£350m Rural Payments Agency IT: pouring money into a digital landfill?

Software company Erudine points out, in the wake of the report of the NAO’s report on the cumbersome and inflexible £350m systems at the Rural Payments Agency, that government needs to change its thinking on IT.

The NAO report explained how the Agency is reliant on Accenture contractors who cost taxpayers an average of £200,000 each. The IT system supports the Single Payment Scheme which costs six times as much per transaction to run as a different Scottish system.

The NAO report – and many NAO reports before it – are reminders that government departments continue to rely on a small number of big contractors. Would it be better for taxpayers, auditors and the public if departments and agencies were reliant on a larger number of smaller innovators?

Officially Whitehall executives prefer big companies because of their capabilities and skills.

Unofficially they place big contracts with big suppliers because of their financial strength – suppliers need to be able to pay large sums in compensation, or bring in extra people at short notice, when things go wrong. This is one reason officials have, when agreeing contracts, usually obtained financial guarantees from the US parent company of, for example, EDS.

Besides ministers will more readily sign off a large contract to a large supplier that is prepared to take the ultimate responsibility for failure. A small company would not have the reserves of money or people to say: the buck stops here.

In practice, though, does financial strength really matter? When a project falls into the abyss, the government will not take the supplier to court because it doesn’t want civil servants to take the witness stand and reveal how anarchic things can be on big projects and programmes.

So the government always settles big IT disputes quietly.  There has never been a court case in which government has taken an IT supplier to court for a full hearing over a failed IT project or programme.

So the financial strength of the supplier will rarely matter when it comes to legal action.

Reserves of staff when things go wrong? How useful are reserves when they are costing you £200,000 a year per individual consultant?

Would it be better for government to think small, change ways of working (which is the real key to saving money) and use innovative companies to provide new IT and support it?

The government, says Erudine, “continues to suffer from a terminal lack of innovation and is unable to introduce new thinking in a climate where it is beholden to a few large suppliers for IT expertise”.  

Martin Rice, CEO of Erudine, said of the Rural Payment Agency’s IT disaster:

“This is yet another example of Government pouring millions in taxpayer’s money into a digital landfill.

“It is inevitable that in a few years this system will either need completely replacing or require millions more spending on changes, maintenance and support – yet the Government continues with the status-quo instead of innovating.

“The IT industry is currently straight-jacketed by vested interest masquerading as best practice. The UK has bright, lateral and resourceful innovators who are currently squeezed out by incumbent prime contractor suppliers.

“Government needs to fundamentally rethink procurement practices, reward innovators internally and engage much more actively with the smaller enterprise community to drive real innovation forward.”

Erudine has an interest in talking about the strengths of the SME innovators – but that doesn’t detract from its point that government is too reliant on major suppliers and too reluctant to change its thinking.


Fujitsu v Department of Health? – it probably will never happen – IT Projects blog

NAO urges DEFRA agency to replace £350m system that’s only 4 years old – ComputerWeekly.com

The NAO’s most serious criticism of any IT-based project? – IT Projects blog