According to a report from the National Audit Office, the Revenue awarded the extension so that Accenture could implement major changes to the National Insurance Recording System , known as NIRS 2, following new government legislation on pensions and benefits.
By awarding the extension without a competitive tender the Revenue was in danger of breaking European procurement rules.
Despite this risk, it decided to go ahead as the costs of delaying the work outweighed the risks of compensation claims from other suppliers.
The problems arose because the original NIRS 2 contract proved insufficiently flexible to deal with the welfare changes.
The NAO said: ‘Legislative timetables should be set so that departments can implement changes while complying with other legal requirements.’
But the NAO conceded the option to stick with Accenture offered the best value.
The NIRS 2 system has had a troubled history since its launch in 1997 including serious operating problems in its early years.
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