Mismanagement to blame for Department for Work and Pensions outsourcing failures, says PAC

The Department for Work and Pensions did not retain sufficient IT management skills in-house to manage a £381m outsourcing contract with EDS to provide new systems for the Child Support Agency.

The Department for Work and Pensions did not retain sufficient IT management skills in-house to manage a £381m outsourcing contract with EDS to provide new systems for the Child Support Agency.

This contributed to problems with new systems which were a factor in the Agency failing to collect £3.5bn in child maintenance, the Public Accounts Committee has concluded.

 “Having outsourced most of its IT capability to EDS, the Department did not maintain the capability to be an intelligent customer,” the committee said in its report.

“It needs to strengthen its independent in-house IT capacity to challenge the validity of assurances given by IT suppliers and keep up to date with both technical and commercial developments in the IT industry by recruiting a cadre of high calibre IT professionals.”

IT outsourcing experts have long said the failure of contracts in giving their expected benefits is often down to poor management from within the customer.

The PAC, which audits public spending in the UK, said the Agency had been working with EDS since February this year to stabilise the new IT system by fixing 500 defects that were still present three years after it was introduced.

The Committee also noted that the number of uncleared applications had improved up to December last year.

However, Edward Leigh MP, chairman of the PAC, said: “The Department for Work and Pensions never really knew what it was doing in dealing with the contractor EDS and the system was a turkey from day one.

“The department also spent £91 million on bringing in external advisers, but there are no records of where more than a third of this money went,” he said.

The government is due to introduce a new organisation, the Child Maintenance and Enforcement Commission to replace the CSA in 2008. “The government must keep an iron grip on this new organisation to ensure that the lessons have been learned from the CSA debacle,” Leigh said.

Work and Pensions Secretary Peter Hain said: “We know that previous reforms have not worked, that is why we are replacing the CSA with a radically different child maintenance system. We have learnt lessons from the past. The new system will lift children out of poverty, give power and choice to parents, enforce responsibilities, and deliver value for taxpayers.”

Child Support Agency: a history of IT failure >>

The Department for Work and Pensions >>

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