EDS: No penalties for DSS IT failure

The Department of Social Security has cleared services supplier Electronic Data Systems of blame for two major IT failures, as DSS ministers prepare to sign a 10-year outsourcing deal worth up to £1bn with the company

The Department of Social Security has cleared its main services supplier, Texas-based Electronic Data Systems (EDS), of any blame for two major IT failures that could cost the taxpayer millions of pounds.

The decision not to place any blame on EDS or seek any compensation comes as DSS ministers prepare to sign a 10-year outsourcing deal worth up to £1 billion with the company.

Some of the department's staff have told Computer Weekly they are concerned that no-one is being held responsible for the problems.

In the first of the failures, EDS's Debt Accounting and Management System was scrapped because of the complexity of the department's debt management process, according to the DSS.

The amount of money EDS received – for a system that was never used – has not been published due to commercial confidence, the Department said.

In a separate incident, 112,000 benefits claimants were overpaid by a total of £10.5m after a fault developed in batch processing that was not picked up by an EDS reconciliation programme.

DSS staff have said EDS has not tried to hide its involvement in the problem, but official internal DSS reviews have cleared both sides of any responsibility.

DSS staff have told Computer Weekly that they fear no lessons will be learned from the problems.

The Cabinet Office is currently conducting a review of public sector IT disasters to see how processes can be improved.

Outsourcing experts have suggested that users may be unwilling, or unable, to criticise their main IT suppliers for fear of damaging a relationship that is critical to the smooth running of the business.

Earlier this year Treasury Minister Dawn Primarolo said that the Inland Revenue would not pursue compensation from supplier Andersen Consulting over problems with the National Insurance Recording System, because this could affect its relationship with the supplier.

The Government is convinced that EDS can modernise outdated DSS IT systems, and control other computer contractors, but only if EDS takes onto its payroll 1,600 DSS computer staff at the Information Technology Services Agency as proposed under the new contract about to be signed.

After months of delays, the signing of a contract is expected in the next few weeks.

But a letter received by Computer Weekly from a DSS official points out that the DSS deal will increase the Government's commitment to one company, which could increase the risk to taxpayers. Market researcher Kable says that EDS now controls more than 70% of the Government's IT outsourcing business.

A spokeswoman for the department said it is not protecting EDS from criticism. Of the overpayments problem she said, "There has been no cover-up. It was a sequence of events that led to this incident. Blame cannot be attached to one organisation".

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