IBM and the Census

Pat F.

“If you lay down with dogs, you get up with fleas.”

The Australian Bureau of Statistics, under the leadership of the Chief Statistician, the Minister, and the Prime Minister, contracted to IBM the task of designing and implementing the 2016 Census of Australia. 

IBM, “International Business Machines”, is one of the largest US multinational corporations, and has been operating in Australia and other countries for many years. It is a corporation with a history of exorbitant profits, failure of projects, abuse of employees’ rights, bribery, and avoidance of contractual responsibilities.

IBM’s Census Failure

IBM’s history is outstanding. It is in decline as a tech giant. One of its most notorious fails was in Australia. IBM’s appointment to introduce Australia’s first on-line Census is so egregious it requires investigation for its possible impropriety, corruption, negligence and ignorant stupidity.

The facts are simple. IBM did the job. The on-line Census operated successfully for less than 12 hours. It then crashed because it could not handle the amount of traffic coming to the website. Concerned that this was an attack on the system, with a risk that private information might be stolen, the ABS ordered the site to be closed until appropriate protections could be restored after the crash. 

The credibility of the ABS has been shattered. The Census has effectively stopped. The final night in September will provide another opportunity for the system to fail. More likely there will be no final rush, and the Census will fail to achieve the numbers required to achieve statistical significance. Which is not important, as the ABS coerces people to provide the data, and then sells the data to the capitalists so that they can better exploit, control, and train their wage slaves.

A website can be brought down by an organised attack (using robots to mimic users), or simply succumb to an unexpectedly large number of genuine users. Either way, it is routine practice to protect systems from that type of failure. It is no more complicated than ensuring that there are sufficient gates to allow spectators rapid ingress and egress from sports events.

IBM is already trying to avoid responsibility for the failure by claiming firstly, that ABS declined to accept an optional extra in the system which would have avoided the problem. And secondly, that it was an ABS decision to close the website, not a failure of their system. This is like a vehicle manufacturer trying to avoid responsibility for their cars crashing, by saying the customer declined the opportunity to have brakes installed as an optional extra, and anyway it was the driver’s decision to drive the car on the road.

In Consumer Protection legislation (which does not apply in this case because the ABS is not a ‘consumer’), the Census website would be described as “not fit for its intended purpose”.

IBM’s Previous Failures

In 2010, the Queensland Government contracted with IBM to supply and install a computerised payroll system capable of being utilised at many different facilities within the Government. IBM seems to have been paid $27m for this job. It did not work. It cost the Queensland government $1.2 billion to make it work. IBM denied responsibility, and the Australian Supreme Court ruled that the IBM’s carefully worded contract did exempt IBM from responsibility for their failure. Whistle-blowers within IBM revealed the use of unethical tactics to secure the contract. IBM is now banned from all government contracts in Queensland.

In the USA, IBM has recorded serious project failures in Indiana, Texas and Pennsylvania. In Japan, the Bridgestone corporation accused IBM of intentional deception, fraud and misrepresentation throughout another failed project. In Britain, the Fujitsu corporation found IBM declined to take responsibility for the failure of a contracted project.

Why IBM Again?

So why would Prime Minister, Minister and ABS Chief give IBM the Census job after those IBM disasters?

Bribery allegations against IBM have surfaced in the past in Poland, Argentina, Bangladesh and the Ukraine. In Feb 2011, a Judge in the USA declared; “This (IBM) is a company that has a history of violating the books and records provisions of the FCPA (Foreign Corrupt Practices Act).”

IBM has a reputation not only for abusing its clients, but also for abusing its own workers and workers of other corporations. IBM was sued by the City of Sterling Heights Police and Fire Retirement System in Michigan USA over a deceitful valuation. At the time, IBM owned a computer chip making business which was a loss making drag on the company’s profits. IBM tried to sell the business to the retirement fund at a valuation of $2.4 billion. Eventually IBM succeeded in off-loading the loss making business to Global Industries, which is owned by Abu Dhabi in the United Arab Emirates. It was not sold for $2.4 billion however. It was sold for -$1.5 billion, that is, IBM paid Global Industries $1.5 billion to take the business off their books!

The Cost

In 2005 the ABS contracted with IBM to supply the Census system for $9 million.  In the Australian budget papers of 2013-4, a provision appears for a further payment of $9.6 million to IBM to host the Census and analysis on an IBM data centre.

An Australian competitor of IBM, also wishing to get the job, remarked that these amounts, although large, were chickenfeed for a company like IBM, and well under the price he could quote for the job. The explanation, he said, is that IBM was buying the right to charge ABS for ongoing storage and operation fees for the huge bank of data involved in the Census. It’s like taking your broken down car to a repairer with a request to repair it and send the bill. And then being shocked when it breaks down again after 12 hours and you receive a bill for thousands of dollars.

The Remedy

IBM will probably waive the contract clauses and claim no responsibility for the failure. What would an independent Australian Government do? 

Seize all of IBM’s assets in Australia until ABS is reimbursed for its immediate and consequential losses. 

Black list IBM so it can never again make a contract in Australia. 

Give future contracts to Australian providers.

Hold Prime Minister, Minister, and Chief Statistician responsible.