The Department of Work and Pensions (DWP) came under fire from members of an influential committee last week over its erratic approach to IT procurement.

The DWP had been one of the few central government departments to have avoided the most recent spate of data loss scandals.

Nevertheless, the Work and Pensions select committee was critical of the number of contentious IT projects in which the department had been involved, including the lamentable Child Support Agency project.

The department, which is responsible for administering benefits and pensions, is one of the largest IT procurers in Europe.
The committee demanded reassurance that the DWP had become a more intelligent customer since its last round of procurement.

Chief information officer Joe Harley told MPs that he would seek to avoid the mistakes of the past.

“We know we have more to do in terms of growing our capability,” he said. “It is crucial that we become a more intelligent customer in dealing with all suppliers.”

The DWP has suffered setbacks because a lack of in-house IT expertise led to poorly defined tenders. Consequently, there was confusion over what suppliers were expected to deliver.

Because of this, of the 19 most significant projects the department has carried out in recent years, nine have run over budget and 10 will be late. The cost overshoot of these projects is about £300m.

DWP officials were quick to point out that many of these time and budget overruns were because of the increased scope of projects.

Over the next three years, the department will be tendering for £3bn worth of contracts, grouped into three “towers” ­– desktop PC services, hosting services, and application maintenance. A fourth contract will integrate these towers.
MPs questioned this approach, saying it seemed inconsistent with a joined-up approach to IT.

But Dean James, DWP corporate IT chief operating officer, said only a few global firms would be able to manage the department’s IT, adding that companies such as US car maker GM have adopted the tower approach.
“By breaking it into towers you open up the contracts to smaller companies and have more competition for your business,” he said.

The model provides a sound base for innovating new products and services, to run on and between towers, according to Malcolm Whitehouse, DWP group applications director.

“We have started to look at software-as-a-service and using more web-based services that can benefit citizens,” said Whitehouse. “But we need a consistent infrastructure to be able to provide these services and the tower model helps with this.”

The department has a dedicated innovation team that is looking at how it can most effectively provide web-based services, and hopes to develop a strong identity verification capability.

The tower system further complicates the tendering process because current contractors BT and EDS own and run millions of pounds worth of assets – ­ mostly servers ­ – on behalf of the DWP.

“We would expect the contract winners to take this estate on board initially, but then they would have the freedom to restructure those assets and move them around if they saw fit,” said James.

The first contract ­ – for desktop services – ­ is open to tender.

Major DWP IT projects

Resources Management System
An off-the-shelf integrated finance, procurement, human resources and payroll system tailored for the department. Staff say it is slow to use and not fit for purpose. DWP is running an improvement plan to make the system more user-friendly.

Employment Support Allowance System
A new system designed to administer the new Employee Support Allowance Benefit. It recently went live on time and on budget and so far has taken 124,000 calls. At the moment the department employs 500 people to key old information into the new system as part of a phased go-live.

Child Support Agency – CS2
A £450m system to administer child support benefits that has been one of the biggest debacles in government IT. It is still experiencing problems six years after the first go-live. The DWP is currently tendering for a £50m
second system to complement the old system, which will go live in 2010. Eventually both are expected to be consolidated into one.

Customer Information System
A database with 90 million records including personal details of everyone in the UK with a National Insurance number. It links to hundreds of local authorities, and other government departments, including HM Revenue & Customs. Costs doubled from £40m to £88m after a substantial increase in scope.