On Friday August 27, 2010, Victoria's then education minister Bronwyn Pike joined students at Hume Central Secondary College as they logged on to computers to chat live to 20 of their contemporaries 8000 kilometres away.
Days earlier, students from Glen Waverley and Balwyn secondary schools touched down in buzzing Shanghai with education department deputy secretary Darrell Fraser and a multimillion-dollar, life-sized classroom to show the world Victoria's "classroom of the future".
Thankfully for Pike and Fraser, the video link to China worked. Just two weeks earlier, the pair had been embarrassed by the shambolic debut of Labor's high-tech online schools learning system dubbed the Ultranet.
On August 9, 2010, half a million Victorian students were given the day off so their teachers could trial the much-hyped Ultranet. But by 9am, the system had crashed. Many teachers were unable to log in and the education department was in chaos.
The failure was one of the first public signs that all was not well with the Ultranet, a $60 million project promised by Labor at the 2006 state election. But inside the Brumby government and the education department, the system crash was just the latest stuff-up in a long line.
Four years on, the Ultranet – an electronic learning system designed to connect students, teachers and parents 24 hours a day – is no more. It was dumped last year by the Napthine government after its cost blew out to $180 million, and it was hardly being used due to technical difficulties and general disinterest among teachers, students and parents.
Fairfax Media's recent revelation that Victoria's Independent Broad-based Anti-Corruption Commission is investigating the education department for "serious corruption" has put the Ultranet, and those responsible for it, back in the spotlight.
The IBAC probe is understood to have begun 12 months ago. Its officers have seized computers and documents from the education department. This week it emerged that four senior education department officials had bought shares in the company awarded the contract to build the Ultranet, Darwin-based CSG Limited. Three of those are no longer with the department. One senior official bought shares before the contract was announced, three others afterwards. Two other senior officials – Fraser and his Ultranet departmental colleague, Dianne Peck – went on to accept senior roles with CSG.
Many in the education department are wondering how it went so wrong, and how many more of their colleagues may be implicated.
The Ultranet fiasco is a tale of what happens when good ideas and intentions clash with political pressure to meet unrealistic budgets and timelines, and of what happens when zealous senior bureaucrats refuse to listen to advice.
To understand how the Ultranet triggered one of the state's biggest corruption investigations, we need to go back to Glen Waverley Secondary College in the early 2000s.
The college was, and is, one of Melbourne's most sought-after public schools. Fraser, described by colleagues as a gregarious but tunnel-visioned man, was at its helm. Peck was his assistant principal. Several other figures who would go on to play important roles in the Ultranet project were also on staff.
In 2004, Fraser made the huge leap from school principal to senior public servant when he was appointed deputy secretary for the Office of School Education. At the same time, Glen Waverley was chosen by the Labor government as the site for an intranet project named the Ultranet.
US software giant Oracle had been chosen by the government to partner the school in the project. It was the beginning of a fruitful relationship between Oracle and Victoria's education department.
The Glen Waverley experiment led to a bigger project called Students@Centre across 12 schools in 2006. Once again, Oracle was in the background and included a testimonial from Fraser in its promotional software.
When Labor promised $60.5 million at the 2006 state election to build an Ultranet connecting students, teachers and parents to an electronic classroom, many of Oracle's rival software suppliers were concerned things had progressed so far that they would not stand a chance in a tender process.
Their fears would prove correct, despite the government's best efforts to smooth over concerns by promising a fair and rigorous tender process.
"There was no question about it. It was always going to be Oracle's software, everything was skewed towards it," says an executive from an IT company involved in the Ultranet tender.
On August 3 2007, Premier John Brumby reshuffled his cabinet and moved Bronwyn Pike from health to education. It was her task to bring the Ultranet from a grand vision to a reality in every classroom before the 2010 state election. Failure was not an option.
Two days earlier, a request for tender to develop and manage the Ultranet was released. All bids returned with costs estimates of more than $100 million, close to double the $60.5 million Labor had promised.
The tender process was aborted, setting the scene for a series of fateful decisions. Millions of dollars were spent on hiring consultants to help "re-scope" the project in order to meet Labor's inflexible budget. Up to 90 per cent of the functions of the original Ultranet plan were abandoned.
"There was a very strong political agenda. The narrowed focus of the project was all about meeting a political deadline. The Ultranet had to be working before the next election … this is not how you run a big project," says an education department official close to the process.
Executives in IT companies also detected the anxiety inside government. One manager, who asked for his identity to be protected because his firm still has government work, says education officials were pleading for companies to quote $60 million, even though they knew their true cost estimates were tens of millions more.
"They were desperate and said we could use contract variations to get the rest of our money," he says.
When the Ultranet went to tender for a second time in November, 2008, five software companies, including Oracle and Microsoft, were invited to bid.
Two weeks earlier, Oracle formed an alliance with Darwin's CSG Limited. Listed on the ASX in 2007 by young Northern Territory entrepreneur Dennis McKenzie, CSG had never worked with Oracle before. Nor had it completed a project as complex as the Ultranet.
CSG's main claim to fame at this point was in the printing business through partnerships with Fujitsu and Xerox. It had also landed the NT Government's IT helpdesk contract through an arrangement with Fujitsu.
McKenzie had secured the rights to Oracle's educational software in October 2008 by offering $5 million to buy a Perth company called Cinglevue Pty Ltd, which was owned by two Oracle executives, Greg Martin and Frank Aloisio, and an employee of a rival IT services company, Greg Tolefe.
Cinglevue had been established in August 2007, the month the initial, unsuccessful Ultranet tender process began. Oracle had granted Cinglevue the exclusive right to market its educational software.
For the Victorian education bureaucrats running the 2008 Ultranet tender process, Aloisio was a familiar name. He had been on Glen Waverley Secondary College's staff under Fraser and Peck in the early 2000s. As the select tender request was sent out on November 14, there were again fears from other software vendors and IT companies that Oracle and its new-found, little-known Darwin partner in CSG had the inside running.
But Melbourne-based IT company Semaphore Consulting, which had teamed with international software firm RM Asia-Pacific to tender for the Ultranet contract, thought it was in with a chance.
Semaphone Consulting business manager Ken Mulholland says both companies were known to the education department, having already provided it with separate software applications. RM Asia-Pacific was so serious about the bid that it flew Peck to Scotland to inspect how its technology was being used in a school district.
By April 2009, Mulholland's team was still in the game. It had been shortlisted by the education department and invited to give a presentation over three days.
However, a senior education department official abruptly cancelled the presentation just two weeks before it was due. "Everyone was in shock because this company from Darwin just came out of the blue and they had no experience at all in the education field," he says.
In May, the education department announced the CSG/Oracle team as the winner of the $60 million Ultranet contract, as well as an additional $17 million technical support contract.
The decision confounded many within the education department. "We could understand Oracle but how could you choose such a small company as CSG to build the project. It had few staff, no Oracle experience, but it landed this huge project," says a serving education bureaucrat.
Events became even stranger when Victoria's Auditor General revealed in a report to parliament in December 2012 that CSG had been suspended from bidding in February 2009 for what the education department had said was "untruthfulness", only to emerge as the winner three months later, despite Premier and Cabinet and Treasury warnings.
"It was the dirtiest thing I've seen in my career," an executive from a rival Ultranet bidder says of the tender process. "I questioned at the time just how high this went up in the government."
CSG's lack of experience in the education field did not deter Pike from singing its praises when she announced the signing of the Ultranet contract on July 1 2009. Describing the tender process as "rigorous and comprehensive", Pike said CSG had "proven it is ready, willing and able to take on this important project".
Thirteen months later in August, 2010, when the Ultranet debuted in schools, Pike's optimism was proven wrong when the system crashed throughout the day.
But the Labor government and those education officials who had invested years of their lives bringing the high-tech dream to life had no choice but to press on. They had come too far to stop.
Fraser and his student delegation proudly headed to Shanghai to show off Victoria's achievement and perhaps sell the vision and technology to other cities, states and nations.
Their mission was sponsored by Oracle, but neither the company nor the education department will disclose the nature or value of its support.
With their dream in tatters and IBAC investigators on the hunt, even those critical of the Ultranet process have sympathy for Pike and Fraser and his old Glen Waverley crew.
"They saw this as a legacy project. Something they could leave the state," says one well-placed observer. "But they cut corners and it brought them undone."
Education department secretary Richard Bolt this week warned the state's 40,000 teachers, support staff and education bureaucrats to brace for further revelations.
He asked them all to consider their actions and to ponder how they would look on the front page of a newspaper.
Read more:
- Ultranet shares and jobs scandal snares Victoria's education department
- Ultranet executive accused of fraud
- Ultranet IT system lined up for Catholic schools
- Threat to subpoena Victorian education chiefs over Ultranet deal
- Ultranet's biggest losers
- Ultranet shares and jobs scandal snares Victoria's education department
