The National Audit Office (NAO) is investigating the Inland
Revenue's decision to extend the contract of Accenture for running
the troubled National Insurance Recording System (NIRS2), without
going out to tender.
Accenture won the NIRS2 contract in 1995 despite bidding £100m less
than its rivals in a deal that was subject to a previous NAO
investigation.
Sandy Gordon, NAO's audit manager, said: "We will be looking at the
decision to award the contract extension to Accenture without
competition.
"The report will not cover the operation or implementation of the
original system. But the previous problems with NIRS2 were a major
factor in the decision to publish a report into the contract
extension award."
NIRS2 has been plagued by problems since the award of the original
contract.
Accenture - then called Andersen Consulting - paid £3.9m in
compensation for delays in 1997 and 1998 that led to delays in
government payments to UK pension companies worth £1.5bn.
At the height of the problems, NIRS2 produced a backlog of pensions
and benefits miscalculations which left 120,000 pensioners
underpaid by £41m, and led to pensions minister Jeff Rooker
branding the IT system as "rubbish".
The NAO will examine why additional development work was
contracted, what options were available to the Inland Revenue for
carrying out this additional work, and how such options were
evaluated in the absence of open competition.
The report will also investigate what steps the Inland Revenue has
taken to ensure problems with the original contract are not
repeated during the course of the additional work.
"This review is one of the NAO's regular routine audits of aspects
of the department's activities," a Revenue spokesman said. "The
main audit work has already been completed. As usual, we have
provided the assistance and information the NAO require."
A spokesman for Accenture added: "All IT systems have teething
problems but in terms of functionality the system is operating
fairly well. Recent reports from the NAO have recognised that we
have made significant progress with NIRS2."
The NAO report will be published in December.