NEC Australia is suing the Australian Criminal Intelligence Commission (ACIC), seeking costs and expenses regarding a cancelled Biometric Identification Services (BIS) project.

The vendor is arguing the system, which was supposed to replace Australia’s existing fingerprint identification system and add facial recognition capabilities, was “substantially built and ready to undergo systems testing by ACIC” when the agency cancelled the project in June 2018.

NEC says the decision to cancel the project at that stage was “curious” and it has been unsuccessful in its attempts to recover costs since.

ACIC declined to comment on the legal proceedings because the matter is now before the court. 

The security agency has previously said the project was terminated because of project delays and that the decision had been mutual when it was made last year after contract extension negotiations broke down.

ACIC referred the BIS project to the Australian National Audit Office for review and a report was published in January this year. It found the procurement process had been effective but the security agency’s administration of the $52 million project “was deficient in almost every significant respect”. 

The BIS project gained government approval despite not going through the typical review process for projects over $30 million. The Department of Finance said such a process was not necessary because the BIS project was an upgrade of an existing system and was therefore not high risk.

Within two years the project had cost $34 million and was scrapped having not met a single significant milestones or deliverables, the ANAO said in its review. The amount included a $2.9 million “goodwill” payment to NEC not linked to any contract milestone. ACIC was unable to explain to the auditor how this amount was calculated.

The national auditor’s report concluded, “ACIC did not effectively manage the BIS project with its approach characterised by: poor risk management; not following at any point the mandated process in the contract for assessing progress against milestones and linking their achievement to payments; reporting arrangements not driving action; non adherence to a detailed implementation plan; and inadequate financial management, including being unable to definitively advise how much they had spent on the project.” 

ACIC was forced to extend its previous contract for fingerprint identification capabilities with separate vendor Morpho for a substantially higher price.

In a statement on Friday NEC Australia announced it will begin legal proceedings in the Supreme Court of Victoria.

“NEC fully respects the right of the ACIC and its CEO to terminate a contract for reasons they see fit,” the statement said.

“Nevertheless a substantial investment in this project was made by NEC and the company is simply seeking to have the investment at the time the contract was terminated for convenience, returned.”

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