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Failed government IT projects could lose taxpayers £1bn

The Home Office has been ordered to pay £224m to a defence contractor; government IT project waste is really adding up.

Costly IT failures seem to be a coalition motif. Photo: Getty

The news broke yesterday that the US defence contractor Raytheon has won an arbitration tribunal against the Home Office, and the government has been ordered to pay £224m to the company.

The tribunal was addressing the government’s unlawful termination of a £750m contract for an electronic border control system (the controversial “eBorders” programme intended to track down terrorists and monitor people moving in and out of the country), and has been one of the longest-running disputes over a government IT system.

A nine-year contract was signed with Raytheon under the last government, in 2007, but was swiftly broken once the coalition took power in 2010. Ministers blamed the company for being behind schedule, and no longer trusted it with building the IT framework to drive the system.

However, Raytheon threatened to sue ministers, blaming the UK Border Agency for the failings of the project’s implementation, and the tribunal yesterday criticised the UKBA’s process used in reaching a decision and carrying out the termination, calling it “flawed”.

The Home Secretary Theresa May has written to both the home affairs select committee and public accounts committee explaining the outcome of the arbitration, and although she didn’t clarify how the department would pay the money, she did comment in the letter:

“The Government has already taken steps to make sure this kind of thing should not happen again.”

Yet failed IT projects have become a bit of a morbid motif in this coalition. Costly IT failures have become a symptom of a rather chaotic propensity to outsource, and in the process fail when managing outsourcing contracts.

Last month, there were unsubstantiated reports that the Department of Health may lose taxpayers £700m by having to pay out for losing a legal battle with Fujitsu over a failed IT system for the NHS; the National Programme for IT (NPfIT). The case was held in secret, and neither the Cabinet Office (which tried to broker a deal with the company) nor Fujitsu would comment on its outcome, but reports emerged nonetheless that the latter may have won – and Fujitsu did announce its intention to sue the DH for £700m in the past, once it was fired for non-performance by the government in 2008.

If it comes to be true that Fujitsu is owed £700m, then this added to Raytheon’s award would mean that the cost to taxpayers of failed government IT projects could reach nearly £1bn.

There is also the Ministry of Justice's recent revelation two months ago of its plans to axe a £127m IT project in favour of an alternative "outsourced solution". According to the Law Society Gazette, the department has already written off £56.3m in staff and contract costs for 2013/14 as a result of this decision.

And when you add the cost of another problematic IT project, the Department for Work and Pensions’ universal credit scheme, which has notoriously already wasted millions on IT failings, it might be time for the government to do more than turn it off and turn it on again.

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