Embattled NSW government insurance agency Icare issued a $140 million IT contract after a short, one-week tender process.
The lucrative contract went to a Capgemini and Guidewire after other bidders for the 2015 contract pulled out, complaining that the tender deadline was “unrealistic” and “extremely aggressive”.
NSW Shadow Finance Minister, Daniel Mookhey, said the IT project tender didn’t “pass the sniff test” and should never have been awarded.
"Icare turned a deaf ear to many warnings about the risk of tendering a $140 million contract in one week,” Mookhey said.
"Icare chose the wrong company through a sham tender.
"Employers and sick and injured workers have paid the price for Icare’s awful mistakes.”
Icare provides workers compensation insurance to some 3.6 million employees in NSW.
Capgemini and Guidewire’s winning bid also received a poor rating from PwC which cited issues with how the consortium would support the large project’s implementation with only a handful of onshore support staff, according to the Sydney Morning Herald.
During NSW parliament last month, Greens MP David Shoebridge suggested that former Icare CEO, Vivek Bhatia, “had an undisclosed close friendship with the senior manager at Capgemini” when the contract was awarded.
Guidewire has flown Icare executives to the US for conferences – which they failed to declare in the annual report – and included them in a promotional video spruiking the software.
Icare has leaned on Guidewire’s technology to underpin an updated claims model designed to help the insurer get people back to work faster.
But a 2019 independent review of Icare noted that the new model deteriorated Icare’s return-to-work performance – a deterioration which only continued at the launch of its Nominal Insurer Single Platform (NISP).
That review noted that the new system “cost considerably more than originally estimated” and that it “was implemented in a rapid timeframe and not combined with any organisational change management”.
The system has cost an estimated $360 million.
Icare has fallen into disrepute following revelations that the state-owned insurer has been rapidly losing money and underpaying sick and injured workers to the tune of $80 million.
It had also signed some $118 million worth of contracts without the appropriate tender process.
Icare’s conduct has been referred to the state’s Independent Commission Against Corruption.