Customs' system bill explodes to $145 million - users face levy

Customs' system bill explodes to $145 million - users face levy

The full financial horror of the Australian Customs Services' massive Cargo Management Reengineering (CMR) Integrated Cargo System project was revealed last night at the Senate Estimates hearing.

Customs CEO Lionel Woodward admitted at that hearing that the project has been re-budgeted to cost $145 million and is now officially broke.

The committee heard that having devoured all of its original budgetary allocations, the Integrated Cargo System (ICS) project funding has most recently been sourced through so-called "internal savings" at Customs, almost certainly at the expense of other projects.

Despite such funding measures, Customs senior management has admitted this will still not be enough to cover the forthcoming ICS funding shortfall.

Around $88 million has been spent to date on the project, and it is likely any deficit will be in the region of $60 million.

While original cost estimates for the ICS and CMR project are notoriously hard to obtain, well-placed sources told Computerworld documentation still exists that estimates the original cost of the ICS system at $35 million.

ICS users, many of whom are members of the Customs Brokers and Forwarders Council of Australia (CBFCA), are almost certain to foot the bill for the shortfall in the form of a levy on top of the existing import declarations cost recovery structure. The move has provoked a call for a full-scale investigation into the matter from the CBFCA.

"This is an extremely serious development for industry. We would suggest [the ICS blowout] and ACS administration requires a fully independent inquiry," CBFCA executive director Stephen Morris told Computerworld.

Morris said that slugging imports with the levy would ultimately flow into the cost equation for Australia's exporting manufacturers who rely heavily on imported goods.

Naturally, the Labor Party has seized on the blowout, with Shadow Customs Minister Mark Bishop invoking the name of the Lord before launching into an attack on any proposed levy.

"God almighty…it shows a lack of adequate preparation at the beginning, continues to demonstrate poor oversight and discloses a lack of understanding within the department of the complexity of the task.

"After all this time one wonders if the simple scale and scope of the job and the level of interconnectivity is simply too much for the department to adequately supervise.

"It was quite clear from Woodward's view that there were insufficient funds left from the original [budget] appropriation or from savings made elsewhere and it has gone back to government for consideration in the budget context.

"So what have we got [for $145 million]? Delays, blowouts and potential levies and an inability to find further savings," Bishop told Computerworld.

A spokesman for Customs and Justice Minister Senator Chris Ellison would not elaborate on the $145 million figure or any proposed levy, saying only that the minister was considering what information has been provided. He did not deny the possibility of a levy.

"We are looking at the material provided to estimates last night. The project itself has changed, and that has changed the cost basis involved. In terms of the exact figure…I'm not aware [Woodward] did provide that figure - we've got to look at the Hansard. It's a question of some revisions that might be considered," the spokesman said.

ICS consortium leader Computer Associates (CA) was one IT vendor revealed to be doing handsomely out of the deal netting around $29 million, which Labor says is a "$15.4 million variation" from what was originally budgeted for, with the project also now out of warranty from CA.

Customs also revealed that it will seek a legislative extension of 12 months, from the last extended go-live date of July 2004, to July 2005.

Meanwhile, it was reported on Monday that Customs CEO Lionel Woodward would bring forward his retirement from June to March of 2004.

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