icare goes back to Capgemini despite procurement scandal

Joseph Brookes
Senior Reporter

New South Wales state insurer icare has handed a $38.5 million contract to the same consulting firm it was found to have favoured in a 2015 procurement scandal involving senior management and an opaque tender process.

icare this month revealed Capgemini will again deliver it a claims management solution using US software Guidewire after beating out “several” bidders for an eight-year, $38.5 million contract.

The agency declined to reveal exactly how many bids were made for the work, which will deliver a cloud-hosted system to support icare’s Home Building Compensation Fund.

Capgemini and Guidewire were selected in 2015 to build a $260 million claims and billing platform for icare, receiving initial contracts of $31 million and $17 million respectively.

The 2015 procurement occurred after an “opaque” tender process that took less than three weeks and appeared to have a “predetermined outcome”, according to a scathing independent review released in 2021.

The then-chief executive of icare Vivek Bhatia had a friendship with the head of Capgemini at the time and received several gifts from the consulting firm and from Guidewire. But he failed to record any conflicts of interest or disclose the gifts.

“There’s a pattern here of contractors who win contracts with icare, providing you with social gifts,” now Treasurer Daniel Mookhey said in a parliamentary inquiry into icare in 2020.

Mr Bhatia, who was paid more than $1.2 million in his final year in the icare role, has rejected the claim and the “demonisation” of the agency.

The independent review of the agency conducted by retired Supreme Court Judge Robert McDougall found the procurement of Capgemini and Guidewire was emblematic of “sloppy” governance at icare.

“Overall, the procurement process adopted for the Guidewire/Capgemini tender, and the attitude expressed by former senior leaders of icare, demonstrate an issue that recurs throughout this report: that the outcome was of primary importance, and that process was at best secondary,” Mr McDougall concluded.

“Indeed, it is open to conclude that, in this case, process was seen as an impediment to achieving a predetermined outcome.”

The McDougall review recommended sweeping changes through 49 recommendations that were accepted by icare.

These include the appointment of a chief procurement officer, with the agency’s senior legal counsel Karina Davies promoted to the role in 2022, and a widespread uplift in procurement practices.

A Procurement Capability Development Plan was designed last year and is still being implemented and embedded under ongoing external verification.

In the meantime, icare has gone back to Capgemini and Guidewire for a new insurance claims policy and billing solution for the Home Building Compensation Fund, the state’s safety net for home owners faced with incomplete and defective building work.

The current platform is approaching end of life and is under extended warranty. An open tender was run by icare in December 2021, remaining open for less than two months over the Summer.

Capgemini was selected and awarded its largest ever publicly disclosed New South Wales government contract.

icare this week declined to say exactly how many bids were made, who made them or whether an evaluation report was prepared.

“A robust governance and assessment framework was followed in relation to the open tender for the HBCF Insurance Claims Policy and Billing Solution contract,” a spokesperson for the agency told InnovationAus.com.

“Several submissions were received and carefully evaluated by icare in terms of provider capability, capacity requirements and competitive pricing over the eight-year contract period.”

Guidewire and cloud giant Amazon Web Services are listed as subcontractors on the contract, which includes some provisions being withheld from public disclosure on commercial in confidence grounds.

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