Defence hands EY $10m for a five month job

The Department of Defence will pay Ernst & Young more than $2 million a month for five months of work on its billion-dollar enterprise resource planning (ERP) overhaul.

The department awarded the consultancy a $10.4 million “strategic planning” services contract last month that will run for 20 weeks between 1 July 2021 and 19 November 2021.

It means Defence is expected to pay EY in excess of $500,000 a week, or more than $100,000 each working day.

A spokesperson told iTnews the contract is for “organisational change management (OCM) services as part of the Defence ERP program”, which first began back in 2017.

As part of the program, Defence will ditch more than 500 applications across finance, procurement and logistics in favour of a SAP Defence Force and Public Security solution hosted on SAP's S/4 HANA.

Initial finance reporting capabilities were rolled out through the SAP-based ERP system earlier this year, with Defence now looking to the larger logistics and maintenance capability release in 2022.

EY has provided change management services for the ERP program since being appointed a strategic partner alongside KPMG in June 2017.

Both partners work alongside systems integrator IBM, which picked up the initial $95 million deal in 2019 and recently scored another $128 million contract to begin the second phase of the program.

The new EY contract builds on an earlier $9.5 million contract from October 2019 that grew to $17.5 million in January 2021.

While this wasn’t clear on the Commonwealth procurement website AusTender, Defence said it would rectify the error.

Since its initial year-long change management services contract in October 2017 worth $4.5 million, EY has also scored one other deal valued at $17.8 million during the 2018-19 financial year.

Defence would not say how many EY staff were providing change management services, including as part of the most recent contract.

“The contract with EY provides significant organisational change management support to the Defence ERP program,” a spokesperson said.

“The commercial arrangement with Ernst & Young has a capped value but flexible resourcing. EY are held to account for the delivery of the projected outcomes.”