Ireland is in uproar over Deloitte's huge consulting bill - made all the more galling by the revelation that it was for the management of two IT systems that ultimately failed. The resulting scandal could even cost Bertie Ahern his government
Ireland has a new public enemy number one – Deloitte. A huge row has
developed in the Republic over the cost of consultants to the public purse
following the failure of two expensive but dud IT systems that Deloitte worked
on.
The row threatens to blow up into a full-blown scandal, claim the political
lives of a minister or two and even become a running sore in a general election
that may be up to two years away but for which campaigning has already started.
The furore might even end up helping to bring down the Fianna Fail government
of accountant Bertie Ahern.
More profoundly, the row has moved beyond the bubble of politics and touched
upon the most sensitive theme of Irish life at present – that despite Ireland’s
new found wealth, which has recently seen it rated as the second-most affluent
country on the planet, there are an awful lot of people getting richer still at
the expense of the taxpayer.
‘Rip-off Ireland’ is the hottest topic of the day, thanks to a smash hit
television programme of the same name aired during the autumn. The programme
aimed to expose how high the tax take was, and where and how much public money
was being spent or in many cases, according to the programme, wasted.
It may not sound like prime-time viewing, but the programme has created a
stink that now touches upon financial, political and public life throughout
Ireland. And at the very centre of this huge swirl of controversy sits Deloitte.
It is the firm’s bad luck that the furore over costly IT failures has blown
up at the worst time. Deloitte has even become known, first on the floor of the
parliament, the Dail, and now throughout Ireland, as ‘Delighted and Touche’,
considering the money the firm made from the IT mess – some 60m euros (£40.5m).
It all centres around the personnel, payroll and related systems (PPARS)
project, which was due to deliver a payroll system for 140,000 staff in the
health sector, and its sister project, FISP, a financial management system for
the same sector. Between them, PPARS and FISP have cost 180m euros and have both
been scrapped.
On its own, that would be bad enough. But what really seems to have fuelled
the controversy is the escalating cost of the PPARS project and how much of that
money was spent on hiring consultants. In both cases, Deloitte acted as a
consultant.
Back in 1998 when PPARS was first sanctioned – and at the time there was
little argument that it was a good idea – the total cost was predicted to be
¤9m. By 2002 that had climbed to 17m euros, a year later 30m euros and by 2004 a
whopping 100m euros.
Earlier this year the estimate had reached 150m euros and it may yet climb
further. FISP was a much smaller project, costing 30m euros, but its advocates
claimed it could make annual savings of 80m euros once up and running.
Whatever the need for the systems, it is clear they have not saved money. One
estimate claimed if the projects had been completed the bill would have reached
400m euros.
Taoiseach Bertie Ahern and under-fire minister for health Mary Harney have
subsequently said the consultancy costs on PPARS were ‘excessive’. The
controversy has led to the government reforming how it monitors major IT
projects. Ministers must justify use of outside consultants, and civil servants
are being given a greater role in procurement.
How cosmetic these changes are remains to be seen. Just as the problems blew
up it was revealed that Deloitte had won the tender for a small IT contract with
the Department of Environment in Ireland.
They may not be the consultants of choice for the Irish public but Deloitte
still seems to have a role to play for government.
Under review
Last month, the Irish Health Service Executive took the decision to suspend
PPARS contracts with Deloitte in line with the recent decision by the HSE board
to put further expansion of the PPARS project on hold.
‘The HSE and Deloitte are actively engaged in managing the satisfactory
conclusion of work in line with these contractual arrangements,; the executive
said. ‘Before making any further investments in the project, the HSE must be
guaranteed that the project can meet its needs and represents good value for
money.’
PPARS is already in use in four HSE locations and will continued to operate
in these locations for the foreseeable future.
An executive group is now to establish the long-term value of PPARS in the
context of the HSE’s national unified structure.