Facing significant reputational risk for cost overruns on a delayed $56 million HR software makeover for New Zealand Police, PwC is fighting to keep under wraps its 2018 damages settlement. A project sub-contractor now being sued by PwC wants to see details.
In 2014, National government commissioned improvements to Police staff information systems. Oracle PeopleSoft was then in use. PriceWaterhouseCoopers was appointed head contractor on a project expected to generate $56.2 million revenue over ten years. Documents released under the Official Information Act show there were government concerns six months out from the go-live date that implementation targets would not be met. The project was delivered late and over budget.
Following a closed-door mediation, PwC agreed in 2018 to pay damages. The amount paid is confidential. As head contractor, PwC accepted liability for the failure to perform.
PwC alleges sub-contractor Zag Ltd bears some of the blame. Previously known as Soltius Ltd, this company has had a revolving door of New Zealand resident shareholders over the years. Its ultimate owner is international consulting company, Accenture.
In the High Court, Zag Ltd demanded to see details of the 2018 out of court mediation and settlement with Police. The general Evidence Act rule is that mediation proceedings cannot be used in any subsequent court case. This is to ensure full and frank disclosure in mediation discussions.
Justice McQueen ruled Zag Ltd could see documents used as part of the mediation, but Zag itself had to keep this information confidential. PwC says the payout to Police was intended as compensation for financial losses. Zag Ltd is entitled to see the detail to determine whether settlement terms were reasonable, Justice McQueen said. It was known during mediation that PwC would be looking to recover some of its settlement costs from sub-contractors. Police agreed at the mediation to assist PwC in any action taken against project sub-contractors.
The extent of Zag Ltd’s liability, if any, has yet to be decided.
PriceWaterhouseCoopers v. Zag Ltd – High Court (13.06.23)
23.087