The federal government spent $52m on a failing welfare calculator even after being told there was a more accurate, simple and reliable option available.
In all, Services Australia paid $191m over four years to the multinational company Infosys for a calculator that processed only 784 aged care claims before being written off as a failure in late July.
The technology would have determined whether applicants were eligible for welfare payments and how much they should be paid, though not to process them automatically without further checks.
In December 2021, the department began canvassing other models, since the Infosys technology was not developing successfully.
Documents obtained by the independent senator David Pocock reveal that 12 months before the Infosys project was scrapped, an alternative model by the company SecureFast had been tested and judged a “solution”, with a much higher success rate.
But after a detailed report on SecureFast was delivered to Services Australia in August 2022, the department spent a further $52.5m on the calculator designed by Infosys, before abandoning it.
The SecureFast system, which used technology produced by a smaller Canberra-based company, has not subsequently been tested further.
Pocock said the report showed “the procurement system was 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 $52m to the original supplier,” Pocock said.
The report found SecureFast could deliver the calculator at “a greater pace and level of assurance for accurate processing of entitlements within acceptable business timeframes”.
It also found SecureFast would allow Services Australia to “significantly streamline its delivery of the entitlement calculation engine using significantly fewer businesses and technical resources”.
It was “foreseeable that the solution will continue to provide the level of performance required”, the report said.
A Services Australia spokesperson said the department was already “well into” the project by the time the report on SecureFast was finalised in August 2022, but it had not fully tested the Infosys option, “which we had committed to”.
“At that stage, we were still in the process of verifying under real world circumstances.
“Ultimately, our testing showed the project was far more complex than originally forecast,” the spokesperson said. “We are analysing all learnings from the projects and considering next steps.”
In March this year, a review by a former senior public servant, Ian Watt, found the Infosys contract with Services Australia warranted “further investigation due to inconsistencies with the commonwealth procurement rules or good practice”.
In September, the Infosys contract was one of several referred to the national anti-corruption commission by the audit committee, which did not make any findings in relation to the conduct of any individuals.
Infosys has defended its work and told Guardian Australia it was awarded the contract after “a 14-month-long stringent government procurement process”.
“We are proud of the work we do for the government of Australia and other Australian clients, and we are committed to the highest level of compliance, integrity and ethical business practices across all markets in which we operate,” a spokesperson said.
