EDS fights its corner as rivals eye DWP deals

Mark Manser pointed to the smooth handling of a huge spike in Jobcentre claims as evidence of the quality of EDS’s service

The Department for Work and Pensions (DWP) is one of the biggest users of IT in central government, and is charged with overseeing welfare and pension payments. For the past three decades it has partnered with IT services firm EDS to deliver the technology to support ­ – and improve –­ its operations.

The supplier is responsible for running all the DWP’s systems, apart from communications, which are run by BT.

In 2006, the department completed a major shake-up of its contract with EDS, grouping its IT into separate “towers” comprising: desktop PC services; hosting services; application maintenance; and a fourth integration layer to link the pieces together. The project was considered a success and early estimates suggest it could lead to £800m in savings.

The current tower contracts run into 2010 and include clauses that allow the DWP to either agree a five-year extension or decide to open them to competitive bidding.

While DWP has renewed the hosting contract with EDS, it has chosen to put out tenders for the desktop IT and application development towers. It is expecting to award the desktop contract in the first quarter of 2010, with the bidding process already under way.

Mark Manser, the new vice president at EDS for DWP, is bullish about the contract situation, dismissing suggestions that the firm is wary about the contract re-bids.

“We fully endorse the competitions and we are looking forward to showcasing what we can do,” he says.

The lucrative contracts have already attracted significant interest from suppliers ­ – perhaps no surprise, with large government IT projects looking like increasingly rare beasts due to the dire state of public finances. Up to 12 suppliers are believed to be showing a strong interest in the desktop and application development towers.

The contracts may potentially be lucrative, but it is not always an easy job. “Any mistakes tend to end up in the newspapers soon after,” says Manser.

And there have been some high-profile failures, such as the calamitous Child Support Agency system. The work and pensions select committee heard earlier this year that of the 19 most significant projects the department has carried out in recent years, nine have run over budget and 10 will be late – ­ though officials were quick to point out that many of these time and budget overruns were because the scope of projects had increased.

But with 130,000 employees successfully dispersing more than two million payments a week, totalling £100bn a year, the overall reliability of the systems is an achievement often overlooked.

The systems’ effectiveness was demonstrated recently, as a recent 82 per cent spike in claims to Jobcentre Plus was handled without problems. The systems had been designed to be scalable, and passed this test with flying colours.

Whichever supplier wins the tower contracts, they are likely to face intense pressure to cut operating costs at the DWP. The government’s recent operational efficiency review suggested £7bn a year could be saved on IT across Whitehall.

In the latest spending round – ­ in operation since 2007 ­ – departments were asked to make five per cent cuts in their operational costs. Manser says that as a result of the latest review, departments could be asked to make between 10 and 20 per cent cuts in IT spending in the next round.

“The private sector can help with process efficiency work at the front end to help achieve this,” he says.

For example, government bodies frequently have five or six channels of engagement for citizens, and there are opportunities to streamline this to a single point of contact.

Such a move was first suggested in James Purnell’s plans for welfare reform. The Conservatives have outlined plans that are comparable.

The cultural, political and legal opposition to such reforms have prevented them in the past but they can now be carried out in a way that provides significant benefits to public services, according to Manser.

“There is a big opportunity for the private sector to move into these kinds of services and I think it will benefit everyone,” he says.