The Housing Corporation, which handles more than £1.3bn of public funds a year, has launched an investigation into "serious" allegations surrounding the management of a £17m IT modernisation project.
The investigation is being carried out in consultation with the Office of the Deputy Prime Minister.
The seven-year application service provider contract with Elonex was designed to replace the corporation's outdated IT systems with a thin-client network, that will be cheaper to run and allow the corporation to improve its services to the public.
The project underpins the future plans of the corporation, a government quango, which is responsible for regulating more than 2,000 housing associations that manage 1.45 million homes in the UK.
The inquiry, which will focus on the Housing Corporation, was revealed in an internal letter to staff dated 8 July from the corporation's chief executive Jon Rouse. It refers to the management of the application service provider contract.
In the letter, which is on the corporation's intranet, Rouse said, "I need to inform you that a whistle-blower in the staff team has made some serious allegations about the past management of the ASP project.
"We are taking these allegations seriously and are launching a full investigation headed by Mark Ripley, head of internal audit. We are doing this in full consultation with the ODPM."
The letter refers to complaints made by an anonymous individual, believed to be a member of the Housing Corporation's staff, to the ODPM.
Rouse said in the letter, "I absolutely respect the right of the individual, who remains anonymous, to make the allegations, though it saddens me that there was no attempt to contact me first."
The investigation aims to establish whether there is any evidence to support the complaint. The Housing Corporation has suspended a senior self-employed IT consultant as a precautionary measure. But it stressed there was no implication of wrongdoing.
"The contractor is very much considered to be innocent unless proven otherwise. However, we had no choice but to take the precautionary step of suspension while the investigation is being carried out," a spokeswoman said.
The ASP outsourcing project has been subject to delays and difficulties (Computer Weekly, 14 January 2003). The contract involved a small number of employees transferring to Elonex and the conversion of desktop PCs to thin clients, which will provide staff with access to the investment management and regulatory computer systems, also run by Elonex.
The new desktop systems were originally slated to be rolled out across the Housing Corporation's nine offices from the end of June 2003, but deadlines have slipped several times. The project is now running at least 13 months behind schedule.
Rouse said in an interview last month that he was determined to get to grips with the project and was devoting 25% of his time to dealing with IT issues. He blamed the outdated IT systems as a factor in the low morale among staff in the organisation.
The project has faced disruption with the departure of senior Housing Corporation staff, including the former chief executive, the assistant chief executive responsible for the project, and the project manager, in the first three months of the year.
A Gateway review in February by the Office of Government Commerce gave the project an amber light but identified weaknesses in project co-ordination during a pilot in the corporation's Leicester office in December 2003. It highlighted the need for the corporation to iron out service agreements for the helpdesk service run by Elonex.
The corporation plans to repeat the Leicester pilot, after overcoming technical hurdles, which have pushed back the project's deadlines.
Leicester is currently the only Housing Corporation office equipped with the new terminals, but timescales for a full roll-out remain uncertain.
A spokesperson for the ODPM said, "The Office of the Deputy Prime Minister is aware of the investigation and is also aware of the action taken to date by the Housing Corporation chief executive.
"It would be inappropriate to comment further while an investigation is underway."
ASP project delays increase
The Housing Corporation gives the go-ahead to a project to move both its desktop and business systems to an application service provider
December 2002-January 2003
The Office of Government Commerce gives the outsourcing project a "red" warning light. Staff stage walk-outs in protest at the outsourcing agreement
The corporation signs a £17m contract with Elonex to implement the ASP project
The corporation misses its original target for the office-wide roll-out
A pilot project takes place at the Leicester office but encounters technical challenges
"Amber" Gateway review gives the go-ahead to the project provided that key issues are addressed
The Housing Corporation plans to re-run the Leicester trial once technical issues are resolved. Roll-out to all nine offices will follow if the trial is successful.