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NZ IRD picks a "dark horse" vendor for new tax system

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NZ IRD picks a “dark horse” vendor for new tax system

Posted on 09 June 2015 by JasonK

Much to the surprise of IT folks the tax department in NZ has decided to pick a little known IT firm in Colorado to replace the current tax system.

The NZherald reports US firm wins contract in $1b IRD project

“The Inland Revenue Department has selected Fast Enterprises as the preferred software supplier for its $1 billion-plus business transformation which will replace its ageing information technology system as part of an overhaul of the agency’s operations.

Deputy commissioner of change Greg James said the tax department was negotiating the final terms of the contract after selecting Colorado-based Fast Enterprises over SAP and Oracle. The price was commercially sensitive.”….

Initial scoping on the project estimates it will cost between $1.3 billion and $1.9 billion over eight to 10 years, a bill that’s attracted criticism from IT specialists including Xero chief executive Rod Drury.”

Government IT systems are a disaster zone and it’s usually the same big companies who win the bids and then screw them up with cost over runs and worse. It is very welcome that IRD in NZ has picked an outside specialist for the project.

There is no way any IT system should cost anything like $200m per year. The various news reports say that the price is commercially sensitive but on the Fast Enterprises website is a short list of international projects which include systems for Finland, Poland and Vietnam.

The U.S and Canadian state systems might be relevant but I’m picking the Finnish system is more relevant to NZ than most as it replaces a complex system 70 different smaller systems applications.


Over on the Finnish tax website there is a public news article Fast-Nortal Group to supply new taxation software to Finnish Tax Administration from 2013

“The Finnish Tax Administration is renewing its data systems and plans to replace some 70 separate taxation-specific programs with a single commercial off-the-self software solution. The winning software, Gentax by Fast Enterprise, is globally one of the most widely used software solutions for taxation purposes.

Fast Enterprises that is to deliver the software is a US-based company ranking among the leading businesses in the ICT sector. Nortal is a Finnish-Estonian IT company which has delivered some of the current systems to the Tax Administration.

The value of the agreement and licencing with Fast-Nortal Group will rise at 62 million euros, and the total cost estimate for 15 years is 226 million euros.

The procurement was carried out through a negotiated procedure, during which the requirements set by the Tax Administration were described in detail to three system suppliers, selected through open competition. At the final stage, tenders were submitted by IBM and Fast-Nortal Group.

The tender submitted by IBM was rejected because the tender price was abnormally low. IBM has submitted a petition with the Market Court for a review of the procurement decision.

The decision to reject the IBM tender is based on a provision in the Public Procurement Act stating that a contracting entity may disqualify a tender which, in view of the size and quality of the procurement, bids an abnormally low price.

The price offered by IBM would have been around 38 million euros including licenses and the total cost for 15 years was estimated at 143 million euros.

The italics in the paragraphs above are mine and show what the numbers were. Obviously the Finnish tax department is NOT spending billions of $. Mentioning the winning bid amounts of 226m Euros over 15 years against IBM’s low ball bid of $143m Euros is very interesting.

226,000,000 is equivalent to 337,716,676.63 New Zealand Dollars @ 0.6692 for Notes – say $338M across 15 years or $22.5m each year in NZ dollars.

Why then would NZ’s tax system still be budgeted at $130m per year for 10 years going on the lowest number of $1.3b mentioned in the Herald article.

In other words NZ could pay for the Finnish tax system in about 2-3 years max but somehow our tax system is way more complicated and expensive by a factor of between 4 and 5 times.

My guess is that the real costs of the Fast Enterprises tax system are closer to the sorts of costs mentioned for the Finn’s system but since government IT projects here are so utterly hopeless there is a massive allowance for screw-ups and miscellaneous consulting fees.

As mentioned above IBM complained about the awarding of the contract to Fast Enterprises. In Market Court rejects IBM claim on the selection of COTS software provider

So a year after the initial decision the Finnish Tax department said this:

“Tax Administration Bulletin, 3/18/2014

Tax Administration starts cooperation with Fast-Nortal

IBM had lodged a claim with the Market Court concerning the Tax Administration’s decision in April 2013 to select Fast-Nortal group as the provider of commercial off-the-shelf software for the IT needs of tax administration. IBM was a shortlisted candidate during the tender process. However, the Tax Administration did not accept its software offer due to its excessively low price.

According to the ruling of the Market Court, the reasons for rejecting the offer were justifiable. The ruling is fully enforceable, which means that the Tax Administration may pursue its plan to sign a purchase agreement with the selected provider.

– We are left with a sense of satisfaction, because we may now initiate the project that is going to improve our services and make the Tax Administration more efficient. Court proceedings have taken some time. However, we have made use of the opportunity to prepare for our future IT migration during the wait that lasted for almost a year, explains Markku Heikura, Director of Information Management.

The Gentax software delivered by the U.S. company Fast Enterprises is among the most widely used IT technologies for taxation. Nortal, an Estonian-Finnish corporation, is one of our current software providers.

The new IT solution is expected to bring some 15 million euros in annual savings to the Tax Administration as maintenance expenses and license fees go down. It makes the work of tax office employees easier: the current IT environment consists of 60 to 70 different applications. The COTS solution merges them into one.

The value of the agreement and licensing with Fast-Nortal Group approximates 62 million euros. Total cost estimate for 15 years is 226 million euros.”

The Finns are still saying that the contract amount is $226m Euros over 15 years. Of course it is difficult for an outsider to make any comparisons between the Finnish system and the NZ system but Finland has 5.4m people and is sparsely populated. It has many similarities to NZ and has been used for comparisons in the past so the questions around NZ costs have to be asked.

Also there have been a few comments on twitter about the Fast Enterprises website. It does look very much like it was built in 1995 and the use of the Jaguar image seems very reminiscent of some modem box designs from about then or a demo layout in Dreamweaver or something.

As various people ( hat tips to John Cortexiphan and var self = this; ) have pointed out User Experience design is very important to online systems. When the Fast Enterprises website is so badly designed you have to ask question if they understand UX at all.

And “Fast Enterprises” as a company name. At least they spell it with an “s” instead of a “z” but a name like that sounds dodgy or satire that writes itself.

I hope I’m wrong about their website and that the real costs are much closer to the Finn scale. It would be great if NZ finally got a government IT project that didn’t suck and for a price that was worth paying instead of a hugely inflated mess.

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Something rotten in the state of concrete


Something rotten in the state of concrete

Posted on 08 May 2015 by JasonK

Buried away in a story on substandard concrete being supplied to 70 sites in Auckland are a few clues that the building industry sector is heading for another disaster.

New Zealand’s largest publicly listed company Fletchers via their subsidiary Firth is being forced into cleaning up the mess caused by dodgy business practices or quality control failure.

In a story today titled Costly repairs for motorway – Remedial work on Waterview ramp to fix faulty concrete will start later this year.

Lets say that again slowly. Concrete supplied to 70 building sites was sub standard.


Investigations are being carried out into weak, substandard, faulty Firth concrete supplied to the $1.4 billion Waterview Connection.

The Well-Connected Alliance building Waterview and the NZ Transport Agency, which will own it, are involved in the work.

A spokeswoman yesterday said: “The NZ Transport Agency and the other organisations in the Well-Connected Alliance are still investigating what repairs will be needed, and how they will be carried out.”

The most interesting part of the story.

“A whistle-blowing contractor working on Waterview estimated it would take a month to demolish the work. The contractor said repairs probably would not hold up the huge tunnel and motorway interchange job.

“But I’m guessing it would take a month so it’s going to cost someone a lot of money,” he said, referring to Ramp 4 retaining walls, footpaths and crash barriers.

The worker said a concrete beam also contained weak concrete.

“It’s a very, very big structural beam across Ramp 4 and almost holding the whole bridge up. That has to be demolished.”

None of the companies involved in the issue front-footed it by revealing how Firth had made then sold the faulty concrete. The worker said the concrete was less than half the strength it should have been.

Questions were put to Fletcher Building, which owns Firth, about these claims, but they were not directly answered by the company.”

The italics are mine. The implication is that unless the whistle blower had mentioned it that the companies involved on billions of dollars worth of construction projects would have just kept quiet.

As I understand it what causes faulty concrete is “Not enough cement had been added to the mix so the concrete would never harden to the required strength” and “Tests were carried out on the big sites to ensure engineering standards were met.”

I’m not an expert on concrete at all, but surely it is much better to have quality tests when the concrete is actually being made and not a month or so after it has been delivered to building sites and used to build important stuctures?

If the concrete is tested AFTER being poured on site then it can only be remedied by demolition and rebuilding. It’s not like building a motorway is cheap.

The Waterview Connection project is $1.4b. The science building project at University of Auckland is $200m and there are all those other projects affected by this giant screw up.

It is good that faulty concrete has discovered but it does seem like finding out your concrete will never harden to the required standards weeks AFTER it has been used in a building project is just plain stupid.

In many (if not most) cases concrete is being used as a structural element in the building process. Everything that is built on those concrete foundations will need to be reworked in some way.

I wonder if new buildings in Christchurch and Wellington – especially are safe – given that the implication of this story is thanks to a whistle blower who called it when the management did not.

P.S I’m told that the (concrete) ingredients are measured at the mixing stage and there was a fault in measuring the cement levels at mix time. It would be good to know about in country that suffers from earthquakes and with hundreds of leaky buildings still out there. It’s not like public confidence in the building sector is solid at all.

Update: 12 May – I spoke with a civil engineer about this issue. He says he was surprised that the company fessed up. ( They didn’t – it was a whistle blower.  A bad sign in my view.) Also that large works tend to be over-engineered to provide a safety margin. Besides tests on concrete process at the plant there is a test at 7 days and then again at 28 days on site. He said that fixing any large works like the Waterview ramp would be a major undertaking. If concrete is at 50% or less of the required density then that is not a simple process error. Lets hope this is not a systemic hidden issue in the building sector.


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Inspiration is the best rocket fuel

Posted on 19 June 2014 by JasonK

Last night Matt Mullenweg told the story of WordPress and how it had all happened. It was a kind of a one man solo theatre performance with a stream of anecdotes counterpointing each step along the journey.

I have been lucky enough to hear Matt speak a few times over the past 6 years and even though I knew most of the story there were still plenty of insights to be had.

The event was held in a school theatre and it was the right setting for a no frills telling of the motivations and the reasons why WordPress is still relevant and exciting today after 10.5 years.

Here are some tweets and posts that captured some of the magic moments. It was great to meets some tweeps in person and to see so many new faces as well as some old favourites.

In the first snap below I was talking with @billbennettnz and unknowingly photo bombed the shot.

In shot: Megan @Madicattt and Laura @lozalock with Matt.

Megan wrote a great post on the evening WordPress co-founder Matt Mullenweg in Auckland

Potaua & Nikolasa Biasiny-Tule run an awesome local news project in Rotorua. They came up especially to say hi. They also very kindly bought Matt a ponamu pendant seen in the photo below.

The moment when Potaua presented the gift he leaned in for a hongi which was a new concept for Matt. Anyway it was a beautiful moment, spontaneous and unscripted and delightfully funny all at the same time.

During the Q & A many of those who asked questions thanked Matt for co-creating WordPress and giving many of us fulfilling work as part of the WP community.

Grant Furley over on his blog got to the essence of the evening in Conversation with WordPress founder beats Awards night

Matt’s presentation was the antithesis of a corporate computing event – no PowerPoint slides, no fancy lighting or sound, no slick media personality as MC*. Just Matt speaking from the heart about the product he develops (WordPress) and the company he founded (Automattic) that provides complementary blog services like hosting and spam protection.

What made the evening so inspiring was his commitment to open source and to his mission of “democratizing publishing”. Matt shared his philosophy and the story of how WordPress grew to the point where today it powers a staggering 22% of all the world’s websites. Rather than speak about “how” or “what” his organisation does, or show any software, he talked about “why” WordPress exists and why it has succeeded in a very tough market. Not only did this resonate strongly with the audience, but it also left you feeling “I want to be part of this”. And it’s that community loyalty that is the backbone of WordPress’ success.

There is much more I could say but Grant has captured most of it including the 4 qualities that Matt looks for when hiring. (*) it was me as the non-slick MC ha :)

Work ethic

Matts final note was an encouragement for everyone to keep giving back to the community and how that creates even more for us all.

Inspiration really is the best rocket fuel. It is comparatively easy to manage a company but leading from the heart and inspiring others to become leaders – now that is an idea worth spreading.

Thanks to Matt for including Auckland and Wellington in the 10 city loop for this trip. The WordPress community has grown hugely in the last 5 years and all signs for the future are green for go just like the beautiful pounamu in the photo below.

Another post worth checking out is Opening up the secret sauce. Open sourcing Bucky Box

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