The Housing Corporation has terminated a £17m contract with Elonex which was at the heart of plans to modernise its IT systems.
The corporation's application service provider project has a chequered history, including staff walkouts, two internal inquiries, a series of missed deadlines and technical problems.
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The organisation has transferred responsibility for the project from Elonex, which had a contract to manage the work until February 2007 at the earliest, to Elonex's subcontractor on the project, Netstore.
The corporation, which is responsible for channelling £2bn of public funds to the UK's 1,500 housing associations annually, said it now plans a review of its long-term IT strategy and may issue a new public IT procurement.
"We now have a period when we can reflect on our technical needs going forward over the next five years. We will review industry best practice, we will review a number of options," said Housing Corporation director of resources Peter Marsh.
The corporation refused to give reasons for ending the contract, citing commercial confidentiality. But IT director Peter Ford said in an internal memo to IT staff, seen by Computer Weekly, that contractual difficulties had brought the corporation's content management project to a halt last year, and "got in the way" of plans to replace the corporation's finance system.
"Most of us will, no doubt, be pleased this relationship has been brought to an end," said Ford. He also acknowledged that many staff had raised concerns about the project from its inception.
Marsh said, "If the contract had been working effectively for both sides there would not have been a termination."
Gideon Wetrin, Elonex's marketing director, said the contract had been "incorrectly terminated", but he was unable to make any further comment.
Project's chequered history
Housing Corporation IT staff staged a series of walkouts protesting against the project, which had been given an initial red light in the government's Gateway 3 review at the end of 2003.
In 2004, the corporation was forced to abandon its plans for desktop thin clients - a key part of the strategy - in favour of desktop PCs, following technical problems.
Jon Rouse, chief executive of the Housing Corporation, told staff at the time that he had reached the "end of his tether" with the project, and said he was spending a quarter of his time dealing with IT issues.
Last June the corporation commissioned Methods Consulting to carry out a review of the project after what Rouse called "legitimate concerns" arose over the project's commissioning and implementation. The review is months behind schedule and is not expected to reach any conclusions until February at the earliest.