MoD payroll system: what went wrong

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MoD payroll system: what went wrong

Rebecca Thomson

The MoD’s Joint Personnel Administration programme is the latest government IT project to hit the headlines for poor performance.

The consequences are that some members of the armed forces have been underpaid because of management and software problems at the Ministry.

The system held incorrect personal data for between 5% and 10% of all military staff, and there were insufficient controls to prevent errors. The problems meant some staff, including serving soldiers in Afghanistan, were underpaid.

In 2007, 51,000 wage packets were underpaid. But supplier EDS said 31,000 of these were only £3 short and were repaid the following month.

Management troubleshooter Colin Beveridge said he is “gobsmacked” by this latest failure. “It is a familiar, but still frightening, story” he said.

The £245m project was meant to improve the administrative support provided to members of the armed services. It is still on track to save the MoD £100m a year.

It replaced several separate payroll systems and career management systems, but poor development and implementation led to big problems for the staff it was supposed to help.

Flawed formulation

The main problem with the JPA was its formulation, a report by the Defence Select Committee said.

When developing the system, the MoD did not focus enough on the requirements for financial reporting or the need for management information data, so staff cannot get the information they need.

“We consider this to be a basic and fundamental error which is unacceptable on a project of this scale and importance,” the Defence Committee’s report said.

An internal review was commissioned after a report by the National Audit Office, which highlighted problems with the system.

In addition to the Ministry’s failure to make sure the system delivered basic financial reporting requirements, the report found the programme was considered an HR project and did not sufficiently involve finance staff in its development. Officials at the MoD relied too heavily on supplier EDS to advise it of the controls needed, despite the fact that EDS did not have a clear understanding of what the MoD required. The contract was awarded to EDS without an open tender, which the MPs also criticised.

MoD finance director Trevor Woolley told MPs, “We replaced a manual system with an automated system. In a manual system there are lots of opportunities for manual intervention if it looks as if a payment is being made at the wrong level or to the wrong person. The automated system we have in JPA does not have that same level of control and the same level of evidence that the right payments have been made to the right people.”

The MoD has so far demanded half a million pounds from EDS as a fine for “service delivery failures”, but the remaining £1.8m of extra costs will be absorbed by the public purse.

Ongoing problems

And the problems have not stopped yet. Although the MoD has put considerable effort into improving the system, the National Audit Office has said there is still more to do and any early benefits of the system will have been lost.

Beveridge said, “Over the past five or six years, the government has placed too much confidence in so-called ‘new technology’ to achieve ambitious cost savings. Many of these initiatives, however, create not only massive disappointment but also huge and unexpected costs, due to an apparent inability of departments and major suppliers to deliver the goods.”

He pointed out that the MoD’s payroll system was effectively computerised in the 1970s. “So why, nearly 30 years later, can’t the MOD get things right now?”

A spokesman for EDS said, “The NAO qualified the MOD accounts as a result of issues around the accounting systems in JPA. We are working with the MOD and NAO to address these issues as a matter of urgency.

“The system has benefits for users and was delivered on time and on budget to 300,000 users between 2006 and 2007.”

“While there were some initial problems with user familiarisation with the new system and training, enhanced training has meant that in a survey of armed forces in November 2008, 81% said they were satisfied with the way they used the JPA system and 85% were satisfied with the services the Service Personnel and Veterans Agency provides,” he said.


EDS response

EDS issued the following statement to Computer Weekly:

During the period covered by the report (2007/2008) the accuracy of wage payments was 99.47%. The report highlights that 51,000 wage packets were short in 2007, however it should be noted that 31,0000 of these cases related to a single incident where £3.00 was deducted in error from pay packets. This was identified and corrected the following month.

The programme will achieve savings of £100m per year and is on track to do so. Such savings free up resources to be devoted to front line services.

There are also benefits for users. The 300,000 self-service users can view pay slips, submit on-line expenses and change personal details directly via the system, removing the need to go through unit HR teams and resulting in a faster service. The system also provides enhanced HR capabilities. For example, casualty information is now entered direct onto the system from operational theatres and is fed within seconds to the SPVA’s Joint Casualty and Compassionate Centre, allowing immediate family liaison arrangements to be made.

The NAO qualified the MOD accounts as a result of issues around accounting systems in JPA. We are working with the MOD and NAO to address these issues as a matter of urgency.

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