Multi-million budget gap after failed project

PUBLIC SECTOR: Damaged pensions body’s botched IT scheme had ‘no clear business case’ a watchdog says

A failed IT project that left Scotland’s public-sector pensions body with a £23 million budget gap had no clear business case, a spending watchdog has found.

The Auditor General for Scotland, Caroline Gardner, said the botched scheme has considerably set back planning at the Scottish Public Pensions Agency (SPPA).

The SPPA runs retirement plans for more than 500,000 people, including NHS employees, teachers, firefighters and police officers.

Its planned IT scheme to integrate pensions administration and payments was meant to save cash and boost efficiency.

The project was shut down last February after years of trouble when the chosen supplier, Capita, failed to provide a working system.

In a report, spending watchdog Audit Scotland said the SPPA did not have a clear business case for the integrated scheme, did not adequately scrutinise Capita’s £5.6m bid – despite it being classed as abnormally low – and set an unrealistic 18-month timetable.

The pensions body spent £6.3m on the project, just £800,000 of which went to Capita, with the remaining money going on contract extensions with incumbent suppliers, internal staff, software licences and specialist support.

The SPPA has since spent a further £2.4m on extending contracts with existing suppliers and received £700,000 from Capita following a legal settlement.

The agency has been left with a £23 million gap in its revenue and capital budget over the next five years.

The Audit Scotland report states: “In our judgment, SPPA did not have enough assurances over Capita’s ability to deliver the project before it awarded it the contract.”

Auditors also found the agency did not have the resources to manage a project of this scale.

The pensions body agreed a budget of £9m for the scheme but set no detailed scope or objectives, said to be a “significant omission” which contributed to the overall project failure.

When the project was put out to tender in 2014, Capita’s bid was classed as abnormally low under public contract regulations, a classification which casts doubt on whether the contract can be fully delivered.

The SPPA queried Capita on parts of the bid and discussed the answers with government lawyers who said more in-depth questions should be asked.

The agency said it did not have the skills to do this, took no further action and accepted Capita’s bid.

Staff changes at SPPA contributed to difficulties adequately scrutinising Capita, as over the life of the IT scheme there were four different senior responsible officers and four changes of chief executive – having a “major impact” on the project management.

SPPA did not have enough assurances over Capita’s ability to deliver the project