A report by public spending watchdog the National Audit Office
(NAO) has found that the Inland Revenue was effectively locked into
a major outsourcing contract with Accenture (formerly Andersen
Consulting) when it needed to quickly change systems to support new
legislation.
The problems arose when changes needed to be made to Accenture's
new National Insurance Recording System (Nirs2) to support
legislation in 1998 for stakeholder pensions and pension sharing on
divorce.
The NAO report found that, after years of delays and problems,
Nirs2 was a success and exceeded the expectations of users but
there was in effect no choice but to give Accenture the extra work
on enhancing the system to support changes in the
legislation.
"The original Nirs2 contract proved insufficiently flexible in
catering for the significant legislative changes proposed in 1998,"
said the report, published this week.
The extra IT work added up to £144m to the original Nirs2 contract
value of between £45m and £76m.
If the Revenue had wanted to give the work to another supplier it
would have had to exercise a break option in the contract and
re-compete the existing and new Nirs2 work.
This exercise alone would have cost an extra £44m, effectively
ruling out any choice of contractors.
Full report:
www.nao.gov.uk/