TaxPersonal TaxAndersen Consulting dodges PFI fine

Andersen Consulting dodges PFI fine

Andersen Consulting could escape a further £38m in compensation for the problems surrounding the National Insurance Recording System, NIRS2. Despite blaming the firm for underestimating the cost and of the computer project, the Contributions Agency has refused to guarantee it will sue for the losses.

The Commons Public Accounts Committee has demanded a full-scale inquiry to establish what went wrong. MPs were ‘astonished’ that the Contributions Agency and Andersens ‘did not appear to have a shared understanding of each others’ responsibilities under the contract.’

In evidence to the committee, Ansersens claimed ‘the hostile and adversarial climate in which this and other PFI contracts had been managed was detrimental to a satisfactory outcome’. Andersens, which has paid almost £4m compensation so far, claimed, ‘One of the lessons to be learned from NIRS2 was that the delivery programme must be feasible from the outset.’

NIRS2 and other computers fiascos such as Siemens’ botched project at the Passport Office have raised a question mark over the use of the private finance initiative for large scale IT schemes.

Delays implementing NIRS2 have caused hardship to thousands of benefits claimants and pensioners, while Andersens has lost around £25m from rescheduling the project. The agency, now part of the Inland Revenue, admitted whoever delivered NIRS2 would have run into difficulties because of its size and complexity.

Andersens claimed the system is working as intended and blamed erroneous returns from employers and invalid data for delays.

‘Future contracts should explicitly recognise a ‘Stabilisation’ phase of live running after completion of development and before the steady state operational phase is reached,’ the firm suggested.

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