Compensation deal concerns MPs
Payments rely on EDS winning new business
The link between EDS paying compensation for the bungled tax credits system and winning more government work has been criticised by MPs.
EDS is to pay the HM Revenue and Customs (HMRC) £71.25m in compensation for problems with the tax credits systems launched in 2003.
But the Commons Treasury Committee has grave concerns about the settlement, which includes staged payments of up to £26m subject to EDS winning new government business.
‘Our concern is not that we believe the contingency payments will influence future decisions by government departments to award contracts, but that it will be impossible to be sure that they have not,’ said the committee this week.
It also delivered a formal protest about the settlement’s confidentiality agreement, which constrained HMRC chairman Sir David Varney in responding fully to its questions.
The committee’s report says IT problems were a significant cause of overpayments totalling £1.8bn last year and £2.2bn the previous year.
It also criticised HMRC for failing to analyse the contribution of IT system error to the tax credit saga, and recommended the National Audit Office independently examine the procurement, design, project management and delivery of the system regardless of the confidentiality clause in the settlement.
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