The federal government paid a multinational tech firm more than $50 million to continue working on its welfare calculator after having identified a faster and more accurate solution from an Australian company.
Documents released to the Senate this week following a motion by independent Senator David Pocock revealed that in early 2022, Services Australia began a proof-of-concept for a new welfare entitlements calculator using a platform developed by a Canberra-based company.
This was while the department was also working with India-based multinational Infosys on the development of a similar system, which saw the company paid nearly $200 million for a system that processed only 784 claims before being canned by the Labor government earlier this year.
The agency began testing an alternative model developed by Australian company SecureFast, and found that this was a more effective solution.
Despite this finding, the government paid Infosys a further $52 million to continue working on its own solution, before this project was eventually scrapped, the documents reveal.
A report into the proof-of-concept using SecureFast’s technology found that this was a “viable” solution as a platform to determine how much welfare participants should be paid based on their individual circumstances.
“Using a top-down, legislative-based approach to entitlement calculations, the proof-of-concept was able to demonstrate the ability to digitise business rules at a greater pace than traditional business rules engines, whilst achieving a high level of rule accuracy,” the Services Australia report said.
“The platform was able to demonstrate technical flexibility and policy flexibility by allowing business rule re-use for similar entitlements, such as Disability Support Pension, while maintaining a high level of rule accuracy.”
SecureFast’s offering achieved accuracy of more than 90 per cent during these tests, and was “able to quickly come to understand, and then implement” complex rules around welfare payments.
The report concluded that using SecureFast’s technology would “significantly streamline” the delivery of the Entitlement Calculation Engine, while using “significantly fewer business and technical resources, whilst delivering a greater pace and level of assurance for accurate processing of entitlements within acceptable business timeframes”.
The report recommended a “shadow mode” implementation of the platform, meaning it would run alongside the existing systems, and then a move towards a production-like environment.
But this further testing did not occur, and Services Australia instead opted to continue paying Infosys $52.557 million in 10 months after the report was finalised.
Pocock said the revelations demonstrate that the government’s procurement system is “broken”.
“This report shows the government knew another firm existed that was capable of building the entitlement calculation engine, but the government doubled down with a further $52 million to the original supplier,” Pocock told The Guardian.
Pocock also secured a Senate inquiry into the Australian tech sector’s sovereign capability, and the effectiveness of the government’s current procurement processes.
A spokesperson for Services Australia said Infosys was already “well into” its welfare calculator project and the department was “committed” to it.
“At that stage, we were still in the process of verifying under real world circumstances,” the spokesperson said.
“Ultimately, our testing showed the project was far more complex than originally forecast. We are analysing all learnings from the projects and considering next steps.”
The former Coalition government awarded Infosys the contract to develop an automated welfare payment calculator in November 2019.
Across four years, the company was paid $191 million, but the calculator it developed only processed 784 claims for one payment type.
The department had planned for this system to eventually process about half of Centrelink’s payments, but the Labor government scrapped it, with Minister for Government Services Bill Shorten saying the government had “nothing to show for it” and “could not keep throwing good money after bad”.