August 19, 2014 7:45 pm

The glitches in government IT contracts

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EDINBURGH, SCOTLAND - FEBRUARY 10: Immigration and border control signs at Edinburgh Airport on February 10, 2014 in Edinburgh, Scotland. A recent survey have show that Scottish people have a more open attitude to immigration than people in England and Wales, according to a poll today for Oxford University's Migration Observatory. (Photo by Jeff J Mitchell/Getty Images)©Getty

The £224m compensation awarded to US defence contractor Raytheon this week has underscored continuing concerns over the government’s ability to run large-scale information technology contracts .

The deal with Raytheon to develop an electronic border control system was conceived in the scramble to improve airport security in the wake of 9/11 terrorist attacks. But the contract to track the movement of passengers in and out of British ports was cancelled by Theresa May, home secretary, in 2010 after it fell behind schedule.

A tribunal ruling that awarded Raytheon £224m in compensation found that the processes used to end the contract “were flawed”.

The eBorders deal was among a raft of IT contracts, including plans to create electronic ID cards and iris-scanning passport checks, that were cancelled soon after the coalition came to power.

Patrick Dunleavy, professor of public policy at London School of Economics, said the government made a series of “hasty decisions” after it was elected, including on Raytheon.

“There was a certain amount of impatience among Conservative ministers and this led to the contract being terminated in unfortunate circumstances,” he said.

Earlier this month the National Audit Office revealed that the Home Office had also squandered £347m on a “practically unusable” IT programme to process immigrants’ paperwork and make it easier for officials to deal with asylum, visas and residency applications by foreigners.

It followed a series of other large-scale IT failures, including an abandoned patient record system for the National Health Service that has cost the taxpayer at least £10bn and may result in legal fees of £700m being paid out to Fujitsu after the Japanese IT company’s contract was terminated in 2008. The case has still to be resolved.

Raytheon’s timeline of problems

The US defence group’s contract was ended after concerns were raised by the Home Office over the electronic border system

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Josh Hewer, senior analyst at IT consultancy Kable, said botched IT contracts are not just confined to government. “The reason we know about public sector contracts is that they have to report; obviously this kind of scandal happens in banks and elsewhere – we’re just less likely to hear about it.”

Earlier this year Francis Maude, Cabinet Office minister, pledged to end all IT contracts worth more than £100m in an attempt to diversify work and reduce reliance on Hewlett-Packard, Fujitsu and IBM. Mr Hewer said this was in line with industry thinking on IT procurement.

Despite this the government is persevering with its largest IT project ever – the troubled £2.4bn universal credit that involves merging six different benefits. Ministers started implementing it three years ago, but have already been forced to write off £34m.

Jim Bligh, head of public services at the CBI employers’ group, said the government still lacked procurement expertise and that many contracts “are still too woolly”.

“Poorly drafted contracts often fail to say clearly what they want delivered at end of programme and who carries the risk if something goes wrong, or the political mood changes,” he said.

The eBorders project seems to be a case in point. One former Home Office official involved in the contract negotiations said his impression was that the Border Agency was “shockingly bad” at managing its relations with Raytheon and had no clear idea of what it wanted.

“There was a sense that post 9/11, we had to get more accurate border checks in place, and it had to be done very quickly,” the official says.

More recently, government departments have disagreed on how best to continue running the large and cumbersome IT project. It is understood that the Home Office and Cabinet Office have been divided over how to proceed.

On Tuesday the Commons public accounts committee raised its concerns about procurement. It said that without stronger powers the Major Projects Authority, a watchdog, “is unlikely to achieve its aim of a systemic improvement in project delivery across government”.

Ms May said the NAO had been asked to look into the Raytheon contract and “steps” were being taken “to make sure this kind of thing should not happen again. Since the Raytheon contract was signed, the government has improved its approach to procurement and would never enter into such a contract today,” she said.

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