Brisbane City Council escalated its dispute with technology supplier TechnologyOne on Friday afternoon, announcing that it had terminated the $122 million contract for the stalled “local government systems” project.
The council told the ASX-listed software company that the contract was cancelled due to “persistent and ongoing contract breaches, significant and unacceptable delays in progressing the contract and a complete loss of faith in the company’s ability to deliver a replacement system for council’s IT systems”.
In addition to the termination, the council indicated it would seek compensation for damages and has informed TechnologyOne the case would be referred to arbitration.
Brisbane City had handed over $20 million to the tech company when it stopped payments in October last year, accusing TechnologyOne of missing milestones.
The dispute spilled into the public domain in January when lord mayor Graham Quirk held a press conference to claim TechOne caused a budget blowout in excess of $60 million.
Quirk said Friday that the termination was forced after a six-month extension from January still did not result in a new working system.
“This decision is about the effective use of ratepayers’ money and ensuring that Council’s core services are not compromised,” he said.
“In the past six months, council offered TechnologyOne the opportunity to reform the contract and met with their representatives on many occasions to assist the company to get the project back on track.”
TechnologyOne released a statement on the ASX in response that it “strongly disputes” the council’s termination claims and would “vigorously defend the claim”.
Last Monday, the software company pre-empted the council’s contract termination, announcing that it would sue its client for more than $50 million. TechOne maintained this stance on Friday, threatening a counterclaim for “wrongful termination of the contract”.
The 30-year-old tech firm also stated it has “total and comprehensive insurance cover for all its projects” and does not expect the Brisbane dispute to impact on its full year profit guidance.
TechnologyOne’s share price was down 2.69% to $5.42 at the close of Friday.