National Audit Office warns over Inland Revenue IT contract

Fears have been expressed by the National Audit Office that the independence of the Revenue is under threat from its over reliance on EDS as its sole IT provider.

Formed by billionaire and US presidency has-run Ross Perot, EDS is now over half-way through a ten-year contract until 2004 with the Revenue worth an estimated £1.5bn. EDS is a major IT supplier to other government departments, including the DETR.

The NAO findings cast a serious question mark over the extent of the EDS’s power over the taxman, and suggest that the US giant is in a position to restrict the size and cost of future work and even block other contenders for contracts.

With the NAO also raising fear that the tie-up could lead to taxpayers footing a far larger bill for the Revenue’s computer services, the concerns will again spotlight the pitfalls of Government and private sector partnerships.

The partnership cost has now escalated £409m above a previously disclosed £2bn price tag.

Staff monitoring the EDS contract need to be rotated and their specialist knowledge of the arrangement spread wide in the organisation, the report urges.

Mass transferral of staff to the US firm, including 1,900 Revenue Information Technology Officials, has already raised alarm bells Revenue will be left without its own IT experts and at the mercy of its only supplier.

The report also argues that the tie-up could cloud the ‘independence and objectivity’ of the Revenue’s evaluation of its providers performance against others.

‘It could also make it difficult, or costly, for the department to extract itself from the partnership at the conclusion of the contract in 2004, or lead to the loss of skills to EDS’, the report warns.

Only a third of the services have been benchmarked for value for money.Removal from the open market place ‘may lead to the procurement of solutions that do not provide value for money’, the report says, and ‘the risk is greatest in fluid markets such as information technology.’


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