Council had "made it clear through both its actions and its statements that it did not want to complete this project, and was endeavouring to engineer a termination of the contract for breach.
"This charade has now come to an end, but unfortunately this now exposes the ratepayers of Brisbane to a $50+ million damages claim for wrongful termination."
Di Marco added that TechnologyOne had been ready, willing and able to complete the contract. "TechnologyOne , as the leading supplier to over 300 councils in Australia, is uniquely placed to provide a compelling value proposition to the ratepayers of Brisbane," he said. "If BCC lawyers had not assumed control of this project in January, and common sense had prevailed, we would still be on track to meet the contracted ‘go live date’."
The contract was awarded in June 2015, but earlier this year the mayor of Brisbane said he would seek to have it renegotiated as the rollout would end up 18 months behind schedule and $60 million over budget.
TechnologyOne was issued the first show-cause notice by the cCuncil on 2 May and responded on 29 May with what it says is a detailed response. On 20 June, the Council informed TechnologyOne that it would not be terminating the contract.
TechnologyOne issued a show-cause notice to the Council on 30 May over the non-payment for work on two phases of the project, Milestones 7 and 8. Payment of $750,000 was received on 23 June, remedying this issue.
The second show-cause notice issued by the Council was on 26 June.