Auditors have criticised Scotland’s public sector pension body over a failed IT project which cost millions and “considerably set back planning”.
The Scottish Public Pensions Agency (SPPA) runs retirement plans for over half a million public sector workers.
It spent more than £6m on a new IT system which the chosen supplier, Capital, was not able to deliver.
Audit Scotland said the SPPA had not applied enough scrutiny to Capita’s bid and now had a £23m gap in its budgets.
The principal role of the body – an executive agency of the Scottish government which is based in Tweedbank – is to administer and pay the pensions of half a million members, who include teachers, NHS staff, police officers and firefighters.
In 2015, it awarded a contract to Capita to integrate its pension administration and payment operations, with the goal of redesigning its systems and making financial savings in the long term.
However, the firm missed a series of deadlines and was unable to provide a working system, and the SPPA pulled the plug on the project in February 2018.
In total, the public body spent £6.3m on the project, including £800,000 paid to Capita, and a further £2.4m extending contracts with existing suppliers when the new IT scheme fell apart. It now has a £23m gap in its revenue and capital budgets across the next five years.
Capita eventually paid back £700,000 in November 2018, following a legal process.
Audit Scotland has now concluded that the SPPA “did not prepare a clear business case” for the new system, and set an “unrealistic” 18-month timetable for completion.
The group’s report also said the SPPA “did not adequately scrutinise the winning tender for the project” which had come in at an “abnormally low cost”.
The Scottish government’s legal department advised bosses that “more in depth questions should be asked to fully assess the bid”. The agency replied that they “did not have the skills to further probe the tender” and accepted the bid, along with Capita’s assurances that it could deliver.
‘No value for money’
Auditors highlighted a high turnover in the leadership team over the brief lifetime of the project, with four different senior officers responsible for it across three years, and a series of changes at executive level. They said this “made it more difficult to manage the supplier and hold it to account”.
Auditor General Caroline Gardner said: “The public sector is under pressure and we are seeing more instances of bodies embarking on IT projects without the necessary staff and assurance arrangements in place to manage them properly.
“In this instance, I found no evidence of a clear business case for a new integrated system, which was pursued at a time when the SPPA was going through significant change. The result was a project that failed to provide value for money and has considerably set back the SPPA’s planning.”
The Scottish Conservatives likened the scheme to past failed projects like the farm payments IT system.
Pensions spokesman Bill Bowman said it was “yet another botched IT contract” which “poses some serious questions for the government”, adding: “The hundreds of thousands of public sector workers whose pensions depend on this organisation deserve answers.”
Labour’s James Kelly said it was “an absolute mess which has cost taxpayers millions of pounds”.
A spokesman for the Scottish government said there would be no disruption to pension services as a result of the failed project.
He said: “The SPPA is already taking steps to improve how contracts are managed and will consider the findings of the Public Audit and Post Legislative Scrutiny Committee when it has considered the report.
“The Scottish government is examining the report and will be reviewing its findings.”